In need of urgent reforms

In need of urgent reforms


The new Union Textiles Minister Giriraj Singh has his task cut out. India’s textiles and apparel (T&A) exports decreased in 2023 compared to the levels in 2018. Over the past two decades, Bangladesh and Vietnam have surpassed India despite their reliance on imported raw materials, highlighting a significant decline in India’s competitiveness. India risks further losing ground in the global T&A market if urgent reforms are not implemented.

Between 2018 and 2023, India’s trade dynamics in the apparels, made-ups and textiles sectors have shown a mixed pattern of growth and decline, according to Global Trade Research Initiative (GTRI). Overall, India’s total exports in these sectors decreased by 7.87 per cent from $37.16 billion in 2018 to $34.24 billion in 2023. At the same time the total imports in these sectors grew by 25.46 per cent over the five years, $7.32 billion in 2018 to $9.18 billion in 2023.

After taking charge of the Ministry, Singh interacted with major industry representatives representing the entire textile value chain on 20 June 2024. During interaction, industry representatives put forward their views on the present status of the textile sector including challenges to be addressed and shared innovative ideas for accelerating growth of the sector.

According to GTRI, the Government of India (GoI) needs to conduct an honest and thorough appraisal of all schemes, including Production Linked Incentive (PLI) scheme and PM Mega Integrated Textile Region and Apparel (PM MITRA) for the textile industry. The current PLI scheme for textiles, approved in September 2021, has failed to boost India’s textile exports. The centre is now reportedly planning to tweak the scheme by bringing in more product lines, such as t-shirts and innerwear, under it. The government is also contemplating to extend the time provided to an applicant to set up the facility from two years to over three years.

However, industry experts want the government to reduce the minimum entry level so that smaller players could also benefit from the scheme. The current PLI scheme structure with large capital layout is more suitable for setting up large textile mills and not apparel manufacturing units, which are a significant employer compared to mills that are increasingly automated. A booming apparels sector will act as demand generator for large mills, which are struggling to sell their products at present.

Meanwhile, despite unfavourable economic conditions in major markets such as the European Union (EU), the US, and West Asian nations, Indian textile exports grew by 9.59 per cent in May 2024 compared to the previous year, according to a report of the Confederation of Indian Textile Industry (CITI). The cumulative exports of T&A during April-May 2024 saw a surge of 5.34 per cent to $ 5.8 billion as compared to the same period last year. While textile exports was up by 6.04 per cent, apparel exports increased by 4.46 per cent.

With the budget scheduled in July 2024, the industry is the wait-and-watch mode.