Structural Change in India: The Impact of Technology on The Textile Industry

This paper mainly focuses on technological changes and its impact on Indian textile industry. This paper covers four segments of Indian textile industry i.e. Spinning, Weaving, Processing and garmenting. The paper examines Technological changes in these segments and their performance in the economy and benefits of the Technology Up gradation Fund Scheme (TUFS) availed by the various sectors of Indian textile industry in the last decade. Results show that the textile industry requires more investment for modernisation and technology up gradation. ABSTRACT Introduction Structural change refers to change in the structure of the economy. Structural changes in an economy consists of change in composition of output, change in trade, change in technology, change in education, and change in employment. An economic condition occurs due to changes in the function and operation of industry or market changes. Structural change of an economy refers to a long term macro level shift in the fundamental structure of an economic system. For example, a Agricultural economy is transformed into a manufacturing economy. The current structural change in the world market is globalization. Fisher (1939) and Clark (1940) look at patterns of change in sectoral employment. The logic of their arguments was such that patterns of production is function of the level of income and that resource and production shifts are an integral part of development. The major de- terminant of these shifts is the income elasticity of demand. Goods or sectors for which there is a high income elasticity of demand will grow in importance as income grows. Countries start with their production dominated by primary production, then secondary activities start to dominate and finally the tertiary sector dominates. The role of technical progress is crucial in the process of structural change as suggested by Paolo Leon (1967) and Luigi Pasinetti (1981). Structural change can be initiated by policy decisions or permanent changes in resources, population or the society. The downfall of com- munism, for example, is a political change that has had far-reaching implications on the economies dependent on the state-run Soviet economy. Structural change in the economy involves changes in the employment structure also. As an economy grows it will undergo some structural changes. The composition of its GDP and structure of employment will change. This has been the experience of all the developed and developing econ- omies. Indian economy also has been experiencing this structural change. In the current phase of globalisation, changes in technology and policy have led to vertical disintegration of production in many industries. Structural change in the global economy is increasingly re- lated to functional and spatial fragmentation of production and con- sumption and their reintegration through trade. Consequently, trade in intermediate goods has grown faster than in final goods (Sturgeon and Memedovic, 2010).