The Indian textile industry is one of the oldest industries in the Indian economy. The Indian textiles industry, currently estimated at around $120 billion, is expected to reach $230 billion by 2020. Indian exports of locally made retail and lifestyle products grew at a compound annual growth rate (CAGR) of 10% from 2013 to 2016, mainly led by bedding, bath and home decor products and textiles.
The Government of India has set a target of achieving export value of around $45 billion for 2017-18 for the sector. As of June 2017, the government is planning to finalise and launch the new textile policy. The policy aims to achieve $300 billion worth of textile exports by 2024-25 and create an additional 35 million jobs. Production of raw cotton in India grew from 28 million bales in FY07 and to 35.1 million bales in FY17. During FY07-17, raw cotton production expanded at a CAGR of 2.3%.
According to a FICCI report titled ‘Global Shifts in Textile Industry & India’s Position (2016)’, global textile and apparel trade grew at a rate of 5.6% over the last decade to reach a value of $820 billion in 2014. During the same period, India’s export of textile and apparel grew at a comparatively high rate of 9.5% to reach an export value of $42 billion. India enjoys the position of being the second largest exporter of textile products in the world.
However, its share in the global exports tells a different story. As compared to the share of the largest exporter, which is China (40%), India’s share is a mere 5%. Countries like Italy, Germany and Bangladesh which are comparatively small as compared to India have a similar share of around 4-5%. This indicates that India has not been able to realise its potential even though it enjoys the presence of a complete value chain and an abundant supply of cheap and skilled labour.
In accordance with estimates from ICRA, apart from the apparel segment, volume growth in textile exports is also expected in other segments like textile made-ups and home furnishings. The average prices for fibre are also likely to stay higher in FY2017 as compared to the previous year which will support the growth in value of textile exports. The Indian government has come up with a number of export promotion policies for the sector. It has also allowed 100% FDI in the Indian textiles sector.
Import of textile and apparel during first three years of 12th five year plan has registered growth of 11.5% in terms of the Indian rupee and growth of 5.3% in terms of the US dollar. During this period, import of silk based textiles has registered a decline of 16.9% in terms of the US dollar and 12.1% in terms of the Indian rupee. Cotton-based textiles have also registered decline of 3.2% in US dollar terms but increased by 2.7% in terms of the Indian rupee. Highest growth in import of textile and apparel product was achieved by the knitted apparel and accessories category which grew at a rate of 35% and 43.1% in terms of the US dollar and in terms of the Indian rupee, respectively.