India’s textile and apparel industry has strengths across the whole value chain, from fibre, yarn, and fabric to clothing. Traditional handloom, handicrafts, wool, and silk items, as well as India’s organized textile industry, account for a sizable percentage of the country’s diverse textile and clothing market.
The organized textile sector in India, which includes spinning, weaving, processing, and garment production, is distinguished by the use of capital-intensive machinery for mass textile production.
The domestic garment and textile sector accounts for around 2% of India’s GDP, or 7% of industry output in value terms. It is also one of the largest employers in the country. This demonstrates the significance of the textile industry to the Indian economy. The textile and garment industry is a labour-intensive business that employs 45 million people in India, ranking second only to agriculture in terms of employment. This industry in India is one of the oldest in the country, serving as a repository and carrier of traditional skills, legacy, and culture.
It is classified into two categories: unorganized and organized. It comprises handloom, handicrafts, and sericulture (production of silk).
The organized industry, which includes the spinning, clothing, and garments segments, employs sophisticated machinery and procedures.
Significance of the Textiles Sector:
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- It contributes 2.3% to the Indian GDP, 7% to Industrial Output, 12% to India’s export earnings, and employs more than 21% of overall employment.
- India is the world’s sixth-largest producer of technical textiles, with a 6% global share, and the world’s largest producer of cotton and jute.
- Technical textiles are useful fabrics used in a variety of industries such as vehicles, civil engineering and construction, agriculture, healthcare, industrial safety, personal protection, and so on.
- India is also the world’s second-largest producer of silk, accounting for 95% of all hand-woven cloth.
Regional Insights
The worldwide textile market is expected to develop at a compound annual growth rate (CAGR) of 4.0% from 2022 to 2030, with a value of USD 993.6 billion in 2021. Increasing apparel demand from the fashion sector, combined with the expansion of e-commerce platforms, is likely to drive market growth throughout the forecast period. The industry is based on three basic principles: creating, manufacturing, and distributing various flexible materials such as yarn and garments. Knitting, crocheting, weaving, and other procedures are widely employed to produce a wide range of finished and semi-finished goods in bedding, clothes, apparel, medical, and other accessories.
Due to the rising sales volume of clothing and apparel goods, Asia Pacific dominated the market and accounted for more than 48% of worldwide revenue in 2021. Furthermore, the presence of a large number of clients buying clothing and related accessories on e-commerce platforms in developing nations is contributing to favourable growth in the regional industry. Increased organized retail penetration, favourable demographics, rising disposable income levels, and favourable government regulations are also likely to fuel the market in APAC, particularly in India, Bangladesh, and Pakistan.
For example, in India, 100 percent Foreign Direct Investment (FDI) is permitted in textiles, with an emphasis on positive market growth. Over the forecast period, the European market is expected to rise at a considerable CAGR. It can be linked to favourable government policies and trade agreements in the textile and garment industry, such as free trade agreements and the Euro-Mediterranean Dialogue. Textile demand in North America, Central and South America is expected to rise throughout the forecast period, owing to increased demand for sports & clothing and home-furnishing textile items. Furthermore, the use of textile fibres, such as synthetic and cellulose fibres, required for filtration in industrial applications is predicted to benefit the environment.
Challenges of the Textiles Sector:
The Indian textile industry is highly fragmented, with the unorganised sector and small and medium-sized businesses dominating.
Outdated Technology: The Indian textile industry faces challenges in accessing cutting-edge technology (particularly in small-scale enterprises) and failing to reach global standards in a highly competitive market.
Tax Structure Issues: The GST (Goods and Services Tax) tax structure makes clothes expensive and uncompetitive in both domestic and foreign markets. Rising labour wages and worker pay are another threat.
Static Exports: The sector’s exports have remained stagnant for the last six years, hovering at USD 40 billion. Lack of Scale: The average size of an apparel unit in India is 100 machines, which is quite little in compared to Bangladesh, which has at least 500 machines per plant.
Lack of International Investment: Due to the aforementioned issues, foreign investors are hesitant to participate in the textile sector, which is also one of the areas of concern.
Despite a surge in investment over the last five years, the industry received just USD 3.41 billion in Foreign Direct Investment (FDI) from April 2000 to December 2019.
Major Initiatives:
Amended Technological Upgradation Fund Scheme (ATUFS): In 2015, the government approved the “Amended Technology Upgradation Fund Scheme (ATUFS)” for textile sector technology upgradation.
The Scheme for Integrated Textile Parks (SITP) aims to help small and medium-sized textile entrepreneurs cluster their investments in textile parks by providing financial support for world-class facilities in the parks.
SAMARTH (Textile Sector Capacity Building Scheme) : To address the scarcity of skilled labour, the government developed the SAMARTH Scheme for Capacity Building in the Textile Sector (SCBTS).
The North East Region Textile Promotion Scheme (NERTPS) is a scheme that promotes the textile industry in the NER by providing infrastructural, capacity-building, and marketing assistance to all segments of the textile industry.
Power-Tex India consists of fresh research and development in power loom textiles, new markets, branding, subsidies, and worker welfare initiatives.
Silk Samagra Scheme: This scheme aims to improve the quality and production of native silk, reducing the country’s reliance on imported silk.
ICARE Jute: This pilot initiative, which began in 2015, aims to alleviate the problems experienced by jute producers by delivering certified seeds at reduced prices and popularising many recently developed retting technologies under water-stressed situations.
The National Technical Textile Mission seeks to establish the country as a global leader in technological textiles while also increasing the use of technical textiles in the domestic market. It wants to grow the local market from USD 40 billion to USD 50 billion.
Remission of Duties and Taxes on Exported Products
The textile and apparel industry has appreciated the Ministry of Commerce’s notification of revised rates under the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme for 65 HS codes in the textile and apparel sector.
The execution of the committee report would increase exports of commodities such as polyester and viscose yarn and fabric, denim fabric, cotton knitted fabric, and so on.
According to him, the RoDTEP is one of the most important export promotion programmes, aiming to reimburse duties, taxes, and levies paid on exported commodities at the Central, State, and local levels, including prior-stage cumulative indirect taxes on goods and services.
In a press release, Confederation of Indian Textile Industry Chairman Ravi Sam stated that tariffs for numerous items, including denim and polyester staple fibre, and spun yarn have been raised. The rate and value cap for viscose rayon spun yarn has been increased from 0.9% to 2.5%, with a value cap of $6 per kilogramme. He also stated that the RoDTEP for woven fabrics made from artificial staple fibre has been raised from 1.2% to 2.5%.
Production Linked Incentive Scheme
The Rs 10,683-crore PLI Scheme for India’s textiles sector garnered Rs 1,536 crore in investments after permission letters were issued to 56 applicants who matched the eligibility requirements.
With an approved budget of Rs 10,683 crore, the Centre launched the PLI to encourage the manufacturing of MMF clothes, MMF garments, MMF fabrics, and Products of Technical Textiles in the country, allowing the textiles industry to attain size and scale and become competitive.
Domestic cotton farming has expanded by 5% to 125.02 lakh hectares, up from 119.10 lakh hectares last year, according to the government, and a brand entitled ‘Kasturi Cotton India’ for Indian cotton has been developed to stimulate mechanized harvesting, improve cotton quality, and cut labour costs.
Furthermore, 74 research projects totalling Rs 232 crore have been granted under the National Technical Textile Mission (NTTM) for speciality fibre and technical textiles, according to the Textiles Ministry’s year-end evaluation for the segment.
Way Forward
The textile industry has enormous potential, which should be realized through the use of innovations, cutting-edge technology, and improved infrastructure. India can organize the textile industry by establishing mega apparel parks and common textile infrastructure. The emphasis should be on modernizing outmoded machines and technologies.
India requires a comprehensive textile strategy. Once it is established, the country must shift into mission mode in order to achieve it.
