The Indian textiles industry has significantly contributed to theeconomic life of the country. Liberalization in India and the scrapping ofquotas in world trade of textiles and clothing has bolstered growth for thesector. In the post quota period, the industry size has expanded from US$ 37billion in 2004-05 to US$ 49 billion in 2006-07. In this period, while thedomestic market increased from US$ 23 billion to US$ 30 billion, exportsincreased from around US$ 14 billion to US$ 19 billion.

A leading sector in the Indian economy, textiles contributes 14%to industrial production, 4% to the GDP and around 17% to the total exportearnings. It is, in fact, the largest foreign exchange earning sector in thecountry. In addition, it provides direct employment to over 35 million people.And with continuing growth momentum, its role in the Indian economy is bound toincrease.

The India Advantage

The textiles and apparels sector is a major contributor to oureconomy in terms of foreign exchange earnings and employment. Moreover certainnatural advantages and external factors have fuelled the growth of thisindustry with a clear competitive edge.

India hasovertaken the US to become the world's 2nd largest cotton producing country,after China, as per a study by International Service for the Acquisition ofAgri-biotech Application. BT cotton was a major factor contributing to higherrate of production, from 15.8 million bales in 2001-02 to 31 million bales in2007-08.

India accountsfor 61 % of the global loomage, 22% of global spindle age, 12% of world'sproduction of textile fibres & yarn, and 25% share in the total world tradeof cotton yarn.


Textiles and Apparel trade


The global textiles and apparel trade estimated at US$ 450 billionand expected to touch US$ 700 billion by 201 0 with demand for textiles andapparels expected to grow to 25% from current figures where Asia willcontribute 85%. The sudden growth and demand for textiles and apparels willprompt international brands and buyers to look to source from low costproducing countries.

India'stextiles and apparels industry is estimated to be worth US$ 49 billion where39% is accounted by the exports market. The domestic and exports markets inthis sector are expected to grow at 6.5% and 12% CAGR respectively. The growthhas continued with total exports increasing to US$ 19.62 billion in 2006-07.Currently India has a 3.5 - 4% share in world export of textiles and 3% inclothing exports.

Indian textiles and products hand looms and handicrafts areexported to more than a 100 countries, Europe continues to be India's majorexport market with 22% share in textiles and 43% in apparel, the US is thesingle largest buyer of Indian textiles and apparel with 19% and 32.6% sharerespectively. Other significant countries in the export list include the UAE, Saudi Arabia, Canada, Bangladesh, China, Turkey and Japan. A recent study of the textile industrypredicts growth for the sector form USD 19 billion in 2006-07 to USD 50 billionby 2012.

Readymade garments (RMG) are the largest export segment,accounting for 45% of total textile exports and 8.2% of India's total exports. This segment has benefited significantly with the termination of theMulti-Fibre Arrangement (MFA) in January 2005. Readymade garments exports from India are expected to touch US$ 14.5 billion by 2009-10 with a cumulative annual growth of18 to 20%, according to Apparel Export Promotion Council.

Another segment in which India has excelled in the export marketis carpets. Exports of carpets have increased from US$ 654.32 million in2004-05 to US$ 930.69 million in 2006-07, a growth rate of 42.23%. DuringApr-Oct '07, carpet exports totaled US$ 404.74 million, making India the world leader with 36% of the global market share.


Technical Textiles


The technicaltextiles industry has witnessed robust growth due to strong demand forautomotive fabrics and is estimated to be worth around US$ 5.09 billion, with apotential to be a US$ 12.62 billion market by 2009-10. The Indian textilesmarket is an emerging industry where the government is making and effort toensure investments are made in this sector sO as to reap profits as technicaltextiles is said to offer very high unit value realisations, making this area aprofitable business venture. The market for technical textiles is poised for astupendous growth. The attractive growth statistics of skilled scientific andtechnical manpower will be a catalyst in shaping the future of this industry.

Development of new fibers and technologies has led to the creation of new applications of technical textiles, which is bound to enlarge the market size and offer opportunities for high growth. To realise the potential and to attract investment into this segment, the Government plans to set up a technology mission on technical textiles. The Technical Textiles industry is also covered under financial assistance schemes like Technology Upgradation Fund Scheme (TUFS) & Scheme for Integrated Textiles Park (SITP).

Investments in the Textile sector


India's liberalised policies allowing 100% FDI in the emerging textiles industry has led to an increase in the investment inflows into the sector. The domestic textiles and apparels market in India is witnessing strong growth owing to a young population, an increase in disposable incomes and a rapid growth in organised retail that has fueled the growth of the textiles market. During the three years 2004-05 to 2006-07, investments in the textile sector has increased from US$ 2.94 billion to US$ 7.85 billion. The total investments in the textiles sector were estimated to be US$ 16.32 billion during this period. By 2012, investment in the textiles and clothing industry is estimated to touch US$ 38.14 billion.


India with its abundant multi-fibre raw material base, well established production bases, design capability and skilled labour force, is well placed to emerge as a global textile and apparel sourcing hub.


The textiles industry has also been witnessing increased collaboration between Indian and foreign companies. According to the CII-Ernst & Young Textiles & Apparel Report 2007, the Indian sourcing market is estimated to grow at an annual average rate of 12% from an expected market size of US$ 22-25 billion in 2008 to US$ 35-37 billion by 2011.

Simultaneously, world's cutting edge fashion brands, like Hugo Boss, Diesel and Liz Claiborne, are stepping up their sourcing from India. Diesel, for example, has split its Asian sourcing operations, hitherto headquarters in Hong Kong, in a bid to focus independently on India. While it currently sources garments worth roughly US$ 18-25 million from India, Diesel aims to hike its India exposure in the nondenim business. And there are more international brands queuing up to source from India. through vendors or wholly-owned units. German kidswear brand Kanz, Ireland's biggest linen manufacturer Baird McNutt. and Finnish textile major Ahlstorm are buying into the India garment story.

Even consumer spending on apparel in India has grown over the last five years, touching the global benchmark of 5 per cent of the total income, according to consultancy firm Mckinsey. Riding on the back of high aspiration value. strong branding and high margins, international brands in India have already got off to a good, early start:

  • Giordano International,the leading international retailer of apparel and accessories. has six outlets in India and plans more in Bangalore, Hyderabad, Pune, Kolkata etc.
  • Gap. earlier sourcing a few products from India, is now looking at using Indian fabrics. craftsmanship and skills like embroidery and batik, for its global requirements. It has six flagship stores and plans to add four more, along with 14 franchisee stores soon.
  • Tommy has now become a US$ 24.79 million brand, growing at well over 100%.
  • Esprit is set to grow 200% to reach a turnover of US$ 18.60 million. They have been growing at this rate every year since they launched India operations in 2005.
  • Sportswear brand Puma has also grown well over 100% since its launch in 2006.

Government Initiative

In an effort to increase India's share in the world textile market, the Government has introduced a number of progressive steps.

  • 100% FDI allowed through the automatic route.
  • De-reservation of readymade garments, hosiery and knitwear from the SSI sector.
  • Technology Mission on Cotton launched to make available quality raw material at competitive prices; TUFS to facilitate the modernisation and upgradation of the textiles industry; and the SITP. Scheme to provide world class infrastructure facilities for setting up textile units through the Public Private Partnership model.
  • The Apparel International Mart, in Gurgaon, will provide world class facility to apparel exporters to showcase their products and to serve as a one-stop-shop for reputed international buyers. The Indian Textile P laza is being built in Ahmedabad to encourage exports.
  • 50 upcoming textile parks to enhance manufacturing capacity & cost competitiveness.

Originally published in New Cloth Market: March 2010