Context:

• India’s textile and apparel (T&A) sector is among the country’s oldest industries, employing 45 million people and contributing 2.3% to GDP.
• Despite this, India’s share in global T&A trade is low — just 4.2% ($37.8 billion) of a $897.8 billion global market.
• In the apparel segment specifically (HS codes 61 and 62), India’s share is only 3% ($15.7 billion out of $529.3 billion), and this has stagnated for two decades.

Current Export Trajectory - Falling Behind Targets:

• India targets $40 billion in apparel exports by 2030, but recent trends show a negative average annual growth rate (AAGR) of (-) 2%.
• If India had maintained the earlier 8.5% AAGR (2004–2017), it could have reached $31 billion by 2030.
• Without substantial policy reform, the $40-billion target remains unrealistic.

Core Constraint - Lack of Scale in Production:

• Fragmented MSME base:
  • 80% of India’s apparel units are MSMEs, making them too small and dispersed to compete globally.
  • Lack of integrated production systems hampers cost efficiency, delivery timelines, and order volume execution.
• International comparisons:
  • China and Vietnam have built large-scale, export-oriented factories.
  • Bangladesh uses centralised “buying houses” to aggregate orders for dispersed producers — a model India lacks.
• Potential for employment and inclusivity:
  • The apparel sector can generate mass formal employment, especially for women and youth.
  • Skill development is quick — a sewing machine operator can be trained in just 60 days.

Case Study - Shahi Exports (A Model of Scalable Success):

• Founded by Sarla Ahuja in 1974, Shahi Exports grew from a 15-women unit to India’s largest apparel exporter with over 100,000 employees, 70% women.
• Success due to:
  • Vertical integration (80% fabric produced in-house),
  • Professionalised operations,
  • Focus on women empowerment and sustainability.
• But the journey took 50 years, highlighting the need for accelerated replication through policy support.

Policy Recommendations - A Blueprint for Bold Reform:

• Financial incentives for scaling:
  • High cost of capital in India (avg. 9%) vs China (3%) and Vietnam (4.5%) needs correction.
  • Structured capital subsidy of 25–30% for enterprises meeting a minimum threshold [say, 1,000 machines (as per the draft PLI 2.0 scheme)] to ensure viability and scale. 
  • Tax holiday of 5–7 years for new scale-focused units.
• Labour law reforms:
  • India’s 52 central labour laws, which created rigidities, discouraging formal hiring and scale, need flexibility.
  • Overtime pay at 2x hourly rate vs ILO standard of 1.25x adds cost pressure.
  • As labour accounts for around 30% of garment production costs, a bold idea could be to link MGNREGA funds (say 25-30%) to subsidise labour costs in garment units.
  • Expand skilling initiatives like SAMARTH for short-cycle, demand-linked training, especially for women.
• Regional hubs and inclusive growth:
  • At least two PM MITRA Parks should be garment-focused, particularly in Uttar Pradesh and Madhya Pradesh.
  • Proximity to labour-rich states can reduce migration, cost, and enhance inclusivity.
• Export-Linked Incentives (ELI): Moving beyond Production-Linked Incentives (PLI) and introducing ELI that reward global competitiveness and market capture, not just volume production.

Conclusion - Beyond Business-As-Usual:

• The garment sector sits at the nexus of job creation, export growth, and value addition across the textile chain.
• If India aspires to build 10 Shahi Exports in 10 years, it requires bold, targeted, and swift policies.
• Delay will only lead to missed opportunities in a fast-moving global marketplace.