The domestic market is also expected to expand significantly, from $ 110 billion in 2022 to $ 1.8 trillion, driven by the rise in e-commerce and fast fashion.
India, the world’s sixth-largest textile and apparel exporter, holds an 11.4 per cent share of the country’s overall exports. The government aims to boost textile exports to $ 600 billion by 2047 from $ 44 billion in FY22, a challenging target. The upcoming Budget 2024 could play a crucial role in propelling the sector towards this ambitious goal.
The domestic market is also expected to expand significantly, from $ 110 billion in 2022 to $ 1.8 trillion, driven by the rise in e-commerce and fast fashion. Projections indicate the domestic market will reach $ 250 billion by 2030, with exports hitting $ 100 billion.
Despite global textile and apparel exports growing at a compound annual growth rate of 3.4 per cent between 2018 and 2022, India’s exports grew by only 1 per cent during the same period. Factors contributing to this slow growth include geopolitical uncertainties, shifts in consumer spending to other essentials and discretionary items, adverse demographics, and low overall segment growth.
The sector faces several critical issues. The Russia-Ukraine war, the Red Sea crisis, and the Israel-Hamas conflict have complicated the international trade environment for Indian exporters. A CRISIL report from February indicated that while the Red Sea crisis might not significantly impact the textiles industry, a prolonged crisis could hurt margins and strain working capital cycles. Higher freight costs due to Houthi disruptions in the Suez Canal have been a hindrance, with freight rates rising by 40-50 per cent. Additionally, weak global demand for textiles remains a major concern, as highlighted by the May 2024 ITMF Global Textile Industry Survey, which reported ongoing stagnation in the textile business climate since September 2022.
The government’s Production Linked Incentive (PLI) scheme for textiles, approved in 2021 with an allocation of Rs 106.83 billion over five years, aims to promote the production of man-made fibre apparel, fabrics, and technical textile products. However, inefficiencies in the PLI scheme have also posed challenges for the sector.