9.20 ndian onom
by late 2015. This has happened due to cent, with some close to 50 per cent; and that
fall in global prices. of leather and footwear averaged more than 25
(v) The Indian aluminium industry will per cent. In its take-off phase of growth, India
continue to face difficulty unless world has underperformed relative to the East Asian
prices increase, because in the short run it competitors. The Indian underperformance, has
is virtually impossible to reduce the cost been particularly marked in the leather sector.
of production.
Social transformation through women
Global aluminium prices, like other metal empowerment
prices, are cyclical and it is difficult to forecast
when they will begin to move upwards. But the These industries create high number of jobs,
trend is expected to change when world industrial especially for women—apparel sector is the most
growth improves. India is avoiding custom duty labour-intensive followed by footwear. Apparels
to reduce import of aluminium because it may are 80-fold more labour-intensive than auto
erode the competitiveness of downstream sectors industry and 240-fold more jobs creating than steel
like power, transport and construction. industry—the comparable numbers for leather
goods are 33-fold and 100-fold, respectively. As
APPArel AnD footWeAr sectors per the World Bank’s employment elasticities, it is
estimated that rapid export growth in these sectors
Since the industrial revolution, no country has
could generate about 5 lakh additional direct jobs
become a major economy without becoming
every year. Enhanced opportunity for women
an industrial power. In case of India, industrial
implies that these sectors could be ‘vehicles for
expansion had been not only stunted but social transformation’—in Bangladesh, female
largely capital-intensive (job creation being not education, total fertility rates, and women’s
compatible to investments). Sitting on the cusp labour force participation moved positively due to
of demographic dividend, India needs to generate the expansion of the apparel sector.
jobs that are formal, productive and compatible
to investment. Besides, the economy has to search A historic opportunity
for alternatives for promoting growth, exports
India has an opportunity to promote the exports
and broader social transformation. In this case
from these sectors as Chinese market shares are
two sectors—apparel and leather & footwear,
either stabilising or falling. The space vacated
presently, look eminently suitable candidates54.
by China is fast being taken over by Bangladesh
Growth and exports and Vietnam in case of apparels; Vietnam and
Indonesia in case of leather and footwear. At
Almost every high growth economies in post- present, Indian apparel and leather firms are
war history in East Asia has been associated with relocating to Bangladesh, Vietnam, Myanmar,
rapid expansion in clothing and footwear exports and even Ethiopia. The window of opportunity
in the early stages. In the successful East Asian is narrowing and India needs to act fast if it is to
economies where GDP growth booms averaged regain competitiveness and market share in these
between 7-10 per cent, growth in the exports of sectors.
these two sectors was exceptional—the average
annual growth of apparel exports was over 20 per Challenges
54. Economics Survey 2016-17, Vol. 1, Ministry of These sectors face a set of common challenges—
inance, overnment of ndia, . elhi, pp. . logistics, labour regulations, the policies related to