India’s new Textiles Minster, K Sambasiva Rao, has high ambitions
for the country’s garment industry.
And it’s about time someone did: India’s performance in global
garment trading has been lamentable: it’s been consistently among the worst
performers since quotas came off in 2005, and the volume of garments it’s
exported to rich countries has fallen year after yeawr, month after month,
between early 2010 and March this year.
That doesn’t just affect this industry and those working in
it: India’s appalling underperformance in everything to do with manufacturing,
and its equally appalling record this century in tackling illiteracy, child
poverty, malnutrition and access to decent sanitary facilities are closely
linked. India’s widely-trumpeted economic growth over the past 20 years has
trickled down to a smaller proportion of its population than anywhere else in
Asia, except possibly Burma – partly because that growth simply hasn’t created
the millions of higher-paid manufacturing jobs growth has in China or Vietnam.
ON practically every indicator of human misery, India ranks with the poorest
countries of Sub-Saharan Africa – and the gap between it and its Asian
neighbours has widened over he past 20 years
The country’s Prime
Minster, Manmohan Singh, is possibly the most highly qualified statesman – at least
academically – anywhere, ever. But it’s now nine years since he came to power
with promises to reform the bureaucratic complexity the garment industry, like
so much else in India, is shackled by. He has simply failed to get reform
through the maze of conflicting pressures in his coalition government. As a
result, India has not only failed to improve living conditions for the mass of
its people: its balance of payments has got dramatically worse.
Now Singh, with under a year before the next parliamentary
elections, has set up a group of ministers to try to develop policies to achieve
real growth, especially in manufacturing. Rao appears to have lots of good
ideas, for spinning, weaving and garment making, and we’ll look at those ideas
in the next in this series.
But while his heart is certainly in the right place, his grasp
of numbers risks undermining the credibility of any plans he might have – and of
the quality of advice he’s receiving from his civil servants.
The dollar value of India’s garment exports fell 5% in the
Indian 2012/13 financial year (the 12 months to March 31, 2013) to $12,5 bn “mainly
due to the reduced demand in the US and Europe” Indian apologists constantly –
and wrongly - claim. India’s volume share of rich-country apparel imports fell
in 2012 from 5.2% to 4.9%, while Vietnam, Bangladesh and China all saw
increases in their share. India’s falling sales were the result of bad Indian policies
– and the continuing repetition of the untrue “reduced demand” claim demonstrates
a contempt for proper analysis that permeates all of India’s hamfisted approaches to competing globally.
But Rao believes his plans can help turn all that round. So
dramatically, in fact, that he claimed India’s garment exporters can
sell $20 bn worth of clothes by March 31, 2014. He said on July 15 that’s what
the exporters themselves were saying. But they’re not going to face an election
in a year’s time. He’s chosen to repeat their propaganda – when two seconds
with a slide rule (his PM will happily teach him) can demonstrate the numbers
are fantasy.
$20 bn of apparel exports represent a 55% growth (in dollars,
not rapidly devaluing rupees) over 2012/13. India’s garment makers are claiming
that exports (by value) grew 11% in the three months from April 1 to June 30.
So between July 1 2013 and March 31 2014, India needs to export a further $16.5
bn worth – 28% up on the whole of 2012/13, and an incredible 69.3% up on the
$9.75 bn India exported in the same nine months of that financial year.
No substantial apparel making country has ever achieved
sales growth of over 50% in a year. And Rao hasn’t even got any plans to
achieve his numbers. All he’s got is a list of ideas he’s going to take to his
colleagues at the end of July. Those ideas include things like looser
regulations on overtime and employment protection: precisely the same ideas the
Prime Minster was touting a decade ago, and still can’t get through his coalition
colleagues. They aren’t plans for making and selling more garments: they’re
plans for making manufacturing easier – once they’re implemented.
Maybe this time they’ll happen. But it’s highly unlikely
they’ll happen fast enough to affect exports before 2014/15: even if his
colleagues buy his proposals in an hour, they won’t be able to implement them until
most Western clients finish negotiations for winter 2013/14 orders.
Rao’s accepting numbers the industry has plucked out of the air
because they think such numbers will persuade the government to back their pet
projects. No-one in the Indian garment industry believes for a nanosecond they’re
remotely credible: they’re silly numbers, invented with complete contempt.
Whether it matters that India will undershoot its
preposterous target by 30% or 40% is debatable.
But in endorsing these junk numbers, Rao has handed opponents of industry reform
the gift they want. “What’s the point of backing further reform?”, they’ll
argue in April 2014, when apparel exports come in at around $13.5 bn - $14.5 bn.
“He’s just done what the bosses demanded, and still undershot by 35%”
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