How a manufacturing boom could help India close the gender gap
Summary
Viksit Bharat and Nari Shakti must go together. As new trade opportunities arise, women’s labour participation can be boosted by export-led hiring. Let’s put appropriate employment incentives in place.The Donald Trump administration’s announcement of reciprocal tariffs on several American trading partners is causing a strategic shift in trade globally. As India gears up to take advantage of this by ramping up manufacturing, there lurks another opportunity. Many of the manufacturing sectors in focus, such as apparel, textiles, footwear, food products and electronics, have a higher than average representation of women in their workforce. In fact, an estimated 60% of the women employed in (both formal and informal) manufacturing are in these sectors.
This could be a critical moment for women’s workforce participation and their economic empowerment in India, and presents an opportunity too precious to be lost. As things stand, Periodic Labour Force Survey data shows that India is at the cusp of the U-shaped curve for female employment popularized by Economics Nobel prize winner Claudia Goldin. Simply put, as India’s income grows, more women should be entering the workforce, triggering a virtuous cycle of development. A gendered approach to manufacturing could provide the tipping point.
Also Read: Abandon prejudices for women's participation in workforce to rise
A brief look at the sectors first. The Indian textiles and apparel industry is projected to grow at a compounded 10% a year to reach $350 billion by 2030 even without the fillip that an export boost may bring. About half the women in formal manufacturing work in the textiles and apparel sector. This is an industry with a history of employing women and a demonstrated comfort with integrating them into the workforce, making it a natural focus area for scaling up female labour-intensive production.
Electronics is another major sector set to expand rapidly, as Indian exports of smartphones, laptops and other items look up, thanks partly to new advantages. The electronics sector contributes about 3.4% of India’s GDP. According to the ministry of electronics and information technology, the exports of India’s electronics industry are expected to increase to $120 billion by 2026.
Gender-representation data of the largest companies in India shows that the consumer durables sector (in which electronics falls) has 14% women, up from only 9% in 2021, driven by players such as Foxconn in Tamil Nadu’s electronics hub. This is an appropriate moment to hardwire gender inclusion into India’s global electronics trade strategy.
Also Read: Women-centric policies need to deliver progress that’s tangible and enduring
Footwear is yet another area of potential growth. The industry is poised for compounded expansion of about 13% annually. Footwear manufacturing is labour-intensive and traditionally employs a high share of women. Targeted support to expand production could boost exports and create thousands of jobs for women.
The potential for growth in women’s employment is clearly demonstrated by our regional neighbours. Women make up 80% of the workforce in Vietnam’s footwear industry, 65% in Bangladesh’s garments industry and 60-65% in Malaysia’s electronics industry, all of which are job- and money-spinners for their respective export sectors.
Employment-linked incentive (ELI) schemes, which states commonly roll out to encourage businesses to create local jobs, can be modified to include an additional benefit linked to women’s representation. These incentives can be offered in a way that blends well with existing schemes in those sectors, so that they do not require much additional budgetary support.
Also Read: Rahul Jacob: Working for women bosses is a privilege one must treasure
Payroll subsidies: Providing a greater subsidy for the employment of women or extending the duration for which a subsidy is paid out in the case of jobs given to women can also help. The subsidy can be set in tiers—progressive benefits with greater women’s representation—to ensure a practical and sustained programme.
Employees Provident Fund Organisation (EPFO) reimbursement subsidy: An easy way to roll out a payroll subsidy is to link it to the employer’s EPFO contribution for women employees. This has the dual benefit of easier authentication and lower need for payroll processing resources.
Capital investment support: Capital expenditure subsidies, including tax benefits and preferential financing for infrastructure investments, can have specified gender diversity targets.
One-time hiring support: Since there may initially be higher costs of hiring associated with employing women, a one-time subsidy could be given to compensate for that and prevent women from being penalized for this job-opportunity-reducing cost gap. Such support should cover jobs across the skill spectrum from blue-collar to white.
Also Read: Why business schools hold the key to bridging the gender gap
Employment through skilling programmes: Many women gain skills under schemes like the Pradhan Mantri Kaushal Vikas Yojana or train at industrial training institutes, but are unable to participate in the job market for a variety of reasons. While this needs to be addressed, industrial employers should be incentivized to go the extra mile in hiring women with such qualifications.
One-time hiring support for senior roles: An incentive for hiring women in high-level or high-skill demanding roles could help. For example, in Tamil Nadu, there is a three-year subsidy for jobs paying over ₹1 lakh per month, with an additional amount if the employee is a woman. Given our commitment to Viksit Bharat and Nari Shakti, this is the right time to harness the power of women for national development. This is a historic knock of an opportunity, one we must not miss. A manufacturing boom could help the country close the gender gap.
The authors are, respectively, former secretary, ministry of labour and employment, Government of India; and founding CEO, the Udaiti Foundation.
topics
