Why this chapter matters for UPSC: Global supply chains, India's garment/textile exports, labour rights in export industries, and the inequality between countries and within countries in global trade are GS3 topics. India's textile and garment exports, the role of WTO, and fair trade principles are regularly tested.

PART 1 — Quick Reference Tables

India's Textile and Garment Industry

Indicator Value Notes
Textile + Apparel exports ~$37–39 billion (2024–25 estimate) 2nd largest earner after engineering goods
Employment in textile sector ~45 million (direct) + ~100 million (indirect) 2nd largest employer after agriculture
Tirupur (Tamil Nadu) ~$3–4 billion garment exports "Knitwear capital of India"; T-shirts, hosiery
India's global rank 2nd largest textile manufacturer in world After China
PM MITRA scheme 7 integrated textile parks; ₹4,445 crore Plug-and-play facilities for textile industry

Key Fibre and Textile Clusters

Product Cluster
Cotton knitwear (T-shirts, hosiery) Tirupur (Tamil Nadu)
Silk sarees Varanasi (Banarasi), Kanchipuram, Mysore
Woollen carpets Bhadohi, Mirzapur (UP), Kashmir
Jute products West Bengal (Hooghly belt)
Leather goods Agra (footwear), Chennai, Kanpur
Handloom Sambalpuri (Odisha), Pochampally (Telangana), Jamdani (WB)
Cotton textiles Surat (Gujarat), Coimbatore, Ahmedabad

PART 2 — Detailed Notes

Global Supply Chains and Who Benefits

Key Term

The shirt's journey (NCERT example):

  1. Cotton farmer (Vidarbha/Telangana): Grows cotton; sells to ginning mill; receives a fraction of final value; faces debt, low MSP
  2. Ginning mill: Separates cotton fibre from seed; sells cotton bales
  3. Spinning mill: Converts cotton into yarn
  4. Weaving/knitting: Yarn into fabric (in Tirupur: knitted fabric for T-shirts)
  5. Garment manufacturing (Tirupur): Cutting, stitching, finishing; mostly by contract labour workers
  6. Export agent: Connects factory to foreign buyer
  7. International brand (UK, USA, Europe): Buys from Tirupur; adds brand name; sells in high-street store for 10–20× the purchase price
  8. Consumer (in London or New York): Buys the shirt

Who benefits most?

  • The international brand captures the highest margin (brand value, design, retail markup)
  • The garment worker in Tirupur gets the least relative to the shirt's final selling price
  • This is the fundamental inequality of global trade — labour is cheap in the Global South; brands/retail are expensive in the Global North

Tirupur's garment workers:

  • Mostly women migrants (from agricultural districts)
  • Work 10–12 hours/day; production targets; often contract/informal employment
  • Workers' rights: Subject to Minimum Wage Act, but enforcement is weak
  • Sumangali scheme (historical): Young women recruited with promise of lump sum at end of 3 years; bonded labour characteristics; campaigns against it by NGOs; largely abolished but informal versions persist

Fair Trade and Global Trade Inequalities

UPSC Connect

UPSC GS3 — International trade and equity:

Why poorer countries face disadvantage in global trade:

  1. Terms of trade: Developing countries export primary commodities (cotton, coffee, tea, minerals) whose prices are volatile and often declining; import manufactured goods whose prices rise → deteriorating terms of trade over time
  2. Tariff barriers: Developed countries impose tariffs on processed goods (e.g., Indian cotton is allowed duty-free but Indian cotton shirts face tariffs) — discourages industrialisation in developing countries
  3. Agricultural subsidies: USA and EU heavily subsidise their farmers ($100+ billion/year combined) → their farm exports are artificially cheap → undercut Indian and African farmers in global markets
  4. Intellectual property: Brands, patents, and trademarks owned by Northern companies; Generic drug production restricted (TRIPS agreement) until flexibilities used

WTO and inequalities:

  • WTO (World Trade Organisation): Governs international trade rules; 166 members; India is a founding member
  • India has successfully argued for: Special and differential treatment for developing countries; flexibilities in TRIPS for medicines; protection for food security programs (public stockholding)
  • Doha Development Round (2001–present): Ongoing agricultural subsidy negotiations; largely stalled; India has blocked agreements it sees as against its farmers' interests
  • MSP and WTO: India's MSP-based procurement is contested by some WTO members as trade-distorting subsidy; India argues food security exemption

Fair Trade movement:

  • Alternative trade system that guarantees farmers and workers in developing countries a minimum fair price
  • Fairtrade certified products: Coffee, cocoa, tea, cotton, bananas
  • Premium paid to farmer cooperatives for community development
  • Critiques: Higher prices borne by consumers; doesn't address structural inequalities; market share is tiny

India's Textile Exports and Policy

Explainer

India's textile sector — significance and challenges:

Significance:

  • 2nd largest employer after agriculture
  • Major foreign exchange earner
  • Women's employment: ~70% of garment workers are women
  • India has advantage in cotton (world's largest cotton producer), silk (2nd after China), jute (world's largest producer)

Challenges:

  • China competition: China has higher automation, scale; lower per-unit costs for mass market garments
  • Bangladesh competition: Duty-free access to EU market; lower labour costs; Bangladesh is world's 2nd largest garment exporter
  • Technology: Indian garment sector is less automated than Chinese/Vietnamese competitors
  • Infrastructure: Power, water, logistics costs are high in India

Policy support:

  • Production Linked Incentive (PLI) Scheme for Textiles: ₹10,683 crore; incentives for man-made fibre (MMF) and technical textile production; target segments where India is weak
  • PM MITRA (PM Mega Integrated Textile Region and Apparel): 7 greenfield textile parks with common infrastructure; plug-and-play facilities
  • RoSCTL (Rebate of State and Central Taxes and Levies): Refunds taxes on exported garments → makes Indian exports more competitive on price
  • TUFS (Technology Upgradation Fund Scheme): Subsidised loans for modernising textile machinery

Handloom and handicraft:

  • India has world's largest handloom sector: 35 lakh handlooms, 43 lakh weavers
  • GI tags protect regional specialties: Banarasi silk, Kanchipuram silk, Jamdani, Pochampally ikat, Channapatna toys
  • Online marketplaces (Amazon Karigar, Flipkart Samarth, ONDC) helping artisans reach global markets

Exam Strategy

Prelims traps:

  • Tirupur = knitwear/T-shirt capital (Tamil Nadu) — NOT saris or silk; knitwear and hosiery
  • India = 2nd largest garment exporter in world AFTER Bangladesh (Bangladesh overtook India; China is #1)
  • India = world's largest cotton producer (in some years; competes with China; fluctuates)
  • India = world's largest jute producer (~75% of world's jute production in Ganga delta; West Bengal + Bangladesh)
  • WTO Doha Round: Agricultural subsidies the sticking point; India + G20 developing countries vs USA + EU
  • PLI for Textiles focuses on MMF (man-made fibres) and technical textiles (NOT traditional cotton garments)
  • PM MITRA = 7 parks (not 5 or 10); Ministry of Textiles; greenfield textile parks

Previous Year Questions

Prelims:

  1. India is the world's largest producer of which of the following fibres?
    (a) Silk
    (b) Jute
    (c) Wool
    (d) Polyester

  2. The Production Linked Incentive (PLI) Scheme for Textiles specifically targets which segments?
    (a) Cotton garments and handloom products
    (b) Man-made fibres (MMF) and technical textiles
    (c) Silk and woollen products
    (d) Jute and coir products

  3. Which of the following statements about the WTO's Doha Development Round is correct?
    (a) It was successfully concluded in 2013
    (b) India agreed to reduce all agricultural subsidies
    (c) It remains largely unresolved, with agricultural subsidies being a major sticking point between developed and developing countries
    (d) India opted out of Doha Round negotiations