TEXTILE INDUSTRY



Published on 18 Feb 2025

India's textile sector is a major economic driver, contributing to GDP and employing millions. As a significant industrial player, it accounts for 7% of industrial output.

Significance of Indian Textile Industry

  • Market Size & Growth:  Currently valued at over $150 billion, with exports exceeding $40 billion. Projected to reach $250 billion by 2025-26, capturing a larger share of the global market.

  • Global Significance:  India boasts a 4% share of the $840 billion global textile and apparel market, ranking fifth in the world.

  • Economic Powerhouse:  The industry contributes significantly to India's economy: 3% to GDP, 7% of industrial output, and 12% of export earnings.

  • Employment Giant:  Provides jobs for over 21% of the workforce, making it a major source of employment.

  • Textile Leader:  India is the world's second-largest silk producer and the source of 95% of the world's hand-woven fabric.

  • Technical Textile Powerhouse:  Ranks sixth globally in technical textiles (functional fabrics with diverse applications) with a 6% market share.  India is also the world's largest producer of cotton and jute.


Locational Factors for India’s Textile Industry

  • Proximity to Raw Materials:  Being close to cotton and jute production areas reduces transportation costs and ensures a steady supply of key materials.

    • Example: Surat and Ahmedabad (Gujarat) near cotton belts, Kolkata (West Bengal) close to jute production areas.

  • Water Availability:  Textile processing, especially dyeing, requires significant water. Locations near rivers, lakes, or with reliable water sources are preferred.

    • Example: Tirupur (Tamil Nadu) by the Noyyal River for water-intensive processes.

  •  Skilled Labor:  Certain regions have a rich history and established communities of skilled textile workers, providing a readily available workforce.

    • Example:. Kanchipuram (Tamil Nadu): Generations of skilled silk weavers renowned for silk sarees.

    • Example: Amritsar (Punjab): Presents skilled craftspeople known for woollen shawls.

  •  Market Access:  Proximity to major consumer markets and ports facilitates efficient domestic distribution and international exports.

    • Example: Mumbai is a major port city with access to domestic markets and international shipping routes.

  •  Infrastructure & Logistics:  Good road, rail, and port connectivity are crucial for transporting raw materials, finished goods, and facilitating export activities.

    • Example: Coimbatore is a Major textile and garment centre with strong road and rail connectivity.

  • Government Policies: Special Economic Zones (SEZs) offer tax breaks and incentives to attract textile manufacturers to specific regions.

    • Example: SEZs in Indore (Madhya Pradesh) offers tax breaks and infrastructure support to attract textile manufacturers.


Challenges faced by Textile Industry

  • Fragmentation:  Dominated by a large number of small and unorganized players, hindering efficient production and scaling.

    • Example: Over 90% of textile units in India are micro, small, and medium enterprises (MSMEs), according to the Textile Ministry. This fragmented structure hinders economies of scale and collective bargaining power.

  • Technology Gap:  Struggles with outdated technology, especially in smaller businesses, making it difficult to compete with international standards.

    • Example: Approximately 40% of spinning mills in India use outdated technology, leading to lower productivity and higher energy consumption.

  • Tax Hurdles:  The GST structure and rising labour costs inflate clothing prices, impacting domestic and export competitiveness.

  • Stagnant Exports:  Export growth has plateaued at around $40 billion for several years.

  • Scale Limitation:  Indian textile units are significantly smaller than competitors like Bangladesh, which boasts an average of 500 machines per factory compared to India's 100.

Efforts and measures to address challenges

  • Skill Development: Collaborate with institutions like the National Institute of Fashion Technology (NIFT) to develop industry-specific training programs.

  • Example: The Tamil Nadu Skill Development Corporation has successfully implemented training programs for textile workers, improving their employability.

  • Cluster Development: Create textile clusters like the Surat Textile Cluster to provide shared infrastructure, resources, and support services to small and medium-sized enterprises (SMEs).

  • Example: The Tirupur Knitwear Cluster has demonstrated the benefits of cluster development in terms of increased productivity and export competitiveness.

  • Technology Upgradation: Leverage government schemes such as the Amended Technology Upgradation Fund Scheme (ATUFS) and the Technology Upgradation Fund (TUF) to provide financial incentives for technology adoption.

  • Value-Added Exports

  • Promote high-quality products: Support initiatives like the Silk Mark Organization to promote high-quality and branded textile products.

  • Export-worthy designs: Collaborate with design institutions like the National Institute of Design (NID) to develop export-oriented designs and patterns.

  • Negotiate trade agreements: Actively pursue Free Trade Agreements (FTAs) with major textile importing countries like the United Kingdom to reduce tariffs and improve market access.

  • Logistics Optimization:  Utilize the Sagarmala Project to improve port infrastructure and coastal shipping, reducing logistics costs for the textile industry.

  • Sustainable Practices: Partner with organizations like the Sustainable Apparel Initiative (SAI) Platform to adopt sustainable practices, reduce environmental impact, and enhance brand reputation.

Tags:
Geography

Keywords:
TEXTILE INDUSTRY Significance of Indian Textile Industry Locational Factors for India’s Textile Industry Challenges faced by Textile Industry Efforts and measures to address challenges in textile industry

Syllabus:
General Studies Paper 1

Topics:
Resources Distribution

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