The budgetary allocation of INR 7, 148 crores to Textiles and Garments industry during Union Budget 2018-19 saw an increase of around 14 per cent in comparison to the amount allocated last year (2017-18) i.e. INR 6226.5 crores. Thisin itself should be a reason to cheer for the people working in the industry. This labour-intensive sector currently employs 45 million people and a higher budgetary allocation might provide a further push to employment. However, there is a need to focus on the half-empty, not the half-full, cup of incentives that have been extended to the sector. A higher allocation for a sector does not directly imply higher benefits for the intended beneficiaries. This may be a result of either inefficient utilisation of funds or expenditure of funds under wrong heads.
The Textile industry, being one of the focus sectors under Make in India campaign, has seen a number of schemes and incentives coming its way over the last few years. Two of the major schemes are: Integrated Skill Development Scheme (ISDS) and Scheme for Integrated Textile Parks (SITP). While ISDS seeks to address the manpower requirements of this diverse sector, SITP aims to provide world-class infrastructure to this industry in terms of incubators, warehouses and processing and development centres.
With regard to ISDS, the government has set up around 3, 250 training centres which are present across India including remote and backward locations .Evidence, however, shows that this Scheme has only been partially effective. During 2015-16, the Textile and Handloom Sector Skill Council certified 19, 378 workers. A Report by Ministry of Skill Development and Entrepreneurship pegs the annual requirement of manpower at 13, 40, 000. This shows that there is a huge mismatch between the supply and demand of labour force in this Sector which needs to addressed right away.
An additional area of concern is the non-functioning and cancellation of some Textile Parks that were to be established under SITP.A major reason why some textile parks have not started functioning or have applied for cancellation is due to problems faced in obtaining clearances for land use, issues related to disputed lands and obtaining environmental clearances. Out of the 30 functional parks, only 10 have achieved full occupancy. As a result of low occupancy rates, these parks have not yet attained their planned investment levels. In addition, the current employment level in the functional parks is only 68, 000 people which is only 57 per cent of the planned employment . In recent times, this sector is experiencing a considerable decline (of around 30 per cent) in exports of cotton yarn despite moderation in domestic consumption post-GST. Thus, there is a need for the government to look at the effectiveness of some of the Schemes that aim to boost exports such as Market Access Initiatives and Technological Mission for Technical Textiles .
One of the important aspects of this industry is its contribution to employment. According to estimates, overall employment in the sector is expected to reach about 60-62 million by 2022 . This sector needs to be at the top of the priority list of the government.
An increase in the budgetary allocation, although desirable, might not be the solution for the problems of this industry. The policy makers should first, look at the pattern of utilisation of funds in previous years and then prepare a blueprint through which critical and unaddressed needs of the sector can be met.