(General Studies III – Economy Section – Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.)
- India’s textile industry, a critical sector for the country’s economy, was valued at $153 billion in 2021.
- Aiming for $350 billion by 2030, the industry faces several challenges but remains resilient due to its diversity, labour intensity, and global significance.
- The sector contributes 2.3% to the national GDP and employs about 105 million people directly and indirectly.
Key Characteristics of the Indian Textile Industry –
- Diverse Product Range: The industry covers a wide range of products, including natural fibres like cotton, silk, jute, and synthetic fibres such as polyester and viscose. India is the second-largest producer of man-made fibres (MMF) and the largest producer of cotton globally
- Labor-Intensive Nature: The textile industry is highly labor-intensive, especially in rural regions, with MSMEs (Micro, Small, and Medium Enterprises) accounting for 80% of the sector’s operations
- Global Standing: India ranks as the third-largest exporter of textiles, with a global market share of 5.4%. The country also ranks second in apparel manufacturing.
- Emerging Sectors: There is increasing demand for technical textiles, such as those used in automotive, healthcare, and construction industries. Additionally, sustainable textiles are becoming more important as the global market shifts toward eco-friendly materials, such as organic cotton and bamboo fibre
Major Challenges Facing the Industry –
- Raw Material Price Volatility: The 10% import duty on cotton and fluctuating prices of MMF have hurt the competitiveness of Indian textiles internationally. Local manufacturers are also struggling due to increased imports from Bangladesh, especially in the knitted fabric segment, which benefits from free trade agreements (FTAs)
- Technological Gaps: One of the industry’s most pressing challenges is the lack of advanced technology, particularly in finishing and processing. Many manufacturers rely on outdated methods, which limits the quality and output of Indian textiles. As a result, they are forced to import high-quality finished fabrics, which reduces cost efficiency
- Geopolitical and Supply Chain Disruptions: The ongoing Russia-Ukraine conflict and rising freight costs due to instability in global shipping routes have severely affected the industry. India’s exports to its major markets, like the US and EU, have declined due to reduced consumption amid recessionary trends
- Sustainability Pressure: Global brands are increasingly focused on sourcing materials that adhere to Environmental, Social, and Governance (ESG) standards. This means Indian manufacturers must meet higher sustainability targets, which can be expensive and difficult to achieve without significant investment
- Changing Consumer Preferences: Consumer preferences are evolving, with a growing demand for comfort wear, athleisure, and sustainable fashion. Indian manufacturers need to adapt to these trends to remain competitive both domestically and internationally.
Government Initiatives and Future Prospects –
- Production-Linked Incentive (PLI) Scheme: Launched in 2021, this ₹10,683 crore scheme aims to boost the production of MMF-based textiles and technical textiles. Investments worth ₹2,119 crore have already been made, creating over 8,000 jobs
- Scheme for Integrated Textile Parks (SITP): This initiative focuses on improving infrastructure across the textile value chain. With 54 textile parks approved, the aim is to develop world-class facilities that enhance operational efficiency
- Sustainability Initiatives: The focus on sustainable practices is growing. The demand for organic and recycled fibres is increasing, while digital textile printing is helping reduce waste and meet consumer demand for environmentally friendly products
- Technical Textiles Growth: Technical textiles, known for their durability and advanced applications in healthcare, automotive, and defense, are a key growth area. This sector is expected to expand rapidly, driven by both government support and rising global demand
The Indian textile industry, despite facing significant challenges such as raw material volatility, technological gaps, and global disruptions, has immense growth potential. Key government initiatives like the PLI and SITP schemes are expected to drive future growth, particularly in the technical textiles and sustainable fashion segments. For the industry to achieve its ambitious goal of $350 billion by 2030, it must address these challenges through innovation, investments in infrastructure, and aligning with global sustainability trends
