The manufacturing fabric

In his Independence Day address last month, Prime Minister Narendra Modi placed “manufacturing power” as the first among the seven streams (saptadhara) that will help India achieve the vision of Viksit Bharat. He also said that in that effort the potential of India’s youth would be fully harnessed. The pertinent question is which manufacturing sector can actually deliver jobs at the scale India needs.

Our research at ICRIER points to textiles and apparel (T&A). But first, why is creating jobs an urgent requirement? India’s growth story will have little meaning if it fails to create mass jobs, that too in the formal sector. India had 616 million employed people aged 15 years and above, but agriculture accounted for 43% of the figure as against merely 12.1% for manufacturing (Periodic Labour Force Survey, 2025). Even a shift of 1 percentage point employment from agriculture to manufacturing would involve moving a large number of workers. The National Democratic Alliance government had promised to create 20 million jobs every year, but what is has delivered is nowhere near that number. The recent student agitations over paper leaks had an undercurrent of a dearth of respectable jobs in the formal sector. Unemployment among those aged 15-29 years was 9.9%, rising to 13.6% in urban India, while 25% were not in education, employment, or training (PLFS, 2025). Also, female labour force participation was 40%, compared with 79.1% for men.

A large share of India’s workforce remains in informal employment, without the stability and social protection of formal jobs. The PLFS usual-status measure includes people who worked for a big part of the year, as well as those who undertook economic activity for at least 30 days. Being counted as “employed” does not necessarily mean having a regular/formal job. For workers to build economic security and resilience, the shift must therefore be towards regular, formal employment with social-security benefits like Employee Provident Fund and Employee State Insurance. This is where the apparel sector matters. It is labour-intensive, employs women in large numbers, and can train workers in short periods — ~60 days for specific production roles.

India has set an ambitious target of $100 billion T&A exports by 2030 (from $36 billion today). Of the $100 billion, $40 billion is for apparel exports specifically (currently $15.7 billion). Our interactions with exporters suggest these targets are not grounded in reality. The targets are more likely to be achieved by 2035 than 2030.

A positive is that India has recently closed its tariff gaps with competitors like Bangladesh and Vietnam, in major markets such as the EU and the UK. But market access alone does not ensure exports. Take, for example, the 2011 India-Japan trade agreement. India’s apparel exports to Japan fell from $229 million in 2013 to $203 million in 2024. We need the scale and capacity to tap the potential of free trade agreements. The solution is not more factories, but creating a competitive ecosystem around them.

Tiruppur, an organically grown knitwear cluster, is perhaps the most compelling example. Its knitwear exports rose from $3.3 billion in 2020-21 to $5.3 billion in 2024-25. The cluster accounts for about 68% of India’s knitwear exports and supports livelihoods of more than a million workers, around 70% of whom are women. Within roughly 20 km, yarn, knitting, dyeing, printing, stitching, finishing, packaging, and dispatch are woven into one production ecosystem. Nearly 20,000 units operate across stages, from knitting, dyeing, and printing to garmenting and ancillary activities. In this ecosystem effect firms and workers specialise and thousands of jobs are created around a common market.

So how did Tiruppur do it? Over decades, entrepreneurs, industry associations, and the government built the institutions and common infrastructure that enabled the ecosystem to grow. The Tiruppur Exporters’ Association, under the leadership of A Sakthivel, and the South India Hosiery Manufacturers’ Association played an important role in building collective capabilities, while infrastructure such as the Netaji Apparel Park supported its expansion. The cluster’s collective strength was evident in tackling the environmental crisis. After the Madras High Court’s 2011 order on units failing to meet zero liquid discharge norms, the cluster invested more than `850 crore in common effluent-treatment infrastructure. Tiruppur also shows what it takes to create the next one million jobs. The cluster depends heavily on migrant workers from Odisha, Jharkhand, Bihar, and elsewhere, making worker housing and retention important challenges. The cluster plans to foray into man-made fibres, technical textiles, and high-value sustainable manufacturing to expand both exports and employment.

But Tiruppur alone cannot help achieve the target of $100 billion T&A exports by 2030. India needs many more such clusters. Some policy steps in this direction were taken by the government in 2021 with the announcement of seven PM MITRA parks. But till date, only one such park (Warangal) is operational. Such a snail’s pace of execution does not inspire confidence that India can achieve its target of $100 billion exports by 2030. That would also limit the speed at which jobs can be created.

Our humble submission is that the Prime Minister needs to give special attention to this sector if we want to create 20 million meaningful jobs annually. Chip-making, AI, and other advanced technologies are important for India’s future, but they are for the highly skilled workforce. A majority of India’s labour force excludes them. The T&A sector offers higher employment intensity at a relatively low cost. China, Bangladesh, and Vietnam have followed that path. India must learn from them.

The real test of the Viksit Bharat vision is whether it can create enough productive jobs. T&A offers a clear opportunity, but it needs the PM’s attention to realise it.

Ashok Gulati and Sulakshana Rao are a Distinguished Professor and a Senior Fellow at ICRIER, respectively.

Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.