Can Indian manufacturing gear up to the apparels manufacturing industry

Abstract

The study on “Can Manufacturing Industry can gear up to the retail boom in India” starts with an understanding of the changing retail landscape in India. The Indian retail market is expected to grow at a very rapid pace owing to changing tastes of the middle class, the change from a pyramidal to a diamond shaped social structure and increase in consumption income of Indians. As a Mckinsey report of May 2007 points out, India is indeed a bird of gold. The study begins with an estimate of the retail market size along with the sectors within it till the year 2015. Consumer durables and IT products, Apparels and food processing industries have been identified as the fastest growing sectors. The Apparels industry has been selected for this study because of the high growth estimates and also the penetration of organised retail format. Apparels industry in India has long been a fragmented labour intensive industry facing challenges typical to any other manufacturing sector. The report is structured to elucidate the supply demand mismatch potential in the industry and the required policy initiatives to bridge the gap. The first section provides a perspective of the export and import trends of apparels. The production capabilities in the country have been then analysed to highlight the highly fragmented nature of the industry. The production levels required to meet the demand has been estimated for the last 5 years along with the current growth rate in production. To analyse the future requirements on the supply side, the government’s targets for exports and domestic market projections have been used to project the required annual growth in apparel production for the next 5 years. It has been found that the current annual growth of apparel production is way below the growth required to meet the lofty targets set by the government. The next section looks at the constraints faced by Indian Apparel Manufacturing in terms of Regressive Labour Laws, Poor Infrastructure, Taxes and Monetary Policy etc. Subsequently, the government initiatives to improve the competitiveness of the Indian Manufacturing Industries and the apparel manufacturing industry in particular have been studied in detail. The approach adopted is to understand the schemes, benefits obtained so far, implications for the future and changes required if any to the schemes. The impact of schemes such as TUFS, SITP, TCIDS, Apparel Marts, ATDC and IAM has been studied and recommendations provided. The fiscal reforms undertaken by the Indian governmentover the last few years and their impact has also been covered in brief. Finally, other sectoral initiatives such as the Cluster approach for manufacturing, changes required in contract labour laws have also been studied. In the end, a set of recommendations to enable the manufacturing to gear up to the retail challenge has been proposed.