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Need for improved manufacturing environment

Oct 01, 2016
Need for improved manufacturing environment

- RK Dalmia, Chairman, Texprocil

The Indian textile and clothing industry is very old and plays a very important part in the Indian economy. Except China, no other nation can match the size, spread, depth and competitiveness of the Indian textile and clothing industry. Liberalisation also has given the much-needed push to the textile industry, which has now successfully become one of the largest in the world. It has a complete value chain from the production of raw materials to the manufacture of finished goods.


  • India has high self-sufficiency in raw material particularly natural fibres. India is currently the largest producer of cotton in the world. Indian textile industry produces and handles all types of fibres
  • There is easy availability of low cost and proficient manpower that contributes extensively to the growth of the industry. Strong entrepreneurial skills have always been the backbone of the Indian textile industry
  • India accounted for around 29 per cent share of the global trade in cotton yarn in 2015
  • The varied sizes of manufacturing units allows for greater flexibility to service smaller and customised orders
  • Natural demand drivers including rising income levels, increasing urbanisation, retail growth drive domestic demand


  • There is a huge dependency of the industry on cotton
  • Processing is a weak link in the Indian textile value chain, adversely affecting its ability to compete in exports.
  • Poor infrastructure along with high power costs, interest costs, taxes are eroding India’s export competitiveness across the textile chain
  • Less attention on man power training, skill building etc.
  • International Quality Standards need to be maintained across all levels of production
  • Very low investment in R&D


  • Market access through bilateral negotiation which helps the trade grow between participating countries
  • Manufacture of high value premium items by moving up the value chain through the production of value added products and more technologically superior products
  • A shift towards the market of branded ready-made garment and more number of emerging malls and retail outlets providing opportunities to industry segments like handicrafts and apparels.
  • Address issues of non-fiscal nature like delivery, quality, meeting compliance standards
  • FDI and investment opportunities
  • Technical textiles market


  • Formation of Trading Blocks like TPP, TTIP, NAFTA, CAFTA, etc., has resulted in a change in the world trade scenario. Existence of bilateral agreements would result in significant disadvantage for Indian exports to partners of such FTAs.
  • Geographical distance from major markets resulting in high shipping expenses and longer lead-times Environmental and international labor laws
  • China factor and increased competition from countries like Bangladesh, Vietnam, Pakistan due to duty free access in major global markets

There is a need for the government to improve the enabling environment for manufacturing by:

  • Refunding state levies incurred in manufacturing and tax rebates on surcharges and duties paid on electricity need to be extended to the value chain
  • Labour reform package extended to garment sector should also be extended to the value chain
  • Improving productivity of sector through training, skill building and managerial capabilities and through retention of work force
  • Tax rebate on creating new employment to be extended to the value chain
  • Need to expedite negotiations on FTAs with EU, Canada and Australia. Also look at bilateral negotiations with China and Turkey
  • Availability of raw material at prices which are on par with international prices