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INDIAN TEXTILE INDUSTRY

INTRODUCTION

India’s textiles sector is one of the oldest industries in Indian economy dating back several
centuries. India's overall textile exports during FY 2017-18 stood at US$ 39.2 billion.

India is the world’s second-largest exporter of textiles and apparels, with a massive raw material
and manufacturing base. The textile industry is a significant contributor to the economy, both in
terms of its domestic share and exports.

Market Size

The Indian textiles industry, currently estimated at around US$ 150 billion, is expected to reach
US$ 250 billion by 2019. India’s textiles industry contributed seven per cent of the industry
output of India in 2017-18. It contributed two per cent to the GDP of India and employs more
than 45 million people in 2017-18 is the second only to agriculture sector in terms of
employment. The sector contributed 15 per cent to the export earnings of India in 2017-18.

The production of raw cotton in India is estimated to have reached 36.1 million bales in FY19^.

Investment

The textiles sector has witnessed a spurt in investment during the last five years. The attracted
Foreign Direct Investment (FDI) worth US$ 3.09 billion during April 2000 to Dec 2018.

Some of the major investments in the Indian textiles industry are as follows:

 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)' with an outlay of Rs 1,300 crore (US$ 202.9 million) from
2017-18 to 2019-20.
 In May 2018, textiles sector recorded investments worth Rs 27,000 crore (US$ 4.19
billion) since June 2017.
 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).

Government Initiatives

The Indian government has come up with a number of export promotion policies for the textiles
sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic
route.

Initiatives taken by Government of India are:

 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.
 The Textile Ministry of India earmarked Rs 690 crore (US$ 106.58 million) for setting up
21 ready-made garment manufacturing units in seven states for development and
modernization of Indian Textile Sector.

 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.
 The Government of India announced a Special Package to boost exports by US$ 31
billion, create one crore job opportunity 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 57.28 billion
(US$ 854.42 million).

Segments of Indian Textile Industry

Indian Textile Industry can essentially be categorized into two segments:

1. Organized Textile Industry

Organized Textile Industry is a highly organized one with immense importance on capital
intensive production process. This sector is characterized by sophisticated mills where
technologically advanced machineries are utilized for mass production of textile products.

2. Unorganized Textile Industry

Unorganized Textile Industry sector is the dominant part in this industry which mainly utilizes
the traditional practices woven or spun in cloth production and hence is labor intensive in nature.
This industry is characterized by the production of clothes either through weaving or spinning
with the help of hands. The decentralized nature is considered as another important feature of the
unorganized textile industry in India.

Following are some major players in Indian Textile Industry

 Bombay Dyeing and Manufacturing Company Ltd (Wadia)


 Bombay Rayon Fashions Ltd.
 Fabindia Overseas Pvt Ltd.
 Grasim Industries Ltd (Aditya Birla)
 JCT Ltd.
 Karnataka Silk Industries Corporation Ltd.
 Raymond Ltd.
 The Lakshmi Mills Company Ltd.
Importance of Textile Industry to Indian economy India
 Second largest producer of textiles and garments after China
 Contributes about 4% to GDP
 Second largest producer of cotton in the world
 Constitutes about12%of India’s exports
 Contributesabout14% to Industrial production
 Investment made in Textile sector since launch of TUFs scheme is Rs. 208000 crores till
June 2010
 Second largest employer in India after agriculture–Direct Employment to 35mn. People

Position of the Indian Textile Industry in the World Textile


Economy
India’s position in the World Textile Economy Indian textile industry is second largest producer
of raw cotton, same position in producing cotton yarn, same in cellulosic fibre yarn, in silk
production largest producer of jute and fourth producer of synthetic fibre. India contributes 20%
to world spindle age capacity, the second highest spindle age in the world after China. It
contributes 6% to the world rotor age and 62% to the world loom age. However, in High-tech
Shuttles Looms this industry’s contribution is only 4.1% to the world Shuttles loom age. 12% to
the world production of textile fibers and yarns is from India and is the largest producer of Jute,
second largest producer of silk and cellulose fiber and yarn, third largest producer of cotton and
fifth largest producer of synthetic fibers and yarns. India’s key assets include a large and low-
cost labor force, sizable supply of fabric, sufficiency in raw material and spinning capacities. On
the basis of these strengths, India will become a major outsourcing hub for foreign manufacturers
and retailers, with composite mills and large integrated firms being their preferred partners. It
will thus be essential for SMEs to align with these firms that can ensure a market for their
products and new orders.
Problem Faced by the Textile Industry in India
The cotton textile industry is reeling under manifold problems. The major problems are the
following:

1. Obsolescence

The plant and machinery and technology employed by a number of units are obsolete. The need
today is to make the industry technologically up-to-date rather than expand capacity as such.
This need was foreseen quite some time back and schemes for modernization of textile industry
had been introduced. The soft loan scheme was introduced a few years back and some units were
able to take advantage of the scheme and modernize their equipment. However, the problem has
not been fully tackled and it is of utmost importance that the whole industry is technologically
updated. Not many companies would be able to find resources internally and will have to depend
on financial institutions and other sources.

2. Government Regulations

Government regulations like the obligation to produced controlled cloth are against the interest
of the industry. “During the last two decades the excessive regulations exercised by the
government on the mill sector has promoted inefficiency in both production and management.

3. Competition from other Countries

In the international market, India has been facing severe competition from other countries like
Taiwan, South Korea, China and Japan. The high cost of production of the Indian industry is a
serious adverse factor.

4. Labor Problems

The cotton textile industry is frequently plagued by labor problems. The very long strike of the
textile workers of Bombay caused losses amounting to millions of rupees not only to the workers
and industry but also to the nation in terms of excise and other taxes and exports.
Vision 2024-25
 The Indian textile industry has strength across the entire value chain.
 Its share in the nation’s GDP is 6% and 13% in exports. After the phasing out of export
quotas in 2005 India’s export performance has been below expectations. Its share of
global exports is around 5% whereas it was expected to rise quickly towards China’s
level.
 The Chinese share in global exports is 39%. Vietnam and Bangladesh have shown
remarkable success.
 Taking innovative measures in partnership with the industry and learning from
experience, India could aspire to achieve 20% growth in exports over the next decade. 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
difficult.

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