Fashion Industry in India: Laws and legislations

Fashion Industry in India: Laws and legislations

Legal & Compliance

Vakilsearch Staff

Vakilsearch Staff

15 Jan 2021, 10:12 — 16 min read

India is known for its varied cultural heritage and elegance. From the famous southern Kancheepuram saree to Lucknow chicken work kurta to Kashmiri outfits, the fashion industry of India is globally recognised for its amalgamation of a dynamic culture. The journey of the fashion industry from traditional outfits to western outfits is a remarkable transformation. India is recognised for welcoming every culture and adapting to it- thus the textile industry is the largest segment of the capital good sector.

 

Evolution and market trends 

Subtlety and elegance were the two synonyms of the fashion industry in India. Inspired by the film industry on the 21st – the styling of outfits was greatly influenced by the industry. Moreover, even the wedding collection nowadays is inspired by the outfits worn by the brides of the film industry. Then, came the era of brands in the market, where the customers were more inclined towards getting quality affirmed clothes at a higher price. Additionally, many global markets entered India as customers were more brand conscious and thus brand attires marked its emergence in the Indian Fashion Industry. 

 

The journey of the fashion industry from traditional outfits to western outfits is a remarkable transformation. India is recognised for welcoming every culture and adapting to it.

 

The advent of fusion culture shifted the focus of the customers from the Chandani Chowk market to showroom shopping as these brands curated the outfits which had the element of both modern and traditional touch and were inspired by the film industry. Eventually, the concept of corporate dressing was introduced and thus, the Fashion Industry of India turned into a profitable market for foreign brands and has travelled from one subculture to another.

 

Additionally, with the concept of online shopping becoming modern day’s culture, the customers can buy their preferred brands without stepping out of the house, consequently resulting in the increased sale of products.

 

At present, the Indian Fashion Industry is a complete market for all kinds of outfits worn across the world and is one of the growing industries in the market. Moreover, the market size is quite big and if one wants to invest in this industry then all that person will require is to have a great sense of fashion knowledge with an element of distinctiveness.

 

Further, according to a report by Economic Times, the Indian Fashion Industry marks a growth of USD 100 billion and at a CAGR of 8-10 per cent offline, the online fashion segment is expected to grow by 15-20 per cent over the next five years. 

 

Various business models in the industry

India’s strengths not only depend on its tradition, but also on raw materials. Moreover, the world over, India is the third-largest producer of cotton, the second-largest producer of silk, and the fifth largest producer of man-made fibers. 

 

IPR in the fashion industry

The fashion industry has evolved so much that now it has become a matter of prestige to own high-quality branded outfits and apparel be it casuals, ethnic, wedding wear, bags, watches, and footwear. The customers are constantly attracted towards branded products but again, they being high priced are not affordable for everyone. Moreover, this leads to counterfeiting of these products- be it their design, name, raw materials used, and even the smallest detailing can be copied and sold to the customers at a cheaper rate. Additionally, this is where the role of intellectual property rights comes into existence. 

 

For years, the culture of wearing branded products increased so much that the customers used to steal the designs and make copies of the designs and sell them at a very low price. Further, this led to a huge loss to the designers and that is when the need for protection was felt. However, the laws relating to the protection of the fashion industry are majorly dealt with under the IPR regime which is again not much developed.

 

The designers make sure that as soon as they design something, they label it and get it protected under trademarks, copyrights, or even designs. Additionally, let’s sneak peek into these rights and understand the level of protection that can be accorded to these brands:

 

Industrial design protection in the fashion industry

Designs include the shape, colour, pattern, texture, and combination of various elements as per Section 2(d) of the Design Act, 2000. Under this Act protection is not the entire garment but to these elements only if they are unique in their appearance. Moreover, this implies that even the sketch of the design should not resemble other pieces. Likewise, this Act aims to protect the piracy of the designs and unless registered, the designs cannot claim protection by law. 

 

Certain designs can’t be registered, including designs featuring scandalous graphics. This gives the designer protection for the visual appearance of the product, but not its feel, material, or function. Further, even the designs printed on fabrics can be protected under industrial design because of the combination of images, lines or colours, etc.

 

The continuing dilemma of copyright versus designs has resulted in a loss to many designers as they are not aware as to what law governs which aspect of the protection. Moreover, this has resulted in an increase in the number of infringement cases by fashion designers. The difference between both the protection can be understood as given below:

Nature of difference Copyright law  Design law
Criteria of protection New
original
within territorial limits of India
New and original
unpublished
capable of being distinguished
not be scandalous or obscene
Term Will extend up to production 

of 50 dresses and will cease post-production. If produced below 50 then the term is Lifetime + 50 years 

10 years from the day it is registered
Nature of protection Limited as per section 15(2) Unlimited up to the term of protection and subject to renewal
Subject matter Artistic work as defined under Section 2 (c)of the Copyright Act, 1957 Designs defined as per Section 2(d) of the Design Act, 2000


Thus, when the manufacturers or designers expect to produce more than 50 garments then protection under the Design Act is advisable otherwise, the Copyright Law always rules the Industry.

 

Handloom industry - reasons for the declining status

The handloom industry is to be the pride of the Indian Textile Industry. One of India’s biggest strengths lies in it being the largest producer of jute and cotton and the second-largest producer of silk globally. Further, the installed spindles in jute mills other than 100 % export-oriented units were 7,48,612. The maximum installed capacity in jute mills other than 100% export-oriented is about 2.75 mn tonnes annually. However, due to the lack of protection for these industries, they have been moved to the verge of extinction. There are certain factors that have hampered the growth of the handloom industry:

  1. Lack of productivity and effectiveness in work
  2. Additionally, an increase in power looms with high subsidies
  3. Illegal encroachment of imitation handloom market
  4. Moreover, the lack of legislation to protect the khadi and handloom factories
  5. Additionally, Ignorance of Societies towards the weavers and lack of work given to them has forced them to approach local weavers.

 

Need for protection of handloom industry

From the Khandua of Odisha to Muga Silk of Assam, from Phulia cotton of West Bengal to Kota Doria of Rajasthan, from Chanderi of Madhya Pradesh to Pochampally of Telangana, the list is endless. Traditional dresses from the northeastern states, such as the ‘mekhela chador’ of Assam or the ‘phanek mayek naibi’ of Manipur speak volumes about the beauty of Indian handlooms. The factors stated above and the declining status of the handloom industry has resulted in the need for the protection of these industries. 

 

Effect of Make In India Policy on textile industry 

Make in India is an initiative by the Government of India to promote and encourage the national, as well as multinational companies to manufacture their products in India. Further, the motive behind Make in India ‟ is to turn India into a manufacturing and innovation hub by using favorable demographic dividends before changing into a demographic nightmare. Undoubtedly, this program was an inspiration to reduce the risk factor of investing in the country by foreign companies and enhance the manufacturing output to 25% to the country’s GDP by 2025 and the creation of millions of jobs.

 

Challenges faced by the textile industry by Make in India initiative:

  • To meet global standards, most textile companies have to adopt global standards of safety and environmental compliance.
  • Diversified global consumer buy pattern is another challenge for domestic players. 
  • Similarly, technological factors are another factor that is still not as advanced as the west. 
  • Meanwhile, maintaining the cost advantage would certainly increase the wage and other expenses. 
  • Moreover, another challenge is to address competitiveness in non-cost factors. 
  • To invite FDI the governments need to invest in infrastructure that will be another challenge.

 

Make in India programme was an inspiration to reduce the risk factor of investing in the country by foreign companies and enhance the manufacturing output to 25% of the country’s GDP by 2025.

 

Government initiative to improve the textile sector in India

 

1. Scheme for Integrated Textile Parks (SITP)

The Scheme for Integrated Textile Parks (SITP) is at the centre of developing a sustainable infrastructure for the textile sector. Under the SITP scheme, the government will provide funding for infrastructure, buildings for common facilities like design & training centre, warehouses, factories, and plant & machinery. 

 

2. Integrated Processing Development Scheme (IPDS)

IPDS is to make Indian textiles more competitive and environment-friendly.

 

3. Integrated Skill Development Scheme (ISDS)

The primary objectives of the program are to standardise courses, increase industry involvement, and to set robust monitoring systems in vocational training of the textile sector.

 

4. Amended Technology Upgradation Fund Scheme for the textiles industry (ATUFS)

ATUFS is to provide incentives to entrepreneurs and business owners for upgrading technologies. A one-time capital subsidy will offer to business owners from Technical Textiles, Garments, and Weaving.

 

5. Market Access Initiatives (MAI)

The MAI is to promote Indian exports in a sustained manner. The scheme funds various market studies and surveys to assist exporters. 

 

6. Market Development Assistance (MDA)

To encourage exporters to conduct promotional activities for their products, MDA is on launch. 

 

7. Merchandise Exports from India Scheme (MEIS)

MEIS is to stimulate the growth of textiles exports from India in various traditional and emerging markets. 

 

8.Technology Mission for Technical Textiles (TMTT)

TMMT has two mini-missions to create a healthy ecosystem for the production of technical textiles in India. Mini Mission I of the plan aims at standardisation, creating common testing facilities, and several resource centers with IT infrastructure. Under Mini Mission II, support will provide to create domestic and export markets for the technical textiles

 

9. Special package for Textile and Apparel sector

The special package will help to achieve this goal by providing incentives to boost exports, labor-friendly policies, and scaling up the production. The garment industry, which employs around 70% women workforce, will be largely benefitted from the special package.

 

Textile industry in India – Gist of the industry 

India is a traditional textile-producing country with textiles in general, and cotton in particular, being major industries for the country. India is among the world’s top producers of yarns and fabrics, and the export quality of its products is ever increasing. Textile Industry is one of the largest and oldest industries in India. Textile Industry in India is a self-reliant and independent industry and has great diversification and versatility.

  1. Organised Mill
  2. Unorganised Mill

 

Textile Industry contributes around 4% of GDP, 9% of excise collections, 18% of employment in the industrial sector, and has 16 % share in the country’s exports. The industry contributes around 25% share in the world trade of cotton yarn. India is the largest exporter of yarn in the international market and has a share of 25% in the world cotton yarn export market.

 

India contributes to 12% of the world’s production of textile fibers and yarn. Indian textile industry is second largest after China, in terms of the spindle, and has a share of 23% of the world’s spindle capacity. India has around 6% of global rotor capacity. The country has the highest loom capacity, including handlooms, and has a share of 61% in world looming. The Apparel Industry is one of the largest foreign revenue contributors and holds 12% of the country’s total export

 

Textile sectors in India

Sectors

Gist of the sector

Man-made fibre/ powerloom sector

It produces a large variety of clothes to fulfill different needs of the market. It is the largest manufacturer of fabric and produces a wide variety of cloth.

Cotton sector

This sector provides huge employment opportunities to around 50 million people-related activities like Cultivation, Trade, and Processing.

Handloom sector

The handloom sector plays a very important role in the country’s economy. It is the second-largest sector in terms of employment, next only to agriculture. This sector accounts for about 13% of the total cloth produced in the country (excluding wool, silk, and Khadi).

Jute sector

Jute is a Golden fiber and after cotton, it is the cheapest fiber available. Indian Jute Industry is the largest producer of raw jute and jute products in the world. India is the second-largest exporter of jute goods in the world.

Silk sector

The Silk industry has a unique position in India and plays an important role in the Textile Industry and Export. India is the 2nd largest producer of silk in the world and contributes 18% of the total world raw silk production.

Woolen sector

India is the 7th largest producer of wool and has a 1.8% share in total world production. The share of apparel grade is 5%, carpet grade is 85%, and coarse grade is 10% of the total production of raw wool. The Industry is highly dependent on the import of raw wool material, due to inadequate production.

Handicraft sector

It plays a significant & important role in the country’s economy. It employs a vast segment of craft persons in rural & semi-urban areas and generates substantial foreign exchange for the country while preserving its cultural heritage.

 

 

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Image source: shutterstock.com

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.

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