Battleground 2024: Ludhiana's textile industry wants govt to stitch up FTAs

Ludhiana’s textile industry is navigating through a sea of challenges, adapting to a new normal of subdued demand, 

while pinning its hopes on governmental support for the establishment of a mega textile park and the signing of free trade agreements (FTAs) with developed economies.
 

The past eight years have been a rollercoaster ride for this labour-intensive industry. All this began with demonetisation in 2016, followed by the introduction of a revamped indirect tax regime – goods and services tax — in 2017. The Covid-19 pandemic in 2020 added to the woes, and the geopolitical tensions since 2022 have led to high inflation and recessionary trends in the West, impacting demand.
 

Vinod Thapar, president of Knitwear Club, an apparel industry association, stresses the urgent need for a mega textile park in Ludhiana. He believes that such a park, akin to those in China, could be a game-changer, creating thousands of jobs and reviving the industry. “We need the government’s intervention on this at the earliest. Discussions on setting up a textile park have been going for the past two-three years and there has been delay due to unavailability of adequate land,” Thapar says.
 

However, the road to recovery won’t be without obstacles. The Indian textile industry faces stiff competition from several countries in the region, such as China, Bangladesh, Sri Lanka, Vietnam, and even Pakistan.

 

The industry is eagerly awaiting the signing of FTAs with the United Kingdom and the European Union. India has been losing ground to competitors like Bangladesh and Vietnam, which enjoy lower duty benefits.
 

Amit Jain, managing director of Shingora Textiles, suggests a shift towards value-added textiles as a potential growth driver. He warns that relying solely on low-cost production may not be sustainable in the long run, as “new-age FTAs negotiated with developed economies require commitments on labour and sustainability”.
 

The implementation of quality control orders (QCOs) by the Centre has also raised concerns, particularly among smaller players in the industry. These non-tariff barriers aim to prevent the import of low-quality products and strengthen India’s position in the supply chain. However, some industry executives argue that QCOs should be imposed judiciously, after consultations with stakeholders, and not disrupt domestic businesses.
 

“QCOs need to be imposed on products that are equally available in India. The government cannot stop the import of certain raw materials… (more so when) the local seller’s quality is not up to mark. Such a hasty implementation of QCOs end up benefiting large Indian companies,” argues a senior industry executive.
 

Businesses in Ludhiana, Punjab’s largest industrial hub, say the city is in dire need of improved connectivity. The nearest airport is in Chandigarh, about 100 km away. Industry insiders also stress the need for a world-class exhibition-cum-convention centre in Ludhiana to boost industrial growth. “These things are crucial if you want industrial growth,” underscores the executive cited above.
 

While some of these issues need to be addressed at the Centre’s level, Ludhiana’s textile industry is hopeful that the state government will consider its demand for a mega textile park and an exhibition-cum-convention centre.
 

In the political arena, Ludhiana, which votes on June 1 in the final phase of the Lok Sabha election, is witnessing a fierce contest between candidates from the Congress, the Aam Aadmi Party, and the Bharatiya Janata Party.
 

While those in the poll fray in Ludhiana haven’t made textile industry-specific promises, BJP candidate 
 

Ravneet Singh Bittu, who won the 2019 polls on a Congress ticket, has promised an exhibition-cum-convention centre in the city. Amrinder Singh Raja Warring of the Congress and Ashok Parashar Pappi of the AAP are the main challengers this time.

According to industry insiders, Prime Minister Narendra Modi remains highly popular and the Lok Sabha elections will test the AAP, which swept the Punjab Assembly polls in 2022.
 

“The Lok Sabha elections will be a reality check for the AAP,” says one of them. “Although the BJP is unlikely to lead in the rural areas because of anger among farmers, a large chunk of the urban (non-Hindu) votes in this constituency may go to the BJP.”

Punjab is witnessing a four-cornered battle in the 2024 polls, a first in nearly three decades. This election will also mark the first time that the BJP is contesting independently, following the end of its alliance with the Shiromani Akali Dal (SAD) in 2021 over the now-repealed farm laws. Similarly, the Congress and the AAP are also contesting separately in Punjab, despite forming an alliance at the national level.