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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 and accounts for 14% of industrial production, 27% of the country’s foreign exchange inflows and 13% of country’s export earnings. The textile sector that employs 45 mn people in India, is second only to agriculture sector in terms of employment.

  •  Foreign direct investment (FDI) in textile sector more than doubled to USD 618.95 mn during 2016-17 from USD 230.13 mn, a year ago.
  •  Exports in the textile sector is expected to reach USD 300 bn by 2024.

 

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 employer 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 textile sector in India is highly diversified with a wide range of segments ranging from products of traditional handloom, handicrafts, wool and silk products to the organised textile industry. Organised textile industry is characterised by the use of capital-intensive technology for mass production of textile products and includes spinning, weaving, processing, apparel and garment.

The domestic textile industry stood at USD 137 bn in 2016, witnessing a growth of 27% from a year ago. Out of USD 137 bn, textile worth USD 97 bn was domestically consumed while the remaining portion worth USD 40 bn was exported in the world market.

Further, domestic consumption of USD 97 bn was divided into household consumption at USD 83 bn and technical textiles at USD 14 bn. While, exports comprised of textile exports at USD 23 bn and apparel exports at USD 17 bn. India also meets the needs of 9% of the world’s total consumption of technical textiles.

Growth Drivers

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

    10%

  • GDP contribution

    2%

  • Share of textile exports of overall exports

    ~ 15%

  • Employment generated

    45 mn

Key policies

Amended Technology Upgradation Fund Scheme (ATUFS)

Under ATUFS, the government provides credit linked Capital Investment Subsidy (CIS) 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.

Integrated Skill Development Scheme (ISDS)

The ISDS has been scaled up during the 12th Plan with an allocation of approximately USD 284 mn to train 1.5 mn people. ISDS seeks to address the critical gap of skilled manpower in textiles industry-oriented training programmes. The scheme is implemented through three components by 86 implementing agencies.

Merchandise Exports from India Scheme (MEIS)

MEIS 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 or Service Exports from India Scheme.

The Government of India brought in the MEIS by 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.

Scheme for Integrated Textile Parks (SITP)

The primary objective of the SITP is to provide the industry with world-class 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.

Special package for textiles

The Union Cabinet under the chairmanship of Prime Minister Narendra Modi gave 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 10 mn 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 USD 30 bn in exports and investment of approximately USD 11 bn over next 3 years.

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 and personal protection, among others. 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

Under the plan, India aims at achieving the ambitious vision of exports worth US$ 300 billion and 20% share of global trade by 2024-25.

Accordingly, the following 10 point strategy is suggested for implementation:

  1. Achieving Scale across the Value Chain
  2. Attract Investment into the Sector
  3. Skill, Quality and Productivity
  4. Reforming Labour Laws
  5. Structural Shift with increasing Value Addition in India
  6. Diversification of Exports in terms of Products and Markets
  7. Promoting Innovation and R&D
  8. New Approach towards Handloom and Handicrafts
  9. Partnership with State Government
  10. Reengineering of Existing Schemes and Policies

FDI Facts

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

  • FDI (in USD) in textile sector (including dyed, printed) during April 2000 - December 2017

  • 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