Backward and Forward Linkages in Textile and Fashion Industry

Shubham Anil Jain
Aditya Birla Fashion and Retail Limited
Bangalore, India
Email: [email protected]

Introduction:
It is truth that, all industries are depending on other industries to obtain goods and services as a point of production inputs. An industry’s backward and forward linkages analyze the industry’s economic interdependence with different industries. If we consider an example then, an increase (or decrease) in the output of the processor chip manufacturing industry would increase (or decrease) demand for inputs from demanding industries such as utilities and wafer manufacturing industries. On the other side, an increase (or decrease) in the output of processor chips would increase (or decrease) the supply of inputs to their following industries such as the computer manufacturing industry. It is found that, an industry’s backward linkage gives a relative measure of the good increase in output induced in upstream industries in response to a dollar increase in the industry’s output whereas, the forward linkage measures the output induced in downstream industries in response to a dollar increase in the industry’s output.

What is Backward Linkage Industry?
Basically, the use by one firm or industry of produced inputs from another firm or industry is known as backward linkage. From this it is clear that, in the textile industry, finished textiles depend on three steps. These are:

1. The first level consists of converting fibers or cotton to yarns,
2. Second step ensures conversion of yarns to grey fabrics
3. Final step consists of converting grey fabrics to dyed, printed of other finished fabrics/apparel.

Backward Linkages in the Textile and Fashion Industry:

Backward linkages sub-sector of textile industry:

1. Cotton:
As cotton is king of textile industry and the main source of making yarn and fabric. But cultivating of cotton requires a vast amount of land. In India, it have vast amount of lands, and also special kind of soil to produce good cotton which makes it special.

2. Spinning mills:
Here, the yarn is created from fiber. It is very important section of textile industry it is where yarn is created for sewing, weaving and knitting. The main products of spinning are mainly cotton yarn. It is observed that, raw material is still under managed and unfocused, which somewhat about 60% of cost of goods is sold.

3. Weaving:
The process of making woven fabric is called weaving. Woven fabric manufacturing condition in India is so satisfactory and good. Woven fabric manufacturing is very costly in textile industry. Even to set a minimum woven composite factory, it requires huge amount. Sometimes, to run this field smoothly and maintain the buyer requirement a huge amount of fabric is imported from China, Vietnam and others country. The first work after getting the order is to search for reliable source to import the fabric and yarn. It is estimated that, importing of woven fabrics cost 75% which is the total amount of an order cost.

4. Knitting:
It is the process of making knit fabric by inter-looping of yarn. Nowadays, knitting industry is the leading market contributor of textile industry. These us due to the low costs machineries knitting and available up gradation this industry has collaborated in huge amount. It is found that, there are lots of composite knit garments industries in the last decade.

5. Trims & Accessories:
As the textile industry is growing very speedy, the demand of raw materials grew in enormous form and areas. India’s trims and accessories industries are very much top level. It cop up the demand fully and present value added service and products. The quality of trims and accessories produced here is very tremendous and good.

What are Forward Linkages?
The activities and movements required to move the business forward play a vital role to expand global “Ready-Made Garments” (RMG) business in country is called as forward linkages. In the global apparel market, basically the product order is placed where additional possibilities are available. The competitor countries are always trying to get the reputation, name and business position in world apparel market. Because of this, to sustain and cop up with the business the sector is facing many challenges day by day because the lack of forward linkages. In this case, it is seen that, many of the industries doesn’t have research and development section; even not grander marketing strategy. The major part of management, production and engineering of the garment industries is controlled by overseas workforces. There is a need to study and identify the present status of forward linkages of country. The reduction and growth rate of garment factories, employment and export of RMG can be analyzed by looking at the important garment item. Involvement and up gradation of the activities for moving forward and local workforce will overcome those challenges as well as expand this business.

Importance of Forward and Backward Linkages in Textile Industry:
It is found that, in developing countries, to achieve successful economic growth and job creation, it is crucial to expand the industrial scale. Many experts focused on this issue by studying industry linkages and stated that there is a mutual relationship between forward and backward linkages in the expanding industry.

Forward linkage mainly refers to the fact that the product of a newly evolving industry is supplied as a material to another industry. It results in allowing the emergence of other new industries. Backward linkage refers to the fact that the product of the newly emerging industry convince demand for materials and enables the emergence of supply industries.

Morris & Fessehaie (2014) has discussed how African countries can study value-added commodity-based industrialization from the viewpoint of forward-backward linkage. In Africa, where primary products are in large quantity, in order to produce value-added products, it is necessary to take backward linkage in consideration, such as expanding the supply side of resources, and forward linkage, such as the necessity for new products to part of the global value chain.

By considering forward-backward linkages in this way, it is possible to structurally achieve the expansion of the industry and its development to other sectors. By clarifying each industry’s correlation with other sectors and departments, it contributes to planning the investment of capital for the efficient and effective expansion of an industry that will contribute to economic growth and employment rate.

This analysis contributes to proposing an efficient capital input strategy that includes other sectors and parts to expand each manufacturing industry.

Conclusion:
Nowadays, textile industry has become heart and biggest earning source of the country. So, this textile industries development is very important in self-sustaining of the country. But the frailty of backward linkage in textile and garment industry, impose a huge threat to the growth of this sector. Textile and garment industry is facing dramatic problems of fulfilling the demand of the buyer because of the lacking in the backward linkages industries. If the textile industry collapses, the countries development would be hampered in huge quantity. So, it is believed that, the people of the country should understand the importance if this industry takes necessary step.

References:

1. https://medcraveonline.com/JTEFT/improvement-of-forward-linkage-to-sustain-the-global-apparel-market-of-bangladesh.html
2. Pyatt G. and Thorbecke, E. (1976), “Planning Techniques for a Better Future”, ILO, Geneva.
3. Raihan, S. and Khondker, B.H.K (2010), “Doha Round Impacts on India: A Study in a Sequential Dynamic CGE Framework”, MPRA Paper 37897
4. https://journalofeconomicstructures.springeropen.com/articles/10.1186/s40008-020-00210-8
5. Backward Linkages in the Textile Industry, https://www.textileblog.com/backward-linkage-in-the-textile-industry/

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Founder & Editor of Textile Learner. He is a Textile Consultant, Blogger & Entrepreneur. He is working as a textile consultant in several local and international companies. He is also a contributor of Wikipedia.

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