India is the one of the world's largest producers of textiles and garments. The potential size of the Indian textile and apparel industry is expected to reach US$ 221 billion by 2021, according to Technopak's Textile and Apparel Compendium 2012.
Textile 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, 4 per cent to the gross domestic product (GDP), and 17 per cent to the country's export earnings. It provides direct employment to over 35 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 the economy of the nation.
The Indian textile industry is set for strong growth, buoyed by both rising 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.
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. Man-made fibre production recorded an increase of 2 per cent during the year 2012-13.
Cotton yarn production increased by about 15 per cent during March 2013 and by about 14 per cent during the year 2012-13. Blended and 100 per cent non-cotton yarn production increased by 10 per cent during March 2013 and production increased by 3 per cent during the year 2012-13.
Cloth production by mill sector registered a growth of 19 per cent during year 2012- 13.
Cloth production by handloom and hosiery increased by 2 per cent and 14 per cent. The total cloth production grew by 1 per cent during March 2013 and by 4 per cent during year 2012-13.
The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted foreign direct investments (FDI) worth Rs 5,674.45 crore (US$ 1.04 billion) during April 2000 to February 2013.
Government Initiatives
The Government of India has promoted a number of export promotion policies for the textile sector. It has also allowed 100 per cent foreign direct investment (FDI) in the Indian textile sector through automatic route.
According to the Union Budget 2013-14:
- Technology Upgradation Fund Scheme (TUFS) to continue in 12th Plan with an investment target of Rs 151,000 crore (US$ 27.58 billion)
- Rs 50 crore (US$ 9.13 million) were allocated to Ministry of Textile to incentivise setting up apparel parks within the Scheme for Integrated Textile Parks (SITP) to house apparel manufacturing units
- A new scheme called the Integrated Processing Development Scheme will be implemented in the 12th Plan to address the environmental concerns of the textile industry
- Working capital and term loans at a concessional interest of 6 per cent to handloom sector
- Scheme of Fund for Regeneration of Traditional Industries (SFURTI) extended to 800 clusters during the 12th Plan
Some of initiatives taken by the Government to further promote the industry are as under:
- India and China have signed a memorandum of understanding (MoU) for promotion of exports of Indian handicrafts
- India and Mauritius have signed a MoU to enhance the trade & economic relations by expanding business and cooperation in the sphere of textiles and clothing including sericulture and silk and fashion industries
- A total of 61 textile parks approved under the SITP are expected to generate over 1 million jobs. Mr Anand Sharma, Union Minister for Commerce, Industry and Textiles, launched 21 new Textile Parks on April 23, 2013
- Mr Anand Sharma, Union Minister for Commerce, Industry and Textiles, Government of India, has announced a scheme on usage of agrotextiles in the North East region of India with a five year budget of Rs 55 crore (US$ 10.04 million)
- Maharashtra has attracted Rs 3,834 crore (US$ 700.03 million) investments in 411 new textile projects, due to the new textile policy, as per Mr Arif Naseem Khan, Minister for Textile, Maharashtra
Road Ahead
The Indian textile 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 the estimates by Alok Industries Ltd.
The Central Silk Board sets targets for raw silk production and encourages farmers and private players to grow silk. To achieve these targets, alliances with the private sector, especially major agro-based industries in pre-cocoon and post-cocoon segments has been encouraged.
For the textile industry, the proposed hike in FDI limit in multi-brand retail will bring in more players, thereby providing more options to consumers. It will also bring in greater investments along the entire value chain - from agricultural production to final manufactured goods.
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$ 0.018 as on May 14, 2013
References: Ministry of Textiles, Indian Textile Journal, Department of Industrial Policy and Promotion, Press Information Bureau