The impact of a global value chain in South India on the rural areas in its vicinity

The impact of a global value chain in South India on the rural areas in its vicinity

The expansion of garment manufacturing in Tiruppur has transformed the surrounding countryside as well as the town, both as garment manufacturing has spread into the countryside and through the knock-on effects of having a dynamic and relatively labour intensive industrial sector nearby. It has provided a valuable alternative to agriculture as agriculture has been running into problems. Many of the people previously employed in agriculture have moved into garment manufacturing and associated activities as the garment sector has expanded. There have been new opportunities for entrepreneurs as well as for labour, not only directly in garment and other manufacturing but in trade and services, transport, construction, et al. as well. The paper uses data collected in 2008/9, and in 1981/2 and 1996, in villages 20-30 km north west of Tiruppur to show how the expansion of the garment sector has changed the local rural economy, and how access to the new opportunities in the garment sector has been structured by gender, caste, and age.

What emerges from these data is that ‘Tiruppur’ has provided direct employment to large numbers from less well-placed households, many of whom now commute to work in Tiruppur and elsewhere. It has also pushed wages up in agriculture and other occupations, including those that are not directly related to the expansion of the garment sector. Considerably more than half of the working population is still engaged in agriculture however. Roughly half of the remainder work in the garment sector, and half in non-agricultural occupations other than garments. The paper shows that more women are now ‘housewives’ staying at home as their husbands are earning more. Labour is strongly supported by welfare measures introduced by the state – programmes such as the PDS (public distribution system) which supplies subsidised food and essential commodities, mid-day meals in school, and now also the NREGS (national rural employment guarantee scheme).

All of these state interventions have had a significant effect on the local economy. Educational provision has expanded very considerably too and is now beginning to produce returns for members of the lowest social strata as well as for those that are better off. One of the worrying factors is that women still receive very substantially lower wages than men however. Caste is still also a major source of differentiation. This is all still very much a ‘low road’ path of development which may have been appropriate in a period in which soaking up surplus labour was a priority. It is no longer appropriate in the Tiruppur region now. The tightening of the labour market might be expected to lead to some upgrading of skills and productivity. It is difficult to see the shift to higher productivity happening without substantial state support of a kind that does not seem to be on the cards. Tamil Nadu is a state that is championing a private sector-led development path – as elsewhere in India, if not more so – right now.

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