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Textile Industry in India

August, 2014


The Indian Textiles Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textiles industry also plays a vital role through its contribution to industrial output, employment generation, and the export earnings of the country.

The sector contributes about 14 per cent to industrial production, four per cent to the gross domestic product (GDP), and 17 per cent to the country's export earnings. India's textile industry is also the largest in the country in terms of employment generation. It not only generates jobs in its own industry, but also opens up scope for the other ancillary sectors. Indian textile industry currently generates employment for more than 35 million people.

Market size

The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand. Abundant availability of raw materials such as cotton, wool, silk and jute and skilled workforce has made India a sourcing hub.

India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5 per cent to eight per cent and reach US$ 80 billion by 2020.

Textile exports in FY15 are expected to grow by 25 per cent to US$ 50 billion, according to Mr Santosh Kumar Gangwar, Minister of State with Independent Charge for Textiles, Government of India.

The most significant change in the Indian textile industry has been the advent of man-made fibres (MMF). India has successfully placed its innovative range of MMF textiles in almost all the countries across the globe. MMF production increased by 9 per cent during April 2014.

Cotton yarn production increased by 2 per cent during April 2014. Cloth production by mill sector and powerloom sector increased by 5 per cent and 6 per cent respectively during April 2014. Total cloth production increased by about 2 per cent during the same month.

Further, the Government of India plans to launch US$ 44.21 million missions for promotion of technical textiles, while the Ministry of Finance has cleared setting up of four new research centres for the industry, which include products such asmosquito and fishing nets, shoe laces and medical gloves.

The global technical industry is estimated at US$ 127 billion and its size in India is pegged at US$ 11 billion.


The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted foreign direct investment (FDI) worth Rs 6,985.86 crore (US$ 1.15 billion) during April 2000 to June 2014.

Some of the major investments in the Indian textiles industry are as follows:

  • Private equity (PE) funds have planned to invest in ethnic wear firms, having observed Mr Kishore Biyani earn a 22-fold return on his investments in ethnic apparel major Biba.
  • Kumar Mangalam Birla plans to purchase 16 per cent stake in cement to garments maker, Century Textiles and Industries.
  • Reliance Industries (RIL) has commissioned a polyester filament yarn (PFY) facility at Silvassa, Dadra and Nagar Haveli, giving boost to its position as the world's largest producer of polyester fibre and yarn.
  • Arvind Ltd and Japan-based OG Corporation has inaugurated manufacturing facilities of their joint venture (JV)-Arvind OG Nonwovens Pvt Ltd-near Ahmedabad, Gujarat, at an investment of about Rs 50 crore (US$ 8.26 million).
  • Private Equity (PE) firm Everstone plans to invest Rs 100 crore (US$ 16.53 million) for an undisclosed minority stake in the fashion label of designer Ritu Kumar.

Government Initiatives

The government has taken a lot of initiatives for the welfare and development of the weavers and handloom sector. Under revival, reform and restructuring (RRR) package, financial assistance to the tune of Rs 1,019 crore (US$ 168.49 million) has been approved and the government has already released Rs 741 crore (US$ 122.52 million).

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

  • Encouraged by turnaround in the textile exports, the Government of India plans to set up a US$ 60 billion target for the next financial year, a jump of over 30 per cent from the current financial year. For the current fiscal year, the government has set a target of US$ 43 billion.
  • As per the 12th Five Year Plan, the Integrated Skill Development Scheme aims to train over 2,675,000 people within the next 5 years (this would cover over 270,000 people during the first two years and the rest during the remaining three years). This scheme would cover all sub-sectors of the textile sector, such as textiles and apparel, handicrafts, handlooms, jute and sericulture.
  • The Government of Odisha plans to set up at least two textile parks under the Scheme for Integrated Textile Parks (SITP) of Union government during the 12th Five Year Plan.
  • The Government of India plans to set up a Rs 100 crore (US$ 16.53 million) venture capital fund to provide equity support to start-ups in the textiles sector, in order to encourage innovative ideas in this export intensive sector.
  • The Government of India has allotted Rs 700 crore (US$ 115.74 million) in the 12th Five Year Plan for the development of technical textiles. In 2012-13, the technical textiles industry reached Rs 7.48 trillion (US$ 123.68 billion) at an annual growth rate of 3.5 per cent.

Road Ahead

The future outlook 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 several international players like Marks & Spencer, Guess and Next having entered 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.

The Government of India is also taking initiatives to attract foreign investments in the textile sector through promotional visits to countries such as Japan, Germany, Italy and France.

Exchange Rate Used: INR 1 = US$ 0.0165 as on August 26, 2014

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