https://doi.org/10.1177/00194662211041000 The Indian Economic Journal 1–8 © 2021 Indian Economic Association Reprints and permissions: in.sagepub.com/journals-permissions-india DOI: 10.1177/00194662211041000 journals.sagepub.com/home/iej Research Note Global Production System, Textile Industry and Wage Disparity: Evidence from South India Nandini Ramamurthy 1 Abstract This article discusses the root causes of wage disparity in the textile industry. The study argues that wage disparity arises through direct and indirect approaches. Both create pressure on suppliers and leads to low wage payment, depriving workers of social security benefits, unpaid holidays and leaves. Hyper-consumerism, free on board (FoB) price, and flexibility have created competition among suppliers and other stakeholders. Suppliers flexibilise rules and re-organise work arrangements to meet on-time production by increasing working hours, introducing wage penalty, strict supervising, and increasing surveillance. JEL Codes: J3, J31, J41, J46, J81, J82, J83 Keywords Wage disparity, global production system (GPS), labour market institutions, free on board (FoB) price, textile industry, Tiruppur I. Introduction This study argues that wage disparity cannot happen in a vacuum but through structural conditions, demand-led indicators, and supply-led factors. Both structural conditions and demand-led indicators are macro factors, while supply-led determinants are micro factors. Thus, wage disparity can arise owing to macro and micro factors, which requires an in-depth exploration. The main components at the macro- level are flexible production 1 , regulations 2 , global governance, national labour market institution 3 and enterprises 4 (Gürtler et al., 2015; Gotte et al., 2020; Locke, 2013). The contributing factors at the micro- level are skills, gender, age, labour migration and employment (Amo-Agyei, 2020; Krishna & Paul 2013; Srivastava & Srivastava, 2010). In addition, hyper-consumerism 5 and FoB (free on board) price systems which are part of the macro debate, determine the wage gap (Anner, 2018). As a result, buyers shift the 1 Tata Institute of Social Sciences, Guwahati, Assam, India. Corresponding author: Nandini Ramamurthy, Tata Institute of Social Sciences, Guwahati Campus Guwahati, Assam 781013, India. E-mail: nandini.rtiss@gmail.com