Textile Sector in India

What’s in today’s article?

• Textile Sector in India
• Significance of the Textile Sector in India
• Key Segments of the Textile Industry
• Current Challenges Facing the Textile Sector
• Government Initiatives to Boost the Textile Sector
• News Summary

Textile Sector in India

• The textile sector is one of the oldest and most significant industries in India, playing a pivotal role in the country's economic landscape.
• It contributes substantially to India’s GDP, export earnings, and employment generation.
• The industry encompasses a wide range of activities, including fiber production, spinning, weaving, knitting, dyeing, and apparel manufacturing, making it a key driver of economic growth and rural development.

Significance of the Textile Sector in India

• Economic Contribution: The textile sector contributes about 2.3% to India’s GDP and 7% to the country’s industrial output.
• Employment: It is the second-largest employer after agriculture, providing direct employment to over 45 million people and indirectly supporting 100 million people in allied sectors.
• Exports: The sector accounts for approximately 12% of India’s total export earnings. In FY 2023, India’s textile and apparel exports stood at around $44.4 billion, making it one of the largest exporters of textiles globally.
• Diverse Segments: The industry includes handloom, power loom, and mill sectors, with India being a global leader in the production of cotton, jute, and silk.

Key Segments of the Textile Industry

• Cotton Textiles: India is the largest producer of cotton globally, with over 30% of the world's cotton production. The cotton segment plays a crucial role, with a strong domestic supply chain supporting both domestic and export markets.
• Handloom and Handicrafts: India’s handloom sector is renowned worldwide for its traditional designs and quality. With more than 4.3 million weavers, this segment preserves India’s rich cultural heritage and contributes significantly to rural employment.
• Technical Textiles: This is a rapidly growing segment that focuses on textiles with functional applications, such as in healthcare, automotive, and agriculture. The market for technical textiles in India is projected to grow at a CAGR of 20%, reaching $23 billion by 2025.
• Man-Made Fibres (MMF): The MMF segment has been gaining traction, contributing 30% to India’s textile market. It includes synthetic fibres like polyester, which are widely used in various industries due to their durability and versatility.

Current Challenges Facing the Textile Sector

• Raw Material Fluctuations: The industry faces challenges due to fluctuations in raw material prices, especially cotton, impacting production costs and profitability.
• Technological Upgradation: Outdated technology in many units hampers productivity and quality. There is a need for significant investment in modern machinery and digital tools to compete globally.
• Environmental Concerns: The textile industry is resource-intensive, consuming large amounts of water and energy. Environmental sustainability has become a critical issue, necessitating the adoption of eco-friendly practices.
• Competition from Other Countries: India faces stiff competition from countries like Bangladesh, Vietnam, and China, which offer lower production costs and faster turnaround times, particularly in the apparel segment.
• Regulatory Hurdles: Compliance with various regulatory norms and access to government schemes can be complex, often leading to delays and increased costs for textile manufacturers.

Government Initiatives to Boost the Textile Sector

• Production Linked Incentive (PLI) Scheme: The government introduced a ₹10,683 crore PLI scheme specifically for the textile sector to promote the production of man-made fibres and technical textiles. This is expected to attract investments worth ₹19,000 crore and create 7.5 lakh jobs.
• National Technical Textiles Mission: Launched with an outlay of ₹1,480 crore, this mission aims to position India as a global leader in technical textiles by enhancing domestic production and research.
• Amended Technology Upgradation Fund Scheme (ATUFS): This scheme provides financial assistance for upgrading machinery, aiming to modernize the textile industry and enhance productivity.
• Skill Development Programs: Initiatives like the Samarth (Scheme for Capacity Building in Textile Sector) focus on skill development, training over 10 lakh youth in various textile-related trades to meet the industry’s demand for skilled labor.
• Mega Integrated Textile Region and Apparel (MITRA) Parks: The government plans to set up 7 MITRA parks with state-of-the-art infrastructure, common facilities, and plug-and-play ecosystems to attract investments and enhance the competitiveness of Indian textiles.

News Summary

• About 12 textile companies are set to receive the first set of incentive payment under the production-linked incentive (PLI) scheme.
• This follows signs of export recovery in August, after delays due to weak demand in Western markets.
• The PLI scheme, launched in 2021 with a budget of ₹10,683 crore, aims to boost production of man-made fibres (MMF), apparel, MMF fabrics, and technical textiles.
  • Textile Secretary Rachna Shah stated that the scheme will enhance manufacturing and investments, leveraging India’s complete value chain.
• Union Minister of Textiles, Giriraj Singh, outlined a roadmap to create 4.5 to 6 crore jobs in the textile sector by 2030 and expand the market size to $350 billion from the current $165 billion.
• Despite these efforts, India’s textile exports declined for the second consecutive year in 2023-24.
• The World Bank reported that India’s share in global exports of labour-intensive sectors like apparel and textiles has stagnated, while countries like Bangladesh and Vietnam have gained market share, aided by free trade agreements and duty concessions.
• The Bank suggested that India could benefit from diversifying exports, leveraging geopolitical shifts, and reducing trade barriers to boost the textile sector's growth.

Q1. What do you mean by Technical Textiles?

Technical textiles are fabrics that are designed for their technical performance and functionality, rather than their appearance. They can be used in a variety of industries, including healthcare, construction, automotive, aerospace, sports, and defense.

Q2. Which States are leading Textile producers in India?

Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh, Karnataka, Madhya Pradesh, Rajasthan, West Bengal are the chief textile-producing states in India.

Source: First tranche of disbursements in textile PLI likely to begin this fiscal | Business Standard