Textile Industry In India

Textiles & garments industry is labour intensive sector that employs 45 mn people in India is second only to the agriculture sector in terms of employment.

India’s textiles sector is one of the oldest industries in the Indian economy, and is a storehouse and carrier of traditional skills, heritage and culture.

It can be divided into two segments

The unorganised sector is small scale and uses traditional tools and methods. It consists of handloom, handicrafts and sericulture (production of silk).

The organised sector uses modern machinery and techniques and consists of the spinning, apparel and garments segment.

Significance of The Textiles Sector

It contributes 2.3% to Indian Gross Domestic Product, 7% of Industrial Output, 12% to the export earnings of India and employs more than 21% of total employment.

India is the 6th largest producer of Technical Textiles with 6% Global Share, largest producer of cotton & jute in the world.

Technical textiles are functional fabrics that have applications across various industries including automobiles, civil engineering and construction, agriculture, healthcare, industrial safety, personal protection etc.

India is also the second largest producer of silk in the world and 95% of the world’s hand woven fabric comes from India.

Challenges of The Textiles Sector

Highly fragmented: The Indian textile industry is highly fragmented and is being dominated by the unorganized sector and small and medium industries.

Outdated Technology: The Indian textile industry has its limitations of access to the latest technology (especially in small-scale industries) and failures to meet global standards in the highly competitive market.

Tax Structure Issues: The tax structure GST (Goods and Service Tax) makes the garments expensive and uncompetitive in domestic as well as international markets. Another threat is rising labour wages and workers’ salaries.

Stagnant Exports: The export from the sector has been stagnating and remained at the USD 40-billion level for the last six years.

Lack of Foreign Investment: Due to challenges given above the foreign investors are not very enthusiastic about investing in the textile sector which is also one of the areas of concern.

Though the sector has witnessed a spurt in investment during the last five years, the industry attracted Foreign Direct Investment (FDI) of only USD 3.41 billion from April 2000 to December 2019.