By Divyaanshu Makkar
Our country’s rich export history in textiles such as jute and cotton is globally known. This is largely due to the developments during the industrial revolution. Jute and cotton products from India were exported across the globe – even today the global price for Jute is determined by its domestic price in India! Our rich tradition of weaving using handlooms is increasingly seen as a sustainable choice against mass produced fast fashion. This is evidenced by the recently reported growth in merchandise export by approximately 15% in 2022.
Merchandise exports from India are growing at a remarkable pace – it is expected to more than double from its current value by 2025. India’s merchandise exports hit a record high of $40.38 billion in 2022, increasing approximately 15 percent year-on-year to $35.26 billion. The revival of exports, supply chain pipelines and improvement in consumer demand have contributed extensively to this growth. Additionally, India’s policies related to FDI, incentive schemes such as RoDTEP, and availability of credit have worked as an effective catalyst. In fact, Niti Aayog in its Export Preparedness Index 2021 highlighted five essential factors for bolstering exports in our country: Raw materials and intermediate goods, R&D, FDI, export infrastructure and export diversification. It is incredible how policy interventions including 100% FDI in the textile industry, trade infrastructure for export scheme (TIES), One District One Product (ODOP) scheme and upgrades in the export basket through FTA’s have aimed to target these five essential factors. It is however important for us to remember that India’s exports, especially in merchandise and lifestyle products, are yet to realise even a fraction of their true potential. While our net export deficit is gradually reducing, it is because the deficit in merchandise trade is offset by the surplus in service trade. In fact, the deficit in merchandise trade widened in 2022 to $27.98 billion from $11.71 billion in 2021. What explains this widening deficit?
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I believe that this deficit can largely be attributed to a history of inadequate trade infrastructure, low credit access, outdated technologies and trade barriers. It is indeed encouraging to see newer policies including the National Infrastructure Pipeline, Gati Shakti Scheme and FTA’s. These are exactly the imperatives merchandise manufacturers in India need today. Investment in R&D in our country has traditionally been on the lower side. Leveraging technology will be an important component for realising growth potential for the textiles and apparels sector. Political will to do this in India is strong – thus quoting our commerce minister Piyush Goyal where he said “Industry and academia connect is essential for the growth of research and development in the application areas of technical textiles in India”. I believe it is equally important to explore how disruptive technology can also be leveraged to rationalise the post-manufacturing and pre-sales process for manufacturers in India. This is critical because MSME manufacturers in India continue to use outdated technologies because of insufficient finance, lack of access to modern technology, and absence of R&D capabilities. While the government has attempted to address credit shortfall through the introduction of the Credit Linked Capital Subsidy Scheme (CLCSS) and technology upgradation through National Manufacturing Competitiveness Programme (NMCP), manufacturers face roadblocks in harnessing fragmented technology solutions offered to them by the market. Globally, manufacturers are harnessing technology to streamline complex processes to improve their efficiency and service delivery to their customers. Alibaba’s contribution towards the extraordinary growth of China’s manufacturing sector was a result of its technology service provided – where they enabled platform convergence for manufacturers by offering multiple services and improving efficiency multifold! This is particularly relevant for India where even today medium and small-scale manufacturers continue to operate manually. Even in cases where these manufacturers adopt technologies, it is often fragmented solutions complicating an already complicated process for people who are digitally unequipped. The government’s flagship schemes including Digital India and Make in India are well positioned to improve digital capabilities for manufacturers in our country. Solutions offered by Indian startups are advancing to support manufacturers across the value chain of production to sales. Vertical SaaS solutions are what is required by offering solutions that specifically keep in mind the needs of that segment. These solutions will not only improve efficiency but make Indian manufacturers competitive at the global level.
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The growth of India’s lifestyle industry will essentially rely on how quickly our manufacturers can adopt integrated technologies in their post-manufacturing and sales processes. India is already an ideal place for textile and apparel manufacture due to our precedent for labour intensive sectors. With China’s ageing population and ongoing geo-political conflicts, the world is looking for a new manufacturing hub. India is ideally positioned with a youthful economy, affordable labour, educated population and a striving start-up ecosystem leveraging technologies to offer new solutions to existing problems. What we in fact need today is for the government to consider how policies such as the National Textile Policy can accommodate integrative technology solutions as part of the roadmap for the sector’s growth. These integrative solutions will essentially streamline major business functions for manufacturers to realise their growth potential in a globally competitive market.
(The author is Co-Founder, Sourcewiz. Views expressed are personal and do not reflect the official position or policy of the FinancialExpress.com.)
