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Why in the News?

India is one of the world’s top textile exporters and a major manufacturing center, but its textile industry is now at a critical stage.

What challenges affect India’s textile industry globally?

• Geopolitical Tensions: Rising global conflicts and trade restrictions disrupt export routes and reduce India’s textile market access. Eg: The U.S.-China trade war shifted demand to countries like Vietnam, affecting Indian exporters’ global share.
• Fragmented Supply Chains: Lack of coordination between suppliers, weavers, and exporters leads to production delays and higher costs. Eg: During the COVID-19 pandemic, uncoordinated lockdowns at different supply chain points delayed delivery timelines.
• Price Volatility: Unpredictable fluctuations in raw material prices reduce planning efficiency and shrink profit margins. Eg: In 2022, cotton prices spiked globally, affecting the cost structure of Indian textile firms and making exports less competitive.
• Sustainability Compliance: Global markets demand eco-friendly and traceable textile products, which Indian firms may struggle to provide without investing in green technology. Eg: The EU’s push for traceability and environmental standards may restrict access for non-compliant Indian products.
• Changing Consumer Preferences: International buyers now prioritize ethically sourced, durable, and sustainably certified products. Eg: Brands like H&M and Levi’s require sustainability certifications, posing challenges for uncertified Indian manufacturers.

Why is regenerative farming vital for textiles?

• Sustainable Raw Material Sourcing: Regenerative farming ensures a steady and eco-friendly supply of natural fibres like cotton, reducing environmental impact. Eg: In Aurangabad, Maharashtra, over 6,000 farmers under the Regenerative Cotton Program reported higher yields and soil health improvement.
• Climate Resilience: It improves soil health and enhances resistance to climate shocks, ensuring consistent fibre quality. Eg: Regen farms showed better crop survival during erratic rainfall and drought periods, supporting uninterrupted textile production.
• Cost-Effective Production: Reduced dependence on chemical inputs lowers input costs, making raw materials more affordable for textile producers. Eg: Farmers using regen methods observed less fertilizer usage, lowering their overall production cost.
• Enhanced Traceability: Regen farming enables real-time data and certification, ensuring supply chain transparency demanded by global brands. Eg: Cotton grown under traceable regenerative systems is preferred by brands like Patagonia for its verified originand sustainability.
• Rural Livelihood and Inclusion: It creates inclusive rural economies by empowering smallholders, supporting gender equity, and connecting farmers with global markets. Eg: Regen cotton initiatives have led to higher incomes and women participation in farming across India’s cotton belts.

How does traceability boost textile exports?

• Product Authenticity: Traceability ensures transparency from raw material to final product, building consumer trust in international markets. Eg: Kasturi Cotton branding enhances India’s image by assuring authentic, high-quality cotton to global buyers.
• Sustainability Compliance: Export destinations demand eco-conscious sourcing. Traceable supply chains show alignment with sustainability standards. Eg: The EU and U.K. emphasize environmentally responsible production under FTAs and Digital Product Passports (DPPs).
• Market Access & Expansion: Traceability helps Indian textiles meet foreign regulatory standards, easing entry into eco-sensitive markets. Eg: India-U.K. Free Trade Agreement (FTA) can boost exports by leveraging traceability credentials.
• Brand Accountability: It shifts perception from just a supplier to a responsible brand, enhancing global brand equity. Eg: Tech-based tracking systems help Indian brands share sustainability stories, increasing appeal in premium markets.
• Competitive Differentiation: Traceable products stand out in global markets with rising demand for ethical fashion. Eg: As per the 2023 Consumer Circularity Survey, over 37% consumers consider traceability a key purchase factor.

What are the steps taken by the Indian government? 

• PM MITRA Scheme: Establishes Mega Integrated Textile Regions and Apparel Parks to integrate the entire textile value chain, reduce logistics costs, boost competitiveness, and create jobs.
• Promotion of Regenerative Cotton Farming: Supports sustainable farming practices to improve soil health, reduce chemical use, and enhance cotton qualitythrough collaborative platforms.
• Support for Technical Textiles and Innovation: Launches initiatives like the National Technical Textiles Mission to promote R&D and commercialization of high-value technical textiles for sectors like healthcare and defense.

Way forward: 

• Adopt Sustainable Practices: Promote widespread use of regenerative farming, traceability technologies, and product circularity to enhance environmental responsibility and global competitiveness.
• Strengthen Innovation and Collaboration: Invest in R&D, encourage public-private partnerships, and leverage trade agreements to boost technological advancement and expand export markets.

Mains PYQ:

[UPSC 2023] Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard.

Linkage: Indian textile industry is “one of the world’s largest manufacturing hubs” and projects its growth to $350 billion by 2030, with the potential to add 35 million new jobs. This PYQ directly addresses the importance of the manufacturing sector for economic growth and government policies supporting it, which are crucial for the textile industry to realize its leadership vision and achieve an “economic competitive edge”.

Why in the News?

India has announced a major cut in import duty — 15% off on fully built electric cars — but only if the makers promise to invest locally and add value within the country. This is part of a new plan called the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI).

How does it aim to promote EV manufacturing in India?

• Investment-Linked Incentives: Offers a 15% concessional import duty on completely built-up (CBU) EVs. Manufacturers must invest at least ₹4,150 crore over 3 years. Eg: A global EV company like Tesla or BYD can benefit from lower import taxes if it sets up a manufacturing plant or R&D unit in India.

• Mandatory Localisation of Production: Companies must achieve 25% Domestic Value Addition (DVA) within 3 years, increasing to 50% in 5 years. Encourages use of local auto components, reduces import dependency, and builds domestic manufacturing capacity. Eg: EV makers could partner with Indian auto component suppliers like Motherson Sumi or Bosch India to meet DVA targets.

• Cap on Imports to Push Local Production: Only 8,000 CBUs annually per manufacturer are allowed under concessional duty for 5 years. Companies must move quickly to set up local production to scale beyond this limit. Eg: After hitting the import cap, a company like Volkswagen may be compelled to start local assembly to meet rising demand and avoid higher duties.

Why is technology transfer critical for India’s EV transition?

• Late Start Requires Catching Up Quickly: India began its EV journey in 2015, about 5 years later than major players like China and the U.S. Without technology transfer, India risks falling behind in innovation and manufacturing capabilities. Eg: China’s early joint ventures helped it quickly develop advanced EV technology, something India needs to replicate.

• Lack of Indigenous Battery Technology: Batteries are the core component of EVs, and India currently lacks the technology to produce advanced batteriesdomestically. Technology transfer will help India build expertise in battery design, manufacturing, and supply chain integration. Eg: China’s vertical integration from mining to battery assembly gave it a competitive edge in pricing and scale.

• Building a Localised EV Ecosystem: Transferring technology via partnerships or joint ventures helps develop local suppliers and skilled workforce. This reduces dependency on imports and supports long-term sustainability of the EV industry. Eg: India’s success in ICE vehicles came through mandated joint ventures which facilitated tech and skill transfer; the same model can be applied to EVs.

How has China’s strategy helped it lead in global EV adoption?

• Early and Ambitious Subsidy Program: Launched the New Energy Vehicle subsidy programme in 2009, much earlier than many countries. This long-term financial support boosted EV production and adoption. Eg: Subsidies encouraged companies like BYD and NIO to rapidly scale EV manufacturing.

• Mandatory Joint Ventures for Technology Transfer: Required foreign EV manufacturers to form joint ventures with Chinese firms until 2022. This ensured technology transfer and domestic capability building. Eg: Tesla initially partnered with local companies to set up manufacturing in China.

• Massive Financial Incentives: China invested around $230 billion over 15 years on EV subsidies, infrastructure, and research—the largest globally. This comprehensive support accelerated industry growth. Eg: Government funding helped develop a vast EV charging network nationwide.

• Gradual Reduction of Import Duties: Reduced import duties on EVs from 25% in 2010 to 15% in 2018. Lower duties made EVs more affordable, increasing domestic demand. Eg: More affordable imports boosted consumer adoption alongside local manufacturing.

• Vertical Integration of Battery Manufacturing: Controls entire battery value chain: mining, processing, manufacturing, and assembly. This integration reduced costs and improved competitiveness against conventional vehicles. Eg: Chinese battery giants like CATL dominate global markets due to this vertical setup.

Way forward:

• Promote Strategic Partnerships for Technology Transfer: Encourage and mandate joint ventures between foreign EV firms and Indian manufacturers to ensure effective technology sharing and skill development.
• Build a Comprehensive Domestic Battery Ecosystem: Invest in creating end-to-end battery manufacturing capabilities, including raw material sourcing, processing, and cell production, to reduce import reliance and lower costs.

Mains PYQ:

[UPSC 2023} How do electric vehicles contribute to reducing carbon emissions and what are the key benefits they offer compared to traditional combustion engine vehicles?

Linkage:  India’s journey to decarbonize and transform mobility, which includes the adoption of EVs, is currently hampered because policies “fall short of addressing a pressing issue… technology transfer”. This question directly addresses the core subject of electric vehicles (EVs) and their benefits, particularly in reducing carbon emissions.