Labour Intensive Product Exports Need Attention

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It has been a welcome move by the Government of India to set up a task force aimed at boosting India's textile exports to reach US$ 100 billion by 2030–31. However, the need is slightly broader to also support the other labour-intensive low-technology products such as leather, footwear, including even toys.

As India attempts to increase high-tech exports across industries, it is also important to play to its strengths in low technology-oriented space, which is highly labour-intensive. 

According to research, India’s share in high-technology exports has increased from 5.3 percent in 2005 to 8.6 percent in 2014, and projected to have reached 16.5 percent in 2024. Similar progress has been witnessed in the mid-technology exported items from 14.9 percent to 19.2 percent to 21.5 percent during the same period. 

India avoided signing the Regional Comprehensive Economic Partnership (RCEP), anticipating competition from other economies. However, with the changing trade patterns in 2025 and India’s interest in signing Free Trade Agreements (FTAs) with developed countries such as the EU and the US, it becomes important for India to augment its capabilities.

However, the low-technology products, critical for Indian exports, have declined from 32 percent to 25 percent to 18 percent. The key items in this category include textiles and apparel, leather, footwear, including toys, which employ a significant part of the population, both in the organised and unorganised segments. Many of these industries are in the Micro, Small, and Medium Enterprises (MSME) segment. 

These products, despite being of a comparatively lower value,  are crucial for a variety of reasons for India. First, since these are labour-intensive products and provide large-scale employment to the country; second, there is a sustained demand for these items in developed countries given their preference for cost-effectiveness and therefore a good export market; and third, these contribute meaningfully to the country’s export earnings.

India’s Merchandise Export Comparison over 20 years

Source: UNCTAD; Author’s calculation 

Strong Demand Exists 

Given the shifting geoeconomic landscape, India may have a strategy in place for such low-technology products that have a sustained market both in India and overseas, offering employment and income in the country. 

Data highlights that the Compound Annual Growth Rate (CAGR) of imports by the EU27 (European Union) of textiles and apparel have increased by 2.7 percent between 2005 and 2024. Similarly, leather imports by the EU27 have increased by 5.1 percent, while footwear imports have increased by 5.2 percent. 

Considering the United States (US) market, the CAGR of its imports have also witnessed a modest increase from 1.1 percent for textiles and apparel, 2.4 percent for leather, and 2.3 percent for footwear. 

In EU27, the cumulative import value of textiles and apparel, leather, and footwear has increased from US$ 204 billion in 2005 to US$ 366 billion in 2024. 

Furthermore, imports by the US have increased, albeit at a lower pace compared to the EU27—from US$ 126 billion to US$ 161 billion. 

In sum, both the EU with its 27 economies and the US collectively offer a massive and sustained market for Indian low-tech labour-intensive products that are produced in the country

Select Low-Tech Product Imports by Developed Countries (US$ billion)

Source: UNCTAD; Author’s calculation

India’s capacity has remained flat 

Despite India’s huge manpower availability, which could easily be deployed in areas such as textiles and apparel, leather, and footwear, India’s share in the EU 27 has not been too impressive. 

While textiles and apparel share in the EU27 has hovered around 3.5 percent, leather has declined from 6.3 percent in 2005 to 5.1 percent in 2024, with footwear remaining stagnant at 2.6 percent during the same period.  

Incidentally, there has been some traction in India’s exports to the US of these items as compared to the EU27, with a share in textiles and apparel, and leather experiencing a good increase over the past two decades.

However, ironically India possesses a latent potential in the toys market. Toy imports have shown a significant increase of 4.2 percent in the EU27 and 3.3 percent in the US, with their combined import market expected to reach double of US$ 68 billion by 2024. Unfortunately, India stands nowhere close to meeting this significant available demand, as its total exports stand at an abysmally low level of US$ 350 million.

India’s Exports of Low-Mid-Tech Products (USD bn)

Source: UNCTAD; Author’s calculation

 Building capabilities Markets 

India avoided signing the Regional Comprehensive Economic Partnership (RCEP), anticipating competition from other economies. However, with the changing trade patterns in 2025 and India’s interest in signing Free Trade Agreements (FTAs) with developed countries such as the EU and the US, it becomes important for India to augment its capabilities. 

It is essential that Indian firms and the government look at tapping this low-technology segment, which has a perennial and growing overseas market. These developed regions offer a huge marketplace and an opportunity for India to capitalise on it. Benefiting from a segment where India already has the capacity will not only create income growth but also increase export earnings for India. 

Technology

Furthermore, one of the key reasons India has chosen to remain away from trade agreements such as RCEP has been the lacunae in its technological production. Most of India’s competitors in areas such as textile and apparel, leather, footwear, and toys are ahead because of their focus on quality, efficiency, and innovation in their production cycle. 

If Indian companies, especially those which are MSMEs, adopt technology while producing such low-tech goods, in the long run, it would help mass-scale production at competitive costs, while fully utilising the manpower available in the country. 

Providing focused financing schemes for low-technology exporting goods, towards securing machinery to produce at a mass scale, remains critical. 

Sustainability 

However, changing market requirements and industry practices make it essential to prioritise the twin transition towards digitalisation and sustainability for these low-tech products, such as textiles and apparel, leather, footwear, including toys. 

For example, some of the key regulations any Indian exporter would have to abide by while exporting to the EU, depending on their products, are compliance with REACH, EU Ecolabel, Toy Safety Directive, CE Marking, among others. 

On multiple occasions, such issues pertain to non-tariff barriers and include environmental, sustainability, and governance hurdles, which have increasingly gained significance in trade with the EU, which again is a large export market for Indian products. 

Driven by increasing consumer awareness, there has been a growing emphasis on sustainable demand globally for both textiles and garments, and leather and footwear. As India looks at signing an FTA with developed countries, exporters must align themselves to get a better piece of the global demand for these products by abiding by these rules and regulations

Standard facilities

Considering the aforementioned factors, there is also an impending need for the Government to set up centres across India, which would help to evaluate and confirm the acceptable export standards related to testing, certification, pre-shipment inspection, among others, for exports. These could not necessarily be in capital cities but at hubs where products such as textiles and apparel, leather, footwear, including toys, are made to save logistic and transportation costs. 

there is little doubt that mass-scale production is a remedy to compete globally in this segment, and the government should focus on this. Such large-scale plans, if successful, will also invite foreign companies to invest in the country, bringing new technology, design, and talent to these low-technology industries, which already have a ready market overseas to be well tapped.

If Indian companies align their low-tech production value chain with the needs of markets, Indian exports are bound to witness a significant increase. 

Aligning 

In the context of the toy market, there remains a huge opportunity for Indian companies with a rich tradition of producing them, with many having a Geographical Indication (GI) tag as well. Concurrently, there are new-age learning and educational toys which are finding a lot of demand. By integrating ethical sourcing, sustainable production, with eco-friendly packaging, India’s toy industry can compete with the Chinese toy industry if produced on a large scale. 

Sum up

In conclusion, there is little doubt that mass-scale production is a remedy to compete globally in this segment, and the government should focus on this. Such large-scale plans, if successful, will also invite foreign companies to invest in the country, bringing new technology, design, and talent to these low-technology industries, which already have a ready market overseas to be well tapped.  

It is also important to mention that one policy will not be suitable for all and would require tailor-made sector-specific strategies to address the various bottlenecks facing them. The four sectors, textile and apparel, leather, footwear, and toys, discussed herein, have huge untapped potential. Suitable policy interventions, both at the centre and at the state level, would help address the various shortcomings while making labour-intensive low-technology products more export-capable and thereby providing them a fillip to cater to the developed countries in the EU and the US. 

Rahul Mazumdar is an economist with the Export-Import Bank of India. Views expressed are personal.

• Indian Economy
• Economics and Finance
• Economic Reforms
• India
• compound annual growth rate
• india merchandise exports
• india's textile exports
• labour intensive manufacturing
• mid tech products
• regional comprehensive economic partnership
• textile industry in india

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