The Government of India is at it again, proposing to increase the minimum wage in all states…
Do they even know or understand how this will impact the industry, which is in no position to take
another blow to its competitiveness?
Inflation is under control, so the food and other commodity prices are stable; neither do I see any new job opportunities in other sectors since the Indian Parliament logjam has put on hold industrial growth. Then what’s the reason for minimum wage increase…, and that too an increase of 25 per cent?
We all know that the apparel and textile industry is the third largest employer after agriculture and has the potential to become the highest employer only if the Government realizes that the industry is quite labour-intensive and very low capital-intensive, which makes it more vulnerable to any increase in labour wages. Instead, the Government is busy appeasing the handloom workers whose contribution is not in any way significant to the economy of the country and are in many ways a liability…
I am not saying that India does not need to preserve its national heritage, nor do I mean to impl< that handlooms are unimportant in the textile value chain… But what I definitely feel is that these handloom weavers will never be able to lift the garment manufacturing industry to become economically strong; what the industry needs is industrialization for employment generation. I can give stats after stats to prove my point…, but the Government already knows…
The labour wage component of a successful factory working at a profit margin of 7 to 8 per cent is 40 per cent of the total outgo, whereas it would just be around 10 per cent for automobile factory. Hence any increase in the wages will directly impact an apparel manufacturing unit’s profit, rendering the operations unviable. What the Government can do is to fix the wages, sector wise keeping in mind the peculiar requirements of each industry…
Knowing that a heavy machinery industry like automobile manufacturing is capital-intensive, driven by automation and requires much less manpower, the industry would be able to pay more to its workers; whereas the industry whose business, and thus the profits are entirely based on the wages of its workers, and is in competition with the likes of Bangladesh and Vietnam that have less than half the wage rates as India, is a matter of grave concern… The Government has to prudently come up with a scheme that ensures the survival of the industry… How they do it, ensuring each industry remains attractive, is another discussion and requires debate and deliberation.
It is fascinating to see how China has tackled its rising wages… Today the country has wilfully reworked its strategy to move up the value chain to remain relevant to the world as a competitive manufacturing destination. While the garmenting segment has gone in for branding instead of being CMT manufacturers, the sewing machine manufacturing industry has graduated to take advantage of this changing mindset, producing now not only basic machines but even high-end IT-enabled technologies, earlier unheard of in China.
With CISMA around the corner, I am leading a strong team from my office to the event and excited by the thought of being a part of the mega event while exchanging notes on the global scenario with old friends from the industry. We will be back to give you the latest on technology and innovation. This issue has an exhaustive preview of various technologies that will be on show and I am sure it will help visitors to plan their visit accordingly. For those who cannot make it, it is a ready-reckoner for what is the latest on garment technology.
Inflation is under control, so the food and other commodity prices are stable; neither do I see any new job opportunities in other sectors since the Indian Parliament logjam has put on hold industrial growth. Then what’s the reason for minimum wage increase…, and that too an increase of 25 per cent?
We all know that the apparel and textile industry is the third largest employer after agriculture and has the potential to become the highest employer only if the Government realizes that the industry is quite labour-intensive and very low capital-intensive, which makes it more vulnerable to any increase in labour wages. Instead, the Government is busy appeasing the handloom workers whose contribution is not in any way significant to the economy of the country and are in many ways a liability…
I am not saying that India does not need to preserve its national heritage, nor do I mean to impl< that handlooms are unimportant in the textile value chain… But what I definitely feel is that these handloom weavers will never be able to lift the garment manufacturing industry to become economically strong; what the industry needs is industrialization for employment generation. I can give stats after stats to prove my point…, but the Government already knows…
The labour wage component of a successful factory working at a profit margin of 7 to 8 per cent is 40 per cent of the total outgo, whereas it would just be around 10 per cent for automobile factory. Hence any increase in the wages will directly impact an apparel manufacturing unit’s profit, rendering the operations unviable. What the Government can do is to fix the wages, sector wise keeping in mind the peculiar requirements of each industry…
Knowing that a heavy machinery industry like automobile manufacturing is capital-intensive, driven by automation and requires much less manpower, the industry would be able to pay more to its workers; whereas the industry whose business, and thus the profits are entirely based on the wages of its workers, and is in competition with the likes of Bangladesh and Vietnam that have less than half the wage rates as India, is a matter of grave concern… The Government has to prudently come up with a scheme that ensures the survival of the industry… How they do it, ensuring each industry remains attractive, is another discussion and requires debate and deliberation.
It is fascinating to see how China has tackled its rising wages… Today the country has wilfully reworked its strategy to move up the value chain to remain relevant to the world as a competitive manufacturing destination. While the garmenting segment has gone in for branding instead of being CMT manufacturers, the sewing machine manufacturing industry has graduated to take advantage of this changing mindset, producing now not only basic machines but even high-end IT-enabled technologies, earlier unheard of in China.
With CISMA around the corner, I am leading a strong team from my office to the event and excited by the thought of being a part of the mega event while exchanging notes on the global scenario with old friends from the industry. We will be back to give you the latest on technology and innovation. This issue has an exhaustive preview of various technologies that will be on show and I am sure it will help visitors to plan their visit accordingly. For those who cannot make it, it is a ready-reckoner for what is the latest on garment technology.
