1. Wage-led increase in China apparel prices can create 1.2 m new jobs in India

Wage-led increase in China apparel prices can create 1.2 m new jobs in India

India’s apparel exports are estimated to have just about crossed $17 billion in 2015-16, compared with the target of $18.73 billion for the fiscal, as outbound shipments to key markets like the US and Europe remained lower than expected due to an economic slowdown.

By: | New Delhi | Updated: April 29, 2016 7:50 AM
Women are going to benefit the most, as every 1% increase in wages could raise the probability of them entering the labour force by 18.9% in India and other South Asian countries, the report says. (Reuters) Women are going to benefit the most, as every 1% increase in wages could raise the probability of them entering the labour force by 18.9% in India and other South Asian countries, the report says. (Reuters)

A potential 10% rise in apparel prices in China, which has seen a sustained rise in its wage costs in recent years, could help India create at least 1.2 million new jobs in its labour-intensive garment industry, a report by the World Bank said on Thursday, reports fe Bureau in New Delhi.

Women are going to benefit the most, as every 1% increase in wages could raise the probability of them entering the labour force by 18.9% in India and other South Asian countries, the report says. As such, the share of women in total employment in apparel industries in these countries is much higher than in any other industries, it adds.

In India, women account for more than half of the workforce in the apparel sector that provides employment to over 45 million people directly and 60 million people indirectly, according to an estimate by the Apparel Export Promotion Council. And the trend is almost similar in other South Asian countries like Bangladesh.

“Rising costs of apparel manufacturing in China provide a window of opportunity for India to focus on apparel in productively employing its huge working-age population,” said Onno Ruhl, World Bank country director (India) at the release of the report titled “Stitches to riches?”. Even other South Asian nations are going to benefit from China’s shift.

However, although India is gaining market share, Southeast Asian countries like Cambodia, Indonesia and Vietnam are outperforming all South Asian nations in overall export performance, product diversity and other non-cost related factors, the report says.

So for India to meaningfully cash in on the gradual shifting of China from the apparel sector, it needs to move quickly to ease barriers to the import of man-made fibres, facilitate market access and encourage foreign investments to reach more end-markets, which could also augur well for light manufacturers like footwear and toy, it says.

India’s apparel exports are estimated to have just about crossed $17 billion in 2015-16, compared with the target of $18.73 billion for the fiscal, as outbound shipments to key markets like the US and Europe remained lower than expected due to an economic slowdown.

However, the sector still managed to witness a marginal rise while the country’s overall exports witnessed a 16% contraction in 2015-16.

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