Since ancient times India is well known across the world for its rich and beautiful textiles. Textile manufacturing in India dates back to several centuries. European industries during the Industrial Revolution were highly dependent on the Indian textile industry. India was solely responsible to meet the cotton needs of European countries during the late 17th and 18th centuries.
India’s textile industry is the second largest in the world, after China. India is the largest producer of cotton and jute. India stands in the second place in the production of polyester, silk and fibre and in the manufacture of PPE. The textile industry in India accounts for 17 percent of the country’s exports.
The Indian textile industry has been witnessing a large number of investments over the past few years. The textile industry in India with a boost from increased domestic demand, policy support and foreign investments is expected to become worth of USD 223 billion by 2021. As the Indian textile industry is poised to register significant growth in future, let us examine some of the reasons that are attracting investments into the sector.
Here are the top ten reasons why investment in the Indian textile sector is an opportunity that businesses cannot afford to miss.
Presence Across Entire Value Chain
The Indian textile industry has presence across the entire value chain right from fibre to apparel manufacturing. Many counties in the world such as Sri Lanka, Myanmar, Vietnam, etc. depend on foreign imports for yarn and fabric and focus on only the end-product. India is one of the few countries with presence across the entire value chain of the textile industry.
Increasing Domestic Market
Indian domestic textile market has been performing better than the largest textile markets such as the USA, the EU and Japan in terms of consumption. Growing urban population and raise in the standard of living of rural population in the country are driving the consumption rates. The domestic apparel market in the country is projected to become USD 220 billion by the end of 2025. This large domestic market helps the Indian textile industry grow without being affected by uncertainties in the global market.
Large Availability of Raw Materials
India is a country with abundant availability of raw materials required for the textile and apparel manufacturing. India has a large availability of both natural fibres such as cotton, jute and silk and synthetic fibres such as polyester filament fibre, polyester staple fibre, acrylic staple, etc. India accounts for 27 percent and 8 percent of global production of cotton and polyester respectively. Unlike many countries that rely on imports, India is self-reliant when it comes to meeting the raw material demand of the textile industry.
Availability of Better Infrastructure
As the textile industry in India dates back to several centuries, India has traditional textile manufacturing infrastructure spread across length and breadth of the country in various clusters. Cotton textile units are present in almost every part of the country. Woollen and synthetic textile industries can be found in the states of Maharashtra, Punjab, Gujrat, Haryana, Uttar Pradesh and Madhya Pradesh. Silk textile industries are primarily present in South India in the states of Andhra Pradesh, Karnataka and Tamil Nadu.
The government of India through SITP (Scheme for Integrated Textile Parks) is providing the textile industry with world-class infrastructure for setting-up textile units. The government sponsored 66 textile parks across the country in various states. The Indian government in collaboration with various state governments is working out plans for the establishment of key infrastructure such as Centre of Excellence and R&D centres to meet the global standards.
The cost of manufacturing in India is relatively lower when compared to cost in China, which is currently considered as the manufacturing hub of the world. Availability of labour at low wages provides India with an edge over other countries, helping businesses particularly with minimal investment plans.
Availability of Skilled Manpower
More than 50 percent of India’s population is below 25 years of age, and more than 65 percent of the population is below 35 years of age. As of 2020, the average of an Indian is 29 years, whereas the age of an individual in China and Japan is 37 and 48 respectively. This young population offers India a clear advantage over its competitors in terms of availability of skilled manpower. The government of India through Skill India program is enabling Indian youth to take up industry-relevant skill training to help them attain skills required by the industry.
Government’s Policy Support
The government has recently allowed 100 percent FDI in the textile sector under the direct rule to encourage foreign investments in the sector. The government has also come up with a number of export promotion policies to increase foreign exports from the country. The Ministry of Textiles is planning to release a New Textile Policy-2020 this year.
Presence of Large Players
Indian textile industry has some of the large manufacturers such as Arvind Limited, Sutlej Textiles & Industries Ltd, Vardhman Textiles Limited, Trident Group, etc. with huge manufacturing capabilities. Many of these textile companies that are well recognized across the world are in either partnerships or JVs with various SMEs and global companies.
Politically stable government is essential for the business growth in any country. Fortunately, India currently has a very stable and decisive government which is coming up with innovative and business friendly policies helping businesses to take advantage of the current global marketing conditions. The government is leaving no stone unturned to improve ease of doing business in the country. In the latest World Bank’s Ease of Doing Business 2020 Survey, India stands at 63rd position among 190 countries, jumping 14 ranks from the previous year.
Special Access to Foreign Markets
The Indian textile industry has preferential market access to 43 countries including Nepal, Sri Lanka, Bangladesh, China, Japan, Pakistan, Afghanistan, South Korea, Vietnam, Malaysia, Thailand, etc. under 15 various trade agreements. India has been granted GSP status by the European Union for garments which allows under which India’s garment exports to the EU will have 20 percent less duty than normal MFN rate.
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