Trade and Gender Inequalities in Labour Market: Case of Textile and Garment Industry in India 1

Transcription

1 Trade and Gender Inequalities in Labour Market: Case of Textile and Garment Industry in India 1 Indira Hirway 2 The process of globalization has opened up developing countries to global production networks (GPNs), which have now emerged as key players in the world trade. The transnational corporations (TNCs) that control GPNs now account for around two third of the world trade. The wide spread use of international outsourcing in GPNs allows global producers to shed their non-core activities and focus on higher value added activities like design, branding and marketing. Developing countries compete with each other for outsourced production and, under the pressure to meet the cost, quality and delivery requirements of their clients as well as to handle fluctuating order volumes, they use different methods of hiring workers. These methods seem to have made significant impact on the recruitment and terms of employment of different categories of workers. As a result, a large number of workers are forced to accept low wages, poor working conditions without adequate social protection. Being less equipped than men to demand fair deal in the labour market, women seem to suffer more from the adverse impact on the labour market. A big challenge before policy makers is to ensure quality employment to workers and to reduce gender inequalities in the labour market to enable both men and women workers to access benefits from increasing trade. This paper examines the dynamics of the functioning of the labour market, including gender inequalities, in the textile and garment industry in India, and attempts to draw policy inferences to promote gender equality in the face of expanding trade in the industry. The paper is divided into three sections: Section One examines the recent developments in the textile and garment industry in India, Section Two studies the recent trends as well as gender differentials in employment and wages of workers in the industry, while Section Three explain these differentials and draws inferences emerging from the study. 1 Paper prepared for the International Seminar on Moving Towards Gender Sensitization of Trade Policy, organized by UNCTAD, New Delhi, February Center For Development Alternatives, Ahmedabad, India. indira.hirway@cfda.ac.in

2 1 Textile and Garment Industry in India: Recent Developments The textile and garment industry is one of the important industries in the global market. The global trade in textile and garments has continuously increased from US $ 212 b in 1990, to US $ 396 in 2003 and is expected to increase to US $ 600 by This industry typifies the development of global productive chains in the world economy. The global production network in this industry is controlled by the TNCs, who are traders and retailers and who set the terms for others in the chain, and decide what to produce and where to produce. The EU and USA together account for percent of the world textile trade and percent of the world clothing trade. The TNC buyers in EU and USA therefore enjoy a powerful position in the world economy. The total activities, from design to raw materials to final products and distribution, are allocated across countries by these retailers as per the comparative advantages of countries. And as the developing countries have the advantage in low labour costs, labour intensive parts of the global commodity chain are located in these countries. With the expiry of the MFA, developing countries have an opportunity to attract global retailers to locate production in their countries. India is among the ten leading textile exporters in the world. In fact, it ranks seventh among the world exporters, with 3.8 percent share in the total world exports (6.5 percent share in value terms). The T & G industry also has a unique place in the Indian economy. It is one of the largest industries in the country, producing 18 percent of the total industrial production, earning 20 percent of the total export earnings and employing about 38 m. persons directly. In terms of employment generation, this industry is the second largest after agriculture. Indian textile industry is as diverse and complex as the country itself. There is organized formal sector, decentralized sector and down the line weavers and artisans in the informal sector. The production of cloth takes place in the mill sector (large scale units) as well as in power looms, handloom, knitting, Khadi, wool and silk sectors. Though the mill sector was predominant before 1970s, at present it produces only 3 percent of the cloth production. Power loom sector produces 63 percent of textiles, the handloom sector produces 13 percent and the hosiery sector produces 21 percent of the total textiles. Hosiery is a relatively new sector, but it has grown very fast during the past decades. Garment (Clothing or apparel) industry is again a relatively new phenomenon, observed to be growing fast since the 1970s due to the potential of apparel exports. Since the modest beginning in the 1970s, it has grown in to a gigantic industry spread over the country. The garment industry produces about 8000 million pieces with the market value of US $ 28 b. It employs 3.54 m persons and is expected to employ 6.8 m. persons by India s global share in garments has increased largely in the 1980s and 19990s. India exported garments worth US $ 30 m. in 1970 and US $ 200 m. in The exports increased thereafter to US $ 914 m. in 1985 and to $ 2.5 b in 1990 (Compendium of Textile Statistics, 2004).

3 Textile Policy in Recent Years Inward Looking T & G Industry: One important feature of the textile policy in India was (is, to an extent) that it was an inward looking policy till mid 1980s. The policy had a domestic focus in the 1970s, and 1980s and the industry was meant to serve the domestic markets. The regulatory mechanisms used for the purpose included (a) licensing to start a unit, (b) permission for expanding, renovating, and diversifying, (c) reservation garments were reserved only for the small scale sector, (d) control on exports and imports, (e) obligations on spinning mills to produce hank yarn for hand looms / power looms etc. In short, the government controlled size, location, scale, growth and expansion of T & G industry through out 1960s to 1980s. (Tewari 2005). All these restrictions led to decentralized and segmented production in the industry. The predominance of small units in the industry is, to a considerable extent, due to this factor. Turning Point in 19985: In 1985, one observes a turn around, when policies of deregulation and liberalization were initiated. Based on the recommendation of the Verma Committee, Government of India declared a National Policy on Textiles (1985) that started the process of deregulation of the industry: (1) It allowed firms to diversify their fabric and fiber base, (2) It raised the maximum limit on allowable investment, particularly for small and medium firms, (3) promoted exports through a variety of duty drawback programmes and (4) encouraged the sector s technical modernization through cheaper credit. The Central government subsequently set up funds for modernization and for importing capital goods and technology. The objective was to boost international competitiveness of the industry. This policy helped in raising exports of T & G products. After 1991, when the liberalization policies were launched officially, several other policy reforms have been introduced such as, de-licensing of some sectors, de-reservation, removal of export barriers and slashing of import duties, particularly for exporters. One important measure taken for the garment industry is its de-reservations from the SSI reservation list. This implies that there is less need now to outsource their work to small units. Again, 100 percent FDI is now allowed in the garment industry to enable companies to build large-scale plants without incurring export obligations. Level playing has been provided to large and small garments manufacturing units by removal excise duty exemption to SSI garments, extension of CENVAT to all and by inclusion of power looms in the tax net. National Textile Policy in 2000: In the context of the liberalization policies on the one hand and the expiry of the MFA on the other hand, Government of India declared National Textile Policy in The vision of the Textile Policy is to produce cloth of good quality at acceptable prices to meet the growing needs of the people and to contribute towards growth of sustainable employment and economic growth of the country (Government of India 2000). The specific objectives included (1) to facilitate the textile industry, to attain a pre-eminent standing in the manufacture and export of clothing, (2) to equip the industry to stand in competitive environment at home and in the global market, (3) to enable the industry to build world class manufacturing capabilities, and to encourage FDI as well as R & D for the purpose, (4) to sustain traditional

4 knowledge, skills and capabilities of weavers and crafts of people, (5) to expand productive employment by promoting growth of the industry and (6) to involve and ensure cooperation and partnership of the government, financial institutions, entrepreneurs, firms and NGOs to achieve the above goals. The thrust areas of the Textile Policy are technological up gradation, enhancement of productivity, quality consciousness, strengthening of the raw material base, product diversification, export expansion, maximization of employment and integrated human resource development. The Ministry of Textiles fixed the export target to raise T & G exports to US $ 50 b in 2010 and launched several schemes in the thrust areas. Expiry of T & G Quotas and New Initiatives: The Textile Ministry, with its old and newly set up institutions / organizations adopted an aggressive policy and introduced several schemes to enable the industry to take maximum advantages of the new liberal environment in general and the expiry of the quotas in particular. 2 The major schemes under the ministry include Technology up-gradation fund scheme (TUFS), Scheme for integrated textile parks (SITP), GSP (generalized system of preferences) scheme, Technology mission on cotton (TMC), Power loom schemes, Textile workers, rehabilitation fund scheme etc. The TUFS is a flagship scheme of the textile ministry (launched in 1999) meant to improve technology and modernize the industry. Though the scheme started slowly, it picked up soon and was expected to inject Rs 250,000 million worth investment in five years. Unfortunately, the scheme stopped for some time, and started after a gap. The SITP was launched by merging the two existing schemes, namely the Apparel Parks for Exports (APE) and the Textile Center Infrastructure Development Scheme (TCIDS). Apparel Parks are to be set up by state governments as State government undertakings, with best infrastructure and the firms with the state of the art machinery. SITPs may be set up in the Special Economic Zones (SEZs), in which case the special provisions of the SEZs would be applicable for them. The scheme targets industrial clusters / locations with high growth potential, which require strategic interventions by way of providing world-class infrastructure support. An important provision of SITP is that the state government in charge may also take the initiative in providing flexibility in labour laws in these clusters. Response from the Private Sector: Private sector units in T & G industry as well as their associations and federations also responded very positively to the new policies and schemes of the Ministry of Textiles and to opportunities opened up after liberalization and expiry of quotas. The CII (Confederation of Indian Industries) including its regional Centres, Textile Association, FICCI (Federation of Indian Chambers of Commerce and Industries) and many regional bodies of private industries tried to help their members by undertaking studies, organizing seminars and meetings to improve contacts and interactions with potential clients in global market, organizing exhibitions and trade fairs at home and abroad and by helping in capacity building as well as in accessing benefits of different promotional schemes. All this created a kind of euphoria in the industry, with the industry booming expanding innovating, diversifying. 2

5 Declining Value of US $: An important development affecting India s competitiveness that has taken place recently is the declining value of US $. Just when the Indian textile and garment exports were picking up after the expiry of the quotas, the value of the Indian Rupee started appreciating. The value of US $, after reaching Rs in April 2006, started showing a gradual decline. It declined to Rs in May 2007 and to Rs in December The rate has remained around Rs throughout this period. The decline has impacted on the trade in multiple ways: (1) it has made imported textiles and garments cheaper than the domestic products, affecting the competitiveness of domestic producers adversely in the domestic market and (2) it has made Indian textiles and garments expensive in the global market affecting adversely their exports. The declining value has affected Indian exports to all over the world to Africa, Middle East countries, USA, EU, Canada and to other Asian countries. India s Exports of Textiles and garments Though India started late, largely due to its inward looking textile policy, the exports of textiles and garments have increased rapidly during the past decade and a half: Textile exports from US $ 1 b. in 1985 to US $ 6.8 b. in 2003, and garment exports from US $ 1 b in 1985 to US $ 6.6 b. in Taken together, India s T & G exports accounted for 21 percent of merchandise exports from India in 2003, up from a mere 3.8 percent in 1970 (Minsitry of Textiles 2005). Figure 1 Growth of India s T & G products showing a structural Break in

6 The exports show an increase from , (Figure 1), when the liberalization policies were initiated. The process of increase continued after 1990, when India adopted the neoliberal policies. The rate of increase seems to have declined after 2000, for garments. Some important aspects of India s exports of T & G products are worth noting: Firstly, the exports show a growth without any significant presence of FDI, i.e. it took place through domestic capital and efforts / technology. This is very much different from other countries. In the case of China, for example, one third of export of apparel was by foreign invested firms. The top ten companies exporting textiles and apparels are all Indian Companies 3. Though the industry produces 18 percent of the national industrial production, its share in FDI has been less than 1 percent. The share has not increased during , as the industry received only Rs lakh FDI (1.03 percent of the total FDI) during this period. This share has remained the same in all the following years. (Tewari 2005). Secondly, the exports preceded entry of global buyers. That is, the exports increased without any significant presence of global buyers like Wal Mart, Nike etc. These buyers entered much later, in the late 1990s. This is again in contrast to what happened in other countries. And thirdly, there has been a rapid progress in the integration of T & G industry with the global market without India entering into any regional trading agreement (RTA) or free trade agreement (FTA) with other countries. India s rapid growth of exports has occurred despite its absence in any major regional trade agreements. Deceleration in the Growth of Exports: The following tables present data on exports of textiles and garments during the periods from 1992/93 to 1999/00 and 2000/01 to 2006/07. Table 1 Total Textiles Exports at a Glance from to (Value in Rs. Million) Item Cotton Textiles CGR Manmade Textiles Silk Wool Ready Made Garments Handicrafts Total These include Arvind Mills, Indian Rayon, Raymonds, Indo Rama Synthetics, Gokuldas, Alok Industries, Welspun, Abhishek Industries Bombay Dyeing and Mahavir Spinning Mills.

7 Table 2 Total Textiles Exports at a Glance from to Item (P) Cotton Textiles Manmade Textiles Silk Wool Ready Made Garments Handicrafts CARG Total Table 1 shows that the exports have increased at percent per year (compound annual rate of growth) during 1992/ /00 and at 6.34 percent during 2000/ /07. Though the exports have increased during the latter period, the rate of increase has declined significantly. This decline has been observed in all the segments of the industry, namely cotton textiles, man made textiles, silk and woolen textiles as well as ready made garments and hand looms. The decline has been the highest in the case of hand looms, from percent during 1992/ /2000 to 0.05 percent during 2000/ /07. This is surprising because 2000/ /07 is a period during which the liberalization policies introduced in 1991 continued and the effective rate of protection declined.. This is the period during which the quotas under he Multi Fiber Agreement (MFA) declined and the garment industry was de-reserved from the SSI sector (2002). The declining rate of increase in the exports therefore indicates that the constraints are on the supply side and not so much in the demand side. It must be added however that the decline after 2006 could be partly due to the appreciation of the Indian rupee against the US $ as this decline has made Indian goods expensive in the global market. As far as global competitiveness of the Indian T & G industry is concerned, several studies have observed that the industry has clear advantages in the global market (PHDCCI 2005, Brand Equity Foundation 2005, Tewari 2005, Singh and Kundu 2005, UNDP 2005, Devnathan 2005). India s advantages are that (1) it has a strong multi fiber base, in cotton, jute, manmade fiber etc, (2) it has the largest loomage in the world and the second largest spindlage in the world, (3) India has a wide range of production, with a wide range of production technologies, ranging from hand spun hand woven Khadi to highly sophisticated IT based technology, (4) India has a vast pool of skilled labour, dynamic entrepreneurship and vibrant design capacity and (5) it has a flexible production

8 system. Also, India has a huge domestic market and a wide production base within the country. In short, India has, within the country, a good supply chain. The small scale dominated and segmented structure of the T & G industry is seen as a major constraint as well as a major advantage of the industry. On the one hand, it is argued that the segmented character of the industry prevented it from emerging as a labour intensive industry. Because of the fragmented character and predominant small size units, Indian T & G industry was (is) not in a position to meet demand from large global buyers like Wal-Mart and Nikes who account for 40 percent of US and EU retail markets. And secondly, small units, with their relatively high costs (compared to the costs of large scale units abroad) find it difficult to survive in the domestic market due to the increased competition from outside. In short, the relatively more labour intensive SME sector in the country finds it difficult to compete with the large scale units in T & G in the global market. The past policies are thus an important limitation for the T & g industry in India in the wake of increased competition in the global market. As Devnathan puts it, it is not labour laws, but it is the historical legacy of reservation to SSIs, that is a constraint of the T & G industry in the expanding global markets. (Devnathan 2005). On the other hand it is argued by some that the small scale has inadvertently helped the industry in the competitive global market (Tewari 2005). To start with, the inward looking strategy or the protectionist policies have allowed the industry to develop in the economy. The large and diversified base of the industry has happened because of the inward policy that enabled the industry to grow to meet the large local market. India has a well-developed textile machinery industry and a sound technology base within the country. In addition, the inward looking policies and the pressure to remain in the SSI sector forced firms to learn how to manage batch products and variability in orders. It made them efficient and to be flexible in the global markets, particularly for small E U buyers. In fact, this prevented Walmartization of the Indian T & G industry. Secondly, it helped in developing designing as many small and medium units had their own designing. As has been pointed out by Nike, buyers today prefer India for new designs and complicated designs to other countries, including China. The proliferation of designing institutions has helped India s competitiveness in the present T & G global market (Tewari 2005). India s fashion institutions in the public and private sectors are a great strength in the garment industry. The garment industry is capable of catering to the changing trends and demands (BERIC 2004). Thirdly, India s small batch production has offered an opportunity for firms to capture the high-end value added, higher quality, automized apparel of complex and variable design. In other words, due to the past policies, India is likely to gain in high-end value added products but is likely to face problems in low-end value added products, manufacturing of which could have employed semi skilled workers on a large scale. In addition, there are several constraints which are likely to affect the competitiveness of the T & G industry adversely. These constraints, according to the UNDP tracking report, (2006), and BERIC (2004), are (1) low level of skills and low productivity in the SSI, home based and cottage industry segment, (2) absence of technological up gradation, (3)

9 poor infrastructure, such as power, roads, ports, airports, warehouses etc, (4) cumber some trade procedures and documents requirements (too many rules / notifications from the government), (5) lack of market information to producers and potential exporters, (6) stability in quality of products not always, (7) lack of financers for expansion, diversification, technological up gradation etc and (9) poor observation of labour standards and other international standards. To sum up, the Indian T and G industry has strengths as well as weaknesses with respect to its integration with the labour market. The net outcome depends on how the industry has fought the constraints and how it has used the strengths. The performance so far indicates that the industry is poised for a boom, and if supported adequately, it will perform well in the coming years. Organized and Unorganized Segments of the Industry An important feature of the industry is that it is divided in to a small organized (formal) sector and a large unorganized (informal sector), and both the sectors, with their different strengths and weaknesses, are responding differently to the new environment. The organized sector consists of the units covered under the Factories Act 1948 and under the statutory labour laws. The permanent workers employed in the sector are entitled to good working conditions, earnings and wages and social protection. The unorganized sector, on the other hand employs less than 10 permanent workers (or less than 20 permanent workers if power is not used), and therefore are not covered by statutory labour laws and social protection. If at all, the units in this sector are covered under scattered and sporadic labour laws, which are enforced indifferently. The organized sector employs about 10 percent of the total work force engaged in the industry (7 percent in the case of garment industry and 11 percent in the case of textile industry). This implies that only 10 percent of workers in the industry are entitled to regulated working conditions and full social security benefits. In the case of women workers, percent workers in the industry are working in the unorganized sector, the percentage rising to percent in the case of textile industry. Overall, the garment industry has a large unorganized segment as compared to that of the textile industry. The share of the organized sector in the total production is very high. 82 percent of the textile production and 41 percent of the garment production comes from the organized sector. In all, 69 percent of the total production of the industry comes from the organized sector though it employs about 10 percent of the total workers in the industry. This implies that the organized sector is highly capital intensive and there is a wide gap between the labour productivity in the two sectors. The organized and unorganized segments of the industry have responded differently to the new opportunities and the new environment in the industry. To start with, the organized sector has invested considerably in the recent years, leading to a high growth rate in the output.

10 Table 3 Employment in Organized and Unorganized T & G ( ) (In Percentages) Organized Unorganized Total Textiles M W T Garment M W T Textile and Garment M W T Source: NSSO Round The share of the organized sector in the total production, however, is much bigger. It contributes more than 70 percent of the total gross value added (GVA) in the industry. This percentage is 72 in the case of the textile industry and 41 in the case of the garment industry. This implies that the organized sector is highly capital intensive and there is a wide gap between the labour productivity in the two sectors. Table 4 Average Annual Growth Rates in the Organized Indian Textile Sector ( Prices) Period Output Employment Real Wages Real Fixed Capital to to to to A striking feature of the table is that both the textile and garment industries have shown a rapid growth since The annual growth rate in real fixed capital has been 8.8 percent during to and it jumped to percent during to Similarly the growth rate of output also showed an increase of 8.17 percent during to and 6.71 during to The growth in employment has been miserable, during the first period and during the second period. The rate of increase in output rose to 9.37 percent during , but the rate of growth of employment remained at 0.98 during this period.

11 The table also shows that the real wages have increased throughout both the periods, though the rate of increase has declined significantly, from 5.44 percent during to to 2.37 percent during to The rate however has increased to 7.09 percent during the early years of the 21 st century. Table 5 Annual Average Growth Rates in Unorganized Textile Sector Period Output Employment Real Wages Fixed Assets The performance in the unorganized sector however differs significantly from that of the organized sector. Table 4 presents the data on the performance of the unorganized sector in the T and G industry. This sector showed a negative growth rate of output and fixed capital during and Though the performance slightly improved during , the rates are still negative. The growth rates in employment and real wages however are positive during both the periods, and The growth rate in employment has shown a big jump from percent in to 6.78 percent during In short, the unorganized sector shows labour intensive growth, with employment and real wages both rising during the late 1990s. In other words, the organized sector is becoming more capital intensive while the unorganized sector is becoming more labour intensive. The labour productivity is growing much faster in the organized sector than in the unorganized sector. Changes in Structure and Characteristics of T & G Industry Both textiles and garments show a higher growth rate in the value added in the post reform period as compared to the pre reforms period. In fact, the increases have been significant, from 2.88 percent in pre-reform period to 6.26 in the post reform period in the case of textiles, and from 6.24 to in the case of garments. However, the growth of employment per year has been much lower, i.e percent during in the case of textile industry and 6.42 percent in the case of garment industry. This indicates that the textiles industry has acquired higher capital intensity during In the case of garment industry, however, there is an increase in the growth rate of value added and in employment, but the labour productivity has decline by 0.05 percent per year. This indicates deskilling or declining labour productivity in the garment sector. This implies that unorganized workers in the garment sector are experiencing lowering of their productivity in the post reforms period.

12 The recent opportunities as well as constraints have brought about several changes in the structure and characteristics of the T & G industry in India. Broadly, two ways have been adopted by the industry to face the global competition. One way is to reduce labour cost by reducing wages and lowering labour standards and to reduce other costs by lowering environmental standards etc, i.e. race to the bottom. The other way is to increase value of products by technological improvements and by product differentiation, and thus advancing from comparative advantage based resource endowments to what M. Porter calls competitive advantage, which can be achieved through innovations and up gradation. Increasing Sub contracting and Outsourcing at Low End: On the one hand, there is a segment of the industry (low / medium value added products) that is getting more into the unorganized / informal sector by sub contracting and out sourcing. This segment is dominated by home workers, home based workers and contract / casual workers. This segment is relatively low skilled with low productivity of labour, low wages and overall low quality of employment. As we shall soon see, this approach is reflected in the growing proportion of unorganized informal workers in the T & G industry Shift to High Value Added Products: On the other hand, some producers are getting in to high value added products. Under this approach, there is an increase the size of production units, firstly because global retailers would like to deal with a smaller number of large producers in the post MFA period and secondly because high value added products need to be produced in large units to take scale advantages in the competitive global market. Production of high value added products need a high level of technology that is capital intensive in character. This needs a larger unit that needs skilled and stable labour, as informal low skill labour will not help. This will push up the average size of units. The average size of unit of production in the T & G industry is observed to be increasing in the post MFA period. (Tewari 2005). The increasing size is also facilitated by the de-reservation of garment industry from the SSI reservation list. Forward and Backward Integration of Units: Another factor that has contributed to the increasing size of production units is increasing forward integration by units, like integration by yarn makers and spinning mills in to garments. For example, Arvind Mills, which was the largest producer of blends and denims in India (and the third largest denim producer in the world) has integrated in to jean & T-shirts production with its own brand. There is also a trend of backward integration by small and medium Knitwear and garment exporters in to yarn making to take maximum advantage of the new global opportunity. For example, a vibrant small firm based Knitwear export cluster in Tirupur, is no more small scale. Several small scale units (for example, in Tamil Nadu) have adopted aggressive modernization with backward linkages to turn into a cluster with medium and large units. The AEPC (Apparel Export Promotion Council) has also observed that the number of exporters of garments has declined drastically in the recent years. This is because the large retailers in the global market want to deal with a small number of producers. There

13 is also a move towards forming umbrella organizations of producers to deal with and to meet the huge demands of large retailers (discussion with Chairman Textile Committee). As we shall soon see, women s share is increasing in the low end of the work force and is declining in the high end of the work force. That is, women are getting crowded in to low skilled, low wage low quality employment. In other words, the segregation between men and women workers is increasing in the industry, with women being pushed to low productivity, low skilled segments and operations. Diversification in T & G Industries: One observes diversification of the industry into new products and technology though the scale of this development is not very large. There is a move towards non-clothing application of textiles, known as technical textiles. Since India has the capability to take advantage of value added textiles, Government of India, in collaboration with the private sector, has decided to specialize in technical textiles. Technical textiles are non-woven textiles, which are used in specialized products in industries. At present, India has 6 percent share in the US $ 107 m. technical textile global market, and it aims to go up to 9 percent share by in this growing segment of T & G. This segment requires highly sophisticated machinery as well as highly skilled labour. This will raise employment avenues of skilled workers, mainly men workers. The low level of literacy and skills of women on the one hand and low mobility and domestic constraints on women workers on the other hand will act as a major restriction to women s entry into the new areas of development in T & G industry. An important consequence of the above developments is that this industry is predominated by the small sector, including the household sector. Though the predominance of the small sector is inherited by the industry, largely because of the inward looking approach and the related policy measures, the number of small units has increased rapidly in the recent period. The number of large scale composite units declined since the 1980s due to the non-viability of the large sector. The number of large and medium scale units declined up to mid 1990s and increased marginally thereafter. The share of the SSI units in the total spinning mills, though low (37.93 percent), has shown a continuous increase during the past decade from in to percent in In the case of weaving mills, 99 percent units are SSI units. In the case of garment industry all the units were SSI units till recently, as this sector was de-reserved from the SSI sector only in Table 6 Structure of T & G Industry in India Spinning Mills 1997/ / /03 Large & Medium SSI spg mills Total % of SSI mills (31.01) (34.27) (37.93) Weaving Mills

14 Large & Medium SSI spg mills Total % of SSI mills (99.00) (99.00) (99.00) Source: Tewari (2005) The small scale in the garment industry is particularly very small. Only 5 percent of garment factories had investment over Rs 10 million! The average investment per unit in the garment industry was US $ 2900 in India! This was a clear disadvantage in the global market, as compared to the average investment of US $ 1 m. in Chinese units and US $ 2.5 m in Hong Kong units. (Heerden, Berhonet and Caspari 2003). The garment sector is the most fragmented sector in the T & G industry, and is dominated by sub contractors and fabricators, who control 72 percent of the manufacturing capacity (Kathuria and Singh 2004). On the whole about 80 percent units are small (SSI + Cottage industry) in this industry with employment up to 11 workers, 14 percent units are medium with workers and only 6 percent units are large units employing 49 + workers. (UNDP 2006). The unorganized segment of the T and G industry is not homogeneous. It comprises of hand looms, power looms, small power processors, traditional hand processors, traditional hand processor as well as small scale and household level garment and hosiery units. The workers are skilled, semi skilled to unskilled; frequently semi literate and illiterate; migrant workers, women workers and child workers; and non-unionized. They lack any bargaining power to demand a betted deal in the labor market. They have, in most cases, accepted whatever working conditions, wages and other benefits offered to them. Riding on Two Horses: In short, the Indian textile industry is riding on two horses. The organized sector is aware and is keen to get equipped to achieve a rapid growth. It is moving towards capital intensive technology and is planning to take advantage of the new opportunities that have emerged in the global market. The sector is increasing its strength by expanding the scale of operation by investing larger amounts and by promoting vertical integration, as the size, backed by strong vertical integration determines power in the global market. This sector is also innovating, collaborating and diversifying to meet the global needs in the industry. The employment in this sector is declining. This is because on the one hand the new technology is highly capital intensive while on the other hand outsourcing is done wherever it is possible mostly in labour intensive segments of production. Except when necessary, these units do not employ permanent workers and take work from contract, temporary and casual workers. Since outsourcing possibilities are large in the garment industry, part of the production is out sourced. The unorganized sector, particularly the exporting unorganized sector, on the other hand is facing steep competition and is finding it difficult to survive, particularly after the

15 decline in the value US $. They try to reduce their cost by all possible means, including low wages. They do not see any connection between low wages and low productivity. 2 Employment and Wages in T & G Industry: The Gender Dimension The employment generated in the textile and garment industry in India was m persons in As the table below shows, maximum contribution to employment comes from power looms, sericulture, handlooms & handicrafts and ready made garments. The handloom sector, in both textiles and clothing, has a unique place in India. It is a traditional sector, which incorporates traditions and heritage of Indian culture. Being employment intensive, it employs a large number of workers. Production in this sector is highly decentralized and has a wide range of products ranging from home linens, carpets, rugs and durries, home furnishings, garments and fabrics. Though in the earlier period, this sector was promoted, protected and subsidized for heritage purpose and employment generation, the focus has recently shifted to efficiency, productivity and employment (Textile policy 1985 and 2000). Table 7 Employment in Textile and Garment Industry in India, 2001 Sr.No Sector / Industry 2001(Estima ted) (Million) 1 Cotton / Man-made Fiber / Yarn Textile / Mill Sector 1.07 (including SSI spinning & exclusive weaving units) 2 Man-made Fiber / Filament Yarn Industry (including 0.11 texturising industry) 3 Decentralized Powerlooms Sector Handloom Sector Knitting Sector Processing Sector Woolen Sector Ready Made Garment Sector (including Knitwear Sector) Sericulture Handicraft Sector Jute Industry 0.2 (1) Organized Jute Industry (2) Decentralized Jute Industry 0.2 Total (1) Source: Planning Commission Tenth Five-Year Plan

16 The total employment in the T & G industry has increased from m. in 2001 to m. in According to an estimate by the Textile Committee, the increase in employment was to be 25 m. by 2010, bringing the total employment in the industry to about 60 m. by Of the additional 25 m, 15 m to 17 m was to be in the garment sector. (11 m. skilled labour as estimated by AEPC 2005). However, in the light of the recent crisis arising from the appreciation of the Indian Rupee, this target may not be achieved. As seen earlier, women are predominantly in the unorganized sector. Of the total women workers, percent workers are employed in the unorganized sector as against percent of men workers. The corresponding percentages are and in the textile industry and and in the garment industry. In all, less than 4 percent of he women workers are employed in the organized segment of the industry against percent of men workers. Most women workers in the industry are working as contract, casual or temporary workers, earning low wages, which are usually piece related and are without social protection. The rates of growth of employment of men and women workers (Table 8) indicates that women s employment has increased faster than men in both textile and garment sectors, implying that there has been feminization of employment in the industry. In fact, the gap between the two rates is very big: In the case of textiles, while men s employment has remained stagnant, women s employment has increased by 1.5 percent per year, and in the case of garments women s employment had increased at 33.1 percent per year, which is more than four times of the rate of men s employment. Since women s employment has increased largely in the unorganized sector, it is clear that the bulk of employment created has been in the unorganized sector. In short, there has been informalization as well as feminization of labour in this industry. Table 8 Rate of growth in Textiles and Garments from to Men Women Total Textiles Garments Source: NSSO Rounds , Table 8 Share of Women Workers in Unorganized T & G Industry Unorganized Home based Textiles Apparel Source: NSSO Rounds

17 The table shows that though the share of the unorganized women workers declined during 1989/ /95, from percent to percent in the case of textiles and from to percent in the case of garments, it increased dramatically for the garment industry thereafter. The share of women in home based workers also increased dramatically, again for the garment sector, after It is clear that the garment industry is increasingly expanding in the home based sector of the industry. This suits to producers, who get docile labour, working for long hours at very low piece rated wages. This also suits poor women, who can work at home with flexible timings, frequently taking help of other family members including children. Table 9 presents data on the share of men and women in home based work. It shows that (1) women have a much higher share in the total home based workers and (2) their share has increased dramatically in the recent years, particularly in the garment industry. In the case of the textile industry, however, the share of home based work seems to have declined for both men and women workers. Table 9 Growth of Home based Workers During Share of Home based Workers ( ) Share of home based Workers ( ) M W T M W T Textiles Garments This indicates that textiles are shifting to non-home based venues gradually, may be because the need is felt to raise the size of production units to produce high value added textiles for the global market. The table also shows that women s share in the textile industry is declining. In the case of the garment industry the share of home based women workers has increased dramatically. Though there is a decline in the share of home based men workers, the overall share of home based workers in the industry does show an increase from 48.8 percent in to 53.7 percent in In short, it appears that increase in home based work has been used as a strategy for cost reduction by T & G production units, particularly in the garment industry. Gender Inequalities in Labour Market: Gender Wage Gap Gender inequalities in the labour market are reflected in all major labour market outcomes with respect to the T & G industry, namely, employment and unemployment, industrial and occupational segregations, wages and related benefits and access to improved skills, productivity and upward mobility.

18 Gender wage gap is an important indicator of the gender inequalities in the labour market. It is a statistical indicator that measures the gap between the wages of men and women workers. Gender wage gap is frequently calculated as a raw gender wage gap using the ratio of average wage rate of women (annual, monthly, weekly, daily or lovely) to that of man. It is argued in the literature that the wage gap arises due to occupational segregation as well as due to pure discrimination. The measure for occupational segregation is an index of dissimilarity which explains complains the occupational wage gap between men and women, while unexplained wage gap refers to gender based discrimination, which is measured through a residual technique, also called Oaxaca decomposition. Wage Gap across Sub Sectors: Table 10 presents gender wage gaps in the different sub sectors of the T & G industry. There are wide variations in wages across sub sectors as well as across men and women in the textile and garment industry in India, varying from Rs in cotton textiles to Rs 60.6 in the garment industry for men and from Rs in cotton textiles to Rs in Garment industry in the case of women workers. It is worth noting that the variations are larger in the case of women workers as compared to women workers. This could be due to the fact that women s employment varies from a high wage employment in the organized sector to a low wage employment in the home based unorganized sector. Table 10 Trends in Average Daily Earnings by Sex in T & G Industry ( to ) M/F ratio M/F ratio M/F ratio Industry Male Female Male Female Male Female Cotton Textiles Woollen Textiles Silk Textiles Synthetic Textiles Jute Textiles Garments Coefficient of Variation Source: Occupational Wage Survey, Labour Bureau, Government of India As the following charts show, the gender wage gap has increased in almost all the cases during the period from to The exception is skill textiles. Similarly, the ratio has increased in all the sectors except cotton textiles and garments. It appears that that ratio depends on several factors including the share of unorganized sector in the total

19 employment. In the case of garment industry, however, the ratio seems to have declined during largely due to the predominance of he unorganized sector in the industry M/F ratio M/F ratio M/F ratio Cotton Textiles Silk Textiles Synthetic Textiles Jute Textiles Garments The gender wage gap is the highest in the garment sector ( ), followed by silk textiles. These gaps seem to be originating from occupation segregation of men and women as well as from gender discrimination. We shall examine these in the following paragraphs. The exception is skill textiles. Similarly, the ratio has increased in all the sectors except cotton textiles and garments. It appears that that ratio primarily depends on the share of unorganized sector in the total employment. When this share declines, the ratio falls, and vice versa. In the case of garment industry, however, the ratio seems to have declined during largely due to the predominance of he unorganized sector in the industry. In addition to the occupation segregation and discrimination, another important factor responsible for the gender wage gap is the differences in the employment status of men and women workers. As seen earlier, women are predominant as informal workers (as compared to men) and therefore, on an average, earn lower wages. Since it is possible for employers to employ women at lower terms and conditions as informal workers by segmenting the labour market, the average wage rate of women tends to become much lower than the male wage rate.