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Indian textile industry poised for giant leap

The Indian textile industry could generate 50 million jobs by 2025, a large majority of them for women. The domestic market could account for a 2.5 times jump and even foreign exchange earnings could go up to a similar size by 2025.

Challenges in meeting these targets include small scale, fragmented clusters, restrictive labor laws and unpredictable wage movements, high operating costs due to taxation and subsidy structures, market access barriers in key markets such as the EU and the US, poor infrastructure, logistics delays, and lack of product development and process improvement.

States could promote infrastructure with plug and play facilities. Different operating models can be built, such as the hub and spoke model, or notified apparel parks. The China model of VAT rebates can be adopted. The exempt-credit-offset method of carrying forward unadjusted rebates can encourage hybrid domestic-export models. Logistics support is essential, especially integration with Bangladesh through single-day transit. Shipping turnaround times must be improved and adequate hinterland connectivity built with key textile parks.

The free trade agreement with the EU would be of considerable benefit. An added provision could be to treat the poor states of India on a similar basis as least developed countries.