Evaluate the impact of the ‘Make in India’ policy on both domestic and foreign manufacturing.
Model Answer Lack of Large-Scale Industries: India's textile sector is dominated by small, informal weaving and processing units. Complex labor laws, weak export contract laws, and challenges in hiring and firing employees deter large-scale investments, reducing the sector’s competitiveness. High PrRead more
Model Answer
- Lack of Large-Scale Industries: India’s textile sector is dominated by small, informal weaving and processing units. Complex labor laws, weak export contract laws, and challenges in hiring and firing employees deter large-scale investments, reducing the sector’s competitiveness.
- High Production Costs: The absence of technological advancements in small-scale units and lack of economies of scale results in higher production costs and inferior product quality. This makes Indian textiles less competitive compared to countries like China and Vietnam.
- Trade Barriers: India lacks free trade agreements (FTAs) with key textile-importing markets, leading to higher prices for Indian products. Countries like Bangladesh benefit from duty-free access to the EU, offering them a significant advantage.
- Declining Cotton Production: India’s cotton production dropped to a 15-year low in 2023-24, while countries like China benefit from intensive farming techniques that boost their cotton production, further affecting India’s textile industry.
- Low Labour Productivity: The Indian textile industry suffers from low labour productivity, caused by a shortage of skilled workers and outdated technologies. China, for example, has nearly double the labour productivity compared to India.
Measures to Enhance Competitiveness
- Promotion of Synthetic Apparel: Shifting towards synthetic fabrics would allow Indian textile manufacturers to produce year-round, overcoming the seasonal limitations of cotton-based industries and increasing production.
- Strengthening Weaving and Processing Sectors: Establishing large-scale, formal weaving and processing units would help standardize quality and improve production efficiency.
- Industry-Friendly Labour Laws: India should introduce flexible labour laws to encourage large-scale investments, such as those seen in the services sector, which would improve industry growth.
- Negotiating Trade Agreements: India should prioritize ratifying preferential free trade agreements with key markets like the EU, UK, and Canada to ensure competitive pricing and improved market access.
Government Initiatives
- The government has implemented schemes like PM MITRA Parks, Production-Linked Incentive (PLI), and the National Technical Textiles Mission to bolster the textile sector. These initiatives aim to meet the export target of $65 billion by 2026 and generate new employment opportunities.
Make in India launched in 2014 aims to transform India into a global manufacturing hub by attracting foreign investment, promoting local production and creating jobs, focusing on sectors like aerospace, automotive, electronics and pharmaceuticals. Significance on Foreign Investments - Attracts $284Read more
Make in India launched in 2014 aims to transform India into a global manufacturing hub by attracting foreign investment, promoting local production and creating jobs, focusing on sectors like aerospace, automotive, electronics and pharmaceuticals.
Significance on Foreign Investments –
Significance on Local Manufacturing –
Challenges to Make in India include infrastructure gaps, regulatory hurdles and skill deficits. Initiatives to promote it include Invest India, Startup India and Skill India along with sector specific policies, simplified tax regimes and eased FDI norms to boost manufacturing and attract investments.
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