If it's going to regain its share of the world apparel market, India's government needs to help its businesses regain credibility, argues Mike Flanagan. It can do this by announcing expansion programmes that materialise, by encouraging job creation, by eliminating pointless random expulsions of garment workers, and putting an end to the culture of denial of child labour.

Two questions to start this month's rant, to see how closely you've been following the news on just-style:

  1. Which country recently, according to its factory owners, expelled from its capital city over a quarter of the garment industry workforce? All citizens of the country; none for any sensible reason.
  2. How much (in percentage and in quantity) does that country's leading textile consultancy think its textile and garment industry exports will grow over the next decade?

Answers:

  1. India, where the Delhi police in mid-September decided to expel any Indians they didn't like the look of if they didn't have identification showing a Delhi address. The expellees have been told not to come back till mid-October.
    According to reports of meetings at the local chapter of India's Apparel Export Promotion Council (AEPC), 100,000 of the city's 350,000 garment workers, all migrants from surrounding Indian states, have been thrown out of the city for a month. Some garment factory owners claim they will lose 40% of their production as a result.
  2. India's Technopak Advisors, at more or less the same time as the Delhi police action, forecast India's textile and garment exports would quadruple to $80bn between now and 2020 - even though they admitted India's share of worldwide textile trade has been falling since quotas were removed in 2005.

The Delhi expulsions seem to be part of a policy of hiding the city's poverty from visitors and TV viewers during the Commonwealth Games - a mini-Olympics for former members of the British Empire.

The effect of the expulsions - of fellow Indians, remember, properly employed in jobs vital to the country's economy - would be inconceivable in any other democracy: it's the kind of banana republic stunt that used to go in Romania under Communist dictatorship.

The "100,000 expulsions" claim may not be accurate: no-one seems to be keeping any track of just who's been thrown out, and there's some suggestion that Indians from other states are leaving "voluntarily" to avoid arrest. But no-one in the local or federal government is even trying to deny that many orders placed with Delhi- area factories are going to be seriously disrupted for the next month or so.

The disruption comes as Indian exporters are trying to explain why Indian garment shipments are currently down, while exports from China and India's immediate neighbours are showing double-digit growth.

India, of course, constantly sees itself as China's main commercial rival - but its garment exports are just one-eighth those of China, and well behind even Bangladesh, whose population is about a seventh of India's.

Series of mishaps
The expulsions are just the latest in a series of mishaps - most the result of inept decisions by national or state governments - that seriously question India's ability to compete in the world garment industry.

  • India has approved 21 major new integrated textile parks across the country since 2005 - but only two are currently operational, according to Vinu Sudan, a director of Brandix India Apparel City, in July. India consistently announces new factory complexes before anyone has acquired the land to build them on. In such a densely-populated country, agreeing compensation with land owners, or with peasants who depend on farming the land, is uncertain. All part of the democratic process - but, in a democracy, it's plain irresponsible to announce new developments without a realistic plan. India's goal for more factories is so far getting almost nowhere.
  • Governments elsewhere in Asia have spent this year making their exporters aware of the implications of Europe's REACH regulations, which require detailed record keeping of chemicals used in exports to the EU. While stringent, the rules apply equally to everyone seeking to sell goods in Europe: only India chose to spend its energy instead, in the words of Sanoj Kumar Jha, deputy secretary at the country's ministry of commerce, working to secure "the total abrogation of REACH". India is no more hurt by the new rules than China or Bangladesh (or Italy or Romania); but its exporters are damaged if its government prefers spouting hot air in international meetings to proper education.
  • Since 2004, India's government has been promising to reform its Industrial Disputes Act, which businesses claim discourages hiring new staff. With stiff opposition to the reforms, no progress has been made. This would be understandable for controversial proposals in a democracy - but the failure to deliver on promises it should have realised it couldn't honour undermines India's credibility.
  • And that credibility has been most drastically strained over the issue of child labour. It's actually rare in the export-oriented end of India's garment industry, but "over 70% of the child workers rescued during 2009 and 2010 are from textile units" the official National Child Labour Project director D Vijayakumar said in June. But the Indian government's record for hysterical denial of the universally acknowledged use of children in its garment industry has set extraordinary standards of unashamed nonsense. In autumn 2007, the country's then Trade Minister Kamal Nath threatened trade sanctions against foreign countries which tolerated reports of the practice, adding that such reports "impact on the credibility of the Indian Government." Announcing an annual social audit of labour-intensive industries such as garment manufacturing in April 2008, the Minister of State for Commerce Jairam Ramesh claimed the audit would help "contradict the propaganda in the US and other Western countries" about child labour.

    The policy of official denial continues. On 23 September, Britain's Daily Telegraph newspaper claimed a photographer had had his accreditation rescinded and his camera wiped after photographing children working on Commonwealth Games construction sites the previous day.

    The result of India's absurd and incredible official statements over child labour means it's almost certain that its attempts to avoid its garment industry being blacklisted by the US government will fail. India's garment industry is already on two US government lists for using child labour. The lists have little direct commercial impact - but India's spent the summer trying to get itself off them, and it seems clear that US officials are concluding that India's done nothing concrete to justify removal. Continued presence on the lists won't immediately hurt India's apparel exporters - but it will inevitably make them go through more hoops to get business from commercial US importers.

Government help to regain credibility
Indian garment makers have an immensely long list of subsidies they think their government ought to be giving them - and India's growers, spinners, weavers and garment makers all claim their problems are the result of the country's government favouring the wrong bit of the textile supply chain. Dealing with India's endlessly squabbling and complaining textile businesses can't be the most enjoyable job in politics.

But the real reason India's lost share of the world apparel market since 2005 is that India's not expanded its export production at anything like the rate of its rivals.

If it's going to regain its share (never mind quadruple its garment exports as consultancy Technopak seems to believe is possible), India's government needs to help its businesses regain credibility - by announcing expansion programmes that materialise, by encouraging job creation, by eliminating pointless random expulsions of garment workers, and putting an end to the culture of denial of child labour.

India needs a successful garment industry. The software and back-office outsourcing businesses so associated with modern India create extraordinarily few jobs: even in India's IT capital, Bangalore, more people work in the textile and garment industries than in all its computer businesses put together.

Unlike China, India lacks other big job-creating export industries: textiles and garments form a far larger proportion of India's global trade than they do of China's, and textiles/garments form the country's biggest employer, after agriculture.

India's failure to achieve the near-parity with China it expected when quotas were abolished in 2005 reflects India's overall problems with international trade. Whereas China had a trade surplus in the past year of $280bn, India's trade deficit was bigger even than the UK's.

India's relative weakness in exporting things translates directly into human poverty: 48% of India's under-5s are classed by the United Nations Children's Fund as malnourished - over three times the incidence of malnutrition in China.

The current near-hysteria in our industry about China's allegedly declining competitiveness, and disturbances in Bangladesh and Cambodia, is causing more and more buyers to ask Clothesource's advice about finding new production locations.

Almost every time, faces fall when we mention India as a possibility: lots of buyers have some memory of an unsatisfactory experience there some time in their careers - just as most buyers have had in most other countries. But unlike unfortunate memories in other countries, we can't reassure buyers that lots of things have got better in India.

It doesn't have to be like that. But Indian garment-makers' problems seem more down to downright bad political decisions than in any other serious garment-exporting country.