SCHOOL OF COMMERCE

Devi Ahilya Vishwa Vidyalaya, INDORE

Bachelors in Commerce
(Accounting and Tax Management)
2018-21

A study on cotton textile industry

Guided By-
Submitted By-
BATM/18/1256
 CONTENTS

Chapters

01 INTRODUCTION
02 INDUSTRY PROFILE
03 LITERATURE REVIEW
04 OBJECTIVE OF STUDY
05 RESEARCH METHODOLOGY
06 EXPORT TREND
07 MAJOR MARKETS
08 POTENTIAL MARKETS
09 POTENTIAL PRODUCTS
10 GOVERNMENT SCHEMES
11 DATA INTERPRETATION &
ANALYSIS
12 S.W.O.T ANALYSIS
13 CONCLUSION
14 BIBLIOGRAPHY
 

Introduction of cotton production in India 

One of mankind’s great discoveries, cotton is one commodity that is available virtually everywhere -
testifying both to its utility, as well as the awe-inspiring impact capitalism, has had on human production
and consumption. Cotton production in India has focused on textiles for over thousands of years, generating
significant employment for both skilled and unskilled labour - thus helping strengthen the country’s
economy. 
The cotton sector in India is considered the second most developed sector in the textile industry (after man-
made fibres). At 18% of the global total, India is the world’s largest producer of cotton. It also has the
largest area under cotton cultivation in the world, representing about 25% of the world’s area under
cultivation. The states of Gujarat, Maharashtra, Andhra Pradesh, Haryana, Punjab, Madhya
Pradesh, Rajasthan, Karnataka and Tamil Nadu are the major cotton producing areas in India.
 
History of Cotton Textile Industry in India 
 

 
The history of the cotton industry in India dates back millennia. India held a global monopoly over the
manufacturing of cotton textiles for about 3,000 years - from 1500 B.C. to 1500 A.D. It served as an ideal
medium of exchange in the barter economy during the ancient period. During the middle ages, it was
exported to Eastern and European markets. This was followed by the establishment of cotton mills by
imperial powers in the modern period.  
The first cotton mill in India was established in 1818 at Fort Gloster near Kolkata but was a commercial
failure. The second cotton mill in India was established by KGN Daber in 1854 and was named Bombay
Spinning and Weaving Company. This mill is said to mark the true foundation of the modern cotton industry
in India. In Ahmedabad - also referred to as the ‘Manchester of India’ - the opening of Shahpur mill in 1861
and Calico mill in 1863 marked the city’s spectacular rise as one of the world’s prime cotton manufacturing
locales.
However, the real expansion of the cotton textile industry in India took place in the 1870s. During this
period, the number of mills rose to 47 - of which over 60 % were in Mumbai. The First and Second World
Wars, the Swadeshi Movement and the grant of fiscal protection rapidly propelled the growth of this
industry. As a result, the number of mills increased from 334 in 1926 to 389 in 1939, and to 417 in 1945.
Production of cotton cloth also increased from 4,012 million yards in 1939 - 40 to 4,726 million in 1945 – 4
Market size and growth of the cotton textile industry in India
 

 
Cotton production in India increased from 119 lakh bales in 1991 - 92 to 345 lakh in 2016 - 17, a growth of
190%. Nearly two - thirds of cotton production in India comes from the states of Maharashtra, Gujarat,
Andhra Pradesh and Telangana - collectively known as the Cotton Basket of India. In FY 2017, India
contributed 26% to total global harvested cotton. It ranked before China, which supplied 21%.
Approximately 62% of India’s cotton is produced in rainfed areas, and 38% on irrigated lands. India grows
all four known species of cultivated cotton.
The cotton industry in India leans towards apparel exports, contributing approximately 51% to overall
apparel exports in FY 18. Approximately 74% of the apparel exported from India is made of cotton. 
Cotton is freely exportable from India, with major export destinations being US, Bangladesh, China,
Vietnam, Pakistan, Indonesia, Taiwan and Thailand, among others. Bangladesh has been the largest importer
of Indian cotton since FY 2015. India's cotton exports are expected to jump 43% to 10 million bales (of 170
kg each) in 2018 - 19; this is due to strong overseas demand, especially from China.  
Cotton made - ups ($ 47.03 bn) accounted for 40.10% share in the global trade of cotton textiles.
Meanwhile, cotton fabrics ($ 56.53 bn) and cotton yarns ($ 13.73 bn) accounted for 48.19% and 11.71% of
total world trade in these items respectively. 
Between Apr - Oct 2018, total textile and clothing exports stood at INR 1.52 tn ($ 21.95 bn). During the
same period, exports of raw cotton including waste, cotton yarn, cotton fabrics and cotton made - ups grew
by 26.01%, to $ 6,893.05 mn from $ 5,470.20 mn. 
  
 
 
Observed Trends

 
•    In 2017 - 18, exports of cotton textiles from India marginally increased by 0.09% to $ 10.71 bn from $
10.70 bn in 2016 - 2017 
•    Exports of cotton yarns grew by 2.08% in value terms during 2017 - 18
•    Cotton made - ups showed a decline of (-) 3.20% in value terms
•    Cotton fabrics reported a growth of 5.36% during the fiscal year 2017 - 18
 
Following are the reputed foreign retailers and brands that import products from the cotton industry
in India:
 
Economy Contribution
 
•    India is the world’s largest cotton producer, accounting for ~38% of global cotton acreage and ~23% of
global cotton production. 
•    It is also the second largest exporter (after the USA) and the second largest consumer (after China). 
•    Within the country, Maharashtra has the highest area under cultivation, at 41.2 lakh ha, followed by
Gujarat at 27.1 lakh and Telangana at 17.9 lakh. Together, these three states account for 72% of the total
cotton acreage in the country.
•    The decline in production has also resulted in a significant decline in the closing stock of the cotton
market in India. It was 8.5 mn bales as on Mar ’19, compared to 12.6 mn during the same period last year.
Owing to the increase in cotton prices vis - à - vis other crops like soybean and paddy, acreage is likely to
shift towards cotton in 2019 - 20 ($A estimates 3.2% YoY rise in acreage). 
•    The cotton market in India is likely to recover from the subdued 2018 - 19 cotton season, during which
yield declined by 11%. Production in 2019 - 20 is estimated to grow ~17%, as both yield and acreage
rebound.
 
Latest Developments
 

According to the Ministry of Textiles’ Cotton Textiles Export Promotion Council (TEXPROCIL), there was
a 26% growth in cotton textile exports between April - September 2018. TEXPROCIL has also proposed to
include cotton yarn, a value - added product, under the Merchandise Exports from India Scheme (MEIS) to
boost the cotton textile industry in India.
Government of India has been rendering support to the cotton textile sector through initiatives such as
Scheme for Integrated Textile Parks (SITP), Integrated Skill Development Scheme (ISDS), Integrated
Processing Development Scheme (IPDS), Market Development Assistance (MDA) and Market Access
Initiative (MAI). Another push to Amended Technology Upgradation Fund Scheme (ATUFS) has been
provided under the special package of INR 6,000 cr for the made - ups and garments sector.
 
EXPORT TRENDS
Total export of cotton products for 10 year i.e.,2009 to 2019

YEAR EXPORT (Values in US $ Million)

2009-10 4,612.28

2010-11 6,926.14

2011-12 8,922.04

2012-13 8,937.03

2013-14 9,926.42

2014-15 7,717.95

2015-16 7,313.24

2016-17 6,611.05

2017-18 7,045.26

2018-19 7,888.29
The Compound Annual Growth Rate (CAGR)
FORMULA: - CAGR = (EV / SV) ^ (1/n)-1
EV= INVESTMENT'S ENDING VALUE = 7888.29
SV=INVESTMENT'S STARTING VALUE = 4612.28
N= NO. OF INVESTMENT PERIOD
( For %= CAGR*100)
CAGR = 6.14

NEXT FIVE YEARS PROJECTION :

YEAR EXPORT DATA

2019-20 836.691

2020-21 880.063

2021-22 942.591

2022-23 1000.466

2023-24 1061.894

MAJOR MARKETS
 5205 - COTN YRN(OTHR THN SWNG THRD)CNTNG 85% OR MORE BY WT OF COTON NT
PUT UP FR RETL SALE

Year 2018-2019

others 1,315.98
CHINA P RP 1,270.10
BANGLADESH 708.65
PR
PAKISTAN IR 199.39
EGYPT A RP 176.38
KOREA RP 135.27

REFERFENCE:https://commerce-app.gov.in/eidb/ecom.asp

5208 - WOVN FBRCS OF COTON CONTNG>=85% BY WT OF COTON WEGHNG NT MORE

THN 200 G/M2

Year 2018-2019

others 676.14
 BANGLADESH 136.68
PR
SRI LANKA DSR 107.84

SENEGAL 82.65
KOREA RP 67.95
TOGO 51.04

REFERFENCE:https://commerce-app.gov.in/eidb/ecom.asp

5209 - WOVN FBRCS OF COTTON, CONTNG >=85% COTN BY WT

WEIGHING>200 GM PER SQM

Year 2018-2019
 others 151.77
BANGLADESH 225.54
PR
USA 27.43
KOREA RP 23.54
SRI LANKA DSR 23.51
EGYPT A RP 14.53

REFERFENCE:https://commer
ce-app.gov.in/eidb/ecom.asp

6302 - Madeups Linen( Kitchen/Bed/Toilet)

YEAR 2018-19
 Others 369.77

USA 971.42

UK 82.97

GERMANY 70.99

CANADA 48.42

AUSTRALIA 40.21

REFERFENCE:https://commerce-
app.gov.in/eidb/ecom.asp

6304 :OTHER FURNISHING ARTICLES, EXCLUDING THOSE OF HEADING 9404

YEAR 2018-19
 others 509.13
USA 1,042.0
3
UK 93.14
GERMANY 84.31
SPAIN 50.71
AUSTRALIA 41.69

REFERFENCE:https://commerce-

app.gov.in/eidb/ecom.asp

6305: SACKS AND BAGS, OF A KIND USED FOR THE PACKING OF GOODS
 YEAR 2018-19

others 444.23
USA 206.72
UK 75.36
GERMANY 71.34
NETHERLAND 67.83
SPAIN 63.19

REFERFENCE:https://co
mmerce-app.gov.in/eidb/ecom.asp

6307: OTHER MADE UP ARTICLES, INCLUDING DRESS PATTERNS

 YEAR 2018-19

others 247.42

U ARAB EMTS 88.92

USA 85.86

NIGERIA 55.94
UK 26.63
AFGHANISTAN TIS 20.98

REFERFENCE:https://commerce-app.gov.in/eidb/ecom.as

POTENTIAL MARKET
CHAPTER - 52 - COTTON ( YARN, FIBRE, FABRIC)

1. Bangladesh
2. China
3. Pakistan
4. Portugal
5. Korea

REFERFENCE:https://commerce-app.gov.in/eidb/ecom.as

CHAPTER - 63 - COTTON ( MADE UPS )

1. Australia
2. Canada
3. Fiji
 4. Georgia
5. Spain

REFERFENCE:https://commerce-app.gov.in/eidb/ecom.as

POTENTIAL PRODUCTS
HSCode Commodity 2017-2018 %Share 2018-2019 %Share %Growth
 5205 COTN YRN(OTHR THN SWNG 3,367.23 1.1094 3,805.84 1.153 13.03
THRD)CNTNG 85% OR MORE
BY WT OF COTON NT PUT
UP FR RETL SALE

5208 WOVN FBRCS OF COTON 1,019.40 0.3359 1,122.43 0.34 10.11

CONTNG>=85% BY WT OF
COTON WEGHNG NT
MORE THN 200 G/M2

5209 WOVN FBRCS OF COTTON, 444.93 0.1466 466.37 0.1413 4.82

CONTNG >=85% COTN BY
WT WEIGHING>200 GM PER
SQM

6302 BED LINEN, TABLE LINEN, 1,542.25 0.5081 1,583.84 0.4798 2.7
TOILET LINEN AND
KITCHEN LINEN

6304 OTHER FURNISHING 1,623.26 0.5348 1,821.12 0.5517 12.19

ARTICLES, EXCLUDING THOSE
OF
HEADING 9404

6305 SACKS AND BAGS, OF A 798.09 0.2629 928.71 0.2814 16.37

KIND USED FOR THE
PACKING OF GOODS

GOVERNMENT SCHEMES
1 MEIS
 2 ALL INDUSTRY RATES OF DUTY DRAWBACK

3 INTEREST EQUALIZATION SCHEME

4 TECHNICAL TEXTILE SCHEME

5 SCHEME GUIDELINES FOR PILOT PHASE TO SET UP

CENTERS IN MANUFACTURING

6 SCHEME GUIDELINES FOR TEXTILE INDUSTRY WORKERS

7 IPDS- INTEGRATED PROCESSING DEVELOPMENT SCHEME

8 MEGA CLUSTER SCHEME

9 SCHEME FOR POWERLOOM SECTOR

10 COMPREHENSIVE CLUSTER EVELOPMENT SCHEME

11 REVISED COMPREHENSIVE POWERLOOM CLUSER DEVELOPMENT SCHEME

REFERENCE: https://www.hepcindia.com/latest-policy/ http://texmin.nic.in/schemes

SWOT ANALYSIS
8.1.STRENGTH
I. Raw material base
India has high self sufficiency for raw material particularly natural fibres. India’s
cotton crop is the third largest in the world. Indian textile Industry produces and
handles all types of fibres.
II. Labour
Cheap labour and strong entrepreneurial skills have always been the backbone
of the Indian Apparel and textile Industry.
III. Flexibility
The small size of manufacturing which is predominant in the apparel industry
allows for greater flexibility to service smaller and specialized orders.
IV. Rich Heritage
The cultural diversity and rich heritage of the country offers good inspiration base
for designers. V. Domestic market
Natural demand drivers including rising income levels, increasing urbanisation and
growth of the purchasing population drive domestic demand.

8.2. WEAKNESS

I. More dependence on cotton

Due to over specialization in cotton, the bulk of the international market is missed
out, synthetic products in India are expensive and fabric required for items like
swimsuit, sky-wear and industrial apparel is relatively unavailable.
II. Spinning Sector
Spinning sector lacks modernization and there is a need of introducing
new technology. III. Weaving Sector
India has relatively less number of shuttle-less loom.

IV. Fabric Processing

Processing is the weakest link in the Indian textile value chain, adversely
affecting its ability to compete in exports.
V. Poor Infrastructure
High power costs and long export lead times are eroding India’s export
competitiveness across the textile chain.
VI. Low Labour Productivity
Productivity levels for manufacturing various apparel items are far lower in India
in comparison with its competitors.

8.3. OPPORTUNITIES
I. Growing Industry
World textile trade would continue to grow at a rate of 3-4% to reach $200-210
billon by 2010.
II. Market access through bilateral negotiation
The trade is growing between regional trade blocs due to bilateral
agreements between participating countries.
III. Integration of Information technology
‘Supply Chain Management’ and ‘Information Technology’ has a crucial role in
apparel manufacturing. Availability of EDI (Electronic Data Interchange),
makes communication fast, easy, transparent and reduces duplication.
IV. Opportunity in High Value Items
India has the opportunity to increase its UVR’s (Unit Value Realization) through
moving up the value chain by producing value added products and by producing
more and more technologically superior products.

8.4. THREATS
I. Decreasing Fashion Cycle
There has been an increase in seasons per year which has resulted in shortening
of the fashion cycle.

II. Formation of Trading Blocks

Formation of trading blocks like NAFTA, SAPTA, etc; has resulted in a
change in the world trade scenario. Existence of bilateral agreements would
result in significant disadvantage for Indian exports.
III. Phasing out of Quotas
India will have to open its protected domestic market for foreign players thus
domestic market will suffer.

REFERENCE:
https://www.ukessays.com/essays/marketing/swot-analysis-of-indian-textile-
industry-marketing essay.php

CONCLUSION
Cotton is under constant threat from artificial fibres, and presence of
contamination is one of its main weaknesses. If this not controlled at the origin, it
will have a serious impact on the whole cotton industry in the long run. Spinners
might prefer to spin artificial fibre yarns and blends, rather than investing in
expensive electronic equipment and still running a high risk in spinning cotton
and its blends. It is high time for cotton growers, ginners and supporting
organizations to get together and act on this issue, especially to minimize fibrous
contaminants such as polypropylene, coloured threads, coloured cloth pieces and
hair.

Textile industry contributes 14% to industrial production and 4 per cent to GDP.
With employment to 45 million people, textile industry is one of the largest source
of employment generation in the country. The industry accounts for nearly 13 per
cent of total export earnings of India ..

The Indian textile industry is at present is one of the largest and most important
sector in the economy in terms of output foreign exchange earnings and
employment in India. The Textile industry has the enriched potential to scale
new height in the globalized economy.

The textile industry in India has gone through significant charges in anticipation of
increased international competition. The industry is facing numerous problems and
among them the most important once are those of liquidity for many organized
sector units, demand recession and insufficient price realization. The long-range
problems include the need for sufficient modernization and restructuring of the
entire industry to cater more effectively to the demands of the domestic and
foreign markets for textiles as per the needs of today and tomorrow. Bricks re
gistered a further growth of 9 percent over the corresponding period of the
previous year.

REFERENCE: http://www.cottonguide.org/cotton-guide/cotton-value-
addition/conclusion/