Indian textile industry – An overview

By: Dr. M. Dhanabhakyam & A.Shanthi
Presented by www.fibre2fashion.com

INTRODUCTION The Indian textile industry is one of the largest in the world with a massive raw material and textiles manufacturing base. fabrics are produced in the powerloom and handloom sectors as well. The Indian textile industry continues to be predominantly based on cotton.com . accounts for around one-third of our gross export earnings and provides gainful employment to millions of people. Textile Industry is providing one of the most basic needs of people and the holds importance. it is a major contribution to the country's economy. It has a unique position as a self-reliant industry. Indirect employment including the manpower engaged in agricultural based raw-material production like cotton and related trade and handling could be stated to be around another 60 million. There are 1. the textile industry accounts for as large as 21% of the total employment generated in the economy. with about 65% of raw materials consumed being cotton.Dhanabhakyam Lecturer in Commerce Department of Commerce Bharathiar University Coimbatore . The textile industry occupies a unique place in our country.8 billion m (about 42 billion ft). In 2000/01. About 27% of the foreign exchange earnings are on account of export of textiles and clothing alone.Indian textile industry . The textiles and clothing sector contributes about 14% to the industrial production and 3% to the gross domestic product of the country. Textile is one of India’s oldest industries and has a formidable presence in the national economy in as much as it contributes to about 14 per cent of manufacturing value-addition. They include cotton and jute growers.com A. INDIAN TEXTILE INDUSTRY STRUCTURE AND GROWTH India’s textile industry is one of the economy’s largest.1 million metric tons) ranks next in importance to cotton weaving. So much so. maintaining sustained growth for improving quality of life. While yarn is mostly produced in the mills. opportunities and treats of the Indian textile industry. Textile and clothing exports account for one-third of the total value of exports from the country. Around 35 million people are directly employed in the textile manufacturing activities. accounts for around one-third of our gross export earnings and provides gainful employment to millions of people. accounting for about 20% of the total industrial production. One of the earliest to come into existence in India. ranking second to China in the production of both cotton yarn and fabric and fifth in the production of synthetic fibers and yarns.Shanthi M.46 E-mail id: shanthmphil@yahoo. key advantages of the industry. Our economy is largely dependent on the textile manufacturing and trade in addition to other major industries. the textile and garment industries accounted for about 4 percent of GDP.fibre2fashion. growth and size of the Indian textile industry. Textile is one of India’s oldest industries and has a formidable presence in the national economy inasmuch as it contributes to about 14 per cent of manufacturing value-addition. from the production of raw materials to the delivery of finished products. It provides direct employment to around 20 million people. This paper deals with structure. it accounts for 14% of the total Industrial production.M. The yearly output of cotton cloth was about 12. contributes to nearly 30% of the total exports and is the second largest employment generator after agriculture. Around 8% of the total excise revenue collection is contributed by the textile industry. The manufacture of jute products (1. India’s textile industry is also significant in a global context. 18 percent of industrial employment.in Abstract The Textile Sector in India ranks next to Agriculture.227 textile mills with a spinning capacity of about 29 million spindles. textile industry export and global scenario and strength. and 27 percent of export earnings (Hashim). with substantial value-addition at each stage of processing. A textile is the largest single industry in India (and amongst the biggest in the world). weakness. role of textile industry in economy. Presented by www. artisans and weavers who are engaged in the organised as well as decentralised and household sectors spread across the entire country.co.An overview Dr. 14 percent of industrial output.46 E-mail id: dhana_giri@rediffmail.Phil Scholar Department of Commerce Bharathiar University Coimbatore .

many of which use outdated technology.e. these types of mills now account for about only 3 percent of output in the textile sector. or blended yarns into woven or knitted fabrics. the last ten years and more particularly in the 90s. more capital-intensive operations. mostly larger. sometimes. which includes dyeing. Overall. and technology outdated. manmade. Structure Of India’s Textile Industry Unlike other major textile-producing countries. rather than the world market. The spinning spearheaded the growth during this period and man-made fibre industry in the organised sector and decentralised weaving sector. manufacturer exporters. small-scale operations and discriminated against larger scale firms: • Composite Mills. labor-intensive enterprises. The analysis of the growth pattern of different segment of the industry during the last five decades of post independence era reveals that the growth of the industry during the first two decades after the independence had been gradual. most owned by the public sector and many deemed financially “sick. India’s weaving and knitting sector remains highly fragmented. weaving. Most firms. The unique structure of the Indian textile industry is due to the legacy of tax. Relatively large-scale mills that integrate spinning. This unique industry structure is primarily a legacy of government policies that have promoted labor-intensive. In India. weaving and. and apparel-making enterprises. however. Average plant size remains small. relative to other major producers. weaving.100 independent units and 200 units that are integrated with spinning. nonintegrated spinning. operate in the small-scale “unorganized” sector where regulations are less stringent and more easily evaded. However. including about 2.com . Weaving and knitting converts cotton. The growth thereafter picked up significantly during the fourth decade in each and every segment of the industry. and laborintensive.fibre2fashion.In contrast to other major textile-producing countries. About 276 composite mills are now operating in India. and just 137.599 larger scale independent units. “Powerlooms” are small firms. fabric finishing. with an average loom capacity of four to five owned by independent entrepreneurs or weavers. about 2. while discriminating against larger scale.146 small-scale independent firms and 1. This sector consists of about 3. The Textile Policy of 1985 and Economic Policy of 1991 focussing in the direction of liberalisation of economy and trade had in fact accelerated the growth in 1990s. The peak level of its growth has however been reached during the fifth decade i. nonintegrated spinning.7 million looms.9 million handlooms. finishing. and fabricators (subcontractors). have led to significant gains in technical efficiency and international competitiveness. characterize India’s textile sector. labor. and apparel enterprises.000 “powerloom” enterprises that operate about 1. India’s textile industry is comprised mostly of small-scale. Largely due to deregulation beginning in the mid-1980s. India’s spinning sector consisted of about 1. though lower and growth had been considerably slower during the third decade. and other regulatory policies that have favored small-scale. mostly mostly small-scale. • Clothing. firms operate in the “organized” sector where firms must comply with numerous government labor and tax regulations. printing. Apparel is produced by about 77. 380. spinning is the most consolidated and technically efficient sector in India’s textile industry. fabric finishing are common in other major textile-producing countries. weaving. small scale enterprises. Modern shuttleless looms account for less than 1 percent of loom capacity.000 looms in the various composite mills. or knitting units. however. Some.000 small-scale units classified as domestic manufacturers. small-scale. broad scope remains for additional reforms that could enhance the efficiency and competitiveness of India’s weaving. Presented by www. which began in the 1980s and continued into the 1990s. Growth of Textile Industry India has already completed more than 50 years of its independence. Policy reforms. Spinning is the process of converting cotton or manmade fiber into yarn to be used for weaving and knitting. In 2002/03. The structure is also due to the historical orientation towards meeting the needs of India’s predominately low-income domestic consumers. cloth finishing. particularly in the spinning sector. • Weaving and Knitting. • Fabric Finishing. however. and other cloth preparation prior to the manufacture of clothing..” • Spinning. and apparel sectors.300 processors are operating in India. Fabric finishing (also referred to as processing). is also dominated by a large number of independent.

The industry uses a wide variety of fibres ranging from natural fibres like cotton. It ranks fourth in terms of staple fibre production and fourth in polyester yarn production. • • ROLE OF INDIAN TEXTILE INDUSTRY IN THE ECONOMY Textile industry plays a significant role in the economy. jute. GOVERNMENT INITIATIVES With a view to raise India's share in the global textiles trade to 10 per cent by 2015 (from the current 3 per cent). Production facilities are available across the textile value chain.142. It has the largest cotton acreage. It contributes 20 per cent of industrial production. this initiative will not only make the industry cost competitive. of about nine million hectares and is the third largest producer of cotton fibre in the world. Alok Industries and Raymonds have established themselves as 'quality producers' in the global market.2 million during the same period in the previous year. Textile exports during the period of April-February 2003-2004 amounted to $11. 30 have been already sanctioned by the government (with a cost of US$ 710 million). by contributing 4 per cent of GDP and accounting for 35 per cent of gross export earnings. The industry is investing in technology and increasing its capacities which should prove a major asset in the years to come. It has been estimated that one out of every six households in the country depends directly or indirectly on this sector. 9 per cent of excise collections. Large Indian players such as Arvind Mills. It is the second largest player in the world cotton trade. Estimates say that the textile sector might achieve about 15 to 18 per cent growth this year following dismantling of MFA. jute.com .Size of Textile Industry in India • • • The textile industry in India covers a wide gamut of activities ranging from production of raw material like cotton. Set up under the Scheme for Integrated Textile Parks (SITP). The Indian textile industry is one of the largest and most important sectors in the economy in terms of output. Welspun India. India has several advantages in the textile sector. This recognition would further enable India to leverage its position among global retailers. The key advantages of the Indian industry are: • • • • • • India is the third largest producer of cotton with the largest area under cotton cultivation in the world. the Ministry of Textiles proposes 50 new textile parks. wool.5 million as against $11. nearly 20 per cent to the country’s total export earnings and 4 per cent ton the GDP. which employ millions of farmers and crafts persons in rural and semi-urban areas. The textile industry is also labour intensive. including abundant availability of raw material and labour. showing an increase of around 5 per cent. India has gathered experience in terms of working with global brands and this should benefit Indian vendors. silk. 18 per cent of employment in industrial sector. The textile sector also has a direct link with the rural economy and performance of major fibre crops and crafts such as cotton. The sector employs nearly 35 million people and is the second highest employer in the country. viscose. but will also enhance manufacturing capacity in the sector. thus enabling India to benefit from global outsourcing trends in labour intensive businesses such as garments and home textiles. silk and wool to man made fibres like polyester.698. from spinning to garments manufacturing. handicrafts and handlooms. Out of the 50. Design and fashion capabilities are key strengths that will enable Indian players to strengthen their relationships with global retailers and score over their Chinese competitors.fibre2fashion. foreign exchange earnings and employment in India. acrylic and multiple blends of such fibres and filament yarn. Presented by www. thus India has an advantage. silk and wool to providing high value-added products such as fabrics and garments to consumers. It has an edge in low cost cotton sourcing compared to other countries. The textile sector contributes 14 per cent of the value-addition in the manufacturing sector. The textile industry plays a significant role in Indian economy by providing direct employment to an estimated 35 million people. Average wage rates in India are 50-60 per cent lower than that in developed countries.

And that of developing countries increased from 47.6 million. Whereas. respectively.20% group 3.90% 3. The Government of India has also included new schemes in the Annual Plan for 2007-08 to provide a boost to the textile sector. • Revival plans of the mills run by National Textiles Corporation (NTC).2 % in the same period.00% 15.Apart from the above. the Government will also increase the TUF (Technology Upgradation Fund) from US$ 124 million in 2006-07 to US$ 211 million in 2007-08. a series of progressive measures have been planned to strengthen the textile sector in India: • Technology Mission on Cotton (TMC) • Technology Upgradation fund Scheme (TUFS) • Setting up of Apparel Training and Design Centres (ATDCs) • 100 per cent Foreign Direct Investment (FDI) in the textile sector under automatic route. fabric. Brand Promotion on Public-Private Partnership (PPP)) approach to develop global acceptability of Indian apparel brands.80% 6. clothing and machinery.com .1 % of total exports.6 million at Jehangir Mill in Ahmedabad.5% in textiles category. These include schemes for Foreign Investment Promotion to attract foreign direct investment in textiles.10% 3. In a further bid to bolster the envisaged annual growth rate of 11 per cent.50% 6.80% 5.40% 34. US$ 2. India Pakistan Turkey Mexico Presented by www. Trade Facilitation Centres for Indian image branding. • Setting up a Handloom Plaza in Ahmedabad with an estimated investment of US$ 24.8% to 62. manmade yarn and fabrics in textiles group and RMG–Man made fibers constituted second position in the two categories.21 million worth of machineries has been ordered for the upgradation and modernisation of these mills. Common Compliance Code to encourage acceptability among apparel buyers and Training Centres for Human Resource Development on Public Private Partnership (PPP) mode. In 2003 the exports figures in percentage of the world trade in Textiles Group (for select countries) were: Export of world trade in textile 1. • Setting up a handloom mall with an investment of US$ 24. • Scrapping of the Textile Committee cess being collected from the textile and textile machinery industry under the Textile Committee Act.2% share in 1990 to 37. Carpets and woolen garments are other items exported from India. INDIAN TEXTILE INDUSTRY In textile Scenario In exports Cotton yarns. Fashion Hubs for creation of permanent market place for the benefit of Indian fashion industry. In global scenario Developed countries' exports declined from 52.fibre2fashion. Ch.33 Billion or 26.40% 3.67 Billion US $ or 37.8 % in 2002. made ups etc made largest chunk with US$ 3. • Setting up two design centres in Gujarat in collaboration with National Institute of Fashion Technology. and Ready Made garments (RMG)-cotton including accessories made largest chunk with 4.80% EU USA Japan China Republic of Korea Taipei. Already. for the revival of 18 textile mills.

EU (15) and Canada constituted 70 % of total garment exports and 40% of India's textiles exports. USA at 6.47 2.00 3619.10% and Mexico at 1. Pakistan at 3.40% 26.9% only. turkey at 3.50% In this sector the exports have declined for EU (15) from 42% to 26.fibre2fashion.7% to 2.50% EU USA China Turkey Mexico India Bangladesh 23.20% 4.22 2005-06 2941. Ch at 5.239 EXPORT DATA FOR THE YEAR 2003-04 **Value in Us$ Million Country USA/Canada EU Total OBA Countries Grand Total 2004-05 2180.5 Billion. EXPORT SCENARIO: Textiles contributed 20% of India's exports to about US $ 12.86 1.90%. next China at 15.80% of export.20%. Among world textile group EU occupies 34.00 2590.The above chart clearly shows that export of world trade in textile group.50%.40%. In non-quota countries UAE is the largest market with 7% of textile exports and 10% of garment exports from India.90% 1.64 1.19 2.60 .00% 2. The Quota Countries mainly USA.5% in period 1980-2003 whereas of China increased from 4% to 23% and of India from 1.00 419.com .00% Taipei.40%. We can see that developing countries' share in textiles had declined and in clothing it has increased sharply.54 6381. Republic of Korea at 6.00 (SOURCE: AEPC CERTIFICATION DATA) Presented by www. India and Japan at 3.35 1. India's Exports: in US $ Billions Year 2003-04 Countries/Region World Quota Countries EU USA Canada Export of Textiles 6.80% respectively.12 .90% 3.098 Export of garments 6. In Clothing Sector the figures were as below in 2003 in percentage of total experts globally: Total Export in Clothing SectorGlobal View 2.00 370.10 4.86 8200.

Indian garment industry is very diverse in size. INDIAN TEXTILE INDUSTRY – SWOT ANALYSIS Strength India has rich resources of raw materials of textile industry. Alternative competitive advantages would continue to be a barrier.68 6247. It comprises suppliers of readymade garments for both.The exports of readymade garments as per AEPC certification data for the last five years are as follows: **Qty in Million PCs and Value in Million US$. Weakness Knitted garments manufacturing has remained as an extremely fragmented industry. In post-2005. silk. Technology obsolescence despite measures such as TUFS. manufacturing facility. Labour force giving low productivity as compared to other competing countries. Low bargaining power in a customer-ruled market. viscose etc.69 8200.com . In the year of 2001-2002 the value of export of readymade garment is 395. India is highly competitive in spinning sector and has presence in almost all processes of the value chain. Because of low labor rates the manufacturing cost in textile automatically comes down to very reasonable rates.00 The above table clearly depicts the export of readymade garments for the last five years.23 and in the year 2005-2006 the value is 8200. Indian labour laws are relatively unfavorable to the trades and there is an urgent need for labour reforms in India. China is expected to capture 43% of global textile trade. Presented by www.96 6038. Increased use of CAD to develop designing capabilities and for developing greater options.00. cost. India is rich in highly trained manpower. but is also likely within the country due to cheaper imports of goods of higher quality at lower costs. domestic or exports markets. It is one of the largest producers of cotton in the world and is also rich in resources of fibres like polyester. Global players would prefer to source their entire requirement from two or three vendors and the Indian garment units find it difficult to meet the capacity requirements. From 2001-2002 it started increasing and in the year 2004-2005 it declines and again in the year 2005-2006 it increases. Companies need to concentrate on new product developments. Standards such as SA-8000 or WARP have resulted in increased pressure on companies for improvement of their working practices. type of apparel produced. Year 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 Value 395.fibre2fashion. Domestic market extremely sensitive to fashion fads and this has resulted in the development of a responsive garment industry. India seriously lacks in trade pact memberships.23 5704. Threats Competition in post-2005 is not just in exports. and requirement for fabric etc. quantity and quality of output. The country has a huge advantage due to lower wage rates. Industry still plagued with some historical regulations such as knitted garments still remaining as a SSI domain. India's global share is just 3% while China controls about 15%. which leads to restricted access to the other major markets. Opportunity Low per-capita domestic consumption of textile indicating significant potential growth.

org www.org meaindia.marketresearch.com To promote your company.com texprocil. Textile Industry is providing one of the most basic needs of people and the holds importance. Fashion.com To read more articles on Textile. Retail and General please visit http://articles. REFERENCES • • • • • • • • • • www. These include schemes for Foreign Investment Promotion to attract foreign direct investment in textiles. Technology. The industry also contributes significantly to the world production of textile fibres and yarns including jute. it is the largest producer of jute. clothing and machinery etc. employment generation and foreign exchange earnings.fibre2fashion. In the world textile scenario. maintaining sustained growth for improving quality of life.bharattextile. second largest producer of silk. The Government of India has also included new schemes in the Annual Plan for 2007-08 to provide a boost to the textile sector.com www. Its contribution to the Indian economy is manifested in terms of its contribution to the industrial production.indialine. follow this link: http://www.com pd.cpim.com .ibef.nic.com/services/article-writing-service/content-promotion-services.fibre2fashion. Apparel.in ezinearticles.asp Presented by www. product and services via promotional article.com www. third largest producer of cotton and cellulosic fibre\yarn and fifth largest producer of synthetic fibre\yarn.CONCLUSION The Indian textile industry has a significant presence in the Indian economy as well as in the international textile economy.fibre2fashion.economywatch.tradeget.com www.com www.

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