Indian Prime Minister Narendra Modi launched ‘Make in India’ and ‘Zero Effect; Zero Defect’ campaign in 2014 to attract manufacturers and FDI building the country’s economy more strong. Textile industry is strongly integrated with agriculture sector and generates many other aligned industries. Textile sector’s total production is more than 108 billion USD and its contribution to India’s GDP is more than 5%. Under those two concepts Indian textile & clothing industry is arriving at a steady growth and the sector is expanding though it has been facing many challenges.
The textile industry was born in the sub continent in ancient period, but the modern textile industry emerged here in early nineteenth century in 1818 when the first textile mill was established. Now this industry is the second biggest industries of India and the second largest producer of textiles and garments in the world, which currently contributing 5 percent to India’s GDP and 14 percent to overall index of Industrial production. India’s overall textile exports during FY 2015-16 stood at US$ 40 billion and the sector donated 13% to the country’s export earnings in 2015 and it is the second largest employer after agriculture, which provides employment to over 45 million people directly and 60 million people indirectly.
Structure of Indian textile industry:
Textile industry of India is self-sustaining as the country is capable to run the industry from raw materials production to finishing process by its own means. The Indian textile industry comprises small-scale, medium-scale, large-scale, non-integrated, spinning, weaving, finishing, and apparel-making firms and enterprises. Here the textile and apparel industry can be broadly divided into three segments one is yarn and fibre (include natural and man-made), which is mainly made by cotton and jute. Therefore, cotton and jute sector is highly linked with textile industry. Second is processed fabrics (including woolen textiles, silk textiles, jute textiles, cotton textiles and technical textiles), and third one is Readymade Garments (RMGs) and apparel. The unorganized sector includes handlooms, powerloom, hosiery, Knitting, readymade garments, khadi, carpet and handicrafts manufacturing units. The organized mill sector comprises of spinning Mills, and Composite Mills where spinning, weaving, and processing activities.
Recent trends of Indian Textile Industry:
The oldest industry is facing several challenges as the sub sectors of weaving, processing and garmenting are fragmented and most of the manufacturing units have small capacities and low manufacturing efficiencies, which are a disadvantage in the global arena. Facilities for realizing the Prime Ministers vision ‘Make in India’ with ‘Zero Effect; Zero Defect’ at each level of the value chain is absent and the cost of production and logistics is high, on the other hand, scarcity of skilled manpower is a great problem. After everything, exports of Indian textile and apparel products have been growing though it is limited to only a few markets. The EU and the US remain the major export destinations with 50% share of the Indian export market. There are several finished goods categories such as suits, women’s western wear, intimate wear, swimwear, outerwear, etc. which has multibillion-dollar trade globally but India’s share in them is quite nominal. In addition, there are several large markets like Japan, Russia, China, Brazil, South Korea, etc. in which India’s trade share is very low.
The size of India’s textile market in 2014 was USD99.0 billion which is expected to touch USD226 billion market by 2023 at a CAGR of 8.7 per cent between 2009-23(estimated). Table 1 shows that share of overall textile and clothing export in country’s economy increased 1.9 percent in the FY 2014-15 over the previous year. Overall textile and clothing export declined -2.4 percent though RMG sector achieve 0.8 percent growth.
|Table 1: India’s textile and clothing exports in USD million. (Source: Ministry of commerce & industry)|
|%Growth||%Share (Apr-Mar 2014-15)||%Share (Apr-Mar 2015-16)|
|Textile and clothing||38,518.8||37,590.3||-2.4||12.4||14.3|
The basic strength of the industry in India is its strong production base of wide range of fibre/yarns from natural fibres like cotton, jute, silk and wool to synthetic/man-made fibres like polyester, viscose, nylon and acrylic.
Cotton production over the past few years has been unstable according to the below chart. Production of raw cotton in India grew from 28 million bales in FY07 to 38 million bales in FY15, but in FY16 production declined to 2.8 percent over the FY15.
Table 2 shows that overall production of man-made filament yarn declined over the last few year, though production of viscose filament yarn and nylon filament yarn increased correspondingly 1.17 percent and 4.71 percent in FY 2015-16 over the past FY.
|Table 2: Production of man-made filament yarn (in million Kg.)|
|Source: Office of Textile Commissioner|
The allied industries:
India is becoming very strong in the value added raw materials and input supplying for textile and apparel industry. Dyes and Pigment Manufacturing industry, Auxiliary chemical manufacturing industry, Machinery manufacturing industry are few to be mentioned here.
Vision for Indian textile and clothing sector:
India aspires to achieve 20% growth in exports over the next decade and in any case the achievement of 15% growth rate in exports should be feasible. In the domestic market, sustaining an annual growth rate of 12% should also not be hard, according to their vision.
That means that with a 12% CAGR in domestic sales the industry should reach a production level of US$ 350 billion by 2024-25 from the current level of about US$ 100 billion for the domestic market. With a 20% CAGR in exports India would be exporting about US$ 300 billion of textile and apparel by 2024-25 while with the lower15% CAGR in exports, India would be exporting about US$ 185 billion of textile and apparel by 2024-25.
Taking into consideration the vision of export growth, India needs to increase its market share of 15% to 20% of the global textile and apparel trade from the current level of 5%. But there are many challenges to achieve the vision. To achieve the ambitious target, 35 million skilled workers would be required by 2024-25.
Government initiative to promote the sector:
The government of India is very cordial to increase export earnings from textile sector and for this purpose, already it takes many plans and actions, and permitted 100 per cent FDI for the sector under the automatic route. From several actions of the government here pointed out some vital issues:
Under union budget of 2015-16, Indian government has allocated around USD584.49 million for Textile Industry to attract the manufacturers, technology up gradation, integrated textiles parks, etc. The Clothing Manufacturers’ Association of India (CMAI) has signed a memorandum of understanding (MOU) with China Chamber of Commerce for Import and Export of Textiles (CCCT) for discovering prospective areas of mutual co-operation to grow apparel exports from India. The Revised Restructured Technology Up gradation Fund Scheme (RRTUFS) covers manufacturing of major machinery for technical textiles for 5 percent interest reimbursement and 10 percent capital subsidy in addition to 5 per cent interest reimbursement also provided to the specified technical textile machinery under RRTUFS. On the other hand, Scheme for Integrated Textile Parks (SITP) of the Government provides assistance for creation of infrastructure in the parks to the extent of 40 per cent with a limit up to Rs 40 crore (US$ 6 million).
Promoting handloom sector the government also takes many steps, including tied up with nine e-commerce players and 70 retailers to increase the reach of handlooms products in the Indian market, which will generate better prices and continuous business, besides facilitating direct access to markets and consumers for weavers.
Finally, the textile industry in India traditionally, after agriculture, is the only industry that has generated huge employment for both skilled and unskilled labor in textiles, and it continues to be the second largest employment-generating sector in India. But for global competitiveness, quality and productivity improvement in the sector are of utmost importance. On the other hand, the sector needs to be made attractive enough for investors to speed up its growth rate. It needs to get US$ 180 billion to US$200 billion investment for achieving the production capacity of about US$ 650 billion by 2024-25. This is a great challenge for the sector. The essential prerequisites for getting investments on the scale required availability of developed land with adequate infrastructure, skilled work force and easy connectivity to ports. Some textile experts said that creating new mega textile parks would be the way forward.