7/1/2019 Indian Textile Industry

Indian Textile Industry

Written by: Dr. P. Chellasamy

INTRODUCTION

The Indian textile industry has a significant presence in the economy as well as in the international textile economy. Its
contribution to the Indian economy is manifested in terms of its contribution to the industrial production, employment
generation and foreign exchange earnings. It contributes 20 percent of industrial production, 9 percent of excise
collections, 18 percent of employment in the industrial sector, nearly 20 percent to the countrys total export earning
and 4 percent to the Gross Domestic Product.

In human history, past and present can never ignore the importance of textile in a civilization decisively affecting its
destinies, effectively changing its social scenario. A brief but thoroughly researched feature on Indian textile culture.

HISTORY OF TEXTILE INDUSTRY

India has been well known for her textile goods since very ancient times. The traditional textile industry of India was
virtually decayed during the colonial regime. However, the modern textile industry took birth in India in the early
nineteenth century when the first textile mill in the country was established at fort gloster near Calcutta in 1818. The
cotton textile industry, however, made its real beginning in Bombay, in 1850s. The first cotton textile mill of Bombay
was established in 1854 by a Parsi cotton merchant then engaged in overseas and internal trade. Indeed, the vast
majority of the early mills were the handiwork of Parsi merchants engaged in yarn and cloth trade at home and
Chinese and African markets.
The first cotton mill in Ahmedabad, which was eventually to emerge as a rival centre to Bombay, was established in
1861. The spread of the textile industry to Ahmedabad was largely due to the Gujarati trading class.

The cotton textile industry made rapid progress in the second half of the nineteenth century and by the end of the
century there were 178 cotton textile mills; but during the year 1900 the cotton textile industry was in bad state due to
the great famine and a number of mills of Bombay and Ahmedabad were to be closed down for long periods.

Technology Upgradation Fund Scheme (TUFS)

At present, the only scheme through which Government can assist the industry is the Technology Upgradation Fund
Scheme (TUFS) which provides for reimbursing 5% interest on the loans/finance raised from designated financial
institutions for bench marked projects of modernisation. IDBI, SIDBI, IFCI have been designed as nodal agencies for
large and medium small scale industry and jute industry respectively. They have co-opted 148 leading commercial
banks/cooperative banks and financial institutions like State Finance Corporations and State Industrial Development
Corporation etc.

Scheme for Integrated Textile Parks (SITP)

To provide the industry with world-class infrastructure facilities for setting up their textile units, Government has
launched the Scheme for Integrated Textile Parks (SITP) by merging the Scheme for Apparel Parks for Exports (APE)
and Textile Centre Infrastructure Development Scheme (TCIDS). This scheme is based on Public-Private Partnership
(PPP) and envisages engaging of a professional agency for project execution. The Ministry of Textiles (MOT) would
implement the Scheme through Special Purpose Vehicles (SPVs).

National Textile Corporation Ltd. (NTC)

National Textile Corporation Ltd. (NTC) is the single largest Textile Central Public Sector Enterprise under Ministry of

https://www.fibre2fashion.com/industry-article/printarticle/543 1/9
7/1/2019 Indian Textile Industry
Textiles managing 52 Textile Mills through its 9 Subsidiary Companies spread all over India. The headquarters of the
Holding Company is at New Delhi. The strength of the group is around 22000 employees. The annual turnover of the
Company in the year 2004-05 was approximately Rs.638 crores having capacity of 11 lakhs Spindles, 1500 Looms
producing 450 lakh Kgs of Yarn and 185 lakh Mtrs of cloth annually.

Cotton Corporation Of India Ltd. (CCI)

The Cotton Corporation of India Ltd (CCI), Mumbai, is a profit-making Public Sector Undertaking under the Ministry of
Textiles engaged in commercial trading of cotton. The CCI also undertakes Minimum Support Price Operation (MSP)
on behalf of the Government of India.

The Ministry of Textiles

The Ministry of Textiles is responsible for policy formulation, planning, and development export promotionand trade
regulation in respect of the textile sector. This included all natural and manmade cellulosic fibres that go into the
making of textiles, clothing and handicrafts.

Export Promotion Capital Goods (EPCG) Scheme

To promote modernization of Indian industry, the GOI set up the Export Promotion Capital Goods (EPCG) scheme,
which permits a firm importing new or Secondhand capital goods for production of articles for export to enter the
capital goods at preferential tariffs, provided that the firm exports at least six times the c.i.f. value of the imported
capital goods within 6 years. Any textile firm planning to modernize its operations had to import at least $4.6 million
worth of equipment to qualify for duty-free treatment under the EPCG scheme.

Export-Import Policy

The GOIs EXIM policy provides for a variety of largely export-related assistance to firms engaged in the manufacture
and trade of textile products. This policy includes fiscal and other trade and investment incentives contained in various
programs

Duty Entitlement Passbook Scheme (DEPS)

DEPS is available to Indian export companies and traders on a pre- and post-export basis. The pre-export credit
requires that the beneficiary firm has exported during the preceding 3-year period. The post-export credit is a
transferable credit that exporters of finished goods can use to pay or offset customs duties on subsequent imports of
any unrestricted products.

The Agreement on Textiles and Clothing (ATC)

The Agreement on Textiles and Clothing (ATC) promises abolition of all quota restrictions in international trade in
textiles and clothing by the year 2005. This provides tremendous scope for export expansion from developing
countries.

Guidelines of the revised Textile Centres Infrastructure Development Scheme (TCUDS)

TCIDS Scheme is a part of the drive to improve infrastructure facilities at potential Textile growth centres and
therefore, aims at removing bottlenecks in exports so as to achieve the target of US$ 50 billion by 2010 as envisaged
in the National Textile Policy, 2000.

Under the Scheme funds can be given to Central/ State Government Departments/ Public Sector Undertakings/ Other
Central /State Governments agencies/recognized industrial association or entrepreneur bodies for development of
infrastructure directly benefiting the textile units. The fund would not be available for individual production units.

Powerloom development and export promotion council

Powerloom development and export promotion council, set up by the ministry of textiles government of India.
PDEXCIL provide some export assistance as follows
Exploration of overseas market.
Identification of items with export potential.
Market survey and up-to-date market intelligence.
Contact with protective buyers to interest them in your products.
Providing your company's profile to overseas buyers and vice-versa.
Advice on international marketing.
Display of selected product groups.

Cotton Textile Export Promotion Council (TEXPROCIL):

The Council looks after the export promotion of cotton fabrics, cotton yarn and cotton made-ups. Its activities include
market studies for individual products, circulation of trade enquiries, participation in exhibitions, fairs and seminars at
home and abroad, in order to boost exports.

https://www.fibre2fashion.com/industry-article/printarticle/543 2/9
7/1/2019 Indian Textile Industry

SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY

Indian textile industry has several Strengths

♦ Abundant Raw Material Availability
♦ Low Cost Skilled Labour
♦ Presence across the value-chain
♦ Growing Domestic Market

Indian textile industry has several Weaknesses

♦ Fragmented industry
♦ Effect of Historical Government Policies
♦ Lower Productivity and Cost Competitiveness
♦ Technological Obsolescence

Indian textile industry has several Opportunities

♦ Post 2005 challenges

♦ Research and Development and Product Development

Indian textile industry has several Threats

♦ Competition in Domestic Market

♦ Ecological and Social Awareness
♦ Regional alliances

Strengths

Abundant Raw Material Availability:

Allowing the industry to control cost and reduce over all lead-times across the value chain.

Low Cost Skilled Labour

Low cost skilled labour providing a distinct competitive advantage for the industry.

Presence across the value-chain

Presence across the value-chain providing a competitive advantage when compared to countries likes Bangladesh,
Srilanka, who have developed primarily as garmenters.

Reduced Lead-times:
Manufacturing capacity present across the entire product range, enabling textile companies and garmenters do source
their material locally and reduce lead-time.

Super Market:
Ability to satisfy customer requirements across multiple product grades- small and large lot sizes specialized process
treatments etc.

Growing Domestic Market

Growing Domestic market which could allow manufacturers to mitigate risks while allowing them to build
competitiveness.

Weaknesses

Fragmented industry
Fragmented industry leading to lower ability to expand and emerge as world-class players.

Effect of Historical Government Policies

Historical regulations thought relaxed continue to be an impediment to global competitiveness.

Lower Productivity and Cost Competitiveness

♦ Labour force in India has a much lower productivity as compared to competing countries like china, Srilanka etc.
♦ The Indian industry lacks adequate economies of scale and is therefore unable to compete with china, and other
countries etc.
♦ Cost like indirect takes, power and interest are relatively high.

Technological Obsolescence

♦ Large portion of the processing capacity is obsolete

https://www.fibre2fashion.com/industry-article/printarticle/543 3/9
7/1/2019 Indian Textile Industry
♦ While state of the art integrated textile mills exist majority of the capacity lies currently with the powerloom sector.
♦ This has also resulted in low value addition in the industry.

Opportunities

Post 2005 challenges

During the year 2005 is a huge opportunity that needs to be capitalised.

Research and Development and Product Development

♦ Indian companies needs to increase focus on product development.

Newer specialized fabric- smart Fabrics , specialized treatement etc.
Faster turn around times for design samples
Investing in design centers and sampling labs.
♦ Increased use of CAD to develop designing capability in the Organisation and developing greater options.
♦ Investing in trend forecasting to enable growth of the industry in India.

Threats

Competition in Domestic Market

♦ Competition is not likely to remain just in the exports space, the industry is likely to face competition from cheaper
imports as well.
♦ This is likely to affect the domestic industry and may lead to increased consolidation.

Ecological and Social Awareness

♦ Development in the form of increased consumer consciousness on issues such as usage of child labour unhealthy
working conditions etc.
♦ The Indian industry needs to prepare for the fall out of such issues by issues by improving its working practices.

Regional alliances

♦ Reginal trade blocs play a significant role in the global garment industry with countries enjoying concessional tariffs
by virtue of being members of such blocs/ alliances.
♦ Indian industry would need to be prepared to face the fall out of the post 2005 scenarious in the form of continued
barriers for imports.

CONCLUSION:

The Indian textile industry is currently one of the largest and most important sector in the economy interms of output
foreign exchange earnings and employment in India. The Textile industry has the potential to scale new height in the
globalized economy. The textile industry in India has gone through significant charges in anticipation of increased
international competition. The industry is facing numerous problems and among them the most important once are
those of liquidity for many organized sector units, demand recession and insufficient price realization. The long-range
problems include the need for sufficient modernisation and restructuring of the entire industry to cater more effectively
to the demands of the domestic and foreign markets for textiles as per the needs of today and tomorrow.

BIBLIOGRAPHY

Text Books:
1. Ruddar Datt, K.P.M. Sundharam, Indian Economy p 658, S.Chand & Company Ltd, New Delhi ,2006
2. P.J. Divatia, Indian Industries in the 21st Century p46, Deep & Deep Publications Pvt Ltd, New Delhi, 2003
3. Francis Cherunilam, Industrial Economics Indian Perspective p457, Himalaya Publishing House 1994
4. B.M.P Singh, Indian Economy Today ,p248,Deep & Deep Publications Pvt Ltd, New Delhi ,2004

Web Sites:

1. http://www.Indianbusiness.nic.in/India-profile/textile.htm
2. http://www.economywatch.com/business-and-economy/textile-Industry.html
3. http://hotdocs.usitc.gov
4. http://www.texprocil.com/annreport/profile-texprocil.doc
5. http://www.aepcindia.com
6. http://www.in.kpmg.com
7. http://pd.cpim.org/2004/10312004-ganguly.html
8. http://www.pdexcil.org/export.htm
9. http://www.giftsnaccessories.com/magazine/Handicrafts/11.htm
10. http://www.iimahd.ernet.in
11. http://icmr.icfai.org/casestudies

https://www.fibre2fashion.com/industry-article/printarticle/543 4/9
7/1/2019 Indian Textile Industry
12. http://www.equitymaster.com/budget0607/sectors/textile.asp
13. http://usda.mannlib.cornell.edu/report

The two world War and the Swadeshi movement provided great stimulus to the Indian cotton textile industry. However,
during the period 1922 to 1937 the industry was in doldrums and during this period a number of the Bombay mills
changed hands. The second World War, during which textile import from Japan completely stopped, however, brought
about an unprecedented growth of this industry. The number of mills increased from 178 with 4.05 lakh looms in 1901
to 249 mills with 13.35 lakh looms in 1921 and further to 396 mills with over 20 lakh looms in 1941. By 1945 there
were 417 mills employing 5.10 lakh workers.

The cotton textile industry is rightly described as a Swadeshi industry because it was developed with indigenous
entrepreneurship and capital and in the pre-independence era the Swadeshi movement stimulated demand for Indian
textile in the country.

The partition of the country at the time of independence affected the cotton textile industry also. The Indian union got
409 out of the 423 textiles mills of the undivided India. 14 mills and 22 per cent of the land under cotton cultivation
went to Pakistan. Some mills were closed down for some time. For a number of years since independence, Indian
mills had to import cotton from Pakistan and other countries.

After independence, the cotton textile industry made rapid strides under the Plans. Between 1951 and 1982 the total
number of spindles doubled from 11 million to 22 million. It increased further to well over 26 million by 1989-90.

CURRENT POSSITION OF TEXTILE INDUSTRY IN INDIA

Textile constitutes the single largest industry in India. The segment of the industry during the year 2000-01 has been
positive. The production of cotton declined from 156 lakh bales in 1999-2000 to 1.40 lakh bales during 2000-01.
Production of man-made fibre increased from 835 million kgs in 1999-2000 to 904 million kgs during the year 2000-01
registering a growth of 8.26%. The production of spun yarn increased to 3160 million kgs during 2000-01 from 3046
million kgs during 1999-2000 registering a growth of 3.7%. The production of man-made filament yarn registered a
growth of 2.91% during the year 1999-2000 increasing from 894 million kgs to 920 million kgs. The production of fabric
registered a growth of 2.7% during the year 1999-2000 increasing from 39,208 million sq mtrs to 40,256 million sq
mtrs. The production of mill sector declined by 2.6% while production of handloom, powerloom and hosiery sector
increased by 2%, 2.7% and 5.1% respectively. The exports of textiles and garments increased from Rs. 455048
million to Rs. 552424 million, registering a growth of 21%. Growth in the textile industry in the year 2003-2004 was Rs.
1609 billion. And during 2004-05 production of fabrics touched a peak of 45,378 million squre meters. In the year
2005-06 up to November, production of fabrics registered a further growth of 9 percent over the corresponding period
of the previous year.

With the growing awareness in the industry of its strengths and weakness and the need for exploiting the opportunities
and averting threats, the government has initiated many policy measures as follows.

The Technology Upgradation Fund Scheme (TUFS) was launched in April 99 to provide easy access to capital for
technological upgradation by various segments of the Industry.
The Technology Mission on Cotton (TMC) was launched in February 2000 to address issues relating to the core fibre
of Cotton like low productivity, contamination, obsolete ginning and pressing factories, lack of storage facilities and
marketing infrastructure
A New Long Term Textiles and Garments Export Entitlement (Quota) Policies 2000-2004 was announced for a period
of five years with effect from 1.1.2000 to 31.12.2004 covering the remaining period of the quota regime.

In the current year Budget 2006-2007 states the measures for Textile Industry as follows

► Allocation to the Technology Upgradation Fund (TUF) enhanced from Rs4.4bn to Rs 5.4bn.
► Provision for the interest subsidy on term loans to the handloom sector to be increased from Rs2.0bn to Rs 2.4bn.
► Rs1.9 bn to be provided for the scheme for integrated Textiles Parks (launched in October 2005 with the intention
of creating 25 textile parks)
► Excise duty on all man-made fibre yarn and filament yarn to be reduced from 16% to 8%
► Import duty on all man-made fibers and yarns to be reduced from 15% to 10%.

FUTURE PROSPECTS:
The future outlook for the industry looks promising, rising income levels in both urban and rural markets will ensure a
rising market for the cotton fabrics considered a basic need in the realm of new economic reforms (NER) proper
attention has been given to the development of the textiles industry in the Tenth plan. Total outlay on the development
of textile industry as envisaged in the tenth plan is fixed at Rs.1980 crore. The production targets envisaged in the
terminal year of the Tenth plan are 45,500 million sq metres of cloth 4,150 million kg of spun yarn and 1,450 million kg
of man made filament yarn. The per capita availability of cloth would be 28.00 sq meters by 2006-2007 as compared
to 23.19 sq meters in 2000-01 showing a growth of 3.19 percent. The export target of textiles and apparel is placed at
$32 billion by 2006-2007 and $50 billion by 2010.

https://www.fibre2fashion.com/industry-article/printarticle/543 5/9
7/1/2019 Indian Textile Industry
Vision India 2010 for Textiles

▪ Textile economy to grow to $ 85 bn. by 2010.

▪ Creation of 12 million new jobs in Textile Sector.
▪ To increase Indias share in world trade to 6% by 2010.
▪ Achieve export value of $ 40 Billion by 2010.
▪ Modernisation and consolidation for creating a globally competitive industry.

STRUCTURE OF INDIAS TEXTILE INDUSTRY

The textile sector in India is one of the worlds largest. The textile industry today is divided into three segments:

1. Cotton Textiles
2. Synthetic Textiles
3. Other like Wool, Jute, Silk etc.

All segments have their own place but even today cotton textiles continue to dominate with 73% share. The structure
of cotton textile industry is very complex with co-existence of oldest technologies of hand spinning and hand weaving
with the most sophisticated automatic spindles and loom. The structure of the textile industry is extremely complex
with the modern, sophisticated and highly mechanized mill sector on the one hand and hand spinning and hand
weaving (handloom sector) on the other in between falls the decentralised small scale powerloom sector.

Unlike other major textile-producing countries, Indias textile industry is comprised mostly of small-scale, nonintegrated
spinning, weaving, finishing, and apparel-making enterprises. This unique industry structure is primarily a legacy of
government policies that have promoted labor-intensive, small-scale operations and discriminated against larger scale
firms:

♦ Composite Mills.
Relatively large-scale mills that integrate spinning, weaving and, sometimes, fabric finishing are common in other
major textile-producing countries. In India, however, these types of mills now account for about only 3 percent of
output in the textile sector. About 276 composite mills are now operating in India, most owned by the public sector and
many deemed financially sick. In 2003-2004 composite mills that produced 1434 m.sq mts of cloth. Most of these mills
are located in Gujarat and Maharashtra.

♦ Spinning.
Spinning is the process of converting cotton or manmade fiber into yarn to be used for weaving and knitting. This mills
chiefly located in North India. Spinning sector is technology intensive and productivity is affected by the quality of
cotton and the cleaning process used during ginning. Largely due to deregulation beginning in the mid-1980s,
spinning is the most consolidated and technically efficient sector in Indias textile industry. Average plant size remains
small, however, and technology outdated, relative to other major producers. In 2002/03, Indias spinning sector
consisted of about 1,146 small-scale independent firms and 1,599 larger scale independent units.

♦ Weaving and Knitting.

The weaving and knits sector lies at the heart of the industry. In 2004-05, of the total production from the weaving
sector, about 46 percent was cotton cloth, 41 percent was 100% non-cotton including khadi, wool and silk and 13
percent was blended cloth. Three distinctive technologies are used in the sector handlooms, powerlooms and knitting
machines. Weaving and knitting converts cotton, manmade, or blended yarns into woven or knitted fabrics. Indias
weaving and knitting sector remains highly fragmented, small-scale, and labour-intensive. This sector consists of
about 3.9 million handlooms, 380,000 powerloom enter-prises that operate about 1.7 million looms, and just 137,000
looms in the various composite mills. Powerlooms are small firms, with an average loom capacity of four to five owned
by independent entrepreneurs or weavers. Modern shuttleless looms account for less than 1 percent of loom capacity.

♦ Fabric Finishing.
Fabric finishing (also referred to as processing), which includes dyeing, printing, and other cloth preparation prior to
the manufacture of clothing, is also dominated by a large number of independent, small-scale enterprises. 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.

♦ Clothing.
Apparel is produced by about 77,000 small-scale units classified as domestic manufacturers, manufacturer exporters,
and fabricators (subcontractors).

INDIAS MAJOR COMPETITIORS IN THE WORLD

To understand Indias position among other textile producing the industry contributes 9% of GDP and 35% of foreign
exchange earning, Indias share in global exports is only 3% compared to Chinas 13.75% percent. In addition to China,
other developing countries are emerging as serious competitive threats to India. Looking at export shares, Korea (6%)
and Taiwan (5.5%) are ahead of India, while Turkey (2.9%) has already caught up and others like Thailand (2.3%) and
Indonesia (2%) are not much further behind. The reason for this development is the fact that India lags behind these
countries in investment levels, technology, quality and logistics. If India were competitive in some key segments it

https://www.fibre2fashion.com/industry-article/printarticle/543 6/9
7/1/2019 Indian Textile Industry
could serve as a basis for building a modern industry, but there is no evidence of such signs, except to some extent in
the spinning industry.

PROBLEM FACED BY THE TEXTILE INDUSTRY IN INDIA

The cotton textile industry is reeling under manifold problems. The major problems are the following:
♦ Sickness:
Sickness is widespread in the cotton textile industry. After the engineering industry, the cotton textile industry has the
highest incidence of sickness. As many as 125 sick units have been taken over by the Central Government. Sickness
is caused by various reasons like the problems mentioned below.

♦ Obsolescence:
The plant and machinery and technology employed by a number of units are obsolete. The need today is to make the
industry technologically up-to-date rather than expand capacity as such. This need was foreseen quite sometime back
and schemes for modernisation of textile industry had been introduced. The soft loan scheme was introduced a few
years back and some units were able to take advantage of the scheme and modernise their equipment. However, the
problem has not been fully tackled and it is of utmost importance that the whole industry is technologically updated.
Not many companies would be able to find resources internally and will have to depend on financial institutions and
other sources.

♦ Government Regulations:
Government regulations like the obligation to produced controlled cloth are against the interest of the industry. During
the last two decades the excessive regulations exercised by the government on the mill sector has promoted
inefficiency in both production and management. This has also resulted in a colossal waste of raw materials and
productive facilities. For example, the mills are not allowed to use filament yarn in warp in order to protect the interest
of art silk and powerloom sector which use this yarn to cater to the affluent section of society.

♦ Low Yield and Fluctuation of Cotton Output:

The cotton yield per hectare of land is very low in India. This results in high cost and price. Further, being largely
dependent on the climatic factors, the total raw cotton production is subject to wide fluctuation causing serious
problems for the mills in respect of the supply of this vital raw material.

♦ Competition from Man-made Fibres:

One of the serious challenges facing the cotton textile industry is the competition from the man-made fibres and
synthetics. These textures are gradually replacing cotton textiles. This substitution has in fact been supported by a
number of people on the ground that it is not possible to increase substantially the raw cotton production without
affecting other crops particularly food crops.

♦ Competition from other Countries:

In the international market, India has been facing severe competition from other countries like Taiwan, South Korea,
China and Japan. The high cost of production of the Indian industry is a serious adverse factor.

♦ Labour Problems:
The cotton textile industry is frequently plagued by labour problems. The very long strike of the textile workers of
Bombay caused losses amounting to millions of rupees not only to the workers and industry but also to the nation in
terms of excise and other taxes and exports.

♦ Accumulation of Stock:
At times the industry faces the problems of very low off take of stocks resulting in accumulation of huge stocks. The
situation leads to price cuts and the like leading to loss or low profits.

♦ Miscellaneous:

https://www.fibre2fashion.com/industry-article/printarticle/543 7/9
7/1/2019 Indian Textile Industry
The industry faces a number of other problems like power cuts, infrastructural problems, lack of finance, exorbitant
rise in raw material prices and production costs etc.

EXPORT AT GLANCE:

Textile exports plays a crucial role in the overall exports from India.Throught export friendly government policies and
positive efforts by the exporting community, textile exports increased substantially from US$ 5.07 billion in 1991-92 to
US$ 12.10 billion during 2000-01. The textile export basket contributing over 46 percent of total textile export. In world
textile trade has risen to 3.1 percent in 1999-2000 as against 1.80 percent in early nineties. Exports have grown at an
average of 11 percent per annum over the last few years, while world textile trade has grown only about 5.4 per cent
per annum in the same years. During

the year 2000-01 Indias textile export was US$ 12014.4 million. It was increased the year 2004-05 US$ 13038.64
million. The exports of textiles (including handicrafts, jute, and coir) formed 24.6% of total exports in 2001-2002,
however this percentage decreased to 16.24% during 2004-2005. The textile exports recorded a growth of 15.3% in
2002-2003 and 8.7% in 2003-2004. Textile exports during the period of April-February 2003-2004 amounted to
$11,698.5 million. During 2004-05 textile exports were US$ 13,039.00 million, recording a decline of 3.4% as
compared to the corresponding period of previous year. However, during April-November, 2005, the textile exports
have shown growth of 8.2% as compare to the corresponding period of previous year. Against a target of US$ 15,160
million during 2004-05, the textile exports were of US$13039 million, registering a shortfall of 14% against the target.
The overall export target for 2005-06 has been fixed at US$ 15,565 million. In 2005 textile and garments accounted for
about 16% of export earning. Indias textile export to the US have shown a good rise of 29.5% between January and
June 2005.

INVESTMENT IN TEXTILE INDUSTRY

Investment is the key for Indian textiles to make rapid strides. The Vision Statement prepared by the Indian Cotton
Mills federation has projected that the industry has the potential to reach a size of $85 billion by 2010 from the current
level of $ 36 billion. Further, the vision statement has estimated that textile exports could touch $40 billion by 2010
from $ 11 billion in 2002. In the process, Indias share in the global textile and clothing trade is expected to double from
three percent in 2002 to six percent by 2010.

To reach these these ambitious target, it is estimated that new investment to the tune of Rs.1, 40,000 crores will be
needed in the next five years. After analysing the capacity and technology levels in various segments of textile
Industry and the need for modernisation, funds required for various segments have been below.

https://www.fibre2fashion.com/industry-article/printarticle/543 8/9
7/1/2019 Indian Textile Industry

The Multi-Fibre Agreement (MFA)

The Multi-Fibre Agreement (MFA), that had governed the extent of textile trade between nations since 1962, expired
on 1 January 2005. It is expected that, post-MFA, most tariff distortions would gradually disappear and firms with
robust capabilities will gain in the global trade of textile and apparel. The prize is the $360 bn market which is
expected to grow to about $600 bn by the year 2010 barely five years after the expiry of MFA.

National Textile Policy 2000

Faced with new challenges and opportunities in a changing global trade environment, the GOI unveiled its National
Textile Policy 2000 (NTP 2000) on November 2, 2000. The NTP 2000 aims to improve the competitiveness of the
Indian textile industry in order to attain $50 billion per year in textile and apparel exports by 2010.86 The NTP 2000
opens the countrys apparel sector to large firms and allows up to 100 percent FDI in the sector without any export
obligation.

https://www.fibre2fashion.com/industry-article/printarticle/543 9/9