S.R.T.E.P.

C

INDIAN TEXTILE INDUSTRY & GLOBAL TRADE IN
TEXTILES AND CLOTHING

TEXTILE TRADITION OF INDIA
India has a diverse and rich textile tradition. The origin of Indian textiles can be traced to the
Indus valley civilization. The people of this civilization used homespun cotton for weaving
their garments. Excavations at Harappa and Mohen -jo-Daro, have unearthed household items
like needles made of bone and spindles made of wood, amply suggesting that homespun
cotton was used to make garments. Fragments of woven cotton have also been found from
these sites.
The first literary information about textiles in India can be found in the Rigveda, which refers
to weaving. The ancient Indian epics-Ramayana and Mahabharat, also speak of a variety of
fabrics of those times. The Ramayana refers to the rich styles worn by the aristocracy on one
hand and the simple clothes worn by the commoners.
Ample evidence on the ancient textiles of India can also be obtained from the various
sculptures belonging to Mauryan and Gupta age as well as from ancient Buddhist scripts and
murals (Ajanta caves). Legend has it that when Amrapali, a courtesan from the kingdom of
Vaishali met Gautam Buddha, she wore a richly woven semi transparent sari, which speaks
volumes of the technical achievement of the ancient Indian weaver.
India had numerous trade links with the outside world and Indian textiles were popular in the
ancient world. Indian silk was popular in Rome in the early centuries of the Christian era.
Hoards of fragments of cotton material originating from Gujarat belonging to 5th century
A.D. have been found in the Egyptian tombs at Fostat. Cotton textiles were also exported to
China during the heydays of the silk route.
Silk fabrics from south India were exported to Indonesia during the 13th century. India also
exported printed cotton fabrics or chintz, to European countries and the Far East before the
coming of the Europeans to India. The British East India Company also traded in Indian
cotton and silk fabrics, which included the famous Dacca muslins. Muslins from Bengal,
Bihar and Orissa were also popular abroad. The past traditions of the textile and handlooms
can still be seen amongst the motifs, patterns, designs, and the old techniques of weaving,
still employed by the weavers.
THE INDIAN SIGNATURE COLLECTION
The Indian signature collection consists of exotic textiles such as Madras checks from Tamil
Nadu, ikats from Andhra and Orissa, tie and dye from Gujarat and Rajasthan; brocades from
Banaras, jacquards form Uttar Pradesh. Daccai from West Bengal, and phulkari from Punjab.
Despite this regional distinction there has been a great deal of technical and stylistic
exchange. The famed Coimbatore saris have developed while imitating the Chanderi pattern
of Madhya Pradesh. Daccai saris are now woven in Bengal, not in Dhaka. The Surat tanchoi
based on a technique of satin weaving with the extra weft floats that are absorbed in the
fabric itself has been reproduced in Varanasi. The Baluchar technique of plain woven fabric
brocaded with untwisted silk thread, which began in Murshidabad district of West Bengal,
has taken root in Varanasi. Their craftsmen have also borrowed the jamdani technique.

24 billion during the year 2000. India is the only country in the world producing all four commercially known silks . first created in India. iron shavings and vinegar for blacks. It is believed that ikat was an innovative technique.44 billion in which clothing accounted for 55. Tasser is found in the remote forests of Bihar.C Woolen weaves are no less subtle.5 billion). indigo and madder roots. Before the artificial synthesis of indigo and alizarin as dye stuffs. Tripura and Manipur are mostly stylized symbols. The states of Kashmir and Karnataka are known for their mulberry silk. Given the wide and exciting range of handloom it is not surprising that the rich and beautiful products of the weavers of India have been called “exquisite poetry in colorful fabrics. Assam is the home of eri and muga silk. tie-dyeing and yarns tie-dyed to a pattern before weaving were the basic techniques of indigenous dyeing of village cloth. The designs used in Assam. In the ikat tie and dye process. the designs in various colors are formed on the fabric either by the warp threads or the weft threads or by both. dung and river sands. leaves and barks of local trees and chemicals obtained from clay. Muga is durable and its natural tones of golden yellow and rare sheen become more lustrous with every wash. India’s share in global textile and clothing trade has been 2. Andhra Pradesh has made a significant contribution to the history of hand-printed textiles in India. the Kalmkari cloth of Andhra Pradesh is printed with local vegetable dyes. Shellac was used for reds. the dyes used and the weaving techniques. Excellence is achieved only if the block is freshly and perfectly chiseled. blues and reds were traditionally extracted from the plants indigofera. global exports of textiles and clothing amounted to US $ 356. its pigments being obtained from the flowers. Andhra Pradesh and Uttar Pradesh. A new technique has been developed in the northern sectors where warp threads are lined. Even today. by the nakshabandhas (graph-paper designers). .” GLOBAL TEXTILE AND CLOTHING TRADE As per the international trade statistics for 2000. The Kashmiri weaver is known the world over for his Pashmina and Shahtoosh shawls. turmeric for yellow and pomegranate rinds for green.2% (USD 157. The designs are produced by artists and the designing is kept within the discipline imposed. anil and rubia tintorum (madder-root).8% (USD 198.S. The ideal seasons for block printing are the dry months. deep blue and a soft rose derived from local earths.87% valued at US$ 10. Eri is soft. Orissa. measured and tied to the loom and then printed. Printing is native to the land.R.E.mulberry.T. The threads forming the design are tied and dyed separately to bring in the desired color and the simple interlacement of the threads produces the most intricate designs that appear only in the finished weaving. eri and muga. brought out by the World Trade Organization [WTO]. which was later carried to Indonesia. Madhya Pradesh. The colors being shades of ochre. the only other place in the world with a strong ikat tradition.P. INDIGENOUS DYING AND PRINTING The process of resist-dyeing.94 billion) and textile accounted for 44. tasser (tussore). These were the main sources for traditional Indian dyes. the type of yarn. West Bengal. cross borders and the galaxy of stars. dull and has wool like finish. The shawls are unbelievably light and warm. The warp-printed material is a specialty of Haryana and Uttar Pradesh.

R. this growth has not been uniform for both the segments. Trousers.S. By and large. medium and small scale Powerloom sector. It accounts for about 21 per cent (35 million spindles) of the world spindleage of 166. Nightshirts and Nightwear chiefly made from cotton fabrics. The apparel sector basically consists of knitted and the woven garment segments. which means it has grown at an average growth rate of 12% overall. India’s apparel exports basket consists of T-shirts. apparel manufacturers in SSI and Spinning mill sector spread all over India.7 million looms (including handlooms). which were USD 303 million in 1990-91. With almost 5. particularly in the rural and remote areas of the country on account of its close linkage with agriculture. It has immense potential for employment generation. jute and coir. Indian textile industry has a significant presence in the world textile economy by virtue of its production of textile fibres/yarns. handloom sector. MMF exports.5 times. Exports of Indian MMF textiles have increased significantly in tune with the world trade during last 10 years. The exports in this sector comprise yarn. cotton yarn and cellulosic fibre/yarn in the world. Shorts. It accounts for over 1. It is also the fifth largest global producer of synthetic fibre/yarn.6% share in GDP and 7% of the industrial production in India. Its predominant presence in the Indian economy is manifested in terms of its significant contribution to the industrial production.36 million spindles.T.E. The knitted segment has grown faster than its woven sibling. it is obvious that India needs to produce more synthetic fibre based products to meet the international demand. Taking a cue from global consumption pattern. However. employment generation and foreign exchange earnings. having grown almost three times. The major markets for RMG are European Union. It is the largest producer of jute and the second largest producer of silk and the third largest producer of cotton.5 % of export earnings and employs about 26 million people.81 million. fabrics. Ladies blouses. whereas the woven segment grew slowly at the rate of 1. have grown by 316% to reach USD 1260 million in 2000- . TEXTILE SECTOR The textile industry occupies a unique position in the Indian economy. 75% of the exports. the industry has the highest loomage about 64 per cent of the world loomage of 8. The Indian Textile and Apparel industry represents a mosaic of widely diversified sectors with the organized and integrated mill sector.9 millions. APPAREL/CLOTHING SECTOR The share of Ready-made garment (RMG) in Textile and Apparel exports is 40-45%. MMF Textile Sector Man-made fibres today account for more than 60% of the world production in textiles and its share is growing at a steady pace. hosiery sector. Skirts. about 35. made-ups.P. In keeping with the world trend the MMF industry in India also grew rapidly during the 90's. Australia and Canada. garments.C TEXTILE & APPAREL INDUSTRY AT A GLANCE The Textile and Clothing industry in India accounts for 14 % of the manufacturing sector output. Gents shirts. handicrafts. USA. The Indian textile industry is predominantly cotton based which accounts for 65 percent of fibre consumption. the industry has doubled its production levels over the last 8 years. Its net foreign exchange earning is also one of the highest. the second largest after China and three per cent of the world rotorage of 7.

though a tiny percentage of the world production. Gulf and the Asian region. Eri and Muga. hand-embroidered ones and Pashmina shawls are finding a very good market in the world. Japan. carpets and silk garments. Australia and South Africa. The total export of silk items is USD 400 million.28 million in the year 1998-99. rising from US$305.33 million in 1992-93 to US$ 1. The production of Mulberry raw silk during 2001 has been 14000 tons. USA. The USA and the EU import about two-thirds of the silk textiles exported from India. rising from US$ 403 million in 1992-93 to US$ 1. Singapore. bedspreads. the Indian textile Industry is a unique case of disintegration. 14500 independent processing units and innumerable garment manufacturers and countless retailers.T. stoles. Indian shawls. The other markets are the Middle East (for traditional sarees). Exports of cotton yarn have shown a phenomenal growth in recent years.E.P. Exports of cotton made-ups have also shown a steady growth over the years. especially. Tasar. There are 2290 players in the organized spinning sector. Belgium.42%. . has some inherent strengths with a capacity to give the consumers exclusive/niche products based on traditional designs and colours. Silk Sector India has the distinction of being the only country in the world to produce all the commercially known varieties of silk – Mulberry. Germany. scarves.R. Indian woollen knitwear is valued for the handwork done on it. Turkey. The main items being produced in India are mixed/blended silk fabrics.23 million during the financial 1999-2000. Saudi Arabia and France. India has a share of 27% in the world trade in cotton yarn. TEXTILES TRADE STRENGHTS Contrary to the global trends towards integration and economies of scale. dress material.3 million in 1999-2000. Wool And Woollen Sector India’s production of wool and woollen textiles. saris. Cotton Textile Sector Exports of cotton textiles (yarn/fabrics/madeups) increased to US$ 3643. cushion covers. marking a growth of around 6. followed by the United Kingdom. The other main markets are Italy. marking an increase of about 282% during this period. UAE continues to be the leading market for Indian synthetic textiles. representing an increase of 229% during this period. New blends like wool/lycra. India has the largest cotton acreage in the world. Exports of cotton fabrics have also shown a steady growth during the last five years from US$ 613. Almost all cotton used in India is grown locally. The highly sophisticated and quality conscious EU is the largest importer followed by the Middle East.S. Australian sports wool and optim fibre are the major thrust blends which will find emerging goods markets for knitwears and shawls. The exports are directed to 163 countries. as against US$ 3423. and cotton is the dominant fibre in the Indian industry. only 278 composite mills and thousands of weaving units. Hong Kong.54 billion in 1999-2000.67 million in 1992-93 to US$ 1005.1 billion in 1999-2000. Spain.C 2001.

C 1. Knitters and spinners. Wide Product Range India produces almost all types of fibres and yarns and has achieved near self sufficiency in some sectors such as those producing polyester fibre and filament yarn. QUOTAS & QUOTA RELATED PROBLEMS Nearly 80% of Indian clothing exports go to the US and EU where they face quota restrictions. India has a large production base with integrated mill sector. alluring range of made-ups and exotic range of fabrics to discerning international buyers. Wide range of production including sophisticated high qualities as well as those required for middle and low end consumers. Made-up Articles . State of the art Apparel manufacturers. A lesser percentage of total textile exports are subject to quotas. Modern Technology The textile and apparel industry in India employs modern technology in production. Also capable of catering to volume orders. This is especially visible in the case of the raw material. i. yarn and fibre. 4. 3. Competitiveness The industry enjoys cost advantages due to creation of huge production capacities. sequins and pearl/bead works which are in great demand in the Arab world is a specialty of India. printed and embroidered dupattas/odhanies in metallic stripes. The secret of India's success lies in the unmistakable quality of its textiles. 5.e. Unique Advanrages to Importers Textiles and Apparel Industry in India has certain unique advantages which are beneficial to overseas buyers. short response time and smaller lots offered. producing sectors. India offers an alluring range of made-up items like scarves/stoles/dupattas and odhanies in exotic shades. During the . With centuries old tradition.R.T. intricate patterns and magical finishes. Powerlooms. Industry is self sufficient and vertically integrated. Large Production Base India is a producer and exporter of quality textiles and apparels.P. India offers a trendiest range of apparels. Diversified small lot production system which can cope better with the changes in fashion demands. Dyed. 2.E. industry has perfected the art and science to produce exquisite goods.S. a) b) c) d) e) 6. Korea and Taiwan and have come out on top. which in turn is reflected in the high quality of products comparable to reputed international brands. Handlooms.specialty items Exports of made-ups have been increasing at a steady pace. competitive prices and reliable supply. Indian items are competing with products of such textile giants like Japan.

E. the most intensive items like shirts and women’s outerwear. PSF. The reason is obvious: It is one of the biggest sectors of the economy. On the contrary. as well as reducing its tariffs. 1. at the very beginning of integration process.e. In fact antidumping levies are far more lethal than quota restraints especially as they have the potential . the growth of this industry has a significant bearing on the overall development of the economy.1. The two largest restraining Members USA and EU have not taken any specific measures to facilitate increased competition in their markets. The European Commission (EC) has been particularly active in this regard. pushed higher by the cost of paying for quotas. in which India has an advantage. It is the only industry that is self-reliant and complete in the value chain . However. A major offshoot of the free trade regime is the frequent use of the anti dumping and anti subsidy action by the developed countries.R. In the last decade. on its part. Indian exporting firms enjoyed a relatively unrestricted growth.S. PREFERENTIAL TRADE AGREEMENTS & RULES OF ORIGIN The agreements under the World Trade Organisation will have their deepest impact on the Indian textile and clothing industry.C course of the first two Multifibre Arrangements in the 1970s. yarns and industrial fabrics. The Uruguay round of multilateral negotiations brought the Multi-fibre Arrangement to an end and the WTO members agreed to enter into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations. The EU. has insisted on additional reciprocal market opening commitments by developing countries before it could consider any meaningful liberalisation of its restrictions. IMPACT OF FREE TRADE. Consequently. India signed bilateral agreements with the EU and US to secure reciprocal market access for textiles and opened its markets to foreign goods by removing import restrictions on textiles such as fibres. As it stands out India has already lowered duties substantially below committed levels and opened its market while the EU and US has so far integrated insignificant products and the most important products would be integrated in the year 2005. the US administration announced its policy to postpone integration of the large bulk of restrained products until the end of the transitional period of the ATC. Polyester Spun Yarn and Polyester Staple fibre fabrics originating from developing countries including India.from raw material to the highest value added products.T. Although the integration schedule and quota phase-out under ATC was originally intended to be a gradual affair. The developed countries have not integrated items of “commercial significance” into the world trading system even after 70% of the period of integration schedule is over.P. Consequently. By 1987. the EC has initiated proceedings on PTY. The repeated recourse to such investigations and back to back investigation has resulted in losses for business and caused considerable damage to trade and competition. some quotas started to bite. apparel exports were curtailed by quota ceilings for most categories. since their export quantities had not reached the limits set by the quotas. during the third phase. will not have their quotas removed until 2005 leading to a problem of uncompetitive prices. it has actually been followed in letter only and not in spirit. Textile companies are already complaining of the ‘Chinese’ onslaught in this sector.2005. The impact of liberalisation through WTO on Indian Textile market is yet to be experienced in a big way since most of the liberalisation under ATC is ‘backloaded’ and will take place in the last year i.

the level of duty concession. PREFERENTIAL TRADE AGREEMENTS The General System of Preferences (GSP) is an agreed exception to the MFN principle under which the Donor Country grants preferential duty on goods originating in beneficiary country which is lower than the normal MFN duty. As part of its legislation implementing the results of Uruguay Round. growing preferential arrangements with targeted regions and countries under Arrangements like Trade Development Act 2000 of the USA.. the US substantially altered its rules for determining the origin of textiles and clothing products. put into effect from July 1996. Each donor country is free to decide the level of concessions.R. . RULES OF ORIGIN Rules of Origin are unilaterally altered by the developed countries to the detriment of developing exporting countries. Unilateral changes in Rules of Origin by USA have affected the trade of textiles and clothing badly.P. promotion such as advertising. the future perspective of Indian Textile & Apparel Industry in post GATT era can be summarised as under:  Exports of textile and apparel products will be quota-free and will only be based on market considerations namely product attributes. Sri Lanka and Thailand. Since the process of harmonisation of Rules of Origin of various countries is being undertaken in the Committee on Rules of Origin. But the concessions of duty free access granted to Pakistan recently on account of drug policy would increase the unhealthy competition and push the prices down in apparel sector. the choice of goods and the rules of origin in respect of GSP. The expansion of regional trade arrangements like NAFTA. pricing. However. the apparel sector in India benefits from EU GSP scheme. FUTURE PERSPECTIVES In the midst of liberalization under WTO framework. would act as insurmountable barriers to global free trade resulting in adverse effect on Indian exports. Consequently. The modified rules. There has been sharp decline in imports from countries whose companies had been targeted for alleged dumping. Indonesia.E. Malaysia.C to restrict sales and erode competitive edge in view of the direct impact on the price of the product. The textile sector in India is not eligible for EU GSP benefits while the same benefits are extended to China.5% in 1994 to 31.S. the procedure to be used and the rules of origin that apply. The EU GSP scheme extends duty benefit to the developing countries and provides special incentives to promote core labour and environmental standards. most GSP schemes are different from each other in terms of the goods covered. Besides. resulted in major changes disadvantageous to developing countries. EU's enlargement programme to include Central & Eastern Europe & Mediterranean rim countries etc.T. In fact data relating to imports of textiles and clothing into USA shows that the share of imports from countries covered by preferential trade arrangements have increased from 19. no member country should be allowed to make any further changes in their Rules of Origin till the harmonisation process is completed.7% in the year 2000. an anti-dumping/anti-subsidy investigation entails significant financial burden on the targeted companies.

as a major supplier of fabrics to the garment industry. as producers in the region over-supplied the world. 2005. Indian exporters are making the necessary adjustments to meet these new standards. The restrictions on import into those countries may come in the form of non-tariff barriers / measures such as based on environmental issues. Since the quota phase-out schedule.P. The impact would be felt across different sectors.R. A taste of things to come has already been experienced in the wake of the 1997 Asian financial crisis. The quota restriction removal will increase both national and international competition. is heavily back-loaded with most sensitive textile items not being freed from quantitative restrictions (QRs) till the very end of the transition period. child labour. While the importing countries continue to set high standards.E. be among them. the industry has made considerable adjustments in order to maintain its international competitiveness. may create a `shock-wave' which could end up disrupting the entire world textile and garment trade. inter-alia. The present export incentives and subsidies will be reduced.  The complete elimination of the Multi-Fibre Arrangement (MFA) quota regime with effect from January 1. as drawn up by industrialized countries.S. there would be a sudden release of `pent-up supply pressure' which could lead to intensified price competition and declining global prices. The EU and US will buy from the lowest cost suppliers. resulting in an escalation of the cost of production. and India may often. The removal of quotas which have been restricting imports from specific sources means freer competition among exporters. the powerloom sector can strengthen its competence on the cost front. this being at a possible higher level than the demand may mean lower volumes and values. especially textiles and clothing.  It may be unlikely that the developed countries will completely open their trade doors after the MFA phase out. as devaluation greatly enhanced competitiveness and prices crashed across Asia.  The GATT is aimed to reduce the levels of subsidies. but not always. health and so on.  The challenges that the Indian exporters face is not only from trade barriers in developed countries. physical distribution – its cost and logistics decisions. However.C brand building and other sales promotion techniques. .  Due to the reduction in import duties of synthetics.T. Export of handloom fabrics may suffer a setback due to lower or no subsidies and hence its competitive advantage will lie in its unique design capabilities. The organised mill sector will have to restructure and emerge. as per the ATC.

4) 4) At present Foreign investment are there in finish fabrics and garment sectors and also in textile machinery sector. 3) 3) Our present policies are also in favour of FDI and encouring by making the policies less cumbersome.T.P.R. 5) 5) The EOU (Export Oriented Units) are giving benefit to attract foreign investment.S. .C Foreign Involvement 1) 1) Foreign investment in production and export exist but in a very limited way.E. 2) 2) Government is relaxing rules for FDI (Foreign Direct Investment) and making it more conducive and liberal.