India’s Textile and Apparel Industry, Opportunities and Challenges

Context: The textile and apparel industry, as India’s second-largest employer after agriculture, holds immense potential to drive large-scale job creation and support the vision of Viksit Bharat by 2047.

Current Status of India’s Textile Industry

• Global Standing & Production: India is the second-largest producer of cotton (24% of global production).
  • The country is also the second-largest producer of man-made fibres (MMF), with key players like Reliance Industries (polyester) and Grasim Industries (viscose).
  • The textile sector employs over 4.5 crore people, with 60 lakh farmers engaged in cotton cultivation.
• Contribution to Economy & Trade: The textile industry contributes 13% to industrial production, 12% to exports, and 2% to GDP.
  • In FY24, textile and apparel exports stood at $34.1 billion, with the US and EU being major markets.
• Regional Specialization: MSME clusters dominate, with hubs like Bhiwandi (fabric production), Tiruppur (t-shirts, undergarments), Surat (polyester, nylon), and Ludhiana (woolen garments) playing key roles.
• Declining Growth: Textile manufacturing contracted by 8% annually between FY20-FY24, while apparel manufacturing declined 8.2% per year due to the pandemic and global downturn.

Challenges Facing India’s Textile Industry

• Low Export Competitiveness: India lags behind China, Vietnam, and Bangladesh due to higher production costs, fragmented supply chains, and a lack of vertical integration.
  • Vietnam exported $40 billion worth of apparel in 2023, surpassing India.
• Supply Chain & Cost Issues: India’s fragmented cotton supply chain increases logistical costs, reducing competitiveness.
  • High raw material costs in MMF:
    • Polyester in India is 33-36% costlier than in China.
    • Viscose fibre is 14-16% more expensive than in China.
• Complex Regulations & Trade Barriers: Cumbersome export procedures (e.g., excessive documentation on fabric, buttons, zippers).
  • India lacks free trade agreements (FTAs) with major consumer markets, unlike competitors like Vietnam.
• Impact of Sustainability Norms: Global brands now demand sustainable sourcing, renewable energy use, and material recycling.
  • The EU’s strict environmental regulations (covering 20% of India’s textile exports) pose challenges for MSMEs adapting to green standards.
• Slow Post-Pandemic Recovery: The pandemic disrupted production and exports, with MSME textile hubs in Tamil Nadu, Maharashtra, and Gujarat suffering the most.
  • Despite export growth in cotton textiles, apparel exports fell from $15.5 billion in FY20 to $14.5 billion in FY24.
• Threat of Fast Fashion & Textile Waste: Fast fashion waste is rising globally, expected to reach 148 million tonnes by 2030.
  • India’s textile recycling market is projected to grow to $400 million but remains small compared to global trends.

Opportunities for Job Creation in India’s Textile & Apparel Industry

• Rising Global Demand: Shifts in supply chains due to geopolitics favor India over China, Vietnam, and Bangladesh.
• Expanding Domestic Market: A growing middle class, e-commerce penetration, and Gen Z consumption trends are driving demand.
• Government Support: Policies like PM MITRA Parks, PLI Scheme, and RoSCTL incentivize investment and expansion.
• Export Potential: If textile exports grow from $45 billion to $100 billion, India can generate 1 million jobs annually until 2030.
• Regional Job Creation: Establishing textile hubs in states like UP, Bihar, Odisha, and MP can boost employment where it is needed most.
• Sustainable Manufacturing: India’s growing focus on textile recycling and circular economy can create green jobs.

Challenges in Realizing Growth Potential

• Cost Disadvantages: India faces a 15-20% cost disadvantage compared to Bangladesh and Vietnam due to lower labor efficiency and higher production costs.
  • Fragmented cotton supply chains and high raw material costs increase logistical expenses.
• Labor Issues: High attrition rates (~10%) and migrant worker issues create workforce instability.
  • Labor-intensive hubs like Tiruppur face shortages, while states like UP, Bihar, and Odisha have a surplus of labor but lack textile industries.
• Lack of Vertical Integration: Unlike China and Vietnam, India’s textile supply chain is not fully integrated, leading to inefficiencies and higher costs.
• Export Challenges: Textile exports are stagnating ($34.1 billion in FY24), with India lagging behind Vietnam and Bangladesh.
  • Complex customs procedures and lack of Free Trade Agreements (FTAs) make Indian textiles less competitive in global markets.
  • Eg., Pending India-UK FTA could unlock $3 billion in exports, 300,000 jobs if resolved.
• Sustainability Compliance Costs: Global regulations (like EU sustainability laws) demand stricter environmental and labor standards, increasing production costs.
  • Water, energy, and waste management challenges need to be addressed for sustainable growth.

Strategic Interventions for Growth

Vertical Integration & Cluster Modernization

• Developing 10–12 mega clusters could reduce lead times from 60 to 30 days.
• Surat Mega Textile Park (₹3,000 crore investment) aims to house 100 dyeing units and 500 garment factories, creating 150,000 jobs by 2026.
• Solar parks (e.g., Gujarat’s 500 MW facility) could cut textile energy costs by 25%.

Policy Reforms & FTA Expansion

• Fast-tracking EU & Canadian FTAs could lower input costs and boost export competitiveness.
• Expanding the RoSCTL scheme to cover GST on freight & packaging would help exporters.
• Labor law reforms (fixed-term contracts, overtime flexibility) could increase female workforce participation by 15%.

Sustainability & Circular Economy Innovations

• ₹1,000 crore R&D push for recycled textiles (e.g., Reliance’s RECRON PET-to-polyester project).
• 50% of the capital subsidies for MSMEs adopting zero-liquid discharge systems to meet EU standards.

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