A Winter of Despair: Ludhiana’s Hosiery Hub Battles for Survival
Ludhiana, Punjab – For decades, the city of Ludhiana has been the undisputed ‘Manchester of India’, the engine room that clothed the nation in winter. From the thickest woollen sweaters to the softest thermal wear, this vibrant city’s small and medium-sized enterprises (MSMEs) built a sprawling, cluster-based economy that provided warm comfort and employment to millions.
But as the winter chill begins to bite across North India, an even colder, existential dread has settled over the local manufacturers. This chill comes not from the weather, but from thousands of miles away—China.
The Ludhiana hosiery industry is currently grappling with a crisis of unprecedented scale, struggling against a tidal wave of cheap, high-volume Chinese imports that industry leaders warn have seized more than 50% of the Indian winterwear market. This aggressive market takeover is not just squeezing profits; it is pushing generations-old family businesses to the brink of closure and putting the livelihoods of hundreds of thousands of workers at serious risk.
The grim reality is summed up by Rajiv Jain, President of the Hosiery and Garment Traders Association: “The chapter of the cottage hosiery industry of Ludhiana is closing.”
Ludhiana has been known as the winter wear hub of India, supplying sweaters, socks, jackets, innerwear, thermals and hosiery garments to wholesale markets and retail chains across the country. But today, this identity is under serious pressure. Cheap Chinese winter wear imports are now dominating the market, taking over more than 50% share in several product categories, according to trade associations and wholesale distributors.
This shift is hurting local manufacturers, many of whom are small and medium family-run units. Rising input costs and cheaper imports are squeezing profits, forcing some hosiery units to reduce production, cut jobs, or operate at reduced capacity.
Industry groups in Ludhiana call the situation a direct threat to the region’s economic backbone, which employs lakhs of workers and supports many allied businesses like yarn manufacturing, embroidery, packaging, and transport.
“We Cannot Compete With These Prices” — Factory Owners Speak
A sweater manufacturer from the Kailash Nagar industrial area said:
“We cannot sell a good quality woollen sweater at ₹350 when Chinese wholesalers are offering similar-looking pieces for ₹180–₹220. It becomes impossible to survive. This is not competition, this is price dumping.”
Another unit owner added:
“Our labour, electricity, yarn, and compliance costs are increasing every year. Chinese imports come at ready-to-sell rates that undercut us completely.”
Many manufacturers say demand has shifted sharply in the last five years, especially in budget and mid-range clothing markets.
How Chinese Winter Wear Became Cheaper
Industry analysts highlight structural reasons:
| Reason | Effect on Price |
|---|---|
| Large-scale factory production in China | Lower per-unit cost |
| Cheaper synthetic blends instead of wool | Reduces raw material cost |
| Government subsidies for export industries | Allows price undercutting |
| Bulk shipping in containers | Lowers freight cost |
| Fully automated knitting and finishing | Higher speed, lower labour cost |
For wholesalers and retailers, the price advantage has become too large to ignore.
The Price War: Why Local Can’t Compete
The core of the problem is a vast price disparity that local manufacturers simply cannot overcome. Chinese manufacturers benefit from massive economies of scale, heavy government subsidies, and far more advanced, modern technology. This allows them to produce goods—from the base yarn and fabric to the finished garment—at a cost that is often 10% to 20% lower than Ludhiana’s production cost.
Vipan Vinayak, President of the Knit and Fab Hosiery Manufacturers Association, highlights the technological gap: “Local production is at least 50 percent behind China in terms of manufacturing efficiency. We cannot compete when their government provides interest-free loans for new machinery, and we are paying high interest rates.”
- The Chinese Advantage: Advanced, automated machinery leads to faster production and minimal wastage.
- The Price Decider: Chinese products, including yarn, fabric, and finished hosiery, flood the Indian market at rock-bottom prices.
- The Quality Perception: Consumers, especially in price-sensitive segments, are increasingly drawn to Chinese imports which are often perceived as having better finishing and a wider variety of modern designs for a lower price.
The impact is visible not only on finished products like sweaters and jackets but also on the raw material supply chain. Local spinners, knitters, and processors who supply the Ludhiana units are suffering because cheap Chinese man-made fibre (MMF) fabrics are being dumped into the market, sometimes allegedly being mislabeled to evade higher import duties.
The Human Angle: More Than Just Clothes, It’s Livelihoods
The Ludhiana hosiery cluster is a classic example of India’s MSME backbone. It is estimated to have over 10,000 small and medium units, employing directly and indirectly over 200,000 people. This industry is a cornerstone of the regional economy, and the crisis is having a profound human impact.
“What’s winter like for Ludhiana makers?”
The rhetorical question captures the anxiety of the season. For workers and small unit owners, the usual pre-winter rush, which brings a surge in orders and a sense of optimism, has become a time of deep uncertainty.
Sanjeev Dhir, a veteran woollen knitwear manufacturer, shared his fears: “Earlier, we would work in two or three shifts during the peak season. Now, many small units are barely operating for a single shift. When orders dry up, we have to let go of skilled workers who have been with us for years. It’s not just a financial loss; it is a loss of a community and its skills.”
The crisis is forcing a painful decision on many local traders: abandon manufacturing entirely and simply become importers and sellers of Chinese goods. This short-term fix is a devastating blow to the nation’s manufacturing goals and represents a significant capital flight from India.
The National Concern: A Blow to ‘Make in India’
The plight of Ludhiana’s hosiery sector transcends a regional business issue; it is a direct challenge to the “Make in India” and “Vocal for Local” initiatives. If a well-established industrial cluster—one that has historically accounted for nearly 90% of India’s woolen hosiery industry—cannot survive domestic competition from imports, it signals a major structural weakness in the country’s manufacturing policy and trade mechanism.
Badish Jindal, President of the World MSME Forum, has strongly voiced the need for protective measures. “India must shield its domestic manufacturing sector. There is no comparison with China regarding technology and government support. The government must understand this. China is already dominating global exports, and now only the domestic market is left for us. If the manufacturing sector collapses here, where will the jobs come from?”
The industry is calling for immediate and decisive government intervention, including:
- Strict Monitoring and Curbing of Imports: Specifically targeting the alleged under-invoicing and mislabeling of Chinese fabrics to ensure fair duty payment.
- Technology Upgradation Support: Providing interest-free or heavily subsidized loans to MSMEs to purchase modern, automated machinery to bridge the efficiency gap with China.
- Extension of PLI Scheme: Currently, large-scale schemes like the Production Linked Incentive (PLI) scheme often require massive investment thresholds (e.g., over ₹100 crore). Local manufacturers are demanding that such incentives be extended to smaller units with investments of up to ₹50 crore to encourage modernization.
- Increased Credit Availability: Ensuring easier access to working capital and credit for small businesses to manage raw material costs upfront.
The Way Forward: Innovation and Policy Shield
While policy support is critical, industry experts also stress that Ludhiana manufacturers must look inward. Innovation in design, investment in branding, and a renewed focus on niche, high-quality products are essential for survival.
Darshan Dawar, President of the Knitwear Club, emphasizes the need to adapt: “We have failed to develop our own strong brand identity over the years. We served as OEMs (Original Equipment Manufacturers) for others. Now, we must prioritize innovation, modern technology adoption, and building a stronger ‘Made in Ludhiana’ identity that stands for superior, sustainable quality, not just cheap bulk.”
If the Ludhiana-stamp of quality is to survive, it will require a combined effort: Government protection to level the playing field against subsidized foreign products, and Manufacturer innovation to ensure their products remain relevant in a rapidly changing market. Otherwise, India’s winter wardrobe will be increasingly dominated by foreign labels, while the lights in Ludhiana’s factories continue to dim.
Frequently Asked Questions (FAQs)
1. Why is Chinese hosiery cheaper than products made in Ludhiana?
The primary reason is the massive scale of production and significant government support in China. Chinese manufacturers operate huge, highly automated factories that benefit from economies of scale, allowing them to produce goods at a much lower per-unit cost. Furthermore, the Chinese government provides various subsidies, including interest-free or low-interest loans for buying state-of-the-art machinery and power subsidies, which drastically reduce their overall operating expenses. In contrast, Ludhiana’s MSMEs often rely on older technology, pay higher interest rates on machinery loans (up to 10-13%), and face higher overheads like electricity and compliance costs. This efficiency and subsidy gap results in Chinese products being 10% to 20% cheaper than local goods.
2. How much of the Indian market has been captured by Chinese imports?
Industry experts, including the heads of various manufacturer and trader associations in Ludhiana, estimate that Chinese products—ranging from raw materials like yarn and fabric to finished winter garments like sweaters, jackets, and thermal wear—have captured more than 50% of the total Indian winterwear market. This figure shows the severity of the threat, as a majority of the market share is now going to foreign producers instead of supporting the domestic industry. This massive market penetration is what is causing the existential crisis for Ludhiana’s small and medium units.
3. What kind of jobs are at risk in Ludhiana due to this crisis?
The jobs at risk are diverse and cover the entire hosiery value chain. Ludhiana’s industry employs over 2 lakh (200,000) people, and the risk extends to:
- Factory Workers: Skilled and unskilled laborers operating knitting, dyeing, and finishing machines.
- Artisans and Tailors: The specialized workers involved in the final cutting, stitching, and detailing of garments.
- MSME Owners: The small entrepreneurs and family businesses who run the production units.
- Ancillary Services: Jobs in dyeing units, packaging, local transport, and trading firms dependent on the hosiery cluster.
As orders shrink, units are reducing shifts, leading to significant layoffs and wage cuts, which directly affects the economic stability of thousands of families in Punjab.
4. What specific steps is the Ludhiana industry asking the government to take?
Ludhiana’s hosiery and textile industry associations are united in their demand for urgent government intervention. The key requests include:
- Stricter Import Controls and Anti-Dumping Measures: Implementing rigorous checks to prevent the under-invoicing and mislabeling of imported goods, particularly cheap man-made fiber (MMF) fabrics, which helps foreign sellers evade correct import duties.
- Financial Support for Technology: Providing easier, low-interest, or subsidized loans for MSMEs to purchase new, automated knitting and processing machinery to improve efficiency.
- Customised Scheme Benefits: Extending the benefits of large-scale initiatives like the Production Linked Incentive (PLI) scheme to the smaller MSME units with lower investment thresholds, such as those investing up to ₹50 crore.
- Infrastructure Support: Investing in common effluent treatment plants (CETPs) and other infrastructure to help small units meet strict environmental compliance costs, a burden that is often too heavy for individual MSMEs.
General Quotes/Versions/Statements
Vipan Vinayak, President, Knit and Fab Hosiery Manufacturers Association:
“The cost of production difference is not just about labour; it’s about technology. We are fighting a government-backed giant with our bare hands. Without a policy shield, the ‘Made in Ludhiana’ identity will soon be just a memory.”
Rajiv Jain, President, Hosiery and Garment Traders Association:
“It is easier for a trader to import from China and sell than to manufacture here. That is the sad truth. Indian capital is flowing out, and new industry is not developing. We are losing our skill base.”
A Local Worker (Name withheld on request):
“We used to work overtime for months, getting good wages for the season. Now, we are lucky to get full-day work, and the owners say they have no orders. If the factories close, where will thousands of us go?”