Uttar Pradesh has better facilities and infrastructure to manufacture and export garments than Bangladesh...
In the last few years, it has become a practice for State Governments to organize business conclaves to facilitate investment for various industries. These much-hyped business conclaves may be bringing in some promised investment, but have failed to generate desired number of employment opportunities to the masses who are uneducated and unemployed. The state of UP is again standing at the threshold of the next UP Investor’s Summit (UPIS) 2018, to be held on 21st and 22nd February. But is the State Government itself aware that it can improve the plundering economy of the state by giving a little more consideration to the garment manufacturing and export industry? We all agree that big ticket projects are equally required, but certainly not at the expense of a large employment generating industry like garmenting... An analytical take by our Editor-in-Chief.
Advantages of Apparel Industry
To its advantage, the garment manufacturing industry is not capital-intensive, a mere US $ 200 (Rs. 10,000) investment on a sewing machine can give employment to around 2 people (in accordance to industry standards, man-machine ratio is 1:1.75 and at some places, it is even higher at 1:2.5) by training them for just 8 days (even if some might put the days as 30); these freshly trained people can be put on to lines. So, an investment of US $ 100 million has the potential to give employment to around 1 million (10 lakh) people. Consider the impact that billion dollars can have on the employment of this industry while the investment of billion dollars in car manufacturing industry may not create even 5,000 jobs (I have not considered the ancillary industry since I know that textile and apparel industry would require multiple entrepreneurs to address the needs of the industry as compared to the car ancillary industry).
However much one may argue that manufacturing is moving back to the west, as cost of production increases in Asia, but I would still give this industry about another 15-20 years’ time before it really moves back to the developed nations, and there is wide spread adoption of automation and robotics even in a country like ours, which takes away the mass jobs. It would be interesting to note that the number of unemployed youth in Uttar Pradesh in the age group of 15-35 years as per the
66th round of the National Sample Survey Organization (NSSO) report is estimated to be a whopping 10 million, and this number can be drastically reduced or removed with an informed investment initiative in the garmenting industry.
UP is a prominent agriculture state and today with agriculture becoming more technology-dependent, it would be requiring much less manpower to work on the fields. The NSSO report also shows that there was a net decline of 4.9 million (49 lakh) agricultural workers in the last five years in Uttar Pradesh and this is only going to increase with more and more people in agriculture finding less and less jobs in their fields and moving on to other manufacturing sectors, which though considered as the cornerstone of the economy, have grown at snail’s pace of only 1.64%, showing very little chances of covering up the growing employment shortfall.
Apart from eradicating unemployment, the investment and support to the garment manufacturing and exports industry would also add substantially to the state’s economic positioning. The perspective to be kept in mind is that the investment of a mere US
$ 100 million on machines also helps to generate an export turnover of around US $ 4 billion (Rs. 24,000 crore) a year, a double gain for the Centre and the State.
Why Uttar Pradesh as a case study?
Firstly, and most importantly, the garment industry is widespread in Uttar Pradesh – Noida in knitted and woven dresses; Meerut in sports goods; Kanpur in kidswear; and Lucknow in Indian ethnicwear – are few among the important natural and man-made garment and textile clusters/hubs for garment manufacturing. (Here it is essential for us to understand that it is easy to piggyback the already existing cluster rather than create new clusters). Already around 1.5 million (15 lakh) workers in some form or the other are associated with the industry and it would not require much efforts to bring up the industry.
Similarity of Bangladesh to Uttar Pradesh
I think the ideal situation would be to follow the Bangladesh model which was earlier the US and European model of growth as well, rather than the Gujarat and other state business models which invite foreign investments through the big spending conclaves for capital intensive industries… Let’s draw some comparisons, putting our submission in perspective. The total population of Uttar Pradesh is 199.5 million, according to the census of 2011, whereas Bangladesh is approaching the 159.5 million mark with unskilled workers forming the major force in both the places.
Even the surface area of 1,47,570 sq. km. of Bangladesh compares well to 2,43,290 sq. km. in Uttar Pradesh.
Advantage: Uttar Pradesh
I can go on to put forth many similarities and advantages in perspective, but the major one is its existing infrastructure of 500 textile training centres such as NITRA, NIFT, Pearl, AMITY, NIFD, IIFT, ATDC and 300 ITIs spread all across the state providing middle-level as well as shopfloor level education and training for the garment industry. It is by all means much more than Bangladesh. Add to this the Government of India’s budgetary provision of 2,000 crore towards skill development. We all know that Bangladesh lacks in its fabric producing capability, but strategically they have converted this weakness into their strength by implementing policies to import the best of fabrics at the best of price from all parts of the world and add further value to this by converting the fabrics to garments for export. Thus, successfully creating employment opportunities and the required foreign exchange!
Whereas, UP as an integral part of India has the advantage of a strong textile industry, as the country is the second largest producer of cotton, with the second largest spinning capacity and the third largest fabric producing centre. However, the country has still not been able to support its front end sufficiently because of its treating the textile supply chain as four separate identities which are: Cotton production, Spinning, Weaving and Garmenting.
To reiterate, if a little focused attention is given by the Government of UP towards the state’s latent potential as a garment manufacturing hub, it can be the richest and most powerful state in the country…
But the similarity ends here
While Uttar Pradesh employs only
1.5 million in garment and textile for an annual export of not more than US $ 2 billion, Bangladesh employs 5 million to fetch exports to the tune of US $ 20 billion. Everyone knows how Bangladesh has risen over the last 10 years riding the bandwagon of a booming global garment trade, driven by a dedicated workforce backed by unclenching Government support to gain a per capita income of US $ 1,190. On the other hand, a technically more resource rich Uttar Pradesh has per capita of only US $ 605; even India with all its frills has a per capita of just US $ 1,720.
One would ask why the industry has not flourished on its own in Uttar Pradesh
Here I would like to lay out few problems the industry faces today in UP. The points discussed are without any prejudice to anyone or the system.
It is no secret that exporting garments today is a tough business,
as besides being competitive, one also has to work under all kinds of compliance norms (not only social and environmental but also technical) stipulated by the buyers, which incidentally are basic compliance relating to ‘the law of the land’. Sadly, the industry is struggling to be compliant and is daily facing the wrath of inspectors from all kinds of Government departments, police and lately the goons of the political class. Though it is claimed that the state is electricity surplus, there is no regular electricity. Water is always a problem and it’s going to be bigger problem in time to come. I can go on with many other bottlenecks including filth and dirt all around the industrial areas or clusters which is a complete eyesore for the visiting foreign buyers. They all require certain minimum hygiene, but these issues can be addressed at the local level…
UP has finally got its own textile policy, but the most surprising fact is that even after the announcement of the textile policy, the State Government has taken no active measure to promote and create awareness of the incentives offered. Other states like Gujarat, MP, Maharashtra, Rajasthan, Odisha, Jharkhand and even their western and eastern neighbours
A head-on comparison between UP and Bangladesh on critical parameters
Varanasi silk has become the hallmark of UP textiles