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Indian Textiles and Apparel Industry Analysis

September, 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. In FY19, India's textile and apparel exports increased 1.66 per cent to Rs 251,387 crore (US$ 35.96 billion) as compared to Rs 247,277 crore (US$ 35.381) in FY18. 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 Union Budget 2019-20, the government has allocated Rs 700 crore (US$ 100.16 million) for Amended Technology Upgradation Fund Scheme (ATUFS). 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 80,000 crore (US$ 11.93 billion) during 2018-2020. As of August 2018, it generated additional investments worth Rs 25,345 crore (US$ 3.78 billion) and exports worth Rs 5,728 crore (US$ 854.42 million). Cumulative FDI in the Indian textiles reached US$ 31.2 billion between April 2000 to March 2019. Under Union Budget 2019-20, Government of India allocated around Rs 4,831.48 crore (US$ 691.29 million) for the Ministry of Textiles. Integrated Wool Development Programme has been allocated Rs 29 crore (US$ 4.14 million) under Union Budget 2019-20. The government has allocated Rs 20 crore (US$ 2.86 million) for the Scheme for Integrated Textile Parks. The Ministry of Textiles 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.

The National Handloom Development Programme will get Rs 456.80 crore (US$ 65.35 million) and the Integrated Processing Development Scheme will get Rs 3.50 crore (US$ 0.50 million). Khadi Express train will be run to create awareness about the Indian khadi.

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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