Digitalization and the Indian Textiles Sector: A Critical Analysis

Abstract

This article discusses and analyses the complex relationship between digitalization and the Indian textile industry. It is found that the process of digitalization has both positive and negative impacts on the sector, in terms of its opportunities and supposed challenges. To effectively meet the challenges and convert these into opportunities, it is proposed that certain measures be taken of the likes of protecting the jobs of the poor and imparting adequate digital skills to the textiles workforce. To make the digital economy a success and not a disaster, it is imperative that digitalization be supported by an effective information and communications technology (ICT) infrastructure, involving both the state efforts and individual initiative. A visionary and practical approach to the issue of digitalization shall render not only the industry but also the economy in an advantageous position, given the pre-eminence of the digital technologies in the world today. In sum, running away from the process of digitalization may be the last thing any industry could manage to do; only embracing it intelligently would be useful for the sector as well as for its stakeholders—managers, employees and the entire Indian economy.

Keywords

Challenges digitalization ICT Indian textiles sector opportunities

Introduction

Digitalization or the process of digital transformation of an economy is a word one often comes across nowadays (Innolytics, 2020). The concept itself is composed of several other aspects that must be explained so as to understand the issue in greater detail.

It must be expounded that the process of digitalization is supported by an enabling digital infrastructure that is in turn composed of vital digital inputs. Digital skills, policy framework and innovation systems, digital accelerators such as socio-cultural aspects are the important components of the so-called digital infrastructure (de Rossi et al., 2003). This infrastructure is in itself incomplete if not for the vital digital inputs of information and communications technology (ICT) that includes the likes of satellites, routers, sensors, broadband and cable wires. Some of the recent additions to this digital framework are digital technologies such as artificial intelligence (AI), big data, Internet of things (IOT) and cloud computing (Rueda-Sabater & Garrity, 2010). It is because of this complex infrastructure that one sees the abundance of Amazon, Facebook and Google; e-commerce platforms and smart machines of the likes of 3-D printers, unmanned aerial vehicles (UAVs), robots and Alexa. The intricacy and interconnectedness of this system are what set it apart from the conventional brick-and-mortar businesses. The inputs and outputs of the digital process help to sustain and grow each other (Innolytics, 2020; Rueda-Sabater & Garrity, 2010).

Figure 1 helps to summarize the concept of digitalization as explained in this section by depicting digitalization as composed of digital inputs and output.

Figure 1.

Source: The author.

In view of the importance of the digital economy in the world today, this article discusses the relationship between the process of digital transformation and the textiles sector, the latter being important from the point of view of employment and exports, especially for developing countries like India. Given the prominence of the sector for the Indian economy, it is imperative to introduce the readers to its statistical dynamics.

As per the latest available figures for 2017–2018, the textiles sector contributes about 2–3 per cent towards the Indian gross domestic product (GDP), 12–13 per cent towards total manufacturing output and earns about ₹2–3 billion through exports (PIB, 2019). Most importantly, the sector provides direct and indirect employment to approximately 105 million people, out of which a disproportionate slice goes to women employees. Given the pre-eminence of the sector from the point of view of its contribution to employment generation, women empowerment through employment, exports and manufacturing output, it becomes all too apparent that the textiles industry holds a special place in the Indian economy. Needless to say, the industry is a socio-economic powerhouse whose relationship with the ongoing process of digital transformation needs a closer look, so as to be able to assess its wider ramifications for the Indian economy and society (PIB, 2019).

Table 1 seeks to condense these facts and figures for the benefit of the readers by mentioning the contribution of the Indian textiles industry to the total industrial output and to exports for the period 2016–2018.

The advent of digital technology in the realm of textiles and clothing has served as a useful and innovative method for the textiles sector to make a mark in this rapidly evolving digital landscape. The desire to beat fierce competition from the bigger and more established players in the industry could not find a better answer than in the digitally smart clothing applications (Axisa et al., 2003). The abundance of smart textiles and clothing accessories such as digital watches and glasses and clothes fitted with sensor devices are all beneficial and novel ways in which the process of digitalization could prove to be helpful for human beings (Axisa et al., 2003, 2004). The ability to track one’s body temperature, pulse rate, respiration count, blood pressure, energy level and the intensity of physical activity undertaken on a daily basis and likewise other such useful facets about one’s body are all but imperative for one to stay healthy in this era of rising non-communicable diseases (Behr, 2018; de Rossi et al., 2003; Seoane et al., 2013).

Table 1.

Some Statistics of the Indian Textiles Sector

Year	Percentage Share of the Textiles Industry in Total Industrial Output (in %)	Contribution to Total Exports (in billion)
2016–2017	12.65	2.65
2017–2018	12.9	2.55

Source: PIB (2019).

The Indian textiles sector is no alien to the ongoing digital push. Digital printing adoption by one of the biggest and most prominent segments of the industry, namely man-made fibre (MMF) points towards the growing acceptance of digital innovations and technologies becoming a part and parcel of the Indian textiles sector (Thomas, 2012).

The Indian MMF segment is making an extensive use of digital printing technologies such as inkjet and direct-to-fabric printers so as to plan novel and creative designs for saris and other such dress material. The industry is, however, marked by a relatively lower adoption of digital technologies in the country, thanks to the presence of barriers such as lower digital literacy, financial constraints faced by small and medium sized firms in the sector and a lack of genuine interest on the part of policymakers (viz., textiles industry executives) to embrace digital technology on a large scale (Thomas, 2012).

In view of the above, the subsequent sections discuss the opportunities and challenges of digitalization for the Indian textiles industry and a possible strategy to meet these challenges. The last but one section concludes the study and the final section discusses the future implications of this study from a typical managerial and practitioners’ perspective.

Digitalization of the Indian Textiles Industry: Challenges and Opportunities

The Indian textiles sector has witnessed both opportunities and challenges as a result of digitalization. Among some of the major opportunities of digitalization are increasing productivity, rising employment opportunities and benefits to customers in the form of wider product variety and the option to manufacture some of these textiles products at home using 3-D technologies. After all, the increasing availability of smart clothes including smart watches is attributable to the ongoing digital revolution in the sector (Hiremath et al., 2014). Also, the digital momentum is particularly noticeable for women, who may witness a greater chance at increasing their access to textiles business markets. Opportunities aside, some of the challenges include job losses, especially in labour-intensive mundane tasks in the textiles industry as also rise in precarious contractual employment as a corollary to automation.

Moving forward, some of the opportunities of digitalization of the Indian textiles industry are to be elicited. A rise in the textiles labour productivity as robots, AI and IOT seek to enhance the efficiency and production capabilities of the Indian textiles industry is one such example (Baker et al., 2017; Duarte & Restuccia, 2010; McKinsey Global Institute, 2017). The others are an increase in employment/job opportunities as technologies such as 3-D printing, automation, robotics, IOT, AI and e-commerce seek to raise the number of specialists pertaining to them (Citigroup-Oxford Martin School, 2015). Also, an increase in output and exports leads to a rise in the number of jobs created under the labour- and export-intensive sectors such as textiles, provided the manpower is skilled and trained enough to handle these technologies (Citigroup-Oxford Martin School, 2015). Besides, a reduction in the production costs due to introduction of efficiency-enhancing digital technologies leads to the entry of new entrepreneurs who themselves fuel job-creation opportunities for others (Citigroup-Oxford Martin School, 2015). Yet another very vital opportunity arises in the area of consumer surplus. The consumers gain by way of their greater involvement in production, distribution and supply chains in 3-D printing and e-commerce (Fernández-Caramés & Fraga-Lamas, 2018; Haghi et al., 2017). This is on account of greater availability of a wider product variety such as customized 3-D products (Haghi et al., 2017). It also imparts self-reliance in making the 3-D printed products themselves, once the technology becomes affordable (Haghi et al., 2017). The last but certainly not the least opportunity of textiles digitalization is gender empowerment. Women may have a greater ability to overcome the barriers to participation in the business opportunities, thanks to the process of digitalization. Thus, technology facilitates greater access to markets for disadvantaged social groups such as women (Lead Innovation, 2019).

As already discussed before, the process of digitalizing the Indian textiles industry is not devoid of challenges. Thus, to get a truer picture of the relationship between textiles and digitalization, one has to look at the various challenges emanating from the same. These challenges may manifest themselves in various realms. In the area of employment, the use of robots, AI, IOT and automation in general may substitute labour in routine labour-intensive manufacturing tasks (Donnan, 2018; Frey & Osborne, 2013; McKinsey Global Institute, 2017). As the traditional division of labour pattern in manufacturing tasks is altered, it leads to a further widening of skill mismatches (McKinsey Global Institute, 2017). The phenomenon of labour substitution may be seen even in skilled segments of the production, distribution and supply chains as the ‘intelligent machines’ overtake humans in both manual and cognitive tasks (McKinsey Global Institute, 2017). Also, in terms of the nature of work/employment, there may be a rise in precarious work conditions (McKinsey Global Institute, 2017), namely a rise in informal, unregulated and contractual jobs. There may be a rise in precarious work conditions and reduced wages as a result of increased pressure on textiles firms to remain competitive, thanks to falling entry barriers in the digital economy (McKinsey Global Institute, 2017).

Having explained this, it is now clear that digitalization of the Indian textiles industry has its own set of opportunities and challenges. Both are intertwined and interrelated, depending on the kind of corrective measures that India takes to turn these challenges into opportunities. Given the necessity and usefulness of the digital technology, the speed and direction of counteractive steps would determine, in a large part, the exact nature and impact of digitalization on the Indian textiles sector. That the process of digitalization is unavoidable should turn the debate from whether to adopt digital technology to how to adopt and implement digital technology in the Indian case. This would aid in the proper adoption and implementation of the digital economy across the Indian textiles sector. The roles of textiles policymakers, both in the government and the industry, must therefore, not focus on saving the labour-intensive jobs by denying digital technologies their fair share, but on accepting the unavoidable nature of digitalization for the industry. For this, adequate policy measures and their implementation must be in place to meet the challenges of a digital economy (Stoppa & Chiolerio, 2014).

The next section discusses the probable measures to meet the challenges of digitalization in the Indian textiles sector so that the opportunity of digital economy is not lost forever.

Measures to Meet the Challenges of Digitalization in the Indian Textiles Sector

The textiles sector in the country faces several challenges as enunciated in the previous section. One of the major challenges before the sector, being a labour-intensive sector, is in the form of substitution of labour with digital technologies. In this regard, imparting skill-intensive, particularly digital skill-intensive training to existent textiles workers must be the need of the hour to prevent imminent job losses (Acemoglu & Restrepo, 2018; Autor et al., 2003; Chan et al., 2012). Most importantly, there is a vital need to reduce the digital skills gap between the digitally skilled and unskilled. Further improvement of digital infrastructure and digital training curricula and the need to emphasize on vocational training must be the rule rather than the exception. Some of the government policies and programmes such as Digital India are especially geared towards achieving this goal, and the Indian textiles sector too could benefit from the same. In sum, the focus of training and educational institutes must shift from imparting only generic training skills to digitally relevant skills so as to enable the employees, both present and future, to match pace with a rapidly evolving digital landscape without any fear of losing their jobs to technological changes (Maiti et al., 2020; Pessot et al., 2020).

Apart from designing industry-relevant courses, the other major concern of rise in precarious work conditions due to digitalization may be met with the aid of better design and implementation of labour laws that make it mandatory for employers in the industry to provide some form of social and wage security to their employees (Pessot et al., 2020). Availability of written contracts and specifying work, wage and social security provisions must be applied to all textiles sector employees. This could bring a greater number of textiles employees in the net of formal and, therefore, regulated economy, with well-defined wage and social security conditions. Formalization of industry is the need of the hour, both for the sake of the sector and its employees (Pessot et al., 2020).

Perhaps one of the easiest measures to boost the Indian textiles sector in a digitalized context would be to enhance the sectoral profile further, with an increased emphasis on generating additional jobs and exports in higher value-added industries like the textiles. It is a well-known fact that greater exports tend to raise employment opportunities in the labour- and export-intensive sectors like the textiles. This is owing to the positive employment export elasticities experienced by the sector, thanks to the generation of jobs per unit of additional export unit. The Indian textiles industry stands to gain from an increased emphasis on boosting its employment and export profile even further (Acemoglu & Restrepo, 2018).

Together, these measures would aid in preventing any massive job redundancies and losses, wage reductions and precarious work conditions such as lack of wage and social security (Acemoglu & Restrepo, 2018).

Social welfare apart, the process of digitalization in the sector needs to meet several other concerns. Some of the other challenges to Indian textiles digitalization are limited budget, lack of leadership initiative and insufficient cyber security measures. To meet these, it is imperative for the medium and small industrial structures to evolve adequate financial pool for digitalization with the aid of government aid. Technology upgradation fund scheme (TUFS) is one such scheme in this regard, which is aimed at modernizing the textiles infrastructural base in the country, by helping medium- and small-scale enterprises financially. In addition to this, the managers of the industry need to be ever-ready to adopt and implement digitally friendly policies in their premises, for which they should evolve suitable worker–employer co-coordination mechanisms for imparting the message of usefulness of digital technologies to their employees and, thereby, prevent any major employee push back. Also, there needs to be an adequate cyber security infrastructural base in the textiles units adopting digital technologies so that there is no compromise on employee security. For this, proper implementation of government policies such as the National Cyber Security Mission must be followed in letter and spirit. Cyber security must go hand in hand with any major digital push anywhere, or else the process of digitalization risks becoming unsustainable and untenable (Dhillon & Caldeira, 2000; Hon et al., 2014; Lymberis, 2004; Pessot et al., 2020).

Last but certainly not the least, subsidized access to digital infrastructure such as affordable Wi-Fi and other such vital ICT tools must be made available to textiles companies for some time initially so that they gain a footprint in the digital technologies (Martinez, 2019; McMillan et al., 2014). Besides, there is an urgent need to close the digital urban–rural divide by reducing taxes on ICT goods and services for rural areas and providing network expansion initiatives to ICT operators and reducing import taxes of local content suppliers. This would expand the digital access to the rural areas and, thereby, to numerous often unaccounted enterprises located in these areas (McMillan et al., 2014).

Keeping in view the probable solutions to digital challenges for the Indian textiles sector, the next section concludes this study by taking a holistic view of the arguments developed thus far.

Conclusion

Given the pre-eminence of digitalization for the Indian textiles, it is imperative to take a broad view of the same in this article from a wide-ranging perspective. This segment shall conclude this study based on the arguments presented in the previous sections and try to give a suitable final viewpoint.

The study elucidated the phenomenon of digitalization in the Indian textiles industry. While explaining the process, it is evident that it involves both advantages and disadvantages. Among the major gains from digitalizing the industry may be increasing productivity, consumer surplus, greater employment opportunities and gender empowerment. Among the disadvantages of digitalization are loss of jobs in routine tasks of manufacturing and rising precariousness of employment.

To meet the challenges of digitalization effectively, it was therefore suggested to the industry managers and practitioners that the process be accompanied by an adequate emphasis on skilling the labour force in the sector and augmenting the digital infrastructure and cyber security.

The Way Forward

This perspective is one of the earliest attempts at analysing and summarizing the complex relationship between digitalization and the Indian textiles sector. Studies and opinion pieces on the Indian textiles industry often overlook this imminent change in the country’s textiles landscape in the years to come, while focusing on its other, often repeated dynamics such as employment, condition of women employees in the sector, technological upgradation and exports.

As elucidated in the article, while it is all too important for the industry managers and practitioners to embrace new currents in technology, it is imperative not to lose sight of a welfarist. This is especially so in a sector that employs several marginalized communities, including women.

Let us not forget the rule that those businesses that commit themselves to the process of digitalization in the current times will almost perpetually uncover new insights about not just their consumers, but their internal business models and demand–supply dynamics (Textile World, 2018). In line with this view, the digital boom too could be a game-changer for textiles firms, if implemented with adequate pro-poor supportive methods.

Footnotes

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The author received no financial support for the research, authorship and/or publication of this article.

ORCID iD

Kanupriya

About the Author

Kanupriya is a Ph.D. Scholar at the Indian Institute of Foreign Trade, Delhi. Her research interest is in the areas of Gender, Trade, Employment and Marketing. She has done her B.A.(Hons.) Economics from Kirori Mal College, University of Delhi and M.A. Economics from Ambedkar University, Delhi. She is a UGC- NET Senior Research Fellow (SRF) at the IIFT, Delhi. She is pursuing her research on the topic “Women & Trade: Gender Dimensions of Trade in the Indian Textiles Sector” under the guidance of Dr. Basanta K. Sahu, Associate Professor in the area of Economics. She can be reached at Kanupriya_phd16@iift.edu

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