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Weaving The Future Of the Textile Industry in India

by IBEF India about a month ago in apparel
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The textile industry of India is witnessing huge growth, and it is all due to the liberal policies of the government. The government has been supportive of small-scale enterprises.

The textile industry in India is the second biggest commercial activity after agriculture. In terms of industrial production, it accounts for 14% of the total production, and in terms of exports, it accounts for 30% of total exports. It is the second biggest employment generator after agriculture.

It is a self-reliant industry as it controls everything from sourcing raw materials to delivering finished goods to domestic and international markets across the globe and is a major contribution to the country's GDP. Also, it is pushing the export graph of the country to new heights. Indian textile companies are exporting finished garments to the world markets.

Structure & Growth of Textile Industry in India

In 2000-01, the textile sector in India was contributing only 4% of GDP with 14% of industrial output, 18% of employment, and 27% of export earnings. But today, it is second to China in the production of cotton yarn and fifth in producing synthetic fibres and yarn. A comparison of data will show that the industry witnessed fast growth in the last two decades.

The success of the textile business is due to the government policies that favour small-scale labour-intensive industries. The government made changes in taxes, labour, and other regulatory policies to support the industry players.

Structure Of The Industry

Indian textile industry has a different structure in comparison to major garment-producing nations. In India, the sector comprises mostly small-scale, non-integrated apparel-making enterprises. And it won’t be an exaggeration to say that it is a legacy of government policies that opened a lifeline for small-scale enterprises that play a crucial role in the development of the textile and finished apparel business in India.

Composite Mills: It is a large-scale facility involving the process of spinning, weaving, and fabric finishing. Despite the prevalence of composite mills in other industrialized countries, India accounts for only 3% of the industry's total output. There are about 276 composite mills in India. Most of them are by the public sector and considered financially sick.

Spinning: Most knitters and weavers use cotton or man-made yarn to make fabrics. This sector witnessed a major change in 1980 when deregulation was introduced. As a result, the spinning sector got 1,146 small-scale and 1,599 large-scale yarn manufacturers in India from 2002-to 03.

Weaving & Knitting: In India, Manmade fabric comes from weaving or knitting. It's highly fragmented and rendered by small enterprises. There are over 3.9 million handlooms and over 38 million power loom enterprises that operate over 1.7 million looms.

Fabric Finishing: It includes dyeing, printing, and other preparations required to finish the garments. The textile industry in India has about 2,300 processors, including 2100 independent and 200 units integrated with spinning or knitting units. And these units are doing a commendable job with the help of government policies that favour small-scale enterprises.

Clothing: It is finished goods or apparel. These are ready-made garments ready to reach the market. And there are over 77,000 small-scale units classified as domestic manufacturers, exporters, and fabricators. Together these units fulfil both domestic and international demands.

Growth Of The Industry

India has completed over 70 years of independence, and the textile sector in India has played a crucial role in the economy of the country. But it was slower in the first three decades. The Textile Policy 1985 & Economic Policy 1991 has changed the textile industry.

The later governments introduced more changes, like in 2015 when the Ministry of Textiles proposed 50 textile parks. And the good thing is that the government has already sanctioned 30 parks for US$710 million. Integrated Textile Parks (SITP) make the facilitation of textiles more cost-competitive and productive.

Today the domestic Indian textile industry stands at a huge advantage as the domestic market share is $75 billion & that of the global market is $28.4 billion. And it is a huge growth compared to the growth achieved in the first three decades of independence.

From April 2016 to March 2021, the country received the highest FDI in textile, from Japan, Mauritius, Italy, and Belgium. In the domestic market, cotton production supports 5.8 million farmers and 50 million labourers in the allied sectors. Export of cotton yarn witnessed 55.62% positive growth from August 2020 to August 2021. In 2020, it was valued at $833.95 billion; in 2021, it went up to $1297.92 billion.

There are a total of 1,77,825 yarn manufacturers in India, including weavers and artisans, registered on Government-e-Marketplace (GeM). It is a government of India initiative to bring the small-scale enterprises at par with the global players. The government is doing a commendable job on this front. Also, it is helping small-scale industries with liberal policies.

Future Of The Textile Industry in India

As per recent data, the future of the textile and garment industry in India is very bright. The government is making liberal policies to support the small-scale enterprises to boost-up the growth and development of the sector.

A study of the textile sector in India shows that this sector has the potential to generate employment and contribute to the GDP. The slow growth of the initial decades has been covered by the fast pace of the recent years.

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About the author

IBEF India

The India Brand Equity Foundation is an organization that works towards promoting the Made in India label globally, and creating awareness of Indian products. The group coordinates with stakeholders to provide data on investment ideas.

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