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Indian Textiles and Apparel Industry Analysis

July, 2021

The textiles and apparel industry can be broadly divided into two segments - yarn and fibre and processed fabrics and apparel. The domestic textiles and apparel market was estimated at US$ 100 billion in FY19. The textile industry has around 4.5 crore workers including 35.22 lakh handloom workers all over the country. Growth in demand is expected to continue at 12% CAGR to reach US$ 220 billion by 2025-26.

Cotton production in India reached 37.10 million bales in FY21*. During FY19, production of fibre in India stood at 1.44 million tonnes (MT) and reached 2.40 MT in FY21 (till January 2021), while that for yarn, the production stood at 4,762 million kgs during same period. The total raw silk production increased by 1% (35,820 MT) in FY20 over the previous year FY19 (35,468 MT) despite COVID-19.

India is the world's second largest exporter of textiles and clothing. Increased penetration of organised retail, favourable demographics, and rising income level are likely to drive demand for teicrxtiles. Cloth production stood at 63.34 billion square meters in FY20 (till January 2020).

The Rs. 10,683 crore (US$ 1.44 billion) production-linked incentive (PLI) scheme is expected to be a major booster for the textile manufacturers. The scheme proposes to incentivise MMF (man-made fibre) Apparel, MMF Fabrics and 10 segments of Technical Textiles products.

Exports of textiles (RMG of all textiles, cotton yarn/fabs./made-ups/handloom products, man-made yarn/fabs./made-ups, handicrafts excl. handmade carpets, carpets and jute mfg. including floor coverings) stood at US$ 2.99 billion, as of June 2021.

In July 2021, exports of cotton yarn/fabrics/made-ups, handloom products, etc., from India increased by 50.86% in June 2021 over June 2019. India’s textile and apparel exports to the United States, its single largest market, were up 55% in the first seven months of 2021. The share of the India’s textiles and apparel exports in mercantile shipments was 11% in 2019-20.

India is working on major initiatives, to boost its technical textile industry. Owing to the pandemic, the demand for technical textiles in the form of PPE suits and equipment is on rise. Government is supporting the sector through funding and machinery sponsoring.

Top players in the sector are attaining sustainability in their products by manufacturing textiles that use natural recyclable materials.

Rising Government focus and favourable policies is leading to growth in the textiles and clothing industry. The Ministry of Textiles is encouraging investment through increasing focus on schemes such as Technology Up-gradation Fund Scheme (TUFS). In Union Budget 2020-21, the Government has allocated Rs. 761.90 crore (US$ 109.01 million) for Amended Technology Upgradation Fund Scheme (A-TUFS). 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 announced a special package to boost export by US$ 31 billion, create one crore job opportunities and attract investment worth Rs. 80,000 crore (US$ 11.93 billion) during 2018-2020. Cumulative FDI (Foreign Direct Investment) inflow in the textiles sector stood at over US$ 3.75 billion between April 2000 to March 2021.

In Union Budget 2020-21, the Government of India has allocated around Rs. 3,515 crore (US$ 502.93 million) to the Ministry of Textiles and Rs. 80 crore (US$ 11.45 million) for the scheme on Integrated Textile Parks. The Ministry of Textiles has announced Rs. 690 crore (US$ 106.58 million) for setting up 21 readymade garment manufacturing units in seven states for development and modernisation of Indian textile sector. National Technical Textiles Mission is proposed for a period from 2020-21 to 2023-24 at an estimated outlay of Rs. 1,480 crore (US$ 211.76 million).

The National Handloom Development Programme has been allocated Rs. 388.21 crore (US$ 55.55 million), whereas, the Integrated Processing Development Scheme has received Rs. 50 crore (US$ 7.15 million) in Union Budget 2020-21.

In March 2021, Minister of Textiles Smriti Irani announced that India will be fully self-reliant in silk production in the next two years.

To support the handloom weavers/weaver entrepreneurs, the Weaver MUDRA Scheme was launched to provide margin money assistance at 20% of the loan amount subject to a maximum of Rs. 10,000 (US$ 134.22) per weaver. The loan is provided at an interest rate of 6% with credit guarantee of three years.

Note: P - Provisional, *-fourth advance estimate, # - India Ratings and Research.

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