Textiles
The Indian textile industry accounts for about 22 per cent of the world's spindle capacity and eight per cent of global rotor capacity.

Textile Industry in India

Latest update: November, 2014

India's textile market size

The size of India's textile market is expected to expand at a CAGR of 10.1 per cent over 2009-21.

India's textile market size

India's textile and apparel sector

In 2012, apparel had a share of 69 per cent of the overall market; textiles contributed the remaining 31 per cent.

India's textile and apparel sector

India's textile exports

Exports grew to US$ 33.3 billion in FY12 from US$ 17.6 billion in FY06, implying a CAGR of 11.2 per cent.

India's textile exports

India's textile exports share

Readymade garments was the largest contributor to total textile and apparel exports from India in FY12P; the segment had a share of 39 per cent.

India's textile exports share

Updated: November, 2014

SECTORAL REPORT | October, 2014

Introduction

India is the one of the world's largest producers of textiles and garments. Abundant availability of raw materials such as cotton, wool, silk and jute as well as skilled workforce have made the country a sourcing hub. It is the world's second largest producer of textiles and garments. The Indian textiles industry accounts for about 24 per cent of the world's spindle capacity and eight per cent of global rotor capacity. The potential size of the Indian textiles and apparel industry is expected to reach US$ 223 billion by 2021, according to a report by Technopak Advisors.

The textiles industry has made a major contribution to the national economy in terms of direct and indirect employment generation and net foreign exchange earnings. The sector contributes about 14 per cent to industrial production, four per cent to the gross domestic product (GDP), and 27 per cent to the country's foreign exchange inflows. It provides direct employment to over 45 million people. The textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of India's economy.

India has overtaken Italy, Germany and Bangladesh to emerge as the world's second largest textile exporter, as per recent data released by 'UN Comtrade'. India's share in Global Textiles increased by 17.5 per cent in 2013 compared to 2012.

The Textiles Vision Document formulated by the National Manufacturing Competitiveness Council (NMCC) has projected that textiles exports from India will touch US$ 300 billion by the year 2024-25.

Market Size

The Indian textiles industry is set for strong growth, buoyed by strong domestic consumption as well as export demand.

The most significant change in the Indian textiles 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 recorded an increase of three per cent during the period April-July 2014.

Cotton yarn production increased by four per cent during April-July 2014. Blended and 100 per cent non-cotton yarn production increased by five per cent during April-July 2014.

Cloth production by mill sector registered a growth of six per cent during April 2013-July 2014.

Cloth production hosiery sector increased by eight per cent during April-July 2014. Total cloth production grew by two per cent during April-July 2014.

Investments

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 US$ 1,495.07 million during April 2000 to September 2014.

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

  • Arvind Lifestyle plans to invest Rs 126 crore (US$ 20.37 million) as capital expenditure this fiscal to expand its footprint. "We are looking at Rs 126 crore (US$ 20.37 million) capex this fiscal, up from Rs 90 crore (US$ 14.54 million) spent last fiscal, as we plan to open around 200 stores,"said Mr J Suresh, Managing Director and Chief Executive, Arvind Lifestyle.
  • Sangam India plans to venture into the seamless garment segment with an investment of Rs 120 crore (US$ 19.39 million). The company plans to set up 10,000 spindles for slub yarn and a mercerise unit, besides modernising the processing division.
  • Non-resident Indian (NRI) businessman Mr Apurv Bagri has acquired controlling stake in leading Indian denim maker Spykar Lifestyle. Mr Bagri's Metmin Investment Holdings has bought a 30 per cent stake from private equity (PE) firm Avigo Capital, which owns a majority stake in Spykar.
  • Arvind Lifestyle Brands plans to foray into the children's wear retail segment in India, as it has signed a franchisee agreement worth US$ 1.8 billion with US-based The Children's Place.
  • Private Equity (PE) firm Everstone plans to invest Rs 100 crore (US$ 16.16 million) for an undisclosed minority stake in the fashion label of designer Ritu Kumar.

Government Initiatives

The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic route.

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

  • The Ministry of Textiles plans to ink a deal with Flipkart to provide an online platform to handloom weavers to sell their products.
  • The Ministry of Textiles will implement the scheme for in-situ upgradation of plain powerlooms for SSI sector in Surat and Ahmedabad powerloom clusters in Gujarat.
  • The government has taken a number of initiatives for the welfare and development of the weavers and the handloom sector. Under revival, reform and restructuring (RRR) package, financial assistance to the tune of Rs 1,019 crore (US$ 164.72 million) has been approved and the Indian government has released Rs 741 crore (US$ 119.78 million).
  • Encouraged by the turnaround in textiles exports, the Government of India plans to set up a US$ 60 billion target for the current financial year, a jump of over 30 per cent from the previous financial year.
  • The Cabinet Committee on Economic Affairs (CCEA) has approved an Integrated Processing Development Scheme (IPDS) with a corpus of Rs 500 crore (US$ 80.82 million) to make textiles processing units more environment-friendly and globally competitive.

Road Ahead

The Indian textiles industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand. The industry is expected to reach US$ 220 billion by 2020, according to estimates by Alok Industries Ltd.

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 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$ 0.016 as on November 27, 2014

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

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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