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A study of environmental practices and their impact on performance of textile firms in India

Student Name: Ms Anupriya Sharma
Guide: Dr Sapna A. Narula
Year of completion: 2020

Abstract:

India is an agriculturally dominated country and textile industry is one of the oldest and amongst the important industries in Indian economy. Indian textile industry is known for providing employment to over 45 million people along with 7% contribution to industrial production and 15% to total manufacturing exports (Ministry of Textiles, Annual report, 2017-18). Over the years, production of textiles has increased, and Asian countries became the hub for textile production owing to low production cost and abundant cheap labor. This increase in production has caused significant environmental impact of the textile industry leading to pressure from various stakeholders towards adoption of environmentally sustainable business strategies. Being an export-oriented industry, it is required that Indian textile industry prepares itself for the challenges ahead as to maintain its competitive position in future, firms will need to ensure environmental sustainability.

The review of literature related to sustainability practices for textile industry drew significant gaps and conclusions which led to formulation of objectives for this study. First, most of the empirical studies from managerial perspective were conducted in developed countries whereas primary research in context of emerging economies like India where most production centres are concentrated, remains scanty. Secondly, previous studies reported in India majorly focused towards technical solutions for overcoming environmental issues with a gap on empirical evidences covering the managerial perception and outlook to take such sustainability initiatives. Only few research studies that provides empirical evidence from India were concentrated only on firms with a sample size of not more than 60 firms. Previous researchers who studied textile sustainability in India underscored the need for more empirical research on managerial perspectives towards sustainable production. These gaps formed the motivation for this study.

In this thesis, the sustainability scenario for textile firms in India through a managerial perspective is presented. The first objective of this study provides an overview of managerial perception towards environmental sustainability practices based on the awareness and outlook of firm managers towards environmental issues in textile industry, and documenting the firms’ practices specific to energy, water and waste management. The second objective presents the impact of various drivers that motivate firm managers towards the adoption of environmentally sustainable practices, and the barriers that limit the adoption of such practices. The third objective presents the impact of adoption of these environmentally sustainable practices on firms’ performance.

Indian cotton industry contributes about 21.5% to world production thereby being largest contributor to country’s exports (Singh et al., 2013). The environmental issues associated with cotton production are humongous as more chemicals are used for cotton than for any other crop and its production requires immense quantities of water along with use of pesticides that contaminate freshwater availability thereby causing water pollution.

Cotton textile firms situated in North and West region of India has been selected for this study. The states chosen for this study namely Gujarat, Maharashtra, Rajasthan, Punjab, Delhi and Haryana are the most industrially concentrated and densely populated areas within North and West India as this region comprises of 68.84% of total textile composite mills and more than 25% of spinning mills. The primary empirical data was collected from survey through emails and field interviews of senior-level firm managers and textile consultants. The respondents were selected based on their knowledge in textile supply chain operation and strategic management. Preliminary analysis included descriptive statistics. Next, principal component analysis was conducted in SPSS (version 2017) to compute the indices for explanatory and dependent variables. Relationships between the dependent and explanatory variables was determined through multiple linear regression analysis.

This study reveals that the firm managers from Indian textile industry consider environmental protection of significant importance to the performance and development of the industry. Further, they agree that environmental collaborations between firms and with suppliers as well as education about environmental issues can lead to a proactive adoption of sustainable practices. Most managers favour seeking government involvement towards introducing sustainability standards and technological support to invest in sustainable practices instead of direct financial assistance.

Results from regression analysis revealed that Indian textile firm managers perceive that regulatory forces, market demand, and market competition (drivers) plays a significant role in pushing firms to adopt 1) environmentally efficient practices (such as emission, effluents and waste management techniques, execute environmental audits etc.) and 2) green procurement practices (use green materials in dyes, use green parameters for supplier selection etc.). However, organisational barriers (such as lack of management support, internal expertise, research and development, technological facilities etc.) limits the firms to adopt environmentally efficient practices (such as emission, effluents and waste management techniques, execute environmental audits etc.). The results further indicate that firms who adopt environmentally efficient practices, experience positive impact on its social capital (consisting of better relations with stakeholders, expansion of business and increase in employee job satisfaction). However, it also leads to increase in firms’ operational costs.

The outcomes of this research are relevant and timely when Indian textile industry is struggling with both economic and environmental performance. Considering significant export revenues, the industry brings, these findings contribute to exiting empirical research and firm managers’ understanding of various environmentally sustainable strategies, assist firm managers in making optimal choices towards environmentally sustainable practices. Based on the results, it is recommended that the firm managers should focus on increasing the awareness level amongst the workers regarding sustainable practices and work towards introducing knowledge sharing platforms particularly between pioneer and new entrant firms towards advantages gained by adopting sustainable practices. As regulatory forces plays a significant role in motivating firms to adopt sustainable practices, the textile associations should come up with policies and help government in formulating policies specific for textile industry. It is also recommended that the government should work towards enhancing the benefits of using ISO certifications and private standards to the firms.