Indian Textile Industry : An Overview

Indian Textile Industry


Indian textiles industry is at the crossroads with the phasing out of quota regime on January 1, 2005 and the full integration of the textiles sector in the WTO. Textiles contribute around 19 per cent of India's total annual export earnings.

According to a recent study, the Indian textile and apparel industry can achieve a potential size of US$ 85 billion by 2010, with a domestic market size of US$ 45 billion and nearly 60 per cent of exports comprising of garments.

India has a natural competitive advantage in terms of a strong and large multi-fibre base, abundant cheap skilled labour and presence across the entire value chain of the industry ranging from spinning, weaving, and madeups to manufacturers of garments.

The Indian companies have been expanding capacities in anticipation of the opportunities emerging from the phase-out of the quota system. Under the Technology Up-gradation Fund Schemes (TUFS), applications with a project cost of Rs. 18,467 crore have been sanctioned for a loan amount of Rs. 8,505 crore.

Several steps have already been taken to improve India's textile industry. Apart from the setting up of the Technology Upgradation Fund Scheme (TUFS), these include


1: New schemes of Apparel Parks for Exports, and Textile Centres Infrastructure Development Scheme, de- reservation of the garments sector.

2: Increase in investment ceilings.

3: Introduction of a Technology Mission on Cotton to improve the productivity and quality of cotton.

4: FDI is freely allowed in the sector.

5: Basic customs duty on designated textile machinery and spare parts have been reduced.

6: Additional Excise Duty on Textiles & Textile Articles (AT&T) and Additional Excise Duty (Goods of Special Importance) Act have been abolished.

7: Excise duty on polyester filament yarn has been reduced.

The signs of resurgence in textiles are also corroborated by an increase in textile exports by 14.1 per cent to US$ 6,542.8 million in April-September 2004-05, from US$ 5,732.0 million during the first six months of 2003-04
The beginnings of the trend are already visible.


1: Specialised textile parks, apparel parks, EOUs and EPZs have been set up.
2:Foreign labels like Walmart, Levis, Gap, JC Penny, Marks & Spencer are fast expanding their budgets to buy an increasing number of garments and fabrics from India.
3: Walmart alone bought $200 million in 2003, a figure which is expected to increase to $3 billion by the end of 2004.
4: European giant GAP is also outsourcing apparel from India.
5: Singapore-based Crocodile International has announced its plans to invest in the country.