Synthesising growth

After a bumper sale in the first half of 2022-23, exports order has declined for Indian textile and apparel (T&A) makers. For example, exporters in Tiruppur (India’s biggest knitwear exporting region) witnessed a sharp decline in orders in October-December 2022 period with 30-40 per cent drop in demand compared to Oct-Dec 2021. Since the Russia-Ukraine conflict began, export orders from Europe (one of India’s leading trade partners) have come down drastically. To tide over the crisis, textile manufacturers are seeking export incentives, interest subvention and additional credit support from the Union Government. They are also demanding the removal of import duty on raw cotton and imposition of anti-dumping duty (ADD) on imports of viscose staple yarn (VSY).

Another factor for India’s stagnant export performance has been the country’s over-dependence on cotton-based T&A products. For example, in Tiruppur, of the total 2,000 textile units, only 10 per cent produce man-made fibre (MMF) or blended fabrics. This is a handicap especially in fast growing segments like sportswear (which uses only synthetic garments). While Ludhiana has emerged as one of the leading MMF product manufacturing centres in the country, the scope is very vast and we need more units/clusters focusing on synthetic garments.

Globally, 70 per cent of T&A market is based on synthetics. The global fibre consumption has increased from 87 million tonnes (MT) in 2014 to 103 MT in 2022, with polyester replacing cotton to become the largest and the fastest-growing category in the world with current global consumption of 57 MT, according to a report of Wazir Advisors.

While India holds fourth position in the global T&A market with 5 per cent share, it stands on the sixth position in apparel exports with 3 per cent share. While China dominates the synthetic T&A space, India’s focuses on cotton based textile value chain. Since 2010, China has lost 4 per cent share in the global apparel trade whereas Bangladesh and Vietnam have gained 3 per cent share each. On the other hand, India’s share has remained stagnant during the same period. Hence, for India to raise its global market share, it has to increase its presence in the MMF based value chain.

Realising the potential of the MMF industry, the Government of India has taken the initiative to promote synthetic textile manufacturing by launching dedicated schemes like Production Linked Incentive (PLI) and MITRA. Launched with an approved outlay of Rs 106.83 billion, PLI scheme has attracted investments of Rs 15.36 billion so far.

At present, Indian textile and apparel market is estimated at $153 billion, with domestic consumption and exports accounting for 70 per cent and 30 per cent share, respectively. India is a growing economy and the T&A market is poised to grow. The market is estimated to reach $ 250 billion by 2025-26, making India as one of the largest producers and consumer of T&A, according to Wazir Advisors report. To reach the $250 billion target, India will have to amplify exports with focus on synthetics.