INDUSTRY PROFILE

The Indian Textile Industry is one of the key and integrated industries in the Indian economy. It
is the largest employer after agriculture. It employs approximately 35 mn people directly and 50
mn people indirectly. The industry accounts for approximately 14% of industrial production,
17% to gross export earnings and 4% to national GDP. 

The textile industry in India traditionally, after agriculture, is the only industry that has
generated huge employment for both skilled and unskilled labor in textiles. The textile industry
continues to be the second largest employment generating sector in India. It offers direct
employment to over 35 million in the country. The share of textiles in total exports was 11.04%
during April–July 2010, as per the Ministry of Textiles. During 2009-2010, Indian textiles
industry was pegged at US$55 billion, 64% of which services domestic demand .In 2010, there
were 2,500 textile weaving factories and 4,135 textile finishing factories in all of
India. According to AT Kearney’s ‘Retail Apparel Index’, India is ranked as the fourth most
promising market for apparel retailers in 2009

Textile industry can be segmented into Natural fibres and Man-Made Fibres (MMFs) based on
use of basic raw material, cotton or crude oil derivate, respectively. Due to tropical climate,
cotton is considered as preferred choice over MMF. Even though, cotton is the dominantly
consumed fibre in India, the share of cotton in total fibre consumption has shown a decline over
the years. It has declined from 74% in FY91 to 59% in FY11. The share of MMF is poised for
higher growth and is expected to share 45 per cent by FY17 of the overall fibre consumption pie
by the textile industry, mainly driven by the limited availability & growth of cotton, increased
blending and the huge price differential. 

The demand for MMF from textile sector will largely be driven by the growing demand for
clothing along with the augmented demand for the home textiles and technical textiles. The
MMF industry can be classified into synthetic and cellulosic fibres comprising polyester, olefin,
nylon, acrylics, viscose etc. 

Polyester alone accounted for approximately 82% of the total MMF consumption in FY11. The
widening price differential between cotton and polyester and growth in use of non-cotton spun
yarn and fabrics will drive the demand for polyester in India. The polyester segment
consumption can be segregated into PFY – 63% and PSF – 37%. The PSF industry is highly
organised with only three players – Reliance Industries, Indo Rama Synthetics and Bombay
Dyeing. In PFY segment, RIL is the largest manufacturer accounting for about 55% of the total
domestic production and Century Enka, Indo Rama Synthetics, Alok Industries, Garden Silk,
JBF Industries are some other significant players.

Raw material prices and availability play a crucial role in the MMF industry. Raw material cost
contributes 75-85 per cent to the total operating cost. The key raw materials used are Purified
Terephthalic Acid (PTA), Mono – Ethylene Glycol (MEG), Caprolactam and Rayon Grade
Wood pulp.

The prices of raw materials used for synthetic MMFs are affected by the crude oil prices and
move in tandem with the global prices. 

The government has announced the National Textile Policy to promote India in the world textile
industry by strengthening the existing policy framework and providing institutional and
technological support for achieving rapid growth in demand of fibres in the country over the next
decade. This policy also envisages the extension of Technology Up gradation Fund Scheme
(TUFS) scheme to MMF production and technical textiles. The GoI has also allowed 100% FDI
in the textile sector through automatic route.