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Indian Textiles Industry: an overview

November, 2013


The Indian Textile Industry counts among the leading textile industries in the world. Apart from providing the basic necessities of life, its role in the country’s economic growth is significant. India’s textile industry contributes about 14 per cent to industrial production; 4 per cent to the country’s gross domestic product (GDP); 17 per cent to its export earnings; and is a source of direct employment for over 35 million people, which makes it the second largest provider of employment after agriculture. Abundant raw materials, healthy foreign direct investments (FDI) and a government willing to invest ensures a bright future for India’s textile sector.

Market Size

The industry is expected to touch US$ 220 billion by 2020, according to estimates by Alok Industries Ltd. Also, India has the capacity to improve its textile and apparel share in the world trade from the current 4.5 per cent to 8 per cent and reach US$ 80 billion by 2020.

Garment exports from India grew by 19 per in the period July 2012–July 2013 to touch US$ 1.27 billion, on the back of increasing demand in developed economies such as the US, according to data released by the Apparel Export Promotion Council (AEPC).

India has the advantage of abundant resources of raw materials. It is one of the largest producers of cotton yarn in the world and there are good resources of fibres such as polyester, silk, viscose, etc. The country is also home to a wide range of cotton fibre and has a rapidly developing synthetic fibre industry.

The most significant change in the Indian textile industry has been the advent of man-made fibres (MMF). India’s innovative range of MMF textiles finds presence in almost all the countries across the globe. MMF production recorded an increase of 7 per cent in the month of August 2013 and grew by 4 per cent during April–August 2013.

Cotton yarn production increased by about 10 per cent during August 2013 and by about 11 per cent during April–August 2013. Blended and 100 per cent non-cotton yarn production increased by 5 per cent during August 2013 and by 8 per cent during April–August 2013.

Cloth production by mill sector registered a growth of 4 per cent during August 2013 and 10 per cent during April–August 2013. Cloth production by handloom and hosiery increased by 3 per cent and 12 per cent during April–August 2013. The total cloth production grew by 6 per cent during August 2013 and by 3 per cent during April–August 2013.


Investment is the key for Indian textiles to make rapid strides. The industry (including dyed and printed) attracted FDI worth Rs 5,883.71 crore (US$ 928.63 million) in the period April 2000–August 2013.

Some of the major investments in the Indian Textile Industry are as follows:

  • Trident Ltd plans to invest Rs 1,667 crore (US$ 263.24 million) to install 176,000 spindles and 500 looms to manufacture around 40,000 TPA of additional cotton yarn of higher count
  • Exhilway, a US-based private equity firm, will fund a Kolkata-headquartered garments retail start-up firm Sconto Retail Pvt Ltd. The initial investment will only be in equity of around Rs 6 crore (US$ 947,490.36), with the graded funding, both in equity and debt, likely to go up to Rs 24 crore (US$ 3.79 million) by the first 18 months
  • The DyStar Group and Arvind Ltd have signed an agreement for joint development in the field of denim. Dedicated teams from DyStar and Arvind's Denim Division will work closely to implement new technologies in indigo dyeing and finishing as well as develop new products, processes and effects for denim fabrics and garments
  • Gitanjali Group has entered into the apparels segment as part of its brand extension of its popular brands and plans to set up 300 selling points across the country in 2013
  • Swedish retailer Rusta plans to import Indian textiles and handicraft worth Rs 200 crore (US$ 31.58 million) annually over the next 3-4 years.

Government Initiatives

India is expected to become a significant player in the global textile economy, both as a consumer and as a producer of textiles. The efforts of the government have resulted in the industry growth rate of 8–9 per cent during the past 2–3 years.

The Ministry of Textiles is responsible for policy formulation, planning, development, export promotion and trade regulation in respect of the textile sector. This includes all natural and man-made cellulosic fibres that go into the making of textiles, clothing and handicrafts.

Some of initiatives taken by the government to further promote the industry are as under:

  • The Government of India plans to set up a Rs 100 crore (US$ 15.79 million) venture capital fund to provide equity support to start-ups in the textile sector, in order to encourage innovative ideas.
  • The Government has allowed 100 per cent FDI in the sector through the automatic route. In the 12thFive Year Plan (2012–17), the government plans to spend US$ 9.1 billion on textiles as against US$ 4 billion in the 11th Plan
  • In order to make textile processing units more environment-friendly and globally competitive, the Cabinet Committee on Economic Affairs (CCEA) has approved an Integrated Processing Development Scheme (IPDS) with an investment of Rs 500 crore (US$ 78.94 million)
  • Under the Technology Upgradation Fund Scheme (TUFS), the cotton textile industry of India will receive margin money from the Ministry of Finance. The industry is also expected to attract Rs 4,000 crore (US$ 631.65 million) in the form of investments over the next six months
  • The Government of India has allotted Rs 700 crore (US$ 110.53 million) in the next Five Year Plan for the development of technical textiles. In 2012–13, the technical textiles industry reached Rs 7.48 trillion (US$ 118.19 billion) at an annual growth rate of 3.5 per cent
  • In the new textile policy, the Government of Gujarat has announced 5 per cent interest subsidy on bank loans for five years, for those who establish new plants for value addition chain like ginning, processing, weaving, knitting, and machine carpeting

Road Ahead

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. The organised apparel segment is expected to grow at a compound annual growth rate (CAGR) of more than 13 per cent over a 10-year period.

Exchange Rate Used: INR 1= US$ 0.0157 as on November 11, 2013

References: Ministry of Textiles, Indian Textile Journal, Department of Industrial Policy and Promotion, Press Information Bureau