15-11-2012, 01:58 PM
A report on Indian Textiles Industry
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OVERVIEW
Background
The textile industry occupies a unique place in our country. One of the earliest to come into
existence in India, it accounts for 14% of the total Industrial production, contributes to
nearly 20% of the total exports. Being the largest foreign exchange earner, accounting for
more than 5 per cent of GDP and providing direct employment to 38 million people,
primarily the weaker sections, it is the second most important sector only after agriculture.
The No.1 exporter of textiles, China, has a share of more than 10 per cent followed by
Korea with 8.1 per cent; India's hovers at 3.5-4 per cent. In clothing exports, China holds a
share of 18.5 per cent followed by Italy (6.7 per cent) and India (3 per cent). India's share
may look small but in monetary terms it is large.
It has a unique position as a self-reliant industry, from the production of raw materials to the
delivery of finished products, with substantial value-addition at each stage of processing; it is
a major contribution to the country's economy. The industry is composed of handlooms,
powerlooms and mills. While the mill sector is well-organised and modern, the same cannot
be said of the powerloom and handloom segments. The mill sector has managed to grab a
reasonable share of the world export market.
Recent Trends
The mood in the Indian textile industry given the phase-out of the quota regime of the
Multi-Fibre Arrangement (MFA) is upbeat with new investment flowing in and increased
orders for the industry as a result of which capacities are fully booked up to April 2005. As a
result of various initiatives taken by the government, there has been new investment of
Rs.500 billion in the textile industry in the last five years. Nine textile majors invested Rs.26
billion and plan to invest another Rs.64 billion. Further, India's cotton production increased
by 57% over the last five years; and 3 million additional spindles and 30,000 shuttle-less
looms were installed.
Spinning mills
With an installed capacity of 40 million spindles, India accounts for about 22 per cent of the
world’s spindle capacity. In 2005, India’s spinning sector consisted of about 1,161 small-scale
independent firms and 1,566 larger scale independent units. Independent spinning mills
account for about 75 per cent of capacity and 92 per cent of production.
Knit/Weaving/Knitting Units
India’s weaving and knitting sector is highly fragmented, small-scale, and labour-intensive.
The woven fabric production industry can be divided into three sectors: powerloom,
handloom and mill sector. In 2005 it consisted of about 3.9 million handlooms, 1.8 million
power looms, and 0.1 million looms in the organised sector. The decentralised power loom
sector accounts for 95 per cent of the total cloth production. The knitted fabric forms 18 per
cent of the total fabric production.
Processing Units
The processing industry is largely decentralised and marked by hand processing units and
independent processing units. Composite mill sectors are very few falling into the organized
category. Overall, about 2,300 processors are operating in India, including about 2,100
independent units and 200 units that are integrated with spinning, weaving or knitting units.
Garment Manufacturing Units
Small-scale fabricators dominate garment manufacturing. Most garment manufacturing units
fare reasonably well on the technology count. The bulk of apparel is produced by about
77,000 small-scale units classified as domestic manufacturers, manufacturer exporters, and
fabricators (subcontractors). The fragmented structure of the industry provides the
advantage of a large pool of skilled workers in different areas of textile manufacturing, and
also gives scope for entry of organized integrated textile manufacturers. Small scale units in
different sectors can also be leveraged as a supply base for sourcing materials at low cost.
Apart from these advantages, the industry has also been experiencing consistent growth
across different sectors, making it one of the key potential sectors in India.
Textile Exports
The Indian textile industry contributes substantially to India’s export earnings. The export
basket consists of wide range of items containing cotton yarn and fabrics, man-made yarn
and fabrics, wool and silk fabrics, made-ups and variety of garments. India’s textile products,
including handlooms and handicrafts, are exported to more than hundred countries.
However, USA, EU Member States, Canada, U.A.E., Japan, Saudi Arabia, Republic of
Korea, Bangladesh, Turkey, etc are the major importers of our textile goods.
During the year 2005-06, the share of textiles exports including handicrafts, jute, and coir in
India’s total exports was 16.63%. India’s textiles exports have registered strong growth in the
post quota period. Textiles exports grew from US$ 14.03 billion in 2004-05 to US$ 17.08
billion in 2005-06, recording a growth of 21.8 per cent. Therefore, the Government has fixed
a higher target of US$ 19.73 billion for the year 2006-07.
GOVERNMENT REGULATIONS AND SUPPORT
Government Initiatives
The textile industry, being one of the most significant sectors in the Indian economy, has
been a key focus area for the Government of India. A number of policies have been put in
place to make the industry more competitive.
The Technology Upgradation Fund Scheme (TUFS)
Recognising that technology is the key to being competitive in the global market, the
Government of India established the Technology Upgradation Fund Scheme (TUFS) to
enable firms to access low-interest loans for technology upgradation. Under this scheme, the
Government reimburses 5 per cent of the interest rates charged by the banks and financial
institutions, thereby ensuring credit availability for upgradation of the technology at global
rates. Under the TUF Scheme, launched on April 1, 1999, loans amounting to Rs. 149 billion
have been disbursed to 6,739 applicants.
In consonance with the industry, the TUF Scheme has been continued during the Eleventh
Plan (2007-2012). Allocation for TUF has been raised from Rs.5.35 billion in 2006-07, to
Rs.9.11 billion in 2007-08. Handlooms will now be covered under the TUF scheme.
Integrated Textile Parks Scheme
Manufacturing is a thrust area for the government, as Indian industry and the government
see foreign companies more as partners in building domestic manufacturing capabilities
rather than a threat to Indian businesses. Following this through, the Central Government as
well as various States has executed Schemes such as, Schemes for Integrated Textile and
Apparel Parks.
Under the Scheme for Integrated Textiles Parks (SITP), 26 parks have been approved so far
out of 30 sanctioned. The Budget provision for these parks has been increased from Rs.1.89
billion in 2006-07 to Rs.4.25 billion in 2007-08.