Navigating Textile Industry Shifts
A transformative decade for global textile industry is looking upon us. It provides an opportunity to evaluate the strategies India needs to adopt in its pursuit to remain competitive in the Global Textile Industry.
India’s economic landscape has shown remarkable resilience in the first half of 2024, with real GDP growth for the final quarter of the fiscal year 2023-2024 recorded at 7.8 per cent. This has led to an overall annual growth rate of 8.2 per cent, surpassing the previous official estimate of 7.6 per cent and marking a significant increase from the 7 per cent growth in FY 2022-2023.
The first half of 2024 is behind us; the uncertainties that continue to affect businesses are slowly receding, thanks to a robust domestic economy and manageable inflation levels. The recent general elections, which saw the incumbent government re-elected, have further bolstered business confidence. This political stability is anticipated to foster on-going policy consistency and a renewed emphasis on growth-oriented reforms, enhancing optimism within the business community.
Shifts in the T&A industry
During the current decade, the Global and Indian Textile and Apparel industry has been under pressure to mitigate challenges such as recovery from the pandemic overturns, unexpected geopolitical developments (conflicts in Ukraine, Middle East) rising inflation, supply chain disruptions (container/vessel shortages), high freight costs (red sea crisis), unstable demand, and fluctuations in commodity prices. These challenges have led the textile and apparel marketplace to become an assembly of fragmented supply chains, with production and sourcing functions often dispersed across multiple countries to leverage cost efficiencies and overcome disruptions.
In the wake of these challenges, the textile stakeholders have shown tremendous resilience in adopting to the shifts resultant from the changing trade dynamics. The shifts required them to upgrade in areas like consumer preferences, technological advancements, market trends and regulatory policies that continue to influence the trade landscape.
Planning for transformative shift
On July 23, 2024, Finance Minister Nirmala Sitharaman presented the India Budget for 2024-25, which elicited mixed reactions from the textile industry. While certain provisions are viewed positively for their potential to stimulate business and create jobs, there are concerns regarding the absence of comprehensive support for the sector. This reflects the on-going challenges faced by the industry amidst a generally favourable economic backdrop.
The Union Budget 2024-25 marks a transformative shift in India’s fiscal strategy, aiming towards a prosperous future for the next generation. The Budget is well balanced and growth oriented addressing the requirements of increasing employment, skill sets and industrial output by focusing on MSMEs, E-Commerce and the manufacturing ecosystem.
MSME focus
At TEXPROCIL, we have been advocating the speedy implementation of various schemes and timely reimbursements of dues to benefit the MSME sector. The government must also ensure that the PM MITRA Parks are fully operational to support integrated textile value chains.
The Union Budget 2024-2025 has given a boost to the MSME sector by assuring credit support during stress period as well as giving a credit guarantee by facilitating term loans for purchase of machinery and equipment without collateral. Also, the development of investment-ready “plug and play” industrial parks with complete infrastructure, in partnership with the states and private sector will also encourage investments.
E-Commerce & energy
The Council has been continuously representing the capabilities and potential of E-Commerce Trade in growing our textile exports. In this regard, the Government must be appreciated for taking step towards creation of E-Commerce Export Hubs in public-private-partnership (PPP) mode enabling MSMEs and traditional artisans to sell their products in international markets. These hubs, under a seamless regulatory and logistic framework, will facilitate trade and export related services under one roof.
The reduction in duty on components that go into the manufacture of solar panels will aid the industry’s preparedness in employing solar energy for a more sustainable and green future.
Reforming the entire value chain
As concerns the textile sector, we must appreciate the Government for proposing a comprehensive review of the agriculture research setup to bring the focus on raising productivity and developing climate resilient varieties. This is expected to improve productivity and boost production of raw cotton in India.
The Rental housing with dormitory type accommodation for industrial workers facilitated in PPP mode with VGF support and commitment from anchor industries will be a huge help and enhance labour supply and welfare.
The development of investment-ready “plug and play” industrial parks with complete infrastructure, in partnership with the states and private sector will also encourage investments. Further, the Schemes for job creation, participation of women in workforce and skilling will go a long way in enhancing the economy of India.
Strategies to enhance trade
To effectively navigate the dynamic trade landscape, textile and apparel businesses are required to adopt some of the strategic imperatives. Innovation, sustainability and circularity in the textiles industry are critical for reducing waste, conserving resources, and ensuring long-term economic and environmental prosperity.
Initiatives and collaborations are underway to improve recycling rates, and adopt circular economy principles to address the challenges posed by:
Ø Fast fashion: Higher production rates are leading to increased dumping of unwanted clothes in land-fills;
Ø Increased use of synthetic fibres: The lifecycle of synthetic fibres starts with production using fossil fuels which causes depletion of critical resources. Also, in the end-use cycle these fibres are known to release micro-plastics that cause pollution.
Internally, the rising consumer awareness and regulatory pressures to meet global norms have led to a growing emphasis on sustainability and ethical practices, thereby compelling companies to integrate sustainability into their business models. This has led the businesses to focus on areas such as eco-friendly materials, energy efficiency, waste reduction, ethical sourcing, and supply chain transparency.
On the external trade front, the textile marketplace of 2024 and beyond presents both challenges and opportunities. Proactive adaptation to industry trends and consumer demands will be essential for maintaining a competitive edge in the evolving textile industry. For example, EU’s Carbon Border Adjustment Mechanism (CBAM) with principles of Extended Producers Responsibility (EPR) will require non-EU countries to prepare by adopting more efficient production methods, transitioning to renewable energy sources, and engaging in trade negotiations.
Way forward
The global and Indian textile & apparel industry is undergoing a steep change characterised by sourcing shifts, sustainability and digitalisation. The crisis facing the industry is real and poses challenges, at the same time, there are opportunities to align business models to the emerging trends.
Navigating through the crisis requires close collaboration among the stakeholders. Strategic adoption of Innovation, Sustainability and Circularity principles can help businesses to navigate this complex landscape. Strengthening the textile eco system is a policy imperative. On the part of the industry, strategy adoption and collaboration can support the accomplishment of a wide variety of development objectives in the textiles sector.
Favourable government policies and the timely implementation of the sectoral reforms should propel Indian textile exports to higher levels.
About the author:
Dr Siddhartha Rajagopal is the Executive Director at The Cotton Textiles Export Promotion Council (TEXPROCIL). He has experience of over two decades in matters relating to international trade in textile and clothing. Having acquired a Master’s Degree in Political Science with specialisation in international economic relations, joined the TEXPROCIL in 1992 after serving the Apparel Export Promotion Council (AEPC).
