Symbol of India’s rich heritage: The Indian Textile Industry is one of the oldest and largest industries of the economy. It contributes to 7 percent of industrial output in terms of value, 2 percent of India’s GDP and 15 percent of the country’s export earnings. The sector is the second largest employer as well as a large foreign exchange earner in the country. In terms of size, the textiles and apparel industry of India is valued at $127 billion. However, in terms of global textile exports, India’s share stands as low as 5% which translates to a value of roughly $39.2 billion; a staggering difference when compared with China’s share of 38%. Even small players such as Vietnam and Bangladesh, having a share of 3% each are threatening India’s position.
Despite the benefits of the availability of labor and a vertically integrated value chain (from fiber, yarn, fabric to apparel), the industry has been finding it difficult to increase its share in global exports. Not one but several factors owe to this situation, namely outdated technology, stringent labor laws, infrastructure bottlenecks and dominance of small scale and unorganized players in the industry. Furthermore, increased competition from low-cost producers like Vietnam and Bangladesh, China’s dominance in global apparel exports, a pressure to end export subsidy from the World Trade Organisation are external factors that are straining the industry.
With the help of the government, much of the factors can be taken care of in order to revive the industry. With the introduction of technology upgradation and skill development subsidies, all producers can be benefitted. Another aspect that can boost the industry is fiber neutrality. Globally, manmade textiles and apparels are in high demand and India needs to encash this opportunity. In spite of the introduction of GST, the differential tax treatment continues with cotton being taxed at 5% and manmade fibers (MMF) being taxed at 12%. This leads to unavailability of MMFs at competitive prices thereby causing a hindrance to growth. In addition, the government must carefully evaluate various trade agreement opportunities that can broaden our access to multiple markets. Focusing on future trends such as scaling up the apparel business to increase share in value-added segments will help the industry to move up the value chain and become a strong competitor. Lastly, innovation in technical textiles will not only align our production with the latest technology but also provide a competitive edge in the global arena.
As an industry, we have all the resources to make this a success story (abundant labor, an array of raw materials, complete value chain). With a few corrections, the government’s consistent support and a forward-thinking approach, our industry can dominate this space and further contribute to the nation’s growth.
About the Author:
Saniya Yenurkar is my childhood friend. She has worked for India’s biggest textile company Arvind Limited for more than 2 years as a Product Manager, an experience which exposed her to the complete lifecycle of various garments produced at Arvind from start to finish!
She has been roped for stocksandbiceps.com as a Textile Sector Expert and this is the first article for a series of other articles on this Sector. Next Article from Saniya would be on the complete process of garment making plus much more!
I thank Saniya on behalf of the readers for her insights!