India's Garment Challenge

Indian apparel exporters jittery over US allegations of child labour26 Jul 2010, 0624 hrs IST,Shramana Ganguly Mehta,ET Bureau

The Economic Times

HMEDABAD: The worst fears of Indian apparel exporters have come true. Big Brother US, which accounts for 30% of India’s apparel exports worth $10 billion, has labelled India as a country that uses child labour in garment manufacturing.

The stand poses huge reputational risk to India that supplies garments to the likes of Wal-Mart, GAP, H&M, Diesel, M&S and Levi’s, all of which swear against child labour. With this, India’s status as an exporter is reduced to the likes of Argentina and Thailand, countries far lower in ranking. However, India still has some hopes as yet another list on countries employing forced child labour is up for review in September, and Indian authorities expect to convince the US counterparts by then.

Indian garment exporting industry shot into the limelight for all wrong reasons in 2007 when child labour was found working on GAP’s contracts in New Delhi. A year later, shutterbugs captured child labour at Tirupur, the knitwear apparel cluster in South India, working on UK retailer Primark’s orders.

The US Department of Labor on Monday put garments from Indian origin in the Executive Order 13126 list, thereby labelling them as “products, by country of origin, which the Department of Labor, State and Homeland Security believe might have been mined, produced or manufactured by forced or indentured child labour”. Even as India pulled up its socks to prove innocence to the US through diplomatic & legal channels, it was perhaps too little, too late to prevent the damage.

The recent move by the US has left the exporters unsettled, just two months before they go under yet another scanner, namely The Trafficking Victims Protection Reauthorisation Act. Both the lists have something in common — the use of child labour by the garment industry.

That India finds mention along with Argentina and Thailand in the list and with Nepal (in case of embroidered garments) has shocked the apex body of apparel exporters, Apparel Export Promotion Council. AEPC knows it too well now that it will have some serious persuasion to do with the US authorities who are due to review the TVPRA list in September.

While AEPC has already come up with a draft common compliance code (code of ethics) for the industry, it has also entrusted the Northern India Textiles Research Association to submit a report on forced labor in the industry shortly. AEPC has maintained that the information relied upon by the US Department of Labour is outdated and inaccurate and that the Indian garment industry should not be included in the lists.

However, its attorney in the US Brenda Jacobs representing the Sidley Austin LLP would have some serious persuasion to do with the US authorities. AEPC chairperson Premal Udani is learnt to be flying to Washington DC on August 19 to hold meetings with US officials concerned.

Udani told ET that the Common Compliance Code would be in place by August, by which time AEPC would hold a series of seminars pan-India to educate not just the exporters, but also their sub-contractors about the code of ethics. “We also intend to reach out to all apparel clusters in the country so that they get their basics right,” he said. Majority of AEPC’s 8,000 members comprises SMEs.

Although the EO list is valid for one year, India is banking its hopes in the next meeting when it would try to impress upon the US about its seriousness to deal with child labour to get off the TVPRA list. “If we are able to get India out of the TVPRA list, we should hope to get off the EO list in future,” Udani added.

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In September, the United States listed India’s garment industry on their Executive Order 13126 Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor List, meaning that the garment industry in India is not free of child and forced labor. India is currently under a new round of examinations in which they hope to have their name cleared. Companies such as Wal-Mart, GAP and Levi’s have all made commitments against child labor, but these same companies also source from India. Many within the Indian garment industry are worried that continuing to have their name on the list of products with child labor will hurt the industry in the country and since the US is responsible for a third of the garment exports from India, there is reason for concern.

In 2007, child labor was discovered in Indian factories contracted to make garments for GAP. A year later, child labor was discovered at another factory with contracts from a UK company.

The Apparel Export Promotion Council of India (APEC) has written a code of ethics known as the Common Compliance Code by which the industry is to abide and expected to train exporters and their subcontractors on the code of ethics by August. The Northern India Textiles Research Association is expected to produce a report for APEC on child labor soon. India is convinced that the US’s decision to place them on the list is due to outdated information.

While APEC seems to have made steps towards ending child labor within the industry, particularly through the creation of industry standards, it is likely to be a difficult battle to have their name removed from the list so soon. Even if India were removed from the list, would the rest of the world be convinced that child labor in their garment industry is no longer a problem? Likely not.

Photo by Kay Chernush for the US Department of State