At a time when prices are increasing across every sector—from food to fuel, from metals to medicine—there remains a surprising outlier in India’s economic landscape, the garment and hosiery industry, opines Rikhab Chand Jain, Chairman, T.T. Group and Former President of Federation of Indian Hosiery Industry (FOHMA) in a signed article “Why are the prices of Garments and Hosiery not increasing?”
He says that while consumers are paying more for everyday essentials like tomatoes, chocolates, and school fees, the price tags on clothes remain stubbornly the same. It’s a quiet but significant anomaly with deeper implications than most realize.
“Over the last 2-3 years, the cost of production has increased, but garment and hosiery business owners, producers, and manufacturers have not raised prices and are not raising them either,” Jain points out. Some have even reduced them out of sheer necessity. This is not a gesture of generosity—it’s a symptom of a fiercely competitive market that’s forcing businesses to prioritize survival over profit.
The industry that refuses to pass the buck
While the public hears daily about inflation from politicians, media, and traders, the apparel sector appears immune, at least on the surface. The contrast is striking. Jain quotes data and says, fuel and power prices rose by 15.15 per cent, grains by 15.45 percent, and even petrol and diesel by 23.79 per cent in 2022-23. Yet, textile production saw a 2.14% decrease in prices over the same period.
Table: Inflation index in 2022-23
|
Item/Category |
Increase in 2022-23 |
|
Fuel & Power |
15.15% |
|
Food Items |
12.00% |
|
Grains |
15.45% |
|
Wheat |
10.40% |
|
Potatoes |
9.78% |
|
Fruits |
4.48% |
|
Petrol, Gas, Diesel |
23.79% |
|
Metal Products |
7.00% |
|
Cement, etc. |
8.35% |
|
Gold-Silver |
30% (estimated) |
|
Dollar |
6% |
|
Textile Production |
-2.14% |
This makes garments one of the few products in India to become cheaper, not costlier, over time—despite the fact that costs for electricity, rent, labor, packaging, and transport have all increased significantly. Jain critically questions “Have the prices of machinery, spare parts, local municipal taxes, and transportation costs not increased?” The answer is clear—they have.
Value hidden in plain sight
Jain argues even the most basic clothing items—like vests, underwear, handkerchiefs, and towels—cost less than their Khadi counterparts, despite Khadi being subsidized by 25 per cent to 33 per cent. Ironically, in premium hotels like the Taj Mahal, laundering these inexpensive garments often costs more than buying them new.
This odd economic situation underlines how deeply undervalued this industry has become. The cause: intense competition and chronic undervaluation. He asks, “Despite overstocking and inventory, have the costs not risen? Have labor wages not increased? Have the prices of electricity, rent, transportation, packaging materials used in hosiery and garment industries not increased?
Have the prices of machinery, spare parts, local municipal taxes, and transportation costs not increased? If every industry and business owner is facing these rising costs, why haven’t the prices gone up? What is holding them back?” The garment sector is one of the few where price increases have been avoided for fear of losing customers, especially as demand continues to rise, not just in urban areas, but also among lower-income groups in villages across India.
A race to the bottom and its hidden cost
While consumers may feel grateful for this price stability, the consequences for the industry are dire, argues Jain. Profit margins have plummeted to just 1–2 per cent, and with inflation averaging around 8 per cent annually, many businesses are already operating at a loss in real terms. In contrast, other industries hope for 5 per cent profit increases, which still fall short of inflation-adjusted growth.
Such minimal profits mean that employee wages remain stagnant, and suppliers, stakeholders, and workers all suffer. When their real income declines, so does their ability to contribute to the economy, be it through spending on food, housing, education, or healthcare. The broader impact is a drag on India’s economic growth and development.
If this situation persists, younger generations may be discouraged from entering the industry, which is already viewed as low-margin and high-risk, Jain says. More profitable and emerging sectors may appear far more attractive, accelerating a potential decline in India's textile backbone.
A dangerous policy shift on the horizon
Adding to the industry's woes is a proposal to increase GST on garments priced above Rs 1000 or Rs 1500. For a sector already struggling with razor-thin margins, this move could be disastrous. Industry leaders have urged the government to reconsider, arguing that higher taxes under current circumstances would lead to widespread closures and job losses.
As the article emphasizes, cutthroat competition has destroyed other sectors before—notably the sari business in Surat, where aggressive marketing and oversaturation led to consumer confusion and the eventual collapse of many brands. A similar fate may await the hosiery and apparel sector unless corrective steps are taken.
Jain writes, “In textiles, instead of an increase, the prices decreased by 2.14 per cent in the last 22-23 years.” So, are workers and owners in the textile, hosiery, and garment industries unaffected by the rising inflation in food, housing, school fees, hospital bills, transport, and travel? Have the rates of sewing, knitting, dyeing, and processing not increased?
The bigger picture
The ripple effects of an underperforming textile industry are immense. From laborers and machine operators to factory owners and local communities, millions depend on this sector. If profit continues to erode, the country risks not only a decline in textile production but also a loss in domestic demand, employment, and export strength.
The path forward demands unity and action. Industry associations, business owners, and policymakers must come together to address the structural weaknesses. Rational pricing, fair taxation, and a focus on sustainable growth are essential for the survival and revival of this vital sector.
As the article puts it, “Victory lies beyond fear.” The textile, garment, and hosiery industries must adapt, innovate, and advocate to reclaim their rightful place in India's economic future. What’s at stake is not just an industry—but the livelihoods of millions, and the fabric of the nation itself.
