Transforming India’s Textile Sector

The textiles & apparel industry must come out of its domestic market closet and focus on the blooming world exports market, suggests Bhadresh Dodhia

India’s exports of T&A have grown at a CAGR of 2.7 per cent during 2012 to 2022. In this, Textiles exports from India has grown at a CAGR of 3.4 per cent during 2012 to 2022. India’s T&A exports is expected to reach US$ 100 billion. by 2030, growing at a CAGR of 10 per cent during 2022 to 2030. Of this, the overall Textiles’ exports are expected to occupy 55 per cent of exports share. At present, the Textiles & Apparel industry contributes 2.3 per cent to the country’s GDP, 13 per cent to industrial production and 12 per cent to exports. Next to agriculture, it is the largest employment generating sector in India with above 45 million of workforce employed in the industry. This article speaks about the potential of the textiles industry, government initiatives, role of research and development which will act as growth driver, investment scenario in Textiles & Apparel industry, success factor to grow, opportunities, challenges and ways to overcome gaps in the sector.

Challenges faced by the industry

The major challenge faced by the textiles industry is lack of availability of several manmade fibres such as nylon 6,6, aramids, carbon. Hence, India is majorly dependent on imports for such fibres. Other key challenges are as follows:

• For India lacks in filament yarn based woven and knitted fabrics manufacturing and processing capacity.
• Low rates of RoDTEP, RoSCTL and duty drawback for MMF Textile Products as compared to cotton textiles products hindering the MMF Textiles exports.
• Inverted duty structure under GST.
• Tough competition from China, Indonesia, Vietnam, etc. in terms of price, quality, and lead time.
• Low level of participation of industry in exports due to the comfort of a large domestic market.
• Conventional and obsolete technology for manufacturing of textiles.
• Lack of large-scale and vertically integrated manufacturing units.
• Quality control orders only on specific items in the value chain.

Ways to overcome the gaps

The challenges in Indian textiles and apparel industry can be tackled by the following ways:

• Focus on manufacturing excellence: This can help the companies to counter the input cost inflation, improve overall performance and set a growth driven goal.
• Economies of scale: Economies of scale are cost advantages derived from the organised production and large scale of operation. This facilitates lower production cost at lesser lead time delivery.
• Vertical integration & joint ventures: Focusing on vertical integration and joint venture with Leading Global Role Models can help the industry to exist in the prevailing global uncertainties.
• Focus on manmade fibre-based fabric manufacturing: Global demand of MMF fabric is much more than cotton based. International brands and retailers are looking for innovative products based on MMF. Manufacturers need to have their own product development set-ups to develop new products instead of replicating someone else’s products.
• Innovation and R&D: Focus on innovation will help to establish India’s position in the market and command better prices.

Role of research and development in transformation

Research and Development (R&D) plays a pivotal role in the textile industry by driving innovation and enhancing product quality. Through R&D, companies can develop new fibres, fabrics, and production techniques that meet evolving consumer demands and environmental standards. Additionally, R&D helps in optimising manufacturing processes, improving sustainability, and reducing waste, thus contributing to an eco-friendly industry. By investing in R&D, textile firms can stay competitive, address market trends, and offer cutting-edge solutions that enhance both functionality and aesthetics in their products.

Government policies & initiatives

Government of India has taken several initiatives to boost the textiles industry by introducing policies and scheme like Pradhan Mantri Mega Integrated Textile Region and Apparel (PM MITRA) Parks Scheme which is Inspired by the 5F vision of Hon’ble Prime Minister – Farm to Fibre to Factory to Fashion to Foreign. The PM MITRA Parks will be set up to address the fragmentation in the textiles value chain and build world class infrastructure. Another initiative is the Production Linked Incentive (PLI) Scheme. The PLI scheme has been launched by the Government to promote the production and exports of MMF Fabrics & Apparel and Technical Textiles products in India. This will enable the textiles industry to achieve size and scale and help to become globally competitive. To boost the technical textiles sector, the government has launched the National Technical Textile Mission (NTTM). The objective of the mission is to boost research and development activities, promote exports and manufacturing of technical textiles in India and make India globally competitive in technical textiles. Furthermore, Kasturi Cotton initiatives has been launched by the government with an objective of promoting traceability and premium Indian cotton at global level.

Sustainability and green initiatives

Particularly the textiles industry has a long history of pursuing initiatives that promote sustainability. The consumption of energy, raw materials, and all other resources, as well as the emission of solid, liquid, and gaseous waste, determine the sustainability of textiles, but we must not overlook the in-use phase, where significant environmental savings can be made, as well as the disposal or recycling phase. Textile brands and manufacturers are taking initiatives towards sustainability. Some recent efforts include H&M which created transparency rules for suppliers and provided details of its sustainability strategy in its annual sustainability report, Nike sets sustainability targets that include minimising its environmental footprint through analysing the supply chain to “use less, use better and use again”, Patagonia — A market leader in responsible fashion, the company has launched an innovative clothing reuse and recycle program.

Skill development & capacity building

India still lacks skilled workforce and technical know-how especially in MMF textiles and technical textiles sector. To address this, the government has launched the Samarth scheme. The scheme has been launched to address the skill gap in the textile value chain, especially in MMF textiles and technical textiles. The scheme aids to generate large scale employment in the Indian textiles industry. The NTTM was launched with its one of the four components i.e. capacity building, to address the skill gap in the technical textiles sector.

Future outlook and success factors

Indian Textiles and Apparel (Textiles & Apparel) Industry is targeted to reach $ 350 billion by the year 2030. Of this, the domestic market is estimated to reach $ 250 billion while the exports are estimated to reach $ 100 billion by the year 2030. One of the key factors to succeed in the textiles & apparel industry in the upcoming years is the focus on collaborating with leading global brands and retailers or creating indigenous brands. Also, the industry should focus more on sustainability and recycling as the leading brands and retailers are looking for sustainable products. Another is the integrated value chain set ups and / or one stop shops will grow further and attain new heights in the textiles & apparel industry. Last but not the least, the textiles & apparel industry must come out of its domestic market closet and focus on the blooming world exports market.

Way forward

The Indian Textiles & Apparel industry is growing slowly but steadily despite several constraints. The sector has immense potential and growth opportunity owing to the strong determination of the entrepreneurs engaged in the industry. With adequate raw material supply, large domestic demand, workforce availability, government support and substantial ecosystem, the industry can become a prominent supplier of good quality textiles & apparel in the world.

About the author:

Bhadresh Dodhia is the Chairman of Manmade And Technical Textiles Export Promotion Council – MATEXIL (formerly SRTEPC). He is also the Co-Chairman of Bharat Tex and the Director of International Trade & Finance, Dodhia Group.