There is hope in the textile industry that it can bounce back. That is significant since the industry, which ruled the roost in the past, has become dormant for quite a time. Sometime down the line, from its glory as one of the shining sectors in India’s growth story and often referred to as India’s future growth engine, textiles have slipped into a trajectory, where it was whimsically referred as a ‘sun set industry’. What is the future of the industry that has brought kudos to India’s workmanship once upon a time?
Some statistics are worth examining. Though it has lost much sheen in the later years, India is the second largest producer of textiles and garments in the world. The forecast of its growth is buoyant. The Indian textiles and apparel industry are expected to grow to a size of US$ 223 billion by 2021. This industry accounts for almost 24% of the world’s spindle capacity and 8% of global rotor capacity. Abundant availability of raw materials such as cotton, wool, silk and jute as well as skilled workforce have made the country a sourcing hub. The industry has made a major contribution to the national economy in terms of direct and indirect employment generation and net foreign exchange earnings. The sector contributes about 14 per cent to industrial production, 4 per cent to the gross domestic product (GDP), and 27 per cent to the country’s foreign exchange inflows. It provides direct employment to over 45 million people. The textiles sector is the second largest provider of employment after agriculture. Thus, growth and all round development of this industry has a direct bearing on the improvement of the India’s economy.
What are the pointers of growth in the textile sector? Foremost is the growing preference for textiles over the synthetics world-over. The potential of technical textiles-textile materials and products used for their technical performance and functional properties are enormous in India. Based on past trends of growth and estimated end user segment growth, the Working Group on Technical Textiles for 12th Five Year Plan (FYP) projected the market size to reach INR 1,58,540 crore by 2016-17 at a year-on-year growth rate of 20% during the 12th Five Year Plan.
Second, ray of hope is slowing down of India’s competitor in textiles-China. Chinese economy is getting overheated. In the process, its competitive edge in export in general and textile in particular is getting affected. This is an opportunity for India to push its agenda more aggressively than even before. Benefits will not flow from a vacuum.. India has to gear up its production facilities and produce for the world at large for getting the economies of scale. Chinese textile goods have penetrated across the world on account of its low price, timely delivery schedule and aggressiveness of its marketing strategy. Also, it is known to undercut the prices drastically to get the market penetration. India also will have to follow similar line. That is possible only with government support. There is a feeling in the textile industry that garments drive the growth of the Indian textile industry and special favors are extended to the sector. But garments can perform to its potential only if all other links like cotton, yarn, fabrics etc. are getting focused attention.
Third, pointer to push up the textile industry has come from unexpected sources, that is from US President Donald Trump, who reversed the decision of the earlier administration to go for regional groupings. Regional groupings like NAFTA, evolving Trans Pacific Partnership (TPP) etc. have been put on hold. India being a non member of either of these groupings, this is a great relief. Some of the medium and large Indian textile companies till recently were planning to set up bases in countries in Sub-Saharan Africa to gain foothold to the US market. They apprehended that once TPP becomes a reality, they will considerably loose the market.
Fourth, important factor for hope is the intention of the industry to invest in technology. Sluggishness in the industry, which lasted for several decades prevented fresh investments in the sector for fear of inadequate return on capital. Since there is some pick up in the industry ,of late and the expectation that industry can do better in future, happily there is a renewed focus on this sector by the investors.
Fifth, there is a strong domestic and export demand for the textiles. The most significant change in the Indian textiles industry has been the advent of man-made fibers (MMF). India has successfully placed its innovative range of MMF textiles in almost all the countries across the globe. MMF production recorded an increase of 10 per cent and filament yarn production grew by 6 per cent in the recent years. Cotton yarn production increased by about 10 per cent in the recent years.. Blended and 100 per cent non-cotton yarn production increased by 6 per cent and by 8 per cent during the recent years.
Cloth production by power loom and hosiery increased by 2 per cent and 9 per cent, respectively, during the recent years.The total cloth production grew by 4 per cent during February 2014 and by 3 per cent during the period April 2013–February 2014. Textiles exports stood at US$ 28.53 billion during recent years as compared to US$ 24.90 billion during the corresponding period of the previous year, registering a growth of 14.58 per cent. Garment exports from India are expected to touch US$ 60 billion over the next three years. The textiles sector also has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted foreign direct investment (FDI) worth Rs 8000 crore between 2000 and 2016
The industry needs support of the government for its development. Apart from more concessional fiscal regime, industry needs to skill more persons to fill the skill gap to move up in the value chain. Also, disbursement under the Technology Development Fund (TUF) should be streamlined for the industry to take up technology replacement steps to produce products which have global demand.