Persistence of Informal Social Networks in Indian Textile Market: A Case Study of Surat

Abstract

The importance of social networks in setting-up and running a business is well established in the literature. Experts on informality have concluded that with the development of a country, the informal sector will increasingly turn formal. However, evidence from this study indicates otherwise. This study looks at Surat in India which is one of the largest textile producing cities internationally. The industrial district has numerous informal establishments that form a part of the crucial ecosystem, working in cohesion with the more established ‘formal’ firms. The study examines the roles that social networks play in sustaining the textile industry. The research infers that social networks are crucial to run a business in the Surat textile market as all transactions take place through informal contracts, which are grounded on trust-based ‘references’, thereby making a strong network structure a key requirement.