Scaling Up Garment Production

Incentive schemes without structural reforms will not help

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The textile and apparel industry is India's largest employment generator after agriculture, and contributes 2.3 per cent to the country's gross domestic product.

Notably, 80 per cent of its capacity is spread across clusters of micro, small, and medium enterprises (MSMEs), implying that a significant portion of the production process, from raw-material processing to garment manufacturing, remains labour-intensive.

As reported by this newspaper last week, the Union government is in the process of formulating a production-linked incentive (PLI) scheme for garments. This will be separate from the existing PLI scheme for textiles.

While the proposal brings fresh hope, past evidence begs the question whether the PLI scheme can indeed transform India's manufacturing ecosystem.

Other than smartphones and pharmaceuticals, overall investment remains far from what was initially expected in other sectors where PLI schemes were launched.