Rahul Mehta: There is an urgent need for a garment-oriented PLI scheme

The Clothing Manufacturers Association of India (CMAI) is the pioneer and most representative Association of the Indian apparel industry for over five decades. It has a membership base of over 20,000 companies, including readymade garment manufacturers, exporters, retailers and ancillary industry. With its headquarter in Mumbai, CMAI also has branches in New Delhi, Bengaluru and Pune. Rahul Mehta, Chief Mentor, CMAI, suggests measures to boost our exports in this conversation with Divya Shetty.

How did India’s textile exports fare in 2024?

The year 2024 began on a sluggish note, with conditions resembling the challenges faced in 2023. However, in the second half of the year, there was an upswing, with growth rates between eight-10 per cent over the corresponding period. Notably, in October, we observed significant growth due to a combination of factors.

Firstly, the on-going disturbances in Bangladesh have led buyers to consider India as an alternative sourcing destination. Additionally, there has been some recovery in the US market, providing an overall advantage.

While the outlook appears brighter compared to earlier, it is important to acknowledge that the base year of 2023 was relatively low. Therefore, while the positive shift is encouraging after years of static or minimal growth, it is essential to remain cautiously optimistic.

Do you believe Donald Trump’s victory in the US presidential election will positively impact the Indian textile industry?

He has mentioned the possibility of imposing additional import duties, which would naturally impact China more significantly but would also affect India. If these measures lead to increased inflation and a significant rise in garment prices for consumers, the market reaction remains uncertain. Personally, I believe Trump’s presidency could either give a significant boost to our exports or act as a dampener. Only time will reveal the actual outcome.

What suggestions would you offer to the government to enhance textile exports in the coming year?

We have made few key recommendations to the government. The first is the urgent need for a garment-oriented PLI scheme. The current scheme is difficult for mid-level textile units to access, and with the right investment, these units could become large garment manufacturers. We propose the maximum investment limit for a garment unit be set at around Rs 100-120 million, which we believe would be a significant improvement.

The second recommendation pertains to the domestic sector. When an organisation or corporation goes bankrupt and enters the NCLT process, vendors—particularly those from the MSME sector—are left with little recourse and typically receive no payments for their shipments. We recommend that MSME vendors be treated on par with secured creditors to ensure they are given fair consideration in such situations.

What is the projected growth for Indian textile exports in the next 5-10 years and what strategies can industry players adopt to stay competitive globally?

My estimate is that we can easily achieve a 10-12 per cent growth annually over the next 5-10 years. However, to reach this growth rate, particularly by capturing market share from competitors like Bangladesh, the following strategies will be essential:

• Increase production capacities: Expanding production facilities will be crucial to meeting growing demand.
• Scale up factory sizes: Small factories with 200-300 machines will not be sufficient to compete in the current market. Larger, more efficient factories are needed.
• Shift focus from price to sustainability and compliance: Moving away from price as the primary marketing focus is vital. We must prioritise sustainability and compliance with newer requirements, especially from European markets, to remain competitive.
• Focus on MMF-based garments: The global textile trade is increasingly shifting towards Man-Made Fibre (MMF) garments, and we must align ourselves with this trend.
• Improve productivity: While Indian labour costs are not excessively high, our productivity levels lag behind global standards. Improving productivity should be a key priority.
• Reduce delivery time: Shortening delivery times is essential, as buyers are no longer willing to wait several months for their orders.

If we focus on and address these strategies, I believe we can achieve a growth rate of 12-15 per cent, possibly even exceed it.