Textiles

Last Updated: November 2011 The textiles industry in India enjoys a distinctive position due to the pivotal role it plays by way of contribution to industrial output, employment generation (second largest after agriculture) and export earnings of the country. The industry is rich and varied, embracing the hand-spun and hand-woven sector at one end and the capital intensive, sophisticated mill sector at the other. Its association with the ancient culture and tradition of the country lends it a unique advantage in comparison with textiles industry of other countries, thus giving it an uncommon edge to cater to a vast variety of products and market segments both domestically, as well as, globally. According to Mr Anand Sharma, Union Minister of Commerce, Industry & Textiles, The Indian textile industry is a key pillar of Indian manufacturing, contributing to 14% of industrial production and over 10% of Indian exports. More significantly, the industry is the second largest employment generator next only to Agriculture engaging 35 million people across various segments in the entire value chain. The industry currently contributes about 14 per cent to industrial production, 4 per cent to GDP, and 17 per cent to the countrys export earnings, according to the Annual Report 2010-11 of the Ministry of Textiles. The industry accounts for nearly 12 per cent share of the country's total exports basket. It provides direct employment to more than 35 million people. Industry sub-sectors The textile industry comprises the following:

Organised Cotton/Man-Made Fibre Textiles Mill Industry Man-Made Fibre / Filament Yarn Industry Wool and Woollen Textiles Industry Sericulture and Silk Textiles Industry Handlooms, Handicrafts, the Jute and Jute Textiles Industry Textiles Exports

Market size The Vision Statement for the textiles industry for the 11th Five Year Plan (2007-12) sees India securing a 7 per cent share in the global textiles trade by 2012. At current prices, the Indian textiles industry is valued at US$ 55 billion, 64 per cent of which caters to domestic demand. Total textile exports during April-March 2010-11 stood at US$ 12.5 billion as against US$ 11.3 billion during the corresponding period of the previous year, according to the latest data released by DGCI&S, Kolkata. Technical Textile Segment The technical textiles segment is expected to grow by 11 per cent per annum till 2012-13 and is likely to grow at 6-8 per cent per annum till 2020 without any policy interventions. If the government intervenes by way of regulatory push, the growth of technical textiles industry can be estimated at 12-15 per cent per annum till 2020, according to Rita Menon, Secretary, Union Ministry of Textiles. She added that the technical textiles segment in India has the potential to attract investment and create additional employment opportunities in coming years. She further said that investments of US$ 1.1 billion are expected by 2012 and employment is expected to increase to 1.2 million by 2012. Government Initiatives Government in the 11th Five Year Plan has restructured the Technology Upgradation Funds Scheme (TUFs), the Scheme for Integrated Textiles Park (SITP) and formulated the National Fiber Policy. Government has enhanced allocation under restructured TUFs from US$ 1.5 billion to US$ 3.0 billion to catalyze investments in hitherto low investment areas like processing, weaving, knitting, technical textiles and skill centres. Under the SITP scheme, US$ 78.5 million allocation was made for sanction of new Integrated Textiles Parks. The National Fiber Policy has been formulated as a fiber neutral policy in a decadal perspective to attract to US$ 33.3 billion of investment

in the next decade. The Scheme for Integrated Textile Park (SITP) - The scheme was approved in July 2005 to facilitate setting up of textiles parks with world class infrastructure facilities. Government has sanctioned 21 new Textiles Parks under the Scheme with a project cost of US$ 397.8 million to be implemented over a period of 36 months. Mr Anand Sharma, Commerce, Industry and Textiles Minister, said that new Textiles Parks would leverage an investment of over US$ 1.7 billion and provide employment to 4 lac textiles workers. Government would finance common infrastructure with a subsidy upto US$ 7.5 million per Textiles Park. Integrated Skill Development Scheme - The Government launched the Integrated Skill Development Scheme for the T&C Sector, including Jute & Handicrafts, in September 2010. The main objective of the scheme is to address the trained manpower needs of textiles and related segments. The Scheme would target to train approximately 2,56,000 persons during 2010-11 and 2011-12. Fiscal incentives are provided for exports of T&C items under various provisions of the Foreign Trade Policy 2009-14 India has the most liberal and transparent policies in Foreign Direct Investment (FDI) amongst emerging countries. Under the automatic route, 100 per cent FDI is allowed in the textile sector. FDI in sectors to the extent permitted under automatic route does not require any prior approval either by the Government of India or Reserve Bank of India (RBI). The government has proposed some more relaxations for the branded garments sector, besides enhancement of duty abatement from 40 per cent to 55 per cent. In pursuance of the Jute Packaging Material (JPM) Act, the Cabinet Committee on Economic Affairs has approved the packaging of 90 per cent of the production of foodgrains and 90 per cent of the production of sugar in the jute packaging material for the Jute Year 2011-12 (July, 2011 to June, 2012), with a few exemptions. The decision will provide relief to 3.7 lakh workers employed in jute mills and ancillary units as well as support the livelihood of around 40 lakh farm families. Besides, it will help to protect the environment because jute is natural, biodegradable and reusable fibre. Investment trends Indias liberalisation of its foreign investment regulations, buoyant domestic demand for textiles, and strong export potential have led to growing foreign investment in the country. The country has become one of the fastest growing destinations for FDI inflows and collaboration. Indias Special Economic Zones (SEZs) attract foreign investment by providing tax incentives, assistance with bureaucratic and administrative problems, and access to reliable infrastructure. Foreign companies have been motivated to enter into collaborations with Indian firms by the increasing profits gains that can be made by producing brands in India and selling them into the Indian market. Indian companies, on the other hand, have been motivated by the scope for gaining technical and marketing expertise from foreign partners. The textiles industry has attracted FDI worth US$ 1,011.52 million between April 2000 and September 2011, according to data released by the Department of Industrial Policy and Promotion (DIPP). In last two years, the Rs 650 crore (US$ 143.72 million) garment e-tailing business has attracted investments worth US$ 70 million. The segment is expected to grow almost ten-fold to nearly Rs 6,000 crore (US$ 1.33 billion) by 2015, as per a study by management consultants Technopak Advisors. Funds like Tiger Capital, IndoUS Venture Partners, Helion Venture Partners, Sequoia Capital and Accel India have invested in the range of $5 million to $52 million in portals like Letsbuy, Flipkart, Fashion And You, Yehbhi, and Snapdeal. Maharashtra will get its first technical textiles park at Ichalkaranji off Kolhapur in the states western region. The project entails an investment of US$ 20.8 million, of which Government subsidy will total US$ 9.5 million: four-fifth of this by the Centre and the rest US$ 1.8 million by the State Government.

Ahmedabad-based textile company Arvind Ltd. has tied up with another major international brand, Geoffrey Beene, LLC for apparel and non-apparel products. Geoffrey Beene has licensed Arvind Retail Ltd. to manufacture and market its men's apparel and non-apparel products The Road Ahead India's T&C industry has great potential, and is one of the mainstays of the countrys economy. The industry has enormous opportunities for domestic as well as international investors given its consistent growth performance, abundant cheap skilled manpower and growing domestic demand. With the abolition of quotas, India has surged ahead of other countries and positioned itself as a value-added manufacturer with a varied material base, an educated and English-speaking class of executives with high product development and design orientation. On the global front, India is set to become an even bigger participant, both as a consumer and as a producer. The country offers an attractive combination of a large domestic market, and a base for low cost production. The industry has gained a strong position in cotton based products, especially in the readymade garments and home furnishings segment, which are expected to be the key drivers of growth for the industry. Besides this, the T&C industry is contributing towards promoting inclusive growth. It has been contributing to broad based socio-economic development by providing employment opportunities at local level. The government envisions building state-of-the-art production capacities and achieving a preeminent global standing in the textile sector by 2020, which includes manufacture and export of all types of textiles. Exchange rate used: INR 1= US$ 0.01919 as on November 24, 2011
References: Ministry of Textiles, Indian Textile Journal, Department of Industrial Policy and Promotion, CII, Business Standard, Economic Times, Press