In a major decision for the Textile Industry in India, the Government in one of its states (Maharashtra) has for the first time decided to provide subsidy to textile owners which would not be linked to bank loans. Subsidy for the Textile Industry in India was earlier credit-linked and only those who availed a bank loan were eligible for getting the Government largesse.

How will this decision have an effect on the sector?

India is the second largest producer of textiles and garments in the world. The Textile Industry in India is expected to grow to a size of USD 223 billion by 2021. The sector accounts for almost 24 % of the world’s spindle capacity and 8 % of global rotor capacity. It is a major contributor to the national economy by direct and indirect employment generation and net foreign exchange earnings. Further it contributes about 14 % to the industrial production, 4% to the Gross Domestic Product (GDP) and 27 % to the country’s foreign exchange inflows. It provides direct employment to over 45 million people which makes it the second largest provider of employment after Agriculture. Concerning exports it is also the largest contributor with approximately 11 % of total exports and realised export earnings worth USD 41.4 billion in 2014-2015, a growth of 5.4 %.

The Textile Industry in India is one of the oldest industries in Indian economy dating back several centuries. Today it is extremely varied, with the hand-spun and hand-woven Textiles Sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The decentralised Powerloom and Knitting Sector form the largest component of the Textiles Sector. The close linkage of the Textile Industry in India to Agriculture for raw material, such as cotton and the ancient culture and traditions of the country in terms of textiles makes the Textile Industry in India unique in comparison to the industries of other countries. The Textile Industry in India has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world.

Also the Government recognized the importance of the Textile Industry in India and has come up with a number of export promotion policies. One initiative was for example the promotion of “India Handloom” on social media like Facebook, Twitter and Instragram with a video connect with primary young customers pointing out the high quality of handloom products. An aim claimed by the Indian Government is also to create 35 million new jobs by way of increased investments by foreign companies.

A very important step towards modernisation of the Textile Industry in India taken by the Government was to provide subsidy to textile owners which would not be linked to bank loans. Spinning mills, cotton ginning, processing and printing units would be given 35 % capital subsidy, technical textiles and composite units 30 %, and power loom and other textile-related units 25 %.  The Government is aiming to bring the Textile Industry in India on par with global standards.

The future for the Textile Industry in India looks promising, held up by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has registered a rapid growth in the past decade with the entry of several international players. The organised apparel segment is expected to grow of more than 13 % over a 10-year-period.

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