I ndian Textile
Industry plays a
through its contribution of about 14%
to industrial production, 4% to GDP
and 16.63% to export earnings. Its
share in global textiles and apparel is
3.9% and 3% respectively. It
provides direct employment to over
35 million people. Textiles sector is
the second largest provider of
employment after agriculture. The
close linkage of the industry to
agriculture and the ancient culture
and tradition of the country make the
Indian textiles sector unique in
comparison with the textiles industry
of other countries. This industry is
growing by 9%-10% and the pace
would be increase to 16% in the coming years. This also provides the Industry with the
capacity to produce a variety of products suitable to different market segments, both within
and outside the country.
The Indian Textile Industry is extremely varied, with the hand-spun and hand-woven sector
at one end of the spectrum, and the capital intensive, sophisticated mill sector at the other.
The decentralized power looms/hosiery and knitting sectors form the largest section of the
The major sub-sectors that comprise the textile sector include the organized Cotton/Man-
made Fibre Textile Mill Industry, the Man-made Fibre/Filament Yarn Industry, the Wool &
Woollen Textile Industry, the Sericulture and Silk Textiles Industry, Handlooms, the Jute &
Jute Textiles Industry and Textiles Exports.
Organized Textiles Industry
The Cotton/Man-made fibre textiles industry is the largest organized industry in India in
terms of employment and number of units. In addition there are a large number of
subsidiary industries dependent on this sector, such as those, manufacturing machinery,
accessories, stores, ancillaries, dyes & chemicals.
There were 1,818 non-SSI textiles mills, as on 31
January 2007, with an installed capacity of 35.37
million spindles and 0.45 million rotors. This was
expected to increase to 39.50 million spindles and
0.62 million rotors by 31 March 2007. The
production of spun yarn, which was 3,160 million kg.
in 2000-01, increased to 3,458 million kg. 2005-06,
and anticipated to touch 3,791 million kg in 2006-07.
Over the years, the production of cloth in the mill-sector has been fluctuating. It declined
from 1,670 million sq. metres in 2000-01 to about 1,576 million sq. metres in 2005-06, and
was projected at 1,729 million sq. metres in 2006-07. The total production of cloth by all
textiles sub-sectors would touch 54,260 million sq. metres in 2006-07, showing an annual
growth of 5.24% during last five years. The per capita availability of cloth was 32.63 sq.
metres in 2004-05 and it increased to 36.53 sq. metres in 2005-06.
Cotton is the major raw material for the domestic textiles industry. In 2004-05, the
provision ratio of use of cotton to man-made fibre and man-made filament yarn by the
textiles industry was 56:44. India account for 16.75% of the global production of cotton
having approximately 9 million hectare. However, in productivity (467.94 kg/ha) the
country lags behind the other major cotton producing countries, namely the USA (931
kg/ha). China (1140 kg/ha) and Australia (1806kg/ha). The global average is 728 kg/ha.
The buoyancy in the textiles sector can be assessed from the fact that consumption of
cotton by the mill, and non-mill sectors has been increasing over the years, from 171.76
lakh bales in 2004-05, to a
record figure of 217 lakh bales in
According to the Annual Report
2006-07 of the Textiles Ministry,
exports of cotton picked up
significantly in 2004-05 and
2005-06 and estimated export of
47 lakh bales in 2005-06. Import
of cotton decreased significantly
from 25.16 lakh bales in 2001-02
to 4 lakh bales in 2005-06.
PRODUCTION OF FABRICS
(In millions of square metres)
Sector 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 April-November
Mills 1,670 1,546 1,496 1,434 1,526 1,656 1,085 1,234
(4.2) (3.7) (3.6) (3.4) (3.4) (3.3) (3.3) (3.5)
Powerlooms 30,499 32,259 33,835 34,794 37,437 41,044 27,105 29,471
(75.8) (76.8) (80.6) (82.1) (82.5) (82.8) (82.6) (83.0)
Handlooms 7,506 7,585 5,980 5,493 5,722 6,108 4,111 4,278
(18.7) (18.0) ((14.2) (13.0) (12.6) (12.3) (12.5) (12.1
Others 558 644 662 662 693 769 513 513
(1.4) (1.5) (1.6) (1.6) (1.5) (1.6) (1.6) (1.5)
Total 40,233 42,034 41,973 42,383 45,378 49,577 32,814 35,496
Note: Figure in parentheses indicate share in output P =Provisional Source: Office of the
Textile Commissioner, Mumbai
Technology Up gradation Fund Scheme (TUFS)
The Technology Up gradation Fund Scheme, the flagship scheme of the Ministry of
Textiles, was launched on 1 April 1999, with the objective of making funds available to the
domestic textiles industry to upgrade the technology of existing units, and also to set up
new units with state-of the-art technology in order to enhance its viability and
competitiveness in the domestic and international markets. The scheme, which was to last
up to 31 March 2004, was extended till 31 March, 2007. In the Tenth Plan (2002-07),
Rs.1,270 crores was earmarked for the scheme. The Government has decided to continue
the scheme, till 2012 and Rs. 911.00 crore had been earmarked for 2007-08. The
allocation on account of interest support was increased from Rs 485 crore to Rs 535 crore
in 2006-07, registering an increase of 10%. The Government has received 8,595
applications under TUFS involving a project cost of Rs 81,371 crore. Of these, 8,312
applications costing Rs 73,532 crore have been sanctioned and Rs 20,953 crore was
disbursed against 5,956 applications.
Benefits of TUFS
• 5% interest reimbursement of the normal interest charged by the lending agency on
Rupee Term Loan (RTL); or
• 5% exchange fluctuation (interest & repayment) from the base rate on Foreign
Currency Loan (FCL); or
• 15% credit linked capital subsidy (CLCS) for the SSI textiles and jute sectors; or
• 20% credit linked capital subsidy (CLCS) for the powerlooms sector; or
• 5% interest reimbursement plus 10% capital subsidy for specified processing
• 25% capital subsidy on the purchase of new machinery and equipment for pre-loom
& post-loom operations, up gradation of handlooms, and testing & quality control
equipment for handloom production units.
The scheme covers spinning, cotton ginning & pressing, silk reeling & twisting, wool
scouring & combing, synthetic filament yarn texturising, crimping and twisting, manufacture
of viscose filament filament yarn (VFY)/ viscose staple fibre (VSF), weaving/knitting
(including non-wovens) and technical textiles. It also covers the manufacture and
processing of fibres, yarns, fabrics, garments and made-ups, the jute sector, and handloom
sector (since 2006-07).
Technology Mission on Cotton
The Technology Mission on Cotton (TMC)
was launched on 19 February 2000, for a
period of five years to give a focused impetus
to cotton R&D. Subsequently, it was
extended for three more years and would
continue till the end of Tenth Plan. The
Mission was comprised 4 Mini Missions with the specific objectives of (i) Research, (ii)
Dissemination of Technology to Farmers, (iii) Improvement in Market Infrastructure and (iv)
Modernization of the Ginning and Pressing sector. The Ministry of Textiles was
implementing the latter two Mini-Missions.
Investment in Textile Sector
The projected value of Indian Textile Industry is estimated to grow from US$47 billion in
2005-2006 to US$115 billion by the year 2012, comprising domestic market of US$60
billion and exports of US$55 billion. The projected growth rate is thus estimated at 16% per
annum during these years and is currently growing between 9% and 10%.
Investment in the textiles sector has picked up in the past two years, increasing from Rs
7,349 crore in 2004-05 to Rs 16,032 crore in 2005-06. During 2003-07, Rs 72,542 crore
was invested the textiles sector. Though investments are being made in the sector both for
expansion of existing capacities and building Greenfield projects, they are not enough.
Foreign direct investment (FDI) in textile and apparel sector in 2005 accounted for only
1.3% of the total FDI in the country estimated at US$500 million. China has been able to
attract FDI worth US$5.4 billion in this sector.
Sectoral Break up of Investment
( Rs crore)
Notwithstanding the current slowdown in textile exports due to rupee appreciation, apparel
export is expected to grow at the rate of 22% in the Eleventh Plan period (2007-12). The
textiles sector is expected to generate revenue of $55 billion at the end of the Eleventh
Plan period, generating more than 17.35 million jobs with an investment of Rs 1,50,600
Machines Required in Various Segments during
The Next Five Years
Sector Fresh capacities needed
Spinning 20 million spindles
Weaving 1,34,600 shuttle-less looms + 2,01,600
Knitting 36,500 machines
Processing 468 process houses with 1 lakh metres per
Garmenting 2.7 million machines
As many as 30 textile parks would be set up by 2008 with an investment of Rs 15,700
crore under the Scheme for Integrated Textiles Parks (SITP) launched in 2005. These
parks would generate an annual production worth Rs 23,600 crore, and creating 0.5 million
new jobs. The Government has increased the allocation for the scheme from Rs 189 crore
in 2006-07 to Rs 425 crore in 2007-08.
In this context, an urgent need has been realised by the trade & industry of this sector to
build up additional capacity in weaving & processing sectors as almost 65% of the value of
a garment and almost 80% of a made-up is determined by the quality of processed fabric.
It is estimated that in order to realise the vision 2010, an additional 58 billion sq.metres of
fabric is required to be produced for which investments worth Rs 28,000 crores in weaving
& knitting and Rs 50,000 crore in processing need to be made.
The International Trade in Textiles and Clothing which was operated under the Multifibre
Arrangement (MFA) from 1974 to 1994, which phased out in December 2004.
Implementation of Agreement on Textiles and Clothing, integrated into WTO rules by 1
January 2005, has given an opportunity and challenges for the structural changes in world
trade in textiles and clothing for developing countries.
Export of Textiles
Item 2003-04 2004-05 2005-06 April-August
Readymade garment 6,235.71 6,558.67 8,403.04 3,085.34 3,461.88
Cotton Textiles 3,599.95 3,544.16 4,493.20 1,650.53 2,071.09
Wool & Woollen Textiles 337.98 417.09 473.91 1 97.42 204.89
Manmade Textiles 1,821.24 2,050.73 2,000.08 777.20 907.83
Silk 545.21 594.56 691.83 279.06 292.75
Handicrafts 1,085.36 1,013.85 1,239.26 524.11 501.46
Coir & Coir 77.77 105.56 134.25 53.99 59.44
Jute goods 242.43 276.25 294.60 127.33 128.79
Total 13,496.31 14,026.72 17,079.57 6,694.97 7,628.13
Source: DGCI&S Foreign Trade Statistics of India (Principal Commodities and countries),
In view of the phased-out of MFA, country like India has to depend largely on its policy
response. The Government of India has already taken steps. to increase the global
competitiveness of the textiles industry. The recent announcements of measures in the
Union Budget 2007-08 would help in technology capacity building. The increase in the
provision for (TUFS) will keep investments in textile sector buoyant and provision for SITP
textile parks will help the unorganised sector to move up the value chain. Increased
allocation to SITP will boost the set up of additional capacities to cater to the growing
domestic market and export.
India’s Major Export Markets of Textiles
(Excluding Readymade Garments)
Export Market 2004-05 2005-06 %age share in total exports
USA 1262.19 1593.32 20.87
UAE 565.10 512.14 6.71
Germany 336.53 405.82 5.32
Italy 338.14 387.61 5.08
UK 344.27 352.24 4.61
Bangladesh 252.81 302.06 3.96
Turkey 224.17 230.81 3.02
South Korea 186.16 229.82 3.01
Spain 175.56 194.25 2.54
Sri Lanka 139.21 174.23 2.28
Egypt 129.53 162.16 2.12
Belgium 141.63 150.84 1.98
France 150.28 148.63 1.95
Saudi Arabia 154.58 148.52 1.95
Japan 128.10 135.29 1.77
Hong Kong 131.48 130.94 1.72
China 93.07 123.51 1.62
Canada 101.31 114.73 1.50
Total (Incld. 6691.01 7633.91 100.00
The export of readymade garments (RMG) increased to US$8,403.04 million in 2005-06
from US$5,021.58 million in 2001-02, showing an increase of 67.32%. The major markets
for RMG have been USA, UK, Germany, France and UAE. Imports of textiles and clothing
of the four major developed markets including Japan are estimated to have increase by
5.5% to about $350 billion in 2006. India’s export to USA rose 12% in 2006. According to
WTO estimate import developments suggest that introduction of quotas in the USA and
European Union (EU) in the course of 2005 had a restrictive impact on textile imports from
China. India’s exports to 25-country EU are 13% and to Japan 12% for 11 months of 2006
calendar year. Japan has always been a good textiles market for India, but traditionally its
presence has been marginal. Apart from Japan, Latin American countries and even China
can offer good opportunities not to say of USA and EU are good export markets for India.
India’s Major Export Markets for Readymade Garments
2004-05 2005-06 % share in total exports
USA 1,990.46 2,799.15 33.31
UK 656.63 910.37 10.83
Germany 449.01 648.58 7.72
France 472.08 615.94 7.33
UAE 522.44 437.88 5.21
Italy 290.63 373.07 4.44
Spain 208.58 348.35 4.15
Netherlands 204.85 288.17 3.43
Canada 250.58 269.52 3.21
Saudi Arabia 168.65 193.38 2.30
Denmark 107.38 177.56 2.11
Belgium 93.54 130.55 1.55
Japan 84.83 112.66 1.34
India’s total exports of 6558.67 8403.04
India’s exports of RMG include Gents shirt, T-Shirts, Ladies Blouse/Shirt, Trouser/Short,
Ladies Dresses, Ladies Skirt, Jackets/Coats. Over the years India has emerged as one of
the main clothing exporting country, however, low and stagnant market share in the world
textile and clothing trade, comparatively lower unit value realization, lack of presence in
high value segment. The aggressive performance of China, Turkey, Bangladesh, Mexico,
Korea and other Asian countries are a great concern for Indian Textile Industry. In the
second year after the phase-out of the MFA, China, India and Bangladesh exporters
performed well benefiting million of low-income textile workers.
The comparison of Indian Textile Industry with other few developing countries is given in
the Table below:
Country Textiles Clothing Total
India 7.85 8.29 16.14
Pakistan 7.09 3.60 10.69
Bangladesh 0.22 6.42 6.64
China 41.05 74.16 115.21
World 202.97 275.64 481.61
Public-Private Partnership Model in Textile Sector
Garmenting would be the single most important segment for augmenting production and
export of textiles and clothing. Plans are in pipeline to introduce the public-private sector
partnership (PPP) model in this sector. The PPP model would be suitable for vocational
education on a higher level in this sector.
The Eleventh Plan foresees a growth of 16 % in the textiles sector which would entail an
outlay of Rs 1,50,600 crore and would foster incremental direct employment for a 6.5
million workforce in spinning, weaving, knitting, processing and clothing. The incremental
manpower requirement in spinning is 4.10 lakh, in weaving 2.70 lakh, knitting 0.20 lakh,
processing 1.50 lakh and clothing 56.50 lakh, taking the total to 65 lakh.
Mapping of ITIs
A Committee set up by the Government has suggested that institutions should be set up in
"catchment" areas from where workers for the textile sector were drawn. It favoured the
"mapping" of ITIs to identify those located near existing clusters of the textile industry and
said that they might be upgraded to meet the training needs of these clusters.
It is projected that 18.97 billion pieces would be churned out annually by 2011-12 in the
clothing sector with a value of Rs 2,99,300 crore. Of these six billion pieces at $34.02
billion (about Rs 1,53,100 crore) would be exported and 12.98 billion pieces worth Rs
1,46,200 crore would be for the domestic consumption.
Thirteen Apparel Training and Design
Centres (ATDC) are now being run by the
Apparel Export Promotion Council
(AEPC). ATDCs have trained over 21,000
workers since inception. AEPC, the
sources said, plans to set up 25 new
centres in 13 States and 13 mobile
centres during the Eleventh Plan. These
would enable ATDCs to train 57,625
trainees besides training 30,000 students
currently under various ATDCs. Fifteen
thousand students would be trained
through mobile sources.
The machinery requirement to produce
18.97 billion pieces would be 24 lakh
machines. Currently, the industry has about 9.50 lakh stitching machines. Thus the
incremental requirement would be 14.50 lakh machines. The investment requirement
during the Eleventh Plan would be Rs 21,800 crore and would create incremental
employment for 56.40 lakh workforce, of which 28.25 lakh would be semi-skilled and 11.30
It is also proposed to set up a Resource Bank for technological database, technology
forecasting and management practices, they said, adding that the industry would be
goaded into setting up testing and designing facilities in the PPP mode with the objective of
deepening the testing and design pattern.
The Indian Textile Industry is well known in the world markets for its characteristics. But
the real challenge lies in facing the competitive markets. Sustaining the impressive rate of
growth over the years, particularly in changing scenario after the phasing out of quotas and
the focus has shifted to tariffs on textiles products along with non-tariff measures like rules
of origin is a great challenge.
With the developed countries losing their comparative advantages in the textile and
clothing sector for a variety of reasons including structural adjustments, rising labour costs,
environmental consideration, they are putting in place of “Codes of Conducts”, scrutinizing
in detail the working practices and norms of the supplying countries. The Government
would assist small and medium entrepreneurs in obtaining globally accredited certification
and establishment systems, viz., ISO 1400, OEKOTEX 100, SA 8000, URAR, ILO
certification to enable them to meet environmental and social standards effectively, which
have become a norm in overseas markets.
Of late, appreciating
rupee has caused
textile sector. The
silk industry has to
bear the maximum
burnt as it is 71%
sensitive to the
hardening of the
and jute are less
sensitive to the rising
rupee at 23% and
The speed at which it
has been occurring is even more harmful, because where as in the last one year the
currency has gone up by overall 11 per cent. The SMEs of this sector, which normally bear
the brunt of adverse currency fluctuations. Effort of exporters are being supplemented by
the Government’s exporter-friendly policies but with the rupee expected to continue to
appreciate, sops cannot be given endlessly, and thus exporters will have to learn to hedge
Imports of Textiles and Clothing into Major Markets by Origin, 2006
(Billion dollars and percentage change)
United EU(25) Japan Canada
World (value) 106.4 183.6 30.0 11.2
World 4 6 6 9
China 15 10 8 22
India 8 13 12 6
Pakistan 12 12 -7 9
Bangladesh 22 34 4 19
Cambodia 25 19 ... 21
Indonesia 25 19 4 18
Philippines 9 26 ... 5
Viet Nam 18 51 6 33
Thailand 1 11 -2 0
Sri Lanka 2 24 12 ...
East Asia (4) -14 33 -5 -12
Sub-Saharan -10 9 ... ...
Egypt 32 14 ... ...
Morocco 69 3 ... ...
Tunisia ... 0 29 —-
CAFTA -7 ... ... ...
Mexico -10 13 6 7
Canada -7 6 -7 ...
United States ... 11 -3 -1
EU(25) -3 1 -2 2
Romania 15 0 ... ...
Bulgaria -18 12 ... ...
Turkey -17 4 20 -1
Least-developed 14 30 27 17
Hong Kong , ... 67 ... ...
Note: East Asia(4) comprises Chinese Taipei, Hong Kong China, Macao China and the
Republic of Korea. EU(25) imports include intra-trade.
Source: Global Trade Atlas and Eurostat, COMEXT data base.
Indian Institute of Foreign Trade
IIFT Bhawan, B21 Qutab Institutional Area
New Delhi- 110016
Note: The author has used various sources in the preparation of this article. For further
details please contact him.