An overview of the Indian textile industry

By Divya Narang & Saptarshi Basu Roy Choudhury on November 22, 2018

The Indian textile industry has occupied a prominent place in the economic development of the country since independence. The industry has expanded at a very fast rate to become the second largest producer of textile and garments. The Indian textile industry accounts for 24% of the world’s spindle capacity. In terms of the growth of the industry, the market size of the industry has grown from $ 70 billion to $ 90 billion in 2012 (India Brand Equity Foundation, 2012). The industry has also emerged as the second largest employer after agriculture and is expected to grow five-fold in the next ten years to cross the market of $ 500 billion. Further, the industry contributed 5 % to the GDP and 27 % to the country’s foreign exchange inflows in 2012 (Paper, 2015).

Size of the textile industry of India

The textile exports comprise 13% of total export earnings (Paper, 2015). With the rise in the exports of textiles, India has emerged as the second largest exporter of textile and garment goods acquiring a major share of 5 % of the global trade. In 2013, India exported textiles and garments worth $ 40 billion. Amongst the various segments, the garment dominated the Indian textile industry acquiring a share of 40%. India exports multiple inputs of man-made filament yarn, staple fibres, knitted fibres to various economies including US, UK, Germany, Belgium and many Asian countries like Bangladesh, Srilanka, UAE and Indonesia.  In terms of imports, India holds a share of 1-2 % among the total imports. India imports from Pakistan, Bangladesh, Nepal, Hong Kong and China (, 2013).

The Indian textile industry is divided into various segments including cotton, silk, wool, man-made fibres and jute. In terms of the growth of these segments, India has emerged as the second largest cotton and cellulosic producing country in the world. In addition to this, India is ranked as the 6th largest clean wool producer in the country, producing 45 million kg of raw wool and accounting for 3.1% of the total world’s wool production(, 2013). Furthermore, India has emerged as the largest producer of jute and the fourth largest producer of synthetic fibres globally(The, Product, Bank, & Reforms, 2009).

Strengthening the textile industry

The government has come up with multiple initiatives to promote growth in the textile industry. The government has allowed 100% FDI in the textile industry through an automatic route. Apart from the external policies, the government has undertaken a technology upgradation fund scheme through which more than INR 250 billion will be infused into the industry (Kumar R, 2018). In addition to this, the scheme for integrated textile parks provides world-class infrastructure to new textile units for which the government has sanctioned INR 60 billion. Furthermore, the government has allocated INR 500 million to build trade facilitation centre and craft museum to promote the production and sale of handloom products. Also, the integrated skill development scheme has provided training to about 1.5 million people that cover all the subsectors including apparels, handicrafts, handlooms, jute and sericulture. Lastly, favourable trade policies framed by the government has promoted growth in the textile industry  (India Brand Equity Foundation, 2012).

The growth of the textile industry can be attributed to the rise in consumer demand. The rise in the per capita income has boosted the annual growth in production and sales of fibres. The man-made products in the cloth purchases of households rose from 38% to 54% (Paper, 2015). In addition to this, availability of raw material and cheap labor has promoted the growth in the industry. Recently the government has doubled the tax on imports of over 300 textile products which has encouraged more domestic production. Lastly, the production trend has shifted towards the superior quality products that are driving the growth in the industry.

The Indian textile industry is ready to explore multiple opportunities for growth that will be driven by strong domestic and export demand. The rise in FDI and domestic income is expected to bring in rapid growth. The future prospects indicate that a rise in consumer demand would require a new production model that is driven by better technology. Increase in foreign investment will bring in trained manpower and capital investment in the form of machinery which is likely to drive the growth process (Kumar R, 2018).


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