Threadbare: What’s Killing 10 Million Textile Jobs In India?

The executive said that the norms should have been implemented in a phased manner.

"These norms are rigid and need a deeper understanding of the subject, supported by procedural changes. They have also added to the cost, which has hit the sector badly," he said, adding that the impact on the large manufacturers will be limited. 

"The worst-impacted are the MSMEs," the executive said. This has also led to thousands losing their jobs, he said.

QCO Shield Or Barrier

Quality Control Orders (QCOs), which are mandatory standards for imported raw fibres, were meant to protect Indian industry from sub-par quality material. But in practice, they have burdened the MSMEs, particularly those in the textile value chain.

Most players in the textile ecosystem — manufacturers, exporters, and policymakers — were reluctant to speak on record about QCOs. But off the record, their frustration was unanimous.

Recently, Amitabh Kant, the former CEO of the NITI Aayog, outlined how QCOs are strangling India’s textile industry when speaking at a Confederation of Indian Industry (CII) event. 

“The apparel sector should have been the next Apple of India,” said Kant, now India’s G20 Sherpa. “It should have created 10 million jobs. But QCOs killed the jobs," he said.

Once heralded as a labour-intensive growth engine, India’s dream of becoming a global textile powerhouse is gradually fraying. Apparel exports are falling, factory units are shutting down, and between rising costs and these policies, the sector's backbone — the MSMEs — are getting squeezed.

“MSMEs are not able to get man-made raw material at international prices because you put QCOs, so they get them at 35 per cent higher prices,” Kant said. “How can Indian MSMEs ever be competitive?”

He placed the blame squarely on the lobbying of large corporations. “It has all been done at the behest of large Indian textile manufacturers. Nobody else would say that, but I'm saying this… It has all been done at the cost of medium and small industry, and at the cost of creating jobs.”

Yet, QCOs are the tip of the iceberg that is slowly squeezing the life out of India's textile sector. 

More Capacity And More Labour

India’s apparel industry is predominantly MSME-led, spread across urban clusters in cities like Tiruppur, Surat, Ludhiana and Panipat. But infrastructure gaps and rising labour shortages have held them back from scaling up.

“There is a serious capacity constraint in India,” Mithileshwar Thakur, Secretary-General of the Apparel Export Promotion Council (AEPC) told The Secretariat. On international orders, he said: “FTAs will translate into genuine benefits only if we create capacity to cater to increased orders.”

One of the biggest hurdles is finding and housing workers. “Another issue is the availability of labour in urban clusters… We face labour shortages during peak season, for a variety of reasons,” Thakur said. “The industry must move to labour-surplus areas in states like Bihar, Orissa, Madhya Pradesh.”

But relocation isn’t easy. “You will have to make sheds and dormitories,” he added. Social compliance — ensuring safe, worker-friendly factory conditions — remains a prerequisite, especially for global buyers. 

"Different buyers ask for different certifications that are issued by different agencies," Rakesh Shrivastav, founder of consultancy Strategic Reflection, tells The Secretariat while talking about the international market. 

With over 25 years of experience in the garment and textile industry, he explains with an example: "If there is an MSME which wants to work with Client X, they might need approval for compliance from one agency. But when they go to work with Client Y, the latter could seek compliance from another agency. It becomes very difficult for an MSME to absorb these certification costs." 

This is a problem across the world. "Unless the industry sits and understands how certification can be consolidated and made into a more uniform process, it is going to be a problem, and the cost is going to be a struggle for most manufacturers," he says. 

Competitive Edge, Lost

Globally, India’s textile sector is losing ground. “Their labour wages are the cheapest,” Thakur said of Bangladesh, which offers both cost advantages and market access. 

Bangladesh and Vietnam, both Least Developed Countries (LDCs), enjoy zero-duty access to major markets like the EU, giving them a competitive edge that Indian exporters lack.

That tariff access has made even common products such as pullovers, cardigans and jerseys unviable for Indian manufacturers, who face higher costs and stricter import restrictions.

The way forward, Kant argued, isn’t through protectionism. “You have to use technology to leapfrog. It can’t be by protectionism,” he said. “You have to use QCOs rationally… but not carry it forward in labour-intensive sectors where jobs get impacted.”

Time For PLI 2.0?

The Production Linked Incentive (PLI) scheme, launched to support manufacturing in India, was expected to attract investment and modernise the textile sector. But its design has left many MSMEs behind.

“Our demand now is that a distinct PLI be designed, or the old one revamped or recalibrated,” Thakur said “The threshold fixed was Rs 100 crore. People in this business do not have that kind of financial muscle to invest.”

He pointed out that most firms don’t meet the eligibility criteria, not just in terms of minimum investment, but also in terms of growth targets and value-addition norms. “Year-on-year growth is stipulated at 25 per cent. The industry norm is not even 7-8 per cent,” he said. “That is an unrealistic expectation.”

The current PLI scheme also requires manufacturers to achieve at least 60 per cent value addition from fabric to garment. “In India, the average value addition is 40 per cent," says Thakur. "We have suggested that it be brought down, so everybody can benefit.”

If the current PLI is tweaked, experts say that the capacity expansion will be mostly in MMF (man-made fibre) apparel and fabric sector. "But that’s fair enough," he concludes, adding, "Our weakness is in the MMF segment.”

There isn't a one-size-fits-all solution to this multifaceted problem. "We might sign a few FTAs, and that can give us some advantage. But I don't think the problem ends here. The government can keep doing its best, but eventually, manufacturers will have to step up," Shrivastav concludes.