Social Compliance in Indian Garment Industry

Indian apparel trade and compliance standards

The Indian apparel industry is working with an objective of reaching 7.5 billion by the end of 2012, a figure that is almost double the size of the last profit calculated by the Indian Chamber of Commerce (ICC).

With the increasing globalisation, a lot of importance has been placed on internationally recognised compliance standards in the garment industry. Factories involved in the international trade must keep a proper check of the garment factory compliance at regular intervals. Therefore, every apparel export business needs to have adequate understanding of compliance guidelines for foreign trade.

Why code of ethics is required

The code of ethics is all about the quality of the products from the factory and the working environment that should meet the requirements of audits and inspections. An individual running an export business needs to follow these ethics sincerely. These ethics are required for:

• Increasing national competitiveness in terms of social compliance
• Increasing competitiveness of small scale manufacturers
• Reducing burden on manufacturers

Some of the compliance codes in Indian garment industry are listed below.

Working hour & wage rate compliance

• Garment factory must ensure that employees should get atleast minimum wages according to the domestic law and as per the time spent by them in the industry
• Employer should pay equal wages to both men and women employees, for performing the same work or work of a similar nature
• Worker employed for more than nine hours on any day or for more than 48 hours in any week, shall be entitled to wages at premium legal rates for such overtime work
• Every worker should be given one holiday (for a period of 24 consecutive hours) in a week. Whenever a worker is required to work on a weekly holiday, he is to be allowed a compensatory holiday for each holiday so lost
• Every worker is to be allowed at least half an hour rest interval after a maximum working of 5 hours at a stretch

Workplace & work environment compliance

• Organisations should ensure proper ventilation, sufficient light and air to provide the employees with standard work environment
• Indian garment industries should provide the workers with comfortable sitting chair with back support and proper leg space

Non-discrimination compliance

• Organisations should not discriminate employees on the basis of physical characteristics, beliefs and cultural characteristics. All the terms and conditions of employment should be based on an individual’s ability to do the job. They should provide equal employment opportunities for all employees and associates irrespective of the employees’ race, color, religion, age, sex, creed, national origin, marital status, etc.

Social compliance in India

The demand for social compliance is increasing day-by-day. However, we can attain a robust compliance system only when the workers are provided with an equal platform to voice their concern and have consultative mechanism at the workplace.

The Apparel Export Promotion Council of India (AEPC), an apex body of Indian apparel exporters, provides all social compliance services to meet international global standards. The council also trains and guides factories to upgrade the workplace conditions and labour standards.

Health and Safety Compliance in Indian Garment Industry

Importance of compliance in garment industry

Garment industry is getting increased attention from consumers, social workers, welfare organisations and branded international buyers. Many international buyers are demanding for factories to comply with their “code of conduct” before placing any order.

Nowadays, continuous adherence to quality standards and employee satisfaction have become important parameters for measuring the company’s performance. Enterprises undertake business compliance, not necessarily out of a need to act generously, but more so for survival in a globally competitive and legally complex modern environment.

In the context of growing competition among exporting countries and increasing demand for products that meet internationally recognised standards, it is essential for the suppliers to improve safety and health compliance code and provide proper working environment in their factories.

Several foreign countries have also developed various international compliance standards on health and safety compliance. Exporters should follow these compliance codes to survive in the global market. Moreover, regular practice of compliance codes of conduct can bring higher price of products, less employee turnover rate, smooth industrial relation as well as global image & reputation.

Need for compliance codes

There is a direct impact of social compliance on company’s financial results, especially for organisations in consumer market where brand name and reputation are most critical assets. Companies should adopt compliance code to protect their goodwill in the market. The Indian garment industry needs to be tough on compliance rather than competing with other developing countries manufacturing inexpensive garments.

Compliance code guidelines

Garment factory should consider the following guidelines while complying with safety and health compliance code standards:

• Industries should comply with international standard code, such as ISO or importing countries standard code to become competitive in international markets
• Young persons (between 15 to 18 years) are not supposed to work on any dangerous machine without adequate training and supervision
• Wiring should be in good condition with no broken junctions or wires sticking out at the ends of the conduit
• Eye‐wear and face shields should be provided in areas with danger of flying objects, sparks, glare, hazardous liquids and excessive dust
• Ear plugs or muffs should be given in places with excessive noise such as generator rooms and embroidery rooms
• Hard hats and protective shoes are necessary for workers involved in loading and unloading operations
• Factories should have effective fire extinguisher with proper usage instructions

Role of Apparel Export Promotion Council in India

In India, the Apparel Export Promotion Council (AEPC) is committed to legal compliance and ethical business practices and encourages members / exporters to comply with all applicable laws and regulations of the country to meet international compliance standards.

Further, the council has designed a garment factory compliance program ‘Disha’ (Driving Industry towards Sustainable Human Capital Advancement) that aims to spread awareness regarding the importance of compliance among garment exporters.

India is increasingly focusing on compliance programs

India is being considered as the next pioneer country in the readymade garment export business. The country is showing positive signs of growth as the foreign buyers are continuously dealing with Indian garment exporters. In the face of such demand, Indian garment manufacturers and exporters constantly have to maintain high quality in finished products and continuously provide variations in style and design to attract the attention of prospective buyers.

With the growing efforts of media, buyers in the US and the EU have increasingly become very conscious towards global standards particularly related to women and children. Therefore, Indian manufacturers need to provide customers with ethically manufactured products in order to survive in the international markets.

Codes of conduct have become increasingly common in recent years, particularly in the apparel sector. Corporations voluntarily develop such codes to inform consumers about the principles that they follow in the production of the goods and services they manufacture or sell. These codes usually address many workplace issues such as child labour, health and safety issues, etc.

The apparel export promotion council of India (AEPC), an apex body of Indian apparel exporters under the textiles ministry is helping domestic textile industry to adhere to global norms through development and implementation of tools to help factories certify, monitor and improve universal standards.

Further, the council has designed a garment factory compliance program ‘Disha’ (Driving Industry towards Sustainable Human Capital Advancement) that aims to spread awareness regarding the importance of social compliance amongst textile exporters. The programme will encourage members to follow better social practices, which will give them a competitive edge in the international market where social compliance is gradually becoming an important buying decision.

“We will develop intensive training on legal requirements on core issues like child labor, trafficked labor, wages amongst others and enable accreditation by international agencies like the International Labor Organization to ensure global acceptance of the program,” as per Lakshmi Bhatia, Director, Free Labor Association.

Need of Compliance Audit

Compliance auditing has become an important task to ensure if the company meets standards of various environmental laws. It is needed to check the welfare of the people working within the boundaries of the garment factory if they are getting wages at the right time, check on working hours and health and safety of the work force.

In order to measure the company’s performance, it is important to continuously adhere to quality standards and employee satisfaction in garment industry. The compliance program team with regular auditing can bring the desired change in the code of conduct, ethics and other issues based on compliance. Further, they provide training on the code of business conduct, violence in the work place, different competition laws, prevention of drug abuse and several other important matters.

Basic Areas of Compliance

• Proper working conditions, minimum wages & standard working hours
• Non-discrimination
• Restriction on child or forced labour
• Freedom of association
• Environmental protection and other safety laws

Increasing Adherence to CSR in Apparel Industry

Globalisation has influenced trade all over the world. Companies are looking for new opportunities for doing business outside their home country. In recent years, Corporate Social Responsibility (CSR) has gained a lot of importance as foreign companies are demanding for ethically manufactured products particularly in the garment sector.

The trend of increasing accountability for corporate social responsibility is promoting companies to develop more socially conscious compliance codes so that they remain viable in global markets. It relates to the steps companies take to ensure that their goods have been produced under acceptable conditions, which includes lawful production under fair and honest dealings.

CSR has come into public awareness more recently as result of globalisation, advancement in communication technology, media coverage and ethical investment opportunities. It is already established in a global context with various international standards set by the United Nations. Some of the international organisations that provide CSR standards for Multi-national corporations are following:

• International Labour Organization (ILO)
• UN Global Compact
• The Organisation for Economic Co-operation and Development (OECD)
• The Universal Declaration of Human Rights (UDHR)

In Indian apparel industry, the role of corporate social responsibility has been a topic of increasing concern for at least a decade. India is a sourcing destination for many international brands for garment products. As the export of garment products from India has increased, the demand for corporate social compliance has also risen. CSR activities in Indian garment industry include the following:

• Fair remuneration
• Proper working conditions
• Training and staff development
• Equal opportunities and diversity
• Employee participation in business decisions
• No child or bonded labour
• Freedom of association

Benefits of CSR/ Business Compliance

When business compliance is taken into consideration, it gives immense benefits to both employees and the organisation. CSR can positively influence enterprise competitiveness in many ways such as:

• Cost savings and increased profitability due to a more efficient deployment of human and production resources
• Improved products / production processes result in better customer satisfaction
• Higher motivation and loyalty of employees
• Enhanced corporate or brand reputation, image and value
• Improved culture within the organisation
• Enhanced word-of-the-mouth communication
• Increased turnover due to competitive advantage
• Better access to public funds due to a better corporate image

Enterprises undertake business compliance, not necessarily out of a need to act generously, but more so for survival in a globally competitive and legally complex modern environment. The Indian garment industry needs to be tough on compliance rather than competing with other developing countries manufacturing inexpensive garments. Every export business needs an adequate understanding of the compliance guidelines for the foreign trade.

The Apparel Export Promotion Council of India (AEPC), the apex industrial body that promotes apparel exports, aims at making India the global benchmark for corporate social compliance in apparel manufacturing and export. With this objective, the Council has embarked on a project – Driving the Industry towards Sustainable Human Capital Advancement (Disha). This programme will encourage members to follow better social practices, which will give them a competitive edge in the global market.

Compliance Code Guidelines for Indian Garment Industry

The Indian apparel industry contributes substantially to India’s export earnings. In recent years, India has emerged as a major sourcing destination for various buyers. The USA and the EU continue to be the most important markets for Indian apparel industry, accounting for about two-third of India’s textiles exports. These countries have been insisting upon compliance to certain social, environmental and safety standards and norms by the production units involved in export business. Corporate codes of conduct that address labour standards vary from company to company.

Some of the common Indian Garment industry compliance code guidelines are:

• Exporters must not be involved in unfair labour practices including but not limited to interferences in matters concerning freedom of association
• There shall be no differences in workers remuneration for work of equal value on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, or social or ethnic origin
• Exporters shall not threaten female workers with dismissal or any other employment decision that negatively affects their employment status in order to prevent them from getting married or becoming pregnant
• Exporters shall ensure that proper ventilation systems are installed within their premises to prevent airborne exposures which may affect the health of workers
• Members shall not use any form of physical or psychological violence, threats, harassment, or abuse against workers seeking to form organisations or participating in union activities, including strikes
• Workers shall be entitled to at least 24 consecutive hours of rest in every seven-day period. If workers must work on a rest day, an alternative consecutive 24 hours rest day must be provided
• Exporters shall provide workers with paid annual leaves as required under local laws, regulations and procedures. Exporters shall not impose any undue restrictions on workers’ use of annual leave or taking any type of sick or maternity leave
• Exporters shall pay workers at least the legal minimum wage or the prevailing industry wage, whichever is higher. In today’s scenario, it is the most essential code of compliance for Indian Industry
• Exporters shall compensate workers for all hours worked. Workers on a piece rate payment scheme or any other incentive scheme should be paid accordingly
• Exporters shall not unreasonably restrain the freedom of movement of workers, including movement in canteen during breaks, using toilets, accessing water, or to access necessary medical attention, as a means to maintain work discipline
• Garment exporters must ensure that the minimum age requirement to non-hazardous employment shall not be less than 14 years. This is the most important concern in India nowadays. Further, each worker has the right to enter into and to terminate their employment freely

Indian apparel makers need to follow all the compliance guidelines to comply with global standards. Often companies adopt industry compliance codes to project a positive image and protect their goodwill in the market. The Indian garment industry needs to be strong on compliance rather than competing with other developing countries manufacturing inexpensive garments.

India complying with international standards on child labour

In India, child labour is not a new phenomenon. It is a serious and extensive problem, with many children under the age of 14 years working in various garment factories. On one hand, child employment helps the children to provide support to their unemployed or underemployed parents, while on the other hand, their future remains in poverty, ignorance, and exploitation due to illiteracy. Child labour flourishes under many conditions such as- discrimination (based on gender, ethnic, or religious issues), unavailability of educational and other alternatives, weak enforcement of child labour laws, etc.

Large global firms, conscious of their image, often set up their own compliance standards for the exporters to ensure that all standards are being complied with. Many U.S. companies have included child labour in their code of conduct, due to persistent evidence of child exploitation in the industry.

In international market, the buyer’s mandatory requirement is to have an audit. As India is a leading garment exporter, the level of garment factory compliance is very high for Indian exporters. The child labour issue is one of the very important aspect that the audit checks. Therefore, all the export units must be highly compliant on issues related to child labour.

Code of conduct for garment exporters

• Garment exporters must ensure that the minimum age requirement to non-hazardous employment shall not be less than 14 years. Additionally, all young workers (between 14 to 18 years) must be protected from performing any work that is likely to be hazardous or that may be harmful to their health and physical, mental, social, or moral development. Exporters must observe all legal requirements for work being performed by authorised young workers.
• Further, the apprentices or vocational students shall not be under the legal age for working (as provided under the applicable laws). They cannot be used on regular production lines as long as they are apprentices and unless their pay and other benefits are at par with the regular workforce.
• A proper process is followed for verifying the age of the workers. The minimum documentation required to be maintained shall include- proof of age certificates by registered/ licensed dentists, birth certificate, school leaving certificate, national identity like passport, driving license, voter card etc. or any other document required under the applicable laws.

Apparel industry players would now make sure that labour contractors don’t engage child labour and get the supply chain of the suppliers audited. Apparel Export Promotion Council (AEPC) has designed a garment factory compliance program ‘Disha’ (Driving Industry towards Sustainable Human Capital Advancement) to make India a global benchmark for social compliance in apparel manufacturing and export. This Common Compliance Code project will prepare the Indian apparel industry on a common platform towards a more social and environmentally compliant industrial environment.