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India - Knitting the future

India is among the world's largest producers of textiles and garments. The Indian domestic textile and apparel industry contributes 2% to India’s GDP, 14% of industrial production, 27% of the country’s foreign exchange inflows and constitutes 13% of country’s export earnings. Employing over 45 mn people the textile sector has the second largest employer after agriculture sector. 

  •  Foreign direct investment (FDI) in textile sector more than doubled to USD 618.95 mn during 2016-17 from USD 230.13 mn in the previous fiscal
  •  By 2024, India is is expected to reach USD 300 bn in exports

 

100% FDI is allowed under automatic route

HIGHLIGHTS

  • Largest producer of cotton & jute in the world
  • Second largest producer of polyester, silk & fibre in the world
  • Second largest employment provider in India

Industry Scenario

Indian textile industry was valued at USD 137 bn in 2015-16 and is expected to reach USD 223 bn by 2021.

The sector is highly diversified with a wide range of segments, like products of traditional handloom, handicrafts, wool, silk products to the organised textile industry comprising of spinning, weaving, processing, apparel and garment characterised by the use of capital-intensive technology for mass production of textile products. 

Out of USD 137 bn of Indian textile market, USD 97 bn is catered through domestic consumption. The remaining market of USD 40 bn is export market. 

Further domestic consumption (USD 97 bn) is divided into household consumption (USD 83 mn) and technical textiles (USD 14 bn). 9% of the world’s total consumption of technical textiles is made in India. Exports (USD 40 bn) has textile exports (USD 23 bn) and apparel exports (USD 17 bn).

Growth Drivers

text gd
  • Expected sector CAGR (2016-2021E)

    10%

  • GDP contribution

    2%

  • Share of textile exports of overall exports

    15%

  • Employment generated (no. of people)

    45 mn

Key policies

Scheme for Integrated Textile Parks (SITP)

Primary objective of the SITP is to provide the industry with worldclass state of the art infrastructure facilities for setting up their textile units. The scheme would facilitate textile units to meet international environmental and social standards. SITP would create new parks of international standards at potential growth centres. This scheme envisages engaging of a panel of professional agencies for project identification and execution.

 

Amended Technology Upgradation Fund Scheme (ATUFS)

In order to promote EoDB in the country and achieve the vision of generating employment and promoting exports through 'Make in India' with 'Zero effect and Zero defect' in manufacturing, it has been decided that government would provide credit linked Capital Investment Subsidy (CIS) under Ammend Technology Upgradation Fund Scheme (ATUFS)
 

Technology Mission for Technical Textiles (TMTT)

Technical Textiles is a high technology sunrise sector which is steadily gaining ground in India. Technical textiles are functional fabrics that have applications across various industries including automobiles, civil engineering and construction, agriculture, healthcare, industrial safety, personal protection etc. Based on usage, there are 12 technical textile segments; Agrotech, Meditech, Buildtech, Mobiltech, Clothtech, Oekotech, Geotech, Packtech, Hometech, Protech, Indutech and Sportech.

 

Vision, Strategy and Action Plan for Indian Textile and Apparel Sector

Strategy ia achieving the ambitious Vision of exports of US$ 300 billion and 20% share of global trade by 2024-25 is not going to be easy andis unlikely with business-as-usual approach. A clear Strategy which can be implemented and would enable success would be an essential prerequisite.

 

Special package for textiles

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has given approval for a special package for employment generation and promotion of exports in Textile and Apparel sector. The move comes in the backdrop of the package of reforms announced by the Government for generation of one crore jobs in the textile and apparel industry over next 3 years. The package includes a slew of measures which are labour friendly and would promote employment generation, economies of scale and boost exports. The steps will lead to a cumulative increase of US$ 30 bn. in exports and investment of Rs. 74,000 crores over next 3 years.

 

Merchandise Exports from India Scheme (MEIS)

Merchandise Exports from India Scheme (MEIS) under Foreign Trade Policy of India (FTP 2015-20) is one of the two schemes introduced in Foreign Trade Policy of India 2015-20, as a part of Exports from India Scheme. (The other scheme is SEIS, Service Exports from India Scheme).

The Government of India has brought in the Merchandise Exports Incentive Scheme (MEIS), replacing five other similar incentive schemes present in the earlier Foreign Trade Policy 2009-14. The schemes that have been replaced by the MEIS scheme include:

-Focus Product Scheme (FPS)
-Focus Market Scheme (FMS)
-Market Linked Focus Product Scheme (MLFPS)
-Agri. Infrastructure incentive scheme
-Vishesh Krishi Gramin Upaj Yojna (VKGUY)

As per the present FTP, the MEIS scheme does not aim to merely replace these five schemes but also aims to rationalize the incentives and enlarges their scopes by removing various restrictions.

Integrated Skill Development Scheme (ISDS)

The ISDS has been scaled up during the 12th Plan with an allocation of INR 1,900 cr to train 15 lakh persons. ISDS seeks to address the critical gap of skilled manpower in textiles industry-oriented training programmes; it is implemented through three components by 86 implementing agencies.

FDI Facts

  • FDI growth in 2016-17 viz-a-viz 2015-16

  • FDI (in USD) in textile sector (including dyed, printed) during Apr2000-Jun2017

  • FDI is allowed  under the automatic route in the textile sector; investment is subject to all applicable regulations and laws.

Recent Investments

  • August 2017 - Toray, a Japanese MNC to invest USD 152.9 mn in manufacturing facility in Sri City

  • June 2017 - Max Fashion, a part of Dubai based Landmark Group, plans to expand its sales network to 400 stores in 120 cities by investing USD 60 mn  in the next 4 years.

  • March 2015 - Grasim Industries has invested USD 15 mn  to develop its first fabric brand, Liva', which it will distribute through 1,000 outlets as part of a plan to stay in sync with changing consumer behaviour.

Major Investors