The textile industry in India is vibrant and thriving and plays a huge role in contributing to the national economy. Ranked next to agriculture, it’s one of the oldest industries in the country and accounts for nearly one-third of our gross export earnings, providing employment to millions of people across the country.
Here, in this post, we provide you a snapshot of the textile industry in India – overview, market size, growth opportunities and more.
Quick Facts about India’s Textile and Garment Industry
- India is the world’s largest producer of two main natural fibres – jute and cotton.
- India is the world’s second largest producer of silk and polyester.
- The textile and garments industry is the second largest employment provider in the country, right next to agriculture, offering over 45 million jobs.
- The textile and garment industry accounts for 2% of the country’s GDP while contributing to over 15% share in overall exports.
Snapshot of India’s Thriving Textile and Garment Industry
The overall value of the textiles and garments industry in the country was $137 billion in 2016. This is predicted to touch $223 billion by 2021. Out of the $137 billion, garments worth $97 billion were consumed domestically. Domestic consumption can be further divided into consumer consumption (around $83 billion) and technical textiles (around $14 billion).
India’s textile industry is highly diversified with plenty of products like traditional handloom cotton, handloom silk, wool, woven products, knitted products, readymade garments and more. The textile industry in India is highly organized, and you can find modern manufacturing units spread all over the country. Spinning, weaving, apparel making, garment stitching, processing, branding, and marketing – the Indian textile industry is capable of carrying out all.
Processes Involved in the Textile Industry
The major components of the Indian textile and garment industry include:
- Composite Mills – These large-scale mills handle spinning, weaving and at times fabric finishing.
- Spinning – This is the process of converting cotton and other manmade fibres into yarn that can be used for knitting and weaving.
- Weaving and Knitting – These processes convert cotton, blended yarns, and other manmade fibres into woven or knitted fabrics. Weaving and knitting are done using power looms or traditional handlooms.
- Fabric Finishing – Also known as processing, this process includes dyeing, printing, and other cloth preparation techniques before manufacturing clothing.
- Clothing and Apparel manufacturing – This is the process of converting fabric into finished garments.
Growth Drivers of the Textiles and Garments Industry
- Rising per capita income, with higher disposable incomes.
- Preference for branded clothing among the younger generations.
- Thriving organized retail landscape and e-commerce sectors. India is the world’s fifth largest market for retail sales.
- Favourable demographics and changing lifestyles.
These are a few reasons, why the textiles and garment industry in India is all set to reach new heights. Furthermore, there is an increasing demand for high-quality branded wear, which in turn drives, apparel industry growth.
FDI Policy in the Textile Sector
100% FDI is allowed in the automatic sector, making the textile industry one of the easiest and lucrative opportunities for foreign investors.
Why the Thriving Textile and Garment Industry in India is great for foreign companies to enter and share a piece of the pie:
- A readily available dynamic local market, which is all set to grow in the next few years. Increased penetration of branded retail stores in tier-I and tier-II cities, increasing income levels with disposable incomes, favourable demographics, and rising preferences for branded products all work to the benefit of foreign investors.
- Favourable government policies and several incentives for manufacturers.
- Market access arrangements with several countries like ASEAN, South Korea, Japan, Chile with negotiations with Australia, EU, and RCEP (Regional Comprehensive Economics Partnerships) with several other countries.
- Abundant availability of raw materials like jute, cotton, wool, silk and other manmade fibres including polyester, rayon, etc.
- Availability of cheap skilled manpower.
- Presence of the entire value chain in the country, right from natural fibre production to processing and manufacturing of apparel.
- Presence of skilled sectors like handloom, handicrafts, etc.
FDI Investments in the Textile and Garments Industry, According to Region
The tiny island nation of Mauritius, in Africa, accounts for the largest FDI investments in the Indian textile industry, with nearly one-third of FDI inflows in the textile and garment industry. Europe ranks second and accounts for nearly 25% of the total FDI inflows in this sector. The top three investing countries in Europe include Belgium, Finland, and Switzerland.
Asia is the third largest investor in India’s textile industry. Singapore, Japan, South Korea, and UAE are the top Asian countries investing in India’s textile and garment industry. America, the Caribbean, and Canada are other top countries investing in this sector.
Wrapping Up
The India textile industry plays a crucial role in the country’s economy and abounds with lucrative growth opportunities. If you are looking to step into the vibrant textile industry in India, get in touch with get in touch with our foreign direct investment experts to know more.