A blueprint to create productive jobs, a lesson from Tiruppur

Why in the News

The Prime Minister’s Independence Day address placed manufacturing power first among the seven Saptadhara streams meant to carry India towards a Viksit Bharat, and tied that effort to harnessing the potential of India’s youth. Research at the Indian Council for Research on International Economic Relations (ICRIER) answers the question that follows, which is which manufacturing sector can actually deliver jobs at the scale India needs, and its answer is textiles and apparel. The evidence offered is the Tiruppur knitwear cluster, an organically grown ecosystem that supports over a million livelihoods, set against the PM MITRA parks announced in 2021 to replicate it, of which only one appears operational. The tension is that India has closed its tariff gaps with competitors and still cannot convert that access into exports, because the binding constraint is not market access but the absence of the cluster ecosystem around the factory.

Why is India’s job problem one of composition and of job quality?

1. The size of the workforce: India had 61.6 crore employed persons aged more than 15 years in 2025.
2. Agriculture’s share of employment: Agriculture still accounted for 43 per cent of employment against 12.1 per cent in manufacturing, per PLFS 2025.
3. The arithmetic of any shift: Even a 1 percentage point shift in employment from agriculture to manufacturing would involve moving a large number of workers.
4. The stated target has not been met: The governing alliance had promised to create 2 crore jobs every year, and the outcome is nowhere near that.
5. Youth unemployment: Unemployment among those aged 15 to 29 was 9.9 per cent, rising to 13.6 per cent in urban areas, per PLFS 2025.
6. Youth outside employment, education and training: 25 per cent of that age group were neither in employment nor in education or training.
7. The gender gap in participation: Female labour force participation was 40 per cent, against 79.1 per cent for men.
8. Student agitations over paper leaks: The recent student agitations over paper leaks reflected the underlying position that respectable formal sector jobs remain scarce even after a basic education.
9. The PLFS usual status measure: The PLFS usual status measure counts people who worked for a long part of the year and also those who undertook economic activity for at least 30 days during the year.
10. The limit of the employment count: Being counted as employed does not mean holding a regular or formal job.
11. Regular formal employment with social security: Economic security requires regular formal employment carrying social security benefits such as the Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI).

Why does apparel fit the gap better than the frontier sectors?

1. Labour absorption in apparel: The apparel sector is labour intensive and employs women in large numbers.
2. Training time for production roles: Workers can be trained in short periods, about 60 days for specific production roles, which is what allows a cluster to scale its workforce quickly.
3. Fit with India’s skill distribution: Chip making, artificial intelligence and other advanced technologies serve a highly skilled workforce, while the majority of India’s labour force is at the bottom end of the skill distribution.
4. The cost of a job is lower: Textiles and apparel offer higher employment intensity at relatively low cost, which is the path China, Bangladesh and Vietnam followed.

Is the $100 billion export target achievable, and what do the international comparisons show about market access?

1. The headline target: India has set a target of $100 billion in textiles and apparel exports by 2030, from $36 billion today.
2. The apparel share of the target: $40 billion of that is for apparel exports specifically, from $15.7 billion today.
3. Exporters do not accept the date: Interactions with exporters suggest the targets are not grounded in current realities and are more likely to be achieved by 2035, not 2030.
4. The capacity gap behind the target: Closing it means building capacity of a scale that does not exist, not raising utilisation at existing units.
5. The tariff gap has already closed: India has recently closed the tariff gaps with competitors such as Bangladesh and Vietnam in major markets including the EU and the UK.
6. The India Japan agreement of 2011: Under the India Japan agreement of 2011, India’s apparel exports to Japan fell from $229 million in 2013 to $203 million in 2024.
7. Market access without capacity: Market access alone does not ensure exports, and India needs the scale and capacity to tap free trade agreements before a concession converts into shipments.

What made Tiruppur work, and what did its environmental crisis show about collective capacity?

1. Tiruppur’s knitwear exports: Tiruppur’s knitwear exports rose from $3.3 billion in 2020-21 to $5.3 billion in 2024-25, per the Tiruppur Exporters Association in 2026.
2. Share of India’s knitwear exports: The cluster accounts for about 68 per cent of India’s knitwear exports.
3. The cluster’s employment base: It supports the livelihoods of more than a million workers, around 70 per cent of them women.
4. The whole chain sits in one place: Within roughly 20 km, yarn, knitting, dyeing, printing, stitching, finishing, packaging and dispatch are woven into one production ecosystem, with nearly 20,000 units operating across the different stages.
5. The ecosystem effect of density: Firms specialise, workers specialise, and thousands of jobs are created around a common market, which is the ecosystem effect the argument rests on.
6. Institutions and common infrastructure built over decades: Entrepreneurs, industry associations and government built the institutions and common infrastructure over decades. The Tiruppur Exporters Association and the South India Hosiery Manufacturers Association built collective capabilities, and infrastructure such as the Netaji Apparel Park supported expansion.
7. The Madras High Court’s 2011 zero liquid discharge order: The Madras High Court’s 2011 order applied to units failing to meet zero liquid discharge (ZLD) norms, meaning norms requiring that no effluent leave the unit as liquid waste.
8. The response was collective, not firm by firm: The cluster invested more than Rs 850 crore in common effluent treatment infrastructure.
9. Collective financing of the effluent plant: A single firm could not have financed that plant, which is the clearest demonstration that the cluster’s value lies in what its firms can do jointly.

What is a cluster ecosystem?

1. The cluster ecosystem: A concentration of firms in one trade inside a small geography, together with the suppliers, contractors, traders and service providers each of them draws on. A single factory then operates inside a supply chain it does not have to own.
2. Why proximity lowers cost: Each stage of production is bought from a neighbouring specialist rather than built in house, so a firm carries only the stage it is good at. The cost and the time of moving material between stages fall close to nil.
3. The shared labour pool: A workforce trained in that trade accumulates in one place, so a unit can add or shed capacity without training workers from scratch, and a worker can change employer without changing town.
4. Collective capability: Facilities no single firm could finance become viable once the cost is spread across thousands of units. Eg. Tiruppur’s common effluent treatment infrastructure, built by the cluster after a court order.

What still constrains Tiruppur?

1. Dependence on migrant labour: The cluster depends heavily on migrant workers from Odisha, Jharkhand, Bihar and elsewhere.
2. Housing is the retention problem: Worker housing and retention are named as the important challenges in taking the cluster to its next million jobs.
3. The cluster’s planned upgrade path: The cluster plans to move into man made fibres, technical textiles and high value sustainable manufacturing to expand both exports and employment.

Why has the national attempt to replicate it stalled?

1. The seven PM MITRA parks announced in 2021: The government announced seven PM MITRA parks in 2021 as the instrument for creating more such clusters.
2. Operational status of the parks: Only one park appears operational, at Warangal, and the others are still in the planning stages.
3. The execution pace against the export target: Such a pace in the execution of even good ideas does not inspire confidence that the $100 billion export target can be reached, and it limits the speed at which jobs can be created.
4. One cluster cannot carry a national target: Tiruppur alone cannot deliver the target, and India needs many more clusters of the same kind.

Challenges to the PM MITRA parks model

1. A greenfield park has to create the ecosystem a cluster inherits: Tiruppur’s advantage is the density of specialised units around a common market, and a new park begins with land and utilities alone. Eg. Nearly 20,000 specialised units in one cluster took decades to assemble.
   The Fix: Anchor each park on an existing textile concentration so tenants arrive with supplier relationships already in place, rather than siting parks to distribute them across states.
2. Land and clearances drive the timeline more than the incentive does: The scheme’s outlay is committed at announcement while state level land transfer, environmental clearance and utility connection decide the commissioning date. Eg. Roughly 70 per cent of infrastructure project delays in India stem from complex land acquisition processes.
   The Fix: Make the release of central assistance conditional on dated state milestones for land handover and clearances, so delay has a financial consequence.
3. Common effluent capacity is the binding utility for textiles: Dyeing and processing are the stages that cannot start without treatment capacity, and they are also the stages that create the most jobs per unit of investment. Eg. Tiruppur had to build more than Rs 850 crore of common effluent treatment infrastructure after a court order, long after the cluster had grown.
   The Fix: Commission the zero liquid discharge plant before tenant allotment rather than after, so processing units can begin operating from the first year.
4. Worker housing is treated as outside the park: A labour intensive park draws migrant workers who need housing at the same moment the units need staff, and housing is rarely part of the industrial park’s own scope. Eg. Worker housing and retention are the named constraints on Tiruppur’s next million jobs.
   The Fix: Include rental worker housing within the park’s own master plan and viability gap funding, treating it as production infrastructure rather than welfare.

Conclusion

The evidence assembled here says the binding constraint on labour absorbing manufacturing is executional rather than strategic. India already has a demonstrated model, a closed tariff gap with its competitors and a stated national target, and the one instrument built to convert all three into jobs has produced a single operating park in five years. Whether the remaining six parks reach commissioning, and on what dated schedule, is the marker that will decide whether the $100 billion target slips to the exporters’ 2035 or fails altogether.

Manufacturing Sector in India

1. Share of GDP: Manufacturing contributes around 17 per cent of GDP, against a policy target of 25 per cent.
2. Share of global manufacturing output: India holds about 2.8 per cent of global manufacturing output, compared with China’s roughly 29 per cent.
3. The size of output: Manufacturing output is projected to reach approximately $1 trillion in FY 2025-26.
4. What incentives have drawn: The Production Linked Incentive (PLI) scheme had drawn over Rs 1.76 lakh crore across 14 sectors as of March 2025.

Government Initiatives for Manufacturing

1. Make in India (2014): Seeks to raise manufacturing’s share of GDP from around 17 per cent toward 25 per cent through ease of doing business reforms.
2. Atmanirbhar Bharat (2020): Promotes self sufficiency, local industry and reduced import dependence without closing the economy off to the world.
3. Production Linked Incentive Scheme (2020): Covers 14 sunrise and strategic sectors, including textiles, with outcome linked financial incentives paid on incremental production.
4. National Manufacturing Mission: A Budget mission targeting a 25 per cent GDP share and 143 million jobs by 2035, unifying policy across clean and sustainable manufacturing.
5. National Logistics Policy: Aims to cut logistics costs and improve supply chain efficiency, which is a direct input into export competitiveness.
6. Industrial corridors: Eleven approved corridors bundle infrastructure to support clustered industrial development, with 12 new industrial nodes approved in 2024.

Back2Basics: PM MITRA Parks

1. What the name stands for: Pradhan Mantri Mega Integrated Textile Region and Apparel parks, administered by the Ministry of Textiles.
2. The design idea: Each park brings spinning, weaving, processing, dyeing, printing and garmenting onto a single site, so a garment can be produced end to end within one location.
3. The vision it implements: The 5F vision, meaning Farm to Fibre to Factory to Fashion to Foreign, which treats the textile value chain as a single continuum from cotton to export.
4. How they are built: Each park is developed by a Special Purpose Vehicle owned jointly by the central and the concerned state government, with central support for development capital and for the first units to begin production.

Matching Previous Year Question

“[2025, GS3, 15 marks] Discuss the rationale of the Production Linked Incentive (PLI) scheme. What are its achievements? In what way can the functioning and outcomes of the scheme be improved?”