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Textile Industries in India

GS II >> Social Justice >> Poverty

Context: The distress in India’s textile and garment industry has captured headlines due to its far-reaching economic implications and challenges faced by the MSME sector.

Introduction to Textile Industry in India:

• Overview: India’s textile sector boasts a rich history, dating back centuries, and stands as one of the oldest industries in the country. Characterized by diversity, the industry spans from traditional hand spun textiles to modern, capital-intensive mills.
• Industry strength and diversification: 5th largest global producer of technical textiles. Aiming for a $300 billion market size by 2047. Highly diversified, covering traditional and organized manufacturing.
• Cotton’s economic role: Sustains 6 million cotton farmers and 40-50 million related workers. Largest global cotton producer (23% share).
• Technical textile exports and industry growth: Technical textile exports grew 28.4% YoY, reaching $2.85 billion. Record textile and apparel exports of $44.4 billion in FY 2021-22.
• Market size and growth projections: Textile and apparel market at $165 billion in 2022. Projected CAGR of 10%, targeting a $350 billion market by 2030.

Recent Textile and Garment Industry distress:

• Impact on foundries and weaving clusters: Foundry operator in Coimbatore, Tamil Nadu, shifted from buying scrap locally to receiving 250 -based textile mill. In Somanur’s powerloom cluster, more than 10 looms are being sold monthly, indicating distress.
• Current state of textile and garment industry: Textiles and apparel’s share in the Index of Industrial Production has shrunk. Andhra Pradesh reports 8-9 textile mills closed, with more on the verge, citing high cotton prices, increased electricity charges, and lack of government support.
• Reasons for crisis: Prolonged period of low demand in both export and domestic markets. Tepid domestic demand despite festival season retail sales on par with the previous year. Textile shipments decline in export markets, impacting the industry.

Significance of Textiles Industry in India:

• Historical importance: The Indian textile industry is one of the oldest and most diverse sectors in the country, encompassing hand-woven, hand-spun, and mill-produced textiles.
• Employment generation: The industry is a major employer, providing jobs to around 4.5 crore workers, including 35.22 lakh handloom workers nationwide.
• Global export hub: India is a significant exporter of various textiles and raw materials, with exports reaching US$ 29.8 billion between April-December 2021. The global market is expected to surpass US$ 209 billion by 2029.
• Cotton production leadership: India holds the title of the world’s largest producer of cotton. In the period October 2021-September 2022, cotton production stood at 360.13 lakh bales.
• Export contribution: The industry plays a crucial role in India’s global trade, with the export of 1.13 million tonnes of cotton yarn in the year 2020-21.
• Foreign Direct Investment (FDI): The textile industry, including dyed and printed segments, attracted significant FDI, amounting to US$ 3.93 billion from April 2000-December 2021.
• Economic boost: The textile industry has been a driving force behind the growth of India’s economy. Worldwide trade in clothing and textiles has significantly contributed to boosting India’s GDP, generating substantial revenue for the country.

Challenges:

• Export and domestic market challenges: Textile shipments declined by 0.41% in April-October 2023 compared to the same period last year.
• Apparel exports saw an 8.08% decline in October and a 14.58% decline in April-October 2023 compared to the corresponding periods last year. Geo-political situation, inflation, and high retailer inventory dampening orders.
• Issues affecting growth: Raw material (fiber) constitutes 60-70% of manufacturing costs, and cotton prices have been volatile.
• Cotton production and yield in India are on a downward trend, impacting the cotton-based textile sector.
• Introduction of QCO and limited domestic supply of man-made fiber (MMF) are additional challenges.
• Call for consistent and long-term government policies: Cotton prices, imposition of import duties, and stabilization are critical factors for industry recovery.
• Lack of import duty on cotton for more than a decade from 2008 is highlighted.

Government measures:

• Scheme for Capacity Building in Textile Sector (SAMARTH): Address the skilled manpower requirement in the textile sector.
• Formulated under the ‘Skill India’ initiative and aligned with the skilling program by the Ministry of Skill Development and Entrepreneurship.
• National Technical Textile Mission: Develop the use of technical textiles in various flagship missions and programs, including strategic sectors.
• PM-MITRA Scheme: Attract investment for the ‘Make In India’ initiative and boost employment through the setting up of seven Mega Integrated Textile Region and Apparel Parks.
• Special Package for Textile and Apparel Sector: Enhance employment and export potential in the apparel and made-up segments. Launched in June 2016 with a package of Rs. 6000 crores.
• Scheme for Integrated Textile Parks (SITP): Provide support for creating world-class infrastructure facilities for the setup of textile units.
• Production-Linked Incentive (PLI) Scheme for Textile: Incentivize manufacturing and export of textile products.
• Cover various aspects of the manufacturing process, including raw material support, skill development, credit facilities, infrastructure support, and technological upgradation.

Way forward:

• Harnessing innovation and technology: Leveraging innovations and adopting the latest technology to enhance productivity and efficiency. Embracing advancements in textile manufacturing processes for a competitive edge.
• Organizing the sector: Establishing mega apparel parks and common infrastructure to streamline the textile industry. Focusing on organizational structure and efficiency to boost overall competitiveness.
• Modernization of machinery: Prioritizing the modernization of outdated machinery and technology. Investing in state-of-the-art equipment to improve manufacturing capabilities.
• Comprehensive blueprint: Developing a comprehensive and strategic blueprint for the textile sector’s growth. Formulating a detailed plan that addresses challenges, sets goals, and outlines a roadmap for the industry’s future.
• Sustainability and eco-friendly practices: Continuing the industry’s focus on sustainability and environmentally friendly practices. Encouraging the adoption of sustainable fibres, organic dyes, and technologies that reduce environmental impact.