The textile sector of India is the oldest business in the history of the Indian economy, which can be dated back to many centuries. The textile industry still today makes the largest contribution in India’s export with 15% of the same. The industry has two large divisions:
- The unorganized portion which includes handloom, sericulture, and handicrafts. These portions are run on small scale basis with the help of traditional machinery and procedures.
- The organized segment including spinning, garments, and clothing. These are manufactured with the upgraded machinery and modern techniques like sale economy.
The export of textile of India owing to FY 2015-16 stands at a figure of US$ 40 billion totally. The industry also provides direct employment to about 51 million people and indirect employment to nearly 68 million people.
The textile sector has a wide range of variation with the hand woven apparels on one hand and huge capital involved aristocratic mills on the other. The function of power looms and knitting division together develops the largest module of the textile industry. The link of the textile sector to the agriculture along with the traditional culture and method has helped the Indian textile domain ideal comparing to that of the industry in other countries.
Size of Market
Currently, it has an estimated worth of around US$ 120 billion and is likely to reach US$ 2020 within the year 2020. It has contributed an average of 4% to IGDP (India’s Gross Domestic Product) and 14% to entire IIP (Index of Industrial Production).
According to the Khadi and Village Industries Commission, khadi products made in India is enhanced by US$ 311.31 billion in the year 2016-17. It is estimated to surpass a sales target of US$ 776.33 billion in the year 2018-19.
The exports associated with products that are locally made together with the lifestyle products as well increased at a CAGR (Compound Annual Growth Rate) of 10% in 2013-16. The Indian Government has a target of exporting textile and apparels of a value of US$ 45 billion during 2017-18.
Companies and its Investments
This sector has experienced an evolution in terms of investment in the preceding five years. It has drawn FDI (Foreign Direct Investment) valued at US$ 2.47 billion throughout April 2000 to March 2017.
Glimpses of the foremost investments in the Indian Textile domain are the following:
- Future Group under its most affordable fashion layout, FBB (Fashion at Big Bazaar) has a plan of opening 80 more new stores across the country. It is aimed as a sale of 230 million units of clothes which in turn will rise by 800 million by 2021.
- Raymond has made collaboration with KVIC to retail readymade garments made by khadi using it fabrics in all Raymond outlets of India.
- A portion of landmark group found in Dubai, Maxx Fashion is intending to extend its retail network in 120 cities through 400 outlets in the following 4 years. This will account an investment of US$ 60 billion.
Steps were taken by the Government
The Government of India has launched various ‘export promotion policies’ for the textile industry. It has granted 100% of Foreign Direct Investment for the purpose of an automatic route.
The major schemes declared in the Union Budget of 2017-18 to enhance the textual domain are:
- Attracting new brands and entrepreneur to spend in segments such as knitting through rising of allotting funds to Mudra Bank. The amount of money is such case range from US$ 20.4 billion to US$ 36.6 billion.
- Modernization of skills used by labors with the investment of US$ 330 million.
Furthermore, other steps that government has taken to endorse this sector are as follows:
- The government has thought of introducing a huge package for the power-loom segment. This package will involve insurance cover, development of cluster, various social welfare programs, and modernization of abandoned looms, tax benefits, and marketing This package will develop the position of power-loom weavers.
- The Ministry of Textiles has recently motioned a ‘Memorandum of Understanding (MoU)’ with twenty online retail companies. It aims at offering a stage to weavers and knitters from different handloom and handicraft groups to showcase their products directly to the consumer nationally without involving any third parties.
- In the Vibrant Gujarat 2017 Summit, another ‘MoU’ is signed valued US$ 1.3 billion in fields such as the development of carpets, apparel processing, textile parks and machinery.
- Lastly, the government has launched a reformation through which the labors will be benefitted as it will generate 11.1 million job opportunities in the textile sectors. This is turn will enhance the textile exports to 32.8 billion US dollar along with an investment of US$ 12.09 billion in the coming 3 years.
Future Prospect
It can be concluded that with so many investments from the foreign and initiatives on behalf of the government for enhancing the export opportunities the future of the Indian Textile industry is way too bright and promising. The increasing focus on consumers and the trend of disposable income, the selling segment has witnessed a massive growth in the past few years. The entry of several international brands such as Marks & Spencer, Guess, and Next have made it possible.
The garment market in India has a probability of growing at a CAGR of 11.8% to attain US$ 180 billion by the year 2020. Besides, the Indian cotton textile sector is likely to exhibit a fixed rise in FY 2017-18. This growth will be supported through a healthy investment of capital, fixed input prices, and stable domestic demand.