Page 448 - SSB Interview: The Complete Guide, Second Edition

Industry and services
Industry accounts for 28% of the GDP and employs 14% of the total

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workforce. In absolute terms, India is 12 in the world in terms of nominal
factory output. The Indian industrial sector underwent significant changes as
a result of the economic reforms of 1991, which removed import restrictions,

brought in foreign competition, led to privatisation of certain public sector
industries, liberalised the FDI regime, improved infrastructure and led to an
expansion in the production of fast-moving consumer goods. Post-

liberalisation, the Indian private sector was faced with increasing domestic as
well as foreign competition, including the threat of cheaper Chinese imports.

It has since handled the change by squeezing costs, revamping management
and relying on cheap labour and new technology. However, this has also
reduced employment generation even by smaller manufacturers who earlier
relied on relatively labour-intensive processes.

Textile manufacturing is the second-largest source of employment after
agriculture and accounts for 20% of manufacturing output, providing
employment to over 20 million people. As stated by the then Minister of

Textiles, Shri Shankersinh Vaghela, the transformation of the textile industry
from a degrading to a rapidly developing industry has become the biggest

achievement of the Central Government. After freeing the industry in 2004–
2005 from a number of limitations, primarily financial, the Government gave
the green light to the flow of massive investment — both domestic and
foreign. During the period from 2004 to 2008, total investment amounted to

$27 billion. By 2012, still convinced of the Government, this figure will
reach $38 billion as expected; these investments in 2012 will create an

additional sector of more than 17 million jobs. But demand for Indian textiles
in world markets continues to fall. According to Union Minister for
Commerce and Industries Kamal Nath, only during 2008–2009 fiscal year

(which ends 31 March), will the textile and clothing industry be forced to cut
about 8 lakh new jobs — nearly half of the rate of two million, which will
have to go across all the export-oriented sectors of the Indian economy to

soften the impact of the global crisis. Ludhiana produces 90% of woollens in
India and is known as the Manchester of India. Tirupur has gained universal