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Indian Textiles and Apparel Industry Analysis

July, 2019

The textile and apparel industry can be broadly divided into two segments - yarn and fibre, and processed fabrics and apparel. The domestic textile industry in India is estimated to reach US$ 223 billion by 2021F from US$ 150 billion in November 2017, while cotton production in India is have reached 36.1 million bales in FY19.^ In FY19, growth in private consumption is expected to create strong domestic demand for textiles.#

Increased penetration of organised retail, favourable demographics, and rising income levels are likely to drive demand for textiles. Cloth production stood at 58.1 billion square metres (provisional) in FY19P (up to Jan 19). India is the world's second largest exporter of textiles and clothing.

Textile and apparel exports from India are expected to increase to US$ 82 billion by 2021. Exports of textiles and apparels from India reached US$ 31.65 billion in FY19 (up to Jan 19). Manmade garments remain the largest contributor to total textile and apparel exports from India.

Rising government focus and favourable policies is leading to growth in the textiles and clothing industry. The Ministry of Textiles is encouraging investments through increasing focus on schemes such as Technology Up-gradation Fund Scheme (TUFS). Under the Union Budget 2018-19, Rs 2,300 (US$ 355.27 million) crore have been allocated for TUFS and Rs 30 crore (US$ 4.63 million) for the Scheme for Integrated Textile Parks, under which there are 47 ongoing projects. In May 2018, textiles sector recorded investments worth Rs 27,000 crore (US$ 4.19 billion) since June 2017.The Cabinet Committee on Economic Affairs (CCEA), Government of India has approved a new skill development scheme named 'Scheme for Capacity Building in Textile Sector (SCBTS)'. The Government of India announced a Special Package to boost exports by US$ 31 billion, create one crore job opportunities and attract investments worth Rs 800.00 billion (US$ 11.93 billion) during 2018-2020. As of August 2018 it generated additional investments worth Rs 253.45 billion (US$ 3.78 billion) and exports worth Rs 57.28 billion (US$ 854.42 million). Cumulative FDI in the Indian textiles reached US$ 3.12 billion between April 2000 to March 2019. Under Union Budget 2019-20, Government of India allocated around Rs 5,831.48 crore (US$ 808.24 million) for the Ministry of Textiles.

The Directorate General of Foreign Trade (DGFT) has revised rates for incentives under the Merchandise Exports from India Scheme (MEIS) for two subsectors of Textiles Industry - Readymade garments and Made ups - from 2 per cent to 4 per cent. As of August 2018, the Government of India has increased the basic custom duty to 20 per cent from 10 per cent on 501 textile products, to boost Make in India and indigenous production.

Note: P - Provisional, ^ - during the cotton season from October2018 to September 2019, # - India Ratings and Research.

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