The textile and apparel industry plays a vital role in the Indian economy. It contributes significantly to industrial output, employment generation, and exports. India’s textile industry has a rich heritage with global recognition. The industry has two categories – Yarn and fiber; and processed fabrics and apparel.
Yarn and Fiber Category
The yarn and fiber segment consists of production of fiber including cotton, jute, silk, and man-made fiber. It also involves production of yarn including cotton, polyester, viscose, wool, and acrylic yarn.
India is the largest producer of cotton and jute and second largest producer of silk and man-made fiber in the world. India produces around 6 million bales of cotton annually. The main cotton growing states are Punjab, Haryana, Maharashtra, Gujarat etc. For silk production, top states are Karnataka, West Bengal, Jammu and Kashmir etc. India has established itself as a major global player in man-made fiber and its production. The states which have a large presence in the man-made fiber industry are Gujarat, Maharashtra, Tamil Nadu etc. The spinning industry converts fiber into yarn which is supplied to the weaving, knitting, and processing sectors.
Processed Fabrics and Apparel Category
The processed fabrics and apparel category includes goods such as woven fabric, knit fabric, processed fabric and readymade garments. In terms of production of fabric, India is the third largest in the world. The readymade garments and apparel industry is one of the principal segments.
In woven fabrics, cotton, silk, wool, and jute are the major fibers used. The main cotton and silk producing clusters are located around Asia’s largest textile markets at Mumbai, Indore, Surat, Ahmedabad etc. For knitted fabrics, hosiery fabrics using cotton, wool and synthetic yarns are largely produced in West Bengal, Maharashtra, Uttar Pradesh, Punjab and Haryana. Processed fabrics involve value addition processes like bleaching, dyeing, printing etc. The major processing hubs are located around Tiruppur, Surat and Ludhiana.
India is also the second largest exporter of apparel after China. Major garment exporting clusters are located in Tamil Nadu, Delhi-NCR, Bangalore etc. India exports readymade garments worth millions to U.S., Europe, Middle East and other countries.
Key Challenges
While the textile and apparel industry holds much promise, it also faces significant challenges:
– Lack of adequate infrastructure – Good infrastructure is lacking, especially in areas of ports, roads, power etc. which increase logistics cost.
– Labor laws – Strict labor laws increase costs compared to competing nations like Bangladesh and Vietnam.
– Low productivity – Indian textile industry has relatively low labor productivity compared to global standards.
– High input costs – Domestic costs of inputs like cotton and synthetics are high compared to global prices.
– Restrictive trade policies – Many developed nations impose import restrictions and non-tariff barriers on textile imports from India.
– Lack of technology upgrades – The industry needs to invest more in machines, automation and new-age textile technologies.
Government Initiatives and Future Prospects
The government has undertaken many initiatives in the recent past to overcome these challenges and boost the textile industry:
– Setting up of mega textile parks with plug-and-play facilities.
– Technology Upgradation Fund Scheme (TUFS) to encourage investments in modern equipment.
– Remission of Duties and Taxes on Exported Products (RoDTEP) scheme.
– Production Linked Incentive (PLI) scheme for MMF Apparel, MMF Fabrics and Footwear sectors.
– GST rate reduction on textiles from 18% to 5%.
With strong government support coupled with huge domestic and export demand, the textile industry is well positioned for high growth in the coming years. It is expected to reach USD 250-300 billion in coming 5 years. The industry will play a critical role in realizing the goal of making India a $5 trillion economy by 2025. With state-of-the-art infrastructure, technology upgrades and facilitative policies, the textile sector has immense untapped potential.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
