UNIT 8 TEXTILES AND GARMENTS

Structure

8.0 Objectives

8.1 Introduction

8.2 An Overview of Indian Textile Industry

8.3 Recent Trends in Exports and Imports

8.4 Recent Trends in Readymade Garments Exports

8.5 Strengths and Weaknesses

8.6 Export Promotion Measures

8.7 Future Prospects and Strategic Responses

8.8 WTO and Textiles and Garments

8.9. Let Us Sum Up

8.10. Key Words

8.11. Terminal Questions

8.0 OBJECTIVES

After studying this unit, you should be able to:

• Explain the importance of textiles and garments industry to the Indian economy.
• Outline the various sectors of the Indian textiles industry
• Identify the trends in export and import of textiles industry
• Analyse the export performance of readymade garments and the trend thereon
• Discuss the strengths and weaknesses of Indian textiles and garments industry
• Explain the export promotion measures undertaken by government to enhance export
of textiles and garments industry
• Discuss the future prospects and strategic responses to boost Indian textiles and
garments export

1
8.1 INTRODUCTION

Indian textile industry is one of the oldest and largest industries of the economy. The textile
industry of India exhibits rich cultural heritage with wide variety of fabrics, hues and
techniques that reflect the diverse traditions across the nation. Interestingly, the sector is
closely linked to agriculture as most of the raw materials like silk, cotton, jute etc. comes
from the agricultural and allied sectors. The textile and garment industry provide large-scale
employment to both skilled and unskilled labour. Over 4.5 crore people are directly employed
in this industry and close to 6.5 crore people are employed in the allied sectors. The sector is
also linked to rural economy and performance of major fibre crafts and crops like handicrafts,
handlooms, cotton, silk, wool etc. alongside employing millions of craft persons and farmers
in rural and semi-urban areas. Fine craftsmanship, global appeal and large manufacturing
base of Indian textiles makes it unique and popular abroad.

The Indian textile and garment industry is valued at over US$ 100 billion and accounts for
14% of the country’s industrial production. India is a net exporter in textile and garment
industry i.e. the export of the industry exceeds its import. The textile and garment industries
thus play an important role of reducing current deficit and earning foreign exchange. In this
Unit, you will learn overview of Indian Textile industry and recent trends in exports and
imports. You will be further learning the recent trends in readymade garments exports,
strengths, weaknesses and export promotion measures. You will be further acquainted with
future prospects and strategic responses and WTO and textiles and garments.

8.2 AN OVERVIEW OF INDIAN TEXTILES INDUSTRY

Textile and garment industry are of great significance to the economy because they have high
domestic value addition, generate employment, and have historically been strength area in the
export markets. The contribution of Indian textile and garment industry to the country’s total
export earnings is around 15%. The industry globally ranks second in production of fibre,
fabric and yarn and fifth in the production of synthetic fibre. The sector is predominantly
based on cotton, with cotton being the raw material for around 65% products.

The Indian textile industry is extremely varied with intensive sophisticated mills to hand-spun
and hand-woven sectors. Wide variety of fibres are used by this industry ranging from natural
fibres like jute, silk, cotton and wool to man-made fibres like viscose, polyester, acrylic and
2
multiple blends of fibres and filament yarn. The industry covers gamut of activities with
production of raw materials at one end to providing high value-added products like fabrics
and garments to consumers at the other end. The Indian textile industry can be broadly
divided into two categories i.e. the organised sector and the unorganised sector. The
organised sector operates on large scale by using modern techniques of production and
consists of spinning, garment and apparel segments whereas the unorganised sector are small
scale units that use traditional methods of production and consists of handloom, sericulture
and wool segments.

The textile and garment industry can categorically be divided into five sectors as shown
below:

Indian Textile Industry

Organised Decentralised Cottage Wool & Silk &

Mill Sector Powerloom Handloom Wooleen Sericulture
Sector Sector Sector

Composite Mill Sector: These are large scale, organised, sophisticated mills that integrate
spinning, knitting & weaving, and sometimes fabric finishing. India’s composite mill sector
is the second largest in the world. India has 3542 mills with an installed capacity of over 50
million spindles and 8,42,000 rotors. Some of the large players of composite mill sector are
Arvind Mills, Lakshmi Mills, Mafatlal Ind., etc. The organised mill sector is found on
threshold of decline as it faces cut-throat competition from powerloom sector which are more
efficient.

Following are the activities undertaken by organised mills:

• Spinning: It is the process of converting manmade fibre or cotton into yarn to be used
for knitting or weaving.
• Knitting and Weaving: It converts cotton, blended or manmade yarns into knitted or
woven fabrics. This sector is the most fragmented, labour-intensive and small-scale
sector of Indian textile industry.

3
 • Fabric Finishing or Processing: It includes printing, dyeing and other cloth
preparation done prior to the manufacture of clothing. Processing involves chemical
treatment including colouration of fabrics and yarns for aesthetics as well as
durability. This sector is dominated by a large number of small-scale and independent
processors.

Powerloom Sector: Indian powerloom sector is among the biggest contributors to the textile
industry. About 60% of the total textile production in India is through decentralised
powerlooms. The home textile sector and readymade garments are heavily dependent on the
powerloom sector. India had 26,00,000 powerlooms as of April 2022, weaving over 20,000
million metrics of fabric and providing employment to more than 8 million workers. The
Indian powerloom sector produces cotton fabrics, dyed fabrics, grey printed fabrics and a mix
of synthetic, cotton and other fibres.

Powerloom sector contributes over 60% of the fabrics meant for exports. Indian powerloom
industry also makes coir geo-textiles, rugs, floor mattings etc. During the year 2021-22, coir
and coir products worth US$ 1492 million were exported from India. Indian cotton textiles
worth US$ 17.2 billion were exported in the year 2021-22, an increase of 54% from 2020-21
and 67% from 2019-20. India is also the largest exporter of sarees in the world accounting for
over half a million shipments every year. USA is the largest importer of India’s powerloom
products followed by China, Netherlands, South Korea and UK.

The government of India launched a Comprehensive Scheme for Powerloom Sector

Development (CSPSD) with the aim of upgrading plain powerlooms, IT, awareness,
publicity, market development, upgradation and modernisation of powerloom service centres.

Powerloom Development & Export Promotion Council (PDEXCIL) was set up in 1995 with
the objective to promote, develop, support, advance and increase the powerlooms and export
powerloom fabrics. PDEXCIL also participates in fairs, organises training & skill
development programmes and provides trade related information to the government &
exporters.

Handlooms Sector: It is an unorganised, decentralised sector consisting of weavers and

artisans engaged at cottage level with skills that has been sustained and transferred from one
generation to other. The handloom sector of India provides employment to over 35 lakhs
weavers and allied workers with women comprising more than 72% of the total handloom

4
workers. The unique aspect of this sector is the level of intricacy and artistry. The natural and
inherent advantages of this sector are:

• Minimal use of power

• Less capital intensive
• Adaptability to market requirements
• Eco-friendly
• Flexibility of small production

The various schemes undertaken by Government of India for the development of handloom
sector are:

National Handloom Development Corporation (NHDC) Ltd.: NHDC was set up in 1983
by the government as a Public Sector Undertaking (PSU) with the objective to supply all
types of yarn, quality dyes and other related materials needed by the handloom sector along
with marketing of handloom products. It also undertakes organising of buyer-seller meetings,
sensitizing programmes, and training for development of new products by using different
kinds of yarns.

National Handloom Development Programme: The approach of NHDP is a need based for
holistic and integrated development of handloom and the weavers. The scheme provides
support towards raw material, technology upgradation, design inputs, marketing support
through exhibitions, permanent structures in the form of marketing complexes, Urban Haats,
development of web portal for e-marketing of products etc. Following are few of the main
components of the scheme:

• Cluster Development Programme (CDP) stresses on development of weavers’

groups that can become self-sustainable. The maximum permissible financial
assistance by the government is Rs. 2 crore per cluster depending on the financial
requirement, managerial capacity, past record and level of maturity of the cluster.
• Handloom Marketing Assistance (HMA) helps the weavers and handloom
organisations in providing direct marketing platform for selling their products directly
to the customers. HMA engages in organising expos, assisting exporters to participate
in international events, buyer-seller meets, etc.

Handloom Export Promotion Council (HEPC) is an agency set up by Ministry of Textiles

to promote exports of handloom products like fabrics, carpets and floor coverings, home
5
furnishings etc. HEPC provides all support and guidance to handloom exporters of India and
global buyers for international marketing and trade promotion.

The Indian handloom export stood at US$ 223 million in the year 2020-21 whereas it stood at
US$ 229 million for the period of April 2021 to February 2022 (Figure: 8.1). The exports of
handloom sector were severely by Covid-19 pandemic and resulted in sharp decline of the
exports from US$ 316 million in 2019-20 to US$ 223 million in the following year (2020-
21). The most exported Indian handloom products during the year 2020-21 are mats and
mattings, carpets, rugs, bedsheets, cushion covers etc. Mats and mattings exported from India
during the year 2020-21 had a share of 29% in the total handloom exports. Various linen
products made from handloom such as bed linen, toilet linen, kitchen linen, napkins,
bedsheets, cushion covers, pillow covers, table clothes etc. had contributed about 23.5% to
the total Indian handloom exports in 2020-21.

Figure 8.1: India’s handloom exports trend

Indian handloom products are exported to more than 20 countries of the world. USA, UK,
Spain, Australia, Germany, France, Italy, South Africa, Netherlands and UAE are the top
importers of Indian handloom products (Figure: 8.2). USA has been the largest importer of
Indian handloom products consistently for the past 8 years. During the year 2020-21, USA
imported products worth US$ 83 million accounting to 37.3% of the total handloom exports
by India.

6
 Figure 8.2: Country – wise exports share

Wool and Woollen Textiles: India globally ranks third in the sheep population and ninth in
wool production. Indian wool and woollen industry is the seventh largest in the world
employing approximately 32 lakh people. Indian wool and woollen industry comprise of
organised and decentralised sectors. The organised sector consists of mills, combing units,
spinning units, machine made carpet manufacturing units, knitwear and woven garment units.
The decentralised units comprise of power loom units, hosiery and knitting units, hand-made
carpets, independent dyeing and process houses.

7
 Figure 8.3: India’s wool and woollen product exports

Indian exports of woollen products include tops, ready-made garments, worsted yarn, wool
tops, woollen yarn, fabric, blankets, knitwear, hand-made and machine-made carpets. During
the year 2021-22 (until January 2022), export of Indian woollen items was valued at US$
1.55 billion, as compared to US$ 935 million in 2020-21 (Figure: 8.3). The largest exported
woollen product from India during the year 2021-22 was floor coverings and carpets made of
wool, with a share of 42% in the total woollen exports and was valued at US$ 395 million.

India import raw wool and rags mainly from Australia and New Zealand because indigenous
production of fine quality wool is very limited in India as required by the organised mill and
the decentralised hosiery sector.

8
Figure 8.4: Country – wise export revenue share of India’s wool and woollen products
industry

The top export destinations for Indian wool and woollen products are USA, UK, Germany,
Italy, UAE, Australia, France, etc..

Central Wool Development Board (CWBD) was set up in 1987 by the Government of India
to look after the growth and development of the woollen industry in India. CWDB launched
Integrated Wool Development Programme (IWDP) in 2021 with the goal to stop the decline
of wool production in India and to improve the manufacturing processes. The objective of
IWDP was to enhance the quality of wool fibre and establish research centres to improve the
exports. It also aimed at improving the branding and marketing of wool products for exports.

Wool and Woollens Export Promotion council (WWEPC) was established in 1964 and
functions under the Ministry of Textiles. Its functions are:

• Acts as a registering authority for the member exporters of wool and woollen blended
products.
• Acts as an advisory body to the GoI for framing policies for the wool and woollen
products.
• Provides financial assistance to the member exporters for participating in international
trades and exhibitions.
• Organises trade expos and buyer-seller meetings
9
 • Organises workshops and seminars for the member exporters to create consciousness
and enhance competitiveness.

Silk and Sericulture: India ranks second in the production of silk globally employing around
10 million people in rural and semi-urban areas. Mulberry, Eri, Tasar and Muga are the four
types of natural silks produced in India that are further processed to produce silk garments,
fabrics, yarns, shawls, carpets, scarves, cushion covers and other accessories. The share of
Mulberry silk production is the largest among all other silks produced in India.

Figure 8.5: India’s silk and silk products exports trend

India exports natural silk yarn, raw silk, fabrics & made-ups, silk waste, readymade garments
and handloom products of silk. India exported silk and silk products valued at US$ 248.56
million during the year 2021-22 (Figure: 8.5). This is an increase of 25.3% over the last
year’s export valued at US$ 198.3 million. The silk fabrics & made-ups and readymade
garments of silk are the most exported Indian silk products contributing 45.3% and 36.3%
respectively to the total silk products exported from India during the year 2021-22.

10
 Figure 8.6: Country – wise share of India’s silk exports during 2020-21

India exports silk products to more than 30 countries of the world. The top importers of
Indian silk products are USA, UAE, China, UK, Australia, Germany, France, Italy, Spain and
Malaysia. USA is the largest importer of Indian silk products with a share of 29% during the
year 2020-21, followed by UAE (10%).

Several initiatives have been undertaken by the government with focus to develop new
technologies, provide education, train more workforce and enhance the connectivity between
experts, scientists and developers. Additionally, various other schemes are implemented by
the government for the development of the industry such as Sericulture Development in
North-Eastern States (NERTS), Silk Samagra, Tribal Sub-Plan (TSP), Scheduled Caste Sub-
Plan (SCSP) etc.

Central Silk Board (CSB) established in 1948 by the Government of India works under the
administrative control of Ministry of Textiles with major activities being research &
development, transfer of technology, training people, IT initiatives, seed organisation, co-
ordination & marketing development, establishing quality certification systems, brand
promotion and exports. Recent digital initiatives of CSB are mKisan, SMS service, SILKS
portal, video conferences, national database for reelers and farmers.

11
The Indian Silk Export Promotion Council (ISEPC) promotes and develops the Indian
silk industry and its exports. ISEPC explores markets, establishes contacts, organises buyer-
seller meets, hosts silk fairs & exhibitions and resolves trade disputes.

8.3 RECENT TRENDS IN EXPORTS AND IMPORTS

8.3.1 Exports

India contributes 4% share to the global trade in textiles and garments and is the sixth largest
exporter of Textiles & Garments globally. The share of textile and apparel in the total exports
of India was 11.4% in the year 2020-21 India exported textile and apparel worth US$ 42.3
billion in the year 2021-22 (Table: 8.1). This was an increase of 42% from the export value
of US$ 29.87 billion in the previous year of 2020-21. The export of textiles and apparel have
been showing a decreasing or negative trend in the years 2019-20 and 2020-21 due to global
slowdown which got further aggravated due to the Covid-19 pandemic resulting in
disruptions of supply chains and demand. The textile industry was heavily hit by the Covid-
19 pandemic. The global demand for fabric and yarn was muted during the first half of 2020-
21. But with the market recovering, the sector too has geared up its pace and the same can be
seen with the increase in exports in the year 2021-22.

Table 8.1: India’s export of textile and apparel in US$ million

Year Exports of Textiles & Apparel in US$

million
2017-18 35724
2018-19 36,558
2019-20 33,379
2020-21 29,872
2021-22 42,346
Source: DGCI&S

India’s majorly exported textile products includes Readymade Garments (RMG), cotton
textiles, man-made textiles and carpets. As shown in Table 8.2 readymade garments represent
the largest share of Indian textile exports followed by cotton textiles until the year 2020-21.

12
However, in the year 2021-22, the export of cotton textiles rose significantly, surpassing the
export of readymade garment and thus contributing to the highest share.

Table 8.2: Commodity Wise Export Share (value in US$ million)

Commodity 2017-18 2018-19 2019-20 2020-21 2021-22

Readymade Garment 16707 16138 15488 12272 16015
Cotton textiles 11212 12405 10263 11128 16516
Man-made Textiles 5413 5551 5324 4180 6944
Wool and Woollen 187 222 181 109 166
Textiles
Silk Products 69 76 72 76 145
Handloom Products 356 344 319 223 269
Jute Products 350 340 357 397 537
Carpets 1430 1482 1373 1491 1754
Source: DGCI&S

India’s textile products are exported to over 100 countries of the world. USA, UK and EU
together account for approximately 47% of the total textile and apparel exports by India
(Figure 8.7). USA was the top importer of Indian textile in the year 2021-22 accounting for
27% of total Indian textile exports, followed by EU (18%), Bangladesh (12%) and UAE
(6%).

13
 Figure 8.7: Country-wise export share

Table 8.3: Major Export Destinations of Indian Textiles & Apparel (in US$ million)

Countries 2019-20 2020-21 2021-22

USA 8626 8322 11865
Bangladesh 2172 2136 5179
UAE 2299 2211 2660
UK 2142 1637 2124
China 1138 1567 1623
Germany 1526 1348 1593
France 911 783 998
Spain 636 705 951
Netherland 729 710 943
Turkey 490 510 921
Source: DGCIS Annual Export

Table 8.3 shows that the major export destinations of Indian textiles and apparel are: USA,
Bangladesh, UAE, UK China etc.

14
Indian textile and garment industry is a net exporting industry indicating that its exports are
much higher than the imports resulting in increased foreign exchange for the country. The
share of textile import is about 2% in the total imports by India in the year 2021-22. The
imports of textile have been showing an increasing trend in the past 5 years except for the
year 2020-21 due to global restrictions imposed on trade during Covid-19 pandemic. The
exports of textiles and apparel for the year 2021-22 was US $ million 7022 (Table 8.4).

Table 8.4: India’s Import of Textile and Garment in US$ million

Year Exports of Textiles & Apparel in US$

million
2017-18 6394
2018-19 6755
2019-20 7498
2020-21 5296
2021-22 7022
Source: DGCI&S

8.3.2 Import

The import share of man-made textiles has increased over the years and is the top imported
product to India with a value of US$ 3433 million in the year 2021-22 (Table: 8.5). The share
of cotton textiles imported to India has shown significant drop over the past 3 years. China
has been the leading importer of textile & apparel to India, followed by Bangladesh, USA
and Vietnam (Table: 8.6).

Table 8.5: Commodity Wise Import Share (value in US$ million)

Commodity 2017-18 2018-19 2019-20 2020-21 2021-22

Readymade Garment 773 1106 1144 881 1244
Cotton textiles 2448 2065 2759 1527 1584
Man-made Textiles 2265 2670 2682 2334 3433
Wool and Woollen 372 425 332 200 336
Textiles
Silk Products 251 202 210 99 153
Handloom Products 11 15 10 6 7

15
Jute Products 181 170 242 176 165
Carpets 94 101 118 72 100
Source: DGCI&S

Table 8.6: Top Importers of Textiles & Apparel to India (in US$ million)

Countries 2019-20 2020-21 2021-22

China 2976 2584 3395
Bangladesh 650 510 839
USA 833 322 452
Vietnam 385 234 364
Indonesia 254 190 261
Thailand 181 136 229
Korea 180 126 192
Australia 162 100 191
Hong-Kong 241 148 182
Egypt 121 92 161
Source: Ministry of Commerce and Industry

Check Your Progress A

1. Enumerate the top five export markets for India’s textile and apparel industry.
………………………………………………………………………………………………
………………………………………………………………………………………………
……………………………………………………………………………………………..
2. Enumerate the top five import markets of textiles and apparel to India.
………………………………………………………………………………………………
………………………………………………………………………………………………
……………………………………………………………………………………………..
3. Enumerate the five sectors of Indian textile industry.
………………………………………………………………………………………………
………………………………………………………………………………………………
……………………………………………………………………………………………..
16
 4. Write any five functions of Wool and Woollen Export Promotion Council (WWEPC).
………………………………………………………………………………………………
………………………………………………………………………………………………
……………………………………………………………………………………………..

8.4 TRENDS IN READYMADE GARMENTS EXPORT

It includes the processes resulting in the manufacture of readymade garments from fabrics.
India is among the top readymade garment manufacturing countries of the world. The
garment sector was badly hit due to economic recession and global lockdowns. The global
apparel consumption is estimated to be shrunk by 22% in the year 2020. India’s export of
readymade garments stood at US$ 16000 million during the year 2021-22 (Table: 8.7). The
Readymade Garments (RMG) accounted for approximately 37% of India’s total textile and
clothing exports.

Table 8.7: India’s Export of Readymade Garments in US$ million

Year Exports of Readymade Garments in US$

million
2017-18 16700
2018-19 16200
2019-20 15500
2020-21 12300
2021-22 16000
Source: DGCI&S

17
 Figure 8.8: India’s ready-made garment export

India’s top export destinations for readymade garments are USA, UAE, UK, Germany, Spain,
France, Saudi Arabia, Netherland and Italy. USA has been the largest importer of Indian
readymade garments valued at US$ 5290 million during the year 2021-22 (Table 8.8). The
next largest importers are UAE (US$ 1810 million) and UK (US$ 1378 million).

Table 8.8: Top Export Destinations of Indian Readymade Garments (in US$ million)

Countries 2019-20 2020-21 2021-22

USA 4181 3254 5290
UAE 1652 1576 1801
UK 1512 1062 1378
Germany 946 787 935
Spain 713 493 581
France 627 504 622
Saudi Arab 495 374 379
Netherland 441 388 543
Italy 332 271 356
Source: DGCI&S

The export of Indian readymade garments has remained mostly stagnant hovering around
US$ 16 billion for the last 5 years with an exception in the years 2019-20 and 2020-21 where

18
it declined to global slowdown and covid-19 pandemic. Some of the recent trends in global
readymade garments are discussed below:

• Rapid Growth in Retail Sector: With rise in consumerism and disposable income,
there has been a rapid growth in the retail sector in the past decade resulting in entry
of various international players of readymade garments in the Indian market like
Guess, Next, etc.
• New Consumer Trends: The sale of readymade garments through e-commerce
websites saw a steep rise in 2020. Also work-from-home (WFH) drove the demand
for causal wear over formal wears. There has been a steep increase in the demand of
sportswear with consumers becoming health conscious and gym-freaks.
• Swing towards Natural Fibres: Natural fibres like cotton, silk, jute, linen and wool
are heavily demanded globally due to their organic and sustainable characteristic. The
customers worldwide have become increasingly conscious of sustainability issues and
the life cycle of materials and products right from the source/origin thereby resulting
in increased demand for natural fibres.

8.5 STRENGTHS AND WEAKNESSES

The Indian textile industry is one of the most important and largest sectors of the economy in
terms of output, employment and foreign exchange earnings. To access India’s position in the
market in relation to its competitors, it becomes important to analyse the strengths and
weaknesses of Indian textile industry. Following are the basic strengths of the Indian textile
and garment industry:

1. Self-Reliant: The Indian textile industry produces raw material (cotton, jute, silk etc.)
and processes the same to finished goods with substantial value-addition at each stage
contributing majorly to the economic growth. The textile industry in India imports
very few raw materials and is mostly self-reliant. Production facilities are available
across the value-chain from spinning to garments manufacturing.
2. Abundant and Low Cost Manpower Resources: The labour intensity of the textile
industry is one of the highest. As per a report of JM Financial Institutional Securities
Limited on ‘Make in India’, this sector is one of the largest sources of direct
employment with over 4.5 million people and employment of 6.5 million people in
allied services. Such large manpower resource employed and mostly in rural and

19
 semi-urban areas at very low cost provides a competitive advantage to the Indian
textile industry.
3. Significant Investments: Investments have increased over the years in the textile and
garment industry of India. By 2025, the Indian textile sector is expected to attract
investments worth US$ 120 billion and grow exports to US$ 300 billion.
4. Skilled Manpower: India is rich in trained manpower with design and fashion
capabilities. This helps the sector to produce quality items at lower costs as compared
to other textile producing countries.
5. Suitable For Different Market Segments: Indian textile industry is very diverse in
size, type of apparel produced, manufacturing facility, cost, requirement for fabric,
quality and quantity of output. With wide variety of products, Indian textile industry
has capacity to cater to the needs of different market segments across the world.
6. International Demand of Indian Cotton Yarn: Cotton contributes to 65% of the
total Indian textile products and is in increased demand due to the consciousness of
global consumers towards natural fibres. India being one of the largest exporters of
cotton yarn, is at an advantageous position over its competitors in Bangladesh and
China and can benefit itself by moving up in the value chain.
7. Quality Producers: Several large Indian players like Welspun India, Arvind Mills,
Raymonds etc. have established themselves in the global market as quality producers.
With the ability to produce high quality fabrics and garments, the Indian textile
industry attracts global importers.
8. Favourable Government Policies: Several government initiatives such as Scheme
for Integrated Textile parks (SITP), Technology Upgradation Fund Scheme (TUFS)
and Mega Integrated Textile Region and Apparel (MITRA) have been of utmost
significance to the Indian textile industry to attract private equity. The government
has allowed 100% FDI (automatic route) in textiles. Production-linked Incentive
(PLI) scheme for manmade fibre and technical textiles worth US$ 1.44 billion has
been launched for a five-year period.

The textile industry of India also suffers from certain weaknesses that has limited the industry
to grow to its full capacity. These are as follows:

1. Use of Outdated Technologies: Unlike other major textile producing countries,

Indian textile sector mostly uses obsolete technology in small-scale, non-integrated

20
 weaving, spinning, cloth finishing, and apparel enterprises. The unorganised sector of
the textile industry still remains labour intensive even when modern and better
technologies are available. Owing to this, the efficiency and competitiveness of the
weaving, fabric finishing and apparel sectors of India are adversely affected.
2. Highly Fragmented Industry: The garment manufacturing industry is extremely
fragmented in India. Global exporters prefer to source their entire requirement from
one or two vendors but the garment units in India find it difficult to meet the capacity
requirements.
3. Unfavourable Tax Structure: The structure of GST (Goods and Service Tax) makes
clothing expensive and uncompetitive both in India and abroad. For instance, cotton,
wool and other natural fibres attracted zero excise duty (under optional duty scheme)
in the previous tax regime but attracts 5% GST under the new regime affecting the
entire value chain of the textile industry including all garments for women and men.
4. Lack of Scale or Low Productivity: The Indian textile industry operates at a very
low scale with the average machinery per factory being only 250-400 which is very
low as compared to other competing countries. For instance, the average size of the
textile units in Bangladesh is 1000 machines per factory.
5. Poor Logistics: The Indian textile industry takes more time in fulfilment of the export
orders due to hindrances in logistics. The domestic transport time taken by India is
much higher compared to other competing nations. For instance, India takes three
weeks more time than China & Vietnam and 7-10 days more than Bangladesh.
6. Differential Tariff Disadvantage: One of the reasons for negative trend of the export
of Indian textile industry is the differential tariff disadvantage to textiles of India from
competing nations like Bangladesh, Pakistan, Turkey in EU markets. For instance,
China was the largest importer of cotton yarn from India but has now shifted from
India to Vietnam/Indonesia because they provide duty free access whereas Indian
yarn carries 3.5% import duty.

8.6 EXPORTS PROMOTION MEASURES

The government has undertaken several reforms to grow the textile and garment industry and
promote its exports given the importance it holds in developing the economy. Following are
some of these reforms:

21
1. Rebate of State & Central Taxes and Levies (RoSCTL): The scheme of RoSCTL
was launched in 2019 and will be effective till March 2024 for exports of garments.
The rebate provided by government on taxes will decrease the effective cost of
products and make it competitive in the global market.
2. Remission of Duties and Taxes on Exported Products (RoDTEP): The scheme of
RoDTEP reimburses local, state or central level taxes /duties/levies incurred in the
process of manufacturing and distributing exported textile products. The objective of
the scheme is to boost Indian exports by providing a level playing field for the
exporters in the international market.
3. Production-Linked Incentive (PLI) Scheme: The scheme was launched by
government to promote production of MMF fabrics, MMF apparel and products of
technical textiles to enable the sector to achieve scale and size and become
competitive.
4. Export Promotion Councils (EPCs): There are 11 EPCs representing various
segments of the textile and garments value chain, viz. fabric, fiber, yarn, readymade
garments of silk, jute, cotton, wool etc. These councils work to promote growth and
export of their respective sectors/products in global markets. Various activities of
EPCs include participating in international exhibitions, providing latest information
on markets, policy initiatives, news on fashion & technology developments etc.
5. Support to Technical Textiles (Functional Fabrics): These are textiles products and
materials manufactured primarily for technical performance and functional properties
and not for aesthetic characteristics. Some examples of technical textiles are airbags,
wrapping fabrics, parachute, umbrella cloth, blinds, shade-nets, crop-covers, diapers,
PPEs etc. Owing to the Covid-19 pandemic, the demand for technical textiles like
PPE suits and equipment have been continuously rising. The government of India has
been immensely supporting the sector with funding and machinery sponsoring.
6. PM Mega Integrated Textile Regions and Apparel Parks (MITRAs) Scheme was
launched by Ministry of Textiles in October 2021 to enable scale of operations, attract
investment, reduce the cost of logistics by housing the entire value-chain at a single
location, augment export potential and generate employment. The scheme focuses on
total value-chain of the textile industry (spinning, weaving, processing, garmenting,
textile manufacturing etc.) by way of developing integrated large scale industrial
infrastructure facility.

22
7. Integrated Processing Development Scheme (IPDS) is being run by the government
with the objective to facilitate the textile industry of India to become globally
competitive using environment friendly technology and processing standards. The
scheme will support new Common Effluent Treatment plants (CETP) and upgradation
of CETPs in already existing processing clusters.
8. Amended Technology Upgradation Scheme (ATUFS) was introduced in 2016 with
the objective of promoting ease of doing business and promoting exports through
“Make in India” with “Zero effect and Zero defect” in manufacturing. The main focus
of the scheme has been on MSMEs which have got higher export potential.
9. Implementation of Integrated Wool Development Programme (IWDP) by the
Central Wool Development Board with Wool Marketing Schemes (WMS) and Wool
Processing Schemes (WPS) like creation of e-portal for marketing / auction of wool,
development of MIS, financial assistance for sheep shearing machines and other
equipment, establishing Common Facility Centres (CFCs) etc.
10. Implementation of Handloom Marketing Assistance (HMA) under National
Handloom Development Programme (NHDP) that provides a marketing platform to
the weavers and exporters. They get assistance not only in marketing, but also, sales,
developing and promoting the marketing channel through expos and events.
11. Concessional Credit: It is provided @6% for a period of three years for the
Handloom Sector. A portal “Handloom Weaver MUDRA Portal” has been developed
in collaboration with Punjab National Bank (PNB) for timely transfer of financial
assistance.
12. The “Indian Handloom” Brand (IHB) was launched in 2015 to endorse the quality
of handloom products in terms of raw material, weaving, processing and other
environmental & social compliances to earn the trust of importers. IHB is given only
to defect free, high quality and authentic handloom products aimed at customers who
seek niche handmade products.
13. ICARE Jute is an initiative of government aiming to help the jute growers by
offering certified seeds at discounted prices and popularizing recently developed
technologies under water-restrictive conditions to enhance productivity and export.
14. Handloom Mark has been launched that serves as a guarantee for the product bought
by the customers. It indicates that the product purchased is a genuine hand-woven
product and not the one made in powerloom or mill made.

23
 15. Several other Government Policies and Initiatives:
• To enhance productivity and marketing capabilities, to adopt modern
management practices and ensure better incomes, 133 handloom companies
have been formed in various states.
• Silk Samagra Scheme aims at lessening the country’s reliance on imported silk
by enhancing the productivity and quality of in-house produced silk.
• Economic Cooperation and Trade Agreements have been signed with UAE
and Australia to welcome Indian textile exports with zero duties to these
nations.
• Design Resource Centres (DRCs) have been set up with the objective to create
and build design-oriented excellence in handloom sector of India thereby
facilitating exporters, weavers, designers and manufacturers.

8.7 FUTURE PROSPECTS AND STRATEGIC RESPONSES

The Government of India is committed to transforming India into a textile manufacturing and
exporting hub. This will require focus on improving product quality. Most Indian products
fail quality tests due to traces of illegal dyes and other environmental regulations. An
endeavour is to be made to upgrade quality and infrastructure to help firms to move to higher
quality standards of textile and garments. Setting up more globally accredited testing
laboratories, enhancing the capacity of Indian testing laboratories and Mutual Recognition
Agreements (MRA) with partner countries should be the major areas of focus for the
government. Some of the future prospects and strategic responses for the Indian textile
industry are discussed below:

1. Productivity Enhancement: With China’s share of textile market offloading, India

has been able to capture only 4 markets (USA, Japan, UK & Australia) out of 9 (USA,
Japan, Germany, UK, Korea, Russia, France, Australia and Netherlands). The other
markets have been captured majorly by Bangladesh and Vietnam. India needs to
utilise the opportunity of capturing vacated markets by increasing its productivity and
reducing the time lags in order fulfilment.
2. Labour Standards: To compete in the international market, necessary training
facilities are to be provided to the manpower with strict adherence to international

24
 labour standard. The support of government is required for maintaining workplace
safety related initiatives. Also, training for use of CAD for developing designing
capabilities would enable the textile industries to deliver high-quality products.
3. Cutting-edge Technology: Majority of the technology in Indian textile industry is
imported which hinders quick access to latest technology and the productivity and
quality thereon. The Indian textile industry demands huge investment for technology
upgradation and modernisation. Use of latest technology is required to remain
competitive in the international markets. The proportion of high-tech products in
China and Vietnam is more as compared to India. There is lack of long-term
investment policies coupled with complex compliances in investment schemes
disrupting the inflow of Foreign direct Investment (FDI) in the sector.
4. Input Access: Value growth is hindered due to lack of ease in import of MMF
fabrics. Such hindrance has restricted the Indian export basket to cotton textiles.
Government’s support and handholding is required to strengthen the processing of
MMF fabrics. Support for raw material, organising training in MMF apparels and
various incentives for investment in technology to make MMF apparels are the key
areas that the government should focus upon.
5. Product Diversification: Diversification in garments is essential; into synthetic
textiles, women’s garments and value-added cotton products to scale up operations
and increase exports. India’s textile and garment sector has been a global leader
particularly in the traditional markets of USA and European Union. The textile sector
of India needs to reorient itself by leveraging its capacity to product diversification as
per the changing requirements of the customers or importers.
6. Strengthening of Economic Ties: With increase in global challenges and emerging
opportunities, various developing countries are becoming competitors of India in the
textile & garment sector. India therefore needs to leverage its capacity in the pre-
garment stages in a manner that a continuum gets established within the region. This
shall further shape India’s economic ties with its neighbouring countries like South
East Asia. Free Trade Agreements (FTAs) with certain countries are needed to get
complete market access in European Union, USA, UK, Canada and Australia.
7. Infrastructure Development: The government needs to work towards developing
infrastructure in the country to facilitate and support supply chain management of the
textile industry. The domestic logistics consumes too much time in comparison to

25
 other competing nations like Vietnam and Bangladesh. This results in loss of markets
to other nations. To overcome such barriers, roads, railways, airports and seaports
along with warehouses are to be developed.

8.8 WTO AND TEXTILES AND GARMENTS

The Uruguay Round of trade negotiations provided for the integration of textiles and clothing
sector into the framework of GATT for a period of 10 years ending on 1st January 2005. The
resultant agreement of integration was known as the Agreement on Textiles and Clothing
(ATC). The integration resulted in quotas, limiting the trade capabilities of textile rich
countries.

The Agreement on Textiles and Clothing (ATC) came to an end in January 2005 thereby
ending a historic anomaly in the world trading system by putting clothing and textiles on the
same footing as other industries under the WTO. The nations have since then been able to
indulge in free and fair trade of textiles and clothing with the lifting of global quotas in
December 2004. The largest beneficiaries of quota elimination have proved to be China and
India. Major determinants of being able to retain existing market share and increase it post-
ATC included the ability to adjust, rise and invest to the challenges of size, structure,
competition and direction of international textile and clothing industry.

India and WTO on Textiles and Garments:

The Foreign Trade Policies (FTP) of India have been aligned with the obligations and
commitments under several WTO agreements. The WTO agreements emphasise on phasing
out of subsidies as per the Agreement on Subsidies and the Countervailing measures
(ASCM). The future export promotion measures of the Indian government are therefore
focused on providing fundamental systematic measures and not just subsidies and incentives.

A National Committee on Trade Facilitation (NCTF) has been constituted to implement the
WTO’s Trade Facilitation Agreement (TFA). NCTF will play a significant role in developing
Pan-India road map for facilitating trade. This will include synergising various trade
facilitation perspectives and organising outreach programmes to sensitise all the stakeholders
about TFA.

26
Check Your Progress B

1. Enumerate the top five markets for readymade garments.

………………………………………………………………………………………………
………………………………………………………………………………………………
……………………………………………………………………………………………..
2. Enumerate any five strengths of Indian textile and garment sector.
………………………………………………………………………………………………
………………………………………………………………………………………………
……………………………………………………………………………………………..
3. Enumerate any five weaknesses of Indian textile and garment sector.
………………………………………………………………………………………………
………………………………………………………………………………………………
……………………………………………………………………………………………..

8.9 LET US SUM UP

The Indian textile and garment industry is among the largest in the world. India is a market
leader in production of several industry segments such as cotton, silk and jute. This industry
plays a significant role in the economic development of India because of its contribution to
GDP, total exports of the country and to the foreign exchange. Indian textile sector is a
storehouse and carrier of traditional skills, culture and heritage.

During the year 2021-22, India recorded the highest textile exports reaching US$ 44.4 billion.
Readymade garment and cotton textiles are the top exported Indian textile product. USA,
Bangladesh, UAE, UK, and China are the top importers of Indian textile and apparel industry.

The major strengths of the industry are domestic availability of raw materials, large
manufacturing base, innovative and diversified products whereas the inherent weaknesses of
Indian textile industry are frequent changes in governments’ policy, costly apparel dur to
application of GST, no access to latest and most advanced technologies, competition in the
area of low-cost clothing from neighbouring nations.

The need for Indian textile sector has expanded with a rise in disposable income. India’s
textile sector has a bright future in both local and foreign markets due to the rapid expansion
of retail sector, significant investments in the form of FDI and government assistance.
27
Government has undertaken several initiatives aimed at boosting investment in the industry
and contributing to growth in exports and employments. Some of the government schemes
are PLI scheme, establishment of seven PM MITRA Parks etc.

8.10 KEY WORDS

1. Capital intensive: It refers to business processes or industries that require huge

amount of investment to produce a good or service and therefore have a high
percentage of fixed assets.
2. Labour intensive: It refers to business processes or industries that require large
amount of labour to produce its goods or services.
3. Global slowdown: It is an extended period of economic recession or decline around
the world.
4. Work-from-home: It is a flexible form of working arrangement allowing an
employee to work from remote location or their homes outside of corporate offices.
5. Fragmented Industry: It is an industry where many small companies compete
against each other and there is no single or group of companies dominating the
industry.
6. Tariff: Prices or tax to be paid on goods entering into a country.

8.11 TERMINAL QUESTIONS

1. Textile and garment industry plays a pivotal role in the growth of a developing economy.
Elucidate with reference to Indian economy.
2. Describe the measures undertaken by the Government of India to boost the exports of
textile and garment sector.
3. India has a natural competitive advantage in textile and garment sector but at the same
time suffers from certain inherent limitations. Explain the statement with suitable
arguments.
4. The end of quota system has been of benefit to India. Do you agree? Explain how the
Agreement on Textiles and Clothing (ATC) is detrimental to the growth of Indian textile
industry.
5. Outline the future prospects and export strategies that India need to adopt to combat
emerging global challenges and create a niche for itself.

28