7-March-2025-Editorial

INDIA’S TEXTILE INDUSTRY

India’s textile industry has immense potential to become a global leader due to its vast domestic market and increasing global demand. However, the sector faces several obstacles such as high production costs, fragmented supply chains, and sustainability issues, which hinder its growth and export performance.

Key Features of India’s Textile Industry

Economic Contribution

• The textile industry contributes 2.3% to India’s GDP, with expectations to reach 5% by 2030.
• It accounts for 13% of industrial production and 12% of total exports.
• The sector provides employment to 4.5 crore people.
• In FY24, exports amounted to USD 35.9 billion, with major markets in the US, EU, and UAE.

Global Standing

• India is the 2nd largest textile producer globally and ranks 6th in textile exports, holding 3.9% of global trade.
• India is the 2nd largest cotton producer, contributing 23.83% of global cotton production.
• It is the leading producer of jute and 2nd largest producer of man-made fibres (MMF), including polyester, viscose, nylon, and acrylic.

Market Growth

• India’s textile and apparel market is estimated to reach USD 350 billion by 2030.

Government Initiatives

• PM Mega Integrated Textile Region and Apparel (MITRA) Parks to boost infrastructure.
• Production Linked Incentive (PLI) Scheme to enhance domestic manufacturing.
• National Technical Textile Mission (NTTM) to promote innovation.
• 100% Foreign Direct Investment (FDI) under the automatic route to attract foreign investment.

Challenges Facing the Textile Industry

1. Lack of Trade Agreements

• Competing nations like Vietnam and China benefit from Free Trade Agreements (FTAs), making their exports more competitive.
• India lacks such FTAs in major textile markets like the US.

2. Slow Growth and Declining Exports

• The textile sector contracted by 1.8% annually from FY20 to FY24, while apparel exports declined by 8.2% per year.
• Apparel exports fell from USD 15.5 billion in FY20 to USD 14.5 billion in FY24.

3. High Raw Material Costs

• Government-imposed Quality Control Orders (QCOs) restrict imports of polyester and viscose, making domestic production expensive.
• Polyester fibre costs 33-36% more in India than in China, and viscose fibre is 14-16% costlier.

4. Weak Export Competitiveness

• Unlike China’s vertically integrated supply chains, India’s fragmented production system leads to higher costs.
• Bangladesh benefits from duty-free exports under Least Developed Country (LDC) policies, making it more competitive.

5. Sustainability Challenges

• Global brands demand sustainable production, increasing pressure on Indian manufacturers.
• EU regulations (2021-24) impact 20% of India’s textile exports, focusing on environmental compliance.
• The global textile sector contributes 6-8% of carbon emissions (~1.7 billion tonnes/year).
• Textile production causes 20% of global water pollution due to dyeing and finishing processes.

Way Forward

1. Strengthening Supply Chains

• Establish Vertically Integrated Textile Parks covering the full production cycle, reducing logistics costs.
• Re-evaluate QCOs on polyester and viscose to allow limited imports and lower production costs.
• Develop “fibre-to-fashion” hubs to improve supply chain efficiency.

2. Utilizing Workforce Potential

• Expand PM MITRA Parks in states with high job demand like Uttar Pradesh, Bihar, and Madhya Pradesh.
• Build worker housing near factories to enhance productivity and reduce turnover.

3. Policy Reforms

• Secure preferential trade agreements with EU, US, and key textile markets to enhance competitiveness.
• Encourage higher MMF consumption by offering incentives for MMF-based textile production.

4. Promoting Sustainability

• Provide financial support to MSMEs for adopting renewable energy and eco-friendly manufacturing.
• Fast fashion waste is expected to reach 148 million tonnes by 2030, creating a demand for recycled textiles, an area where India has significant potential.
• Strengthening waste management infrastructure will be crucial for sustainable growth.

Conclusion

India’s textile industry holds immense potential to become a global leader, but challenges such as high raw material costs, fragmented supply chains, and sustainability regulations must be addressed. Through policy support, infrastructure development, and environmental compliance, India can boost its competitiveness in global markets.