Micro, small and medium enterprises (MSMEs) in the textile and garment sector will need greater government hand-holding to take advantage of market access opportunities emerging from India’s free trade agreements (FTAs) with developed economies, industry representatives said on Thursday.
While FTAs can open new markets for smaller exporters by lowering or eliminating tariffs, MSMEs often lack the resources to identify overseas buyers, participate in international trade fairs and meet the technical and regulatory standards required in developed markets, said Om Prakash Gupta, Laghu Udyog Bharati (LUB) general secretary.
“FTAs can offer a big opportunity, but support from the government to bring in new customers or to display products and seek customers would be crucial,” Gupta said.
He said smaller textile units also needed assistance in complying with product and sustainability standards in advanced markets and dealing with non-tariff barriers (NTBs). Such requirements can emerge suddenly and impose significant compliance costs on small businesses that lack dedicated resources to monitor and meet them.
The call for greater support comes as India seeks to significantly expand its textile and apparel industry and increase its presence in global markets. Textile Minister Giriraj Singh, addressing the Textile Conclave organised by LUB, assured smaller textile and garmenting units of government support to help achieve the target of doubling the size of the textile industry to $350 billion by 2030, including $100 billion in exports.
Gupta, however, flagged the pressure on margins faced by small manufacturers, saying some measures aimed at protecting domestic industry could also raise their input costs. He cited the use of measures such as minimum import prices (MIPs), which, while providing protection to domestic producers, can make imported raw materials more expensive for downstream manufacturers.
LUB also called for extending the Production Linked Incentive (PLI) scheme for textiles to a wider base of MSMEs. At present, the minimum investment threshold for participation in the textile PLI scheme is Rs 100 crore, which, according to the industry body, puts the scheme beyond the reach of many smaller manufacturers.
Skill shortages are another constraint. LUB has suggested that MSMEs be brought within the ambit of the National Apprenticeship Promotion Scheme so that students from Industrial Training Institutes (ITIs) can undergo longer-duration on-the-job training with smaller manufacturing units.
The industry body is also expanding its own skilling efforts. Gupta said LUB currently operates 47 training centres across the country covering seven trades and plans to increase the number to 100 by the end of the current financial year. It is also working to establish stronger linkages between these centres, MSME units and ITIs.
For textile MSMEs, industry representatives said, the ability to benefit from FTAs will therefore depend not only on tariff concessions but also on their capacity to meet global standards, find overseas buyers, scale production, and navigate increasingly complex trade regulations.