Owing to increased competition in the garment industry, there is greater informalisation of workforce happening. As the employee’s profit margin is shrinking they prefer to temporally hire workers, leading to decrease in the share of formal employment. In such scenario, Indian exporters have to switch towards greater mechanization and avoid hiring workers on permanent basis. Moreover MNCs, owing to their massive market reach and financial resources, are outsourcing semi-finished products, and are thus able to thrive in such situation.