India is the world's second-largest producer of textiles and garments. The Indian textile industry accounts for about 22 per cent of the world's spindle capacity and eight per cent of global rotor capacity. It has the highest loom capacity (including hand looms) with 61 per cent of the world's market share.
Textile plays a major role in the Indian economy. It contributes 14 per cent to industrial production and four per cent to gross domestic product (GDP). The size of India's textile market is expected to expand at a compound annual growth rate (CAGR) of 10.1 per cent over 2009-2021 to reach US$ 223 billion. Indian textile exports grew to US$ 33.3 billion in FY12 from US$ 17.6 billion in FY06, implying a CAGR of 11.2 per cent.
The Government of India is encouraging investments through increasing focus on schemes such as Technology Upgradation Fund Scheme (TUFS) and cluster development activities. The Ministry of Textiles has commenced an initiative to establish institutes under the public-private partnership (PPP) model to encourage private sector participation in the development of the industry.
Rising incomes has been a key determinant of domestic demand for the sector; with incomes growing in the rural economy as well, the upward push on demand from the income side is set to continue. The retail sector has experienced a rapid growth in the past decade with several international players such as Marks & Spencer, Guess and Next having entered the Indian market. The organised apparel segment is expected to grow at a CAGR of more than 13 per cent over a 10-year period.