India’s Textile Industry is one of the strongest economies of the country. It accounts for 4% of India’s GDP in the last years. In the ‘Make in India’ initiative, the government seeks to support the industry with several financial supports and schemes. Also, being recognized as one of India’s oldest industries, the Textile industry is looking forward to staying on the growth path and expanding furthermore. Readymade garments already contribute 7% to the GDP, exports are 11%. And providing the 2nd largest employment after agriculture, textile companies give employment opportunities to many people. What is the current situation on the Textile market in India?
India’s Union Government has recently inaugurated a scheme to promote the Textile Industry in the northeastern states of India. This scheme, called North-East Region Textile Promotion Scheme (NERTPS), is aimed to increase exports, jobs and the migration of workers to other regions. Under this scheme, the government for example provides funds to set up Apparel and Garment Making Centres (AGMC) in each of the eight states in India’s Northeast. The recent amount of total funds for the NERTPS is about $156 million.
The first two AGMC’s in the states of Nagaland and Tripura have been opened by the Union Textiles Minister of India this April. The other six facilities are expected to start running within the next months. Those centres shall force ‘Make in India’ in the textile branch and bring readymade garment to this region. Also, the AGMC’s will take care of skill up-gradation and Marketing of the products. The Northeast of India is especially strong in the handlooms and traditional clothes branches. So the opening of new facilities to produce these textiles will help to boost the garment industry growth in these regions.
Additionally, each of the centres will provide 1,200 to 1,500 new jobs. Those employees will also be trained on the new facilities, as 100 of the 300 sewing machines will be provided for training. They are, as mentioned by Minister Shri Gangwar, now looking to the northeastern regions to create qualitative work which can be in demand not only in the region, but all over India and internationally. With having close ties with some of the border-countries, the Northeast can easily market the new products to these other countries. The Minister is also confident that the new centre in Tripura will stimulate handlooms, silk and handicrafts by helping their Textile industry grow.
Even though the outlook for the Indian Textile industry is good, exports remained flat at $40 billion in FY2015-2016 and industry experts fear possible impacts of a Trans-Pacific Partnership that other countries such as Australia, Singapore and Canada closed with America. This Partnership could lower the exports and market share in the US as India isn’t part of the TPP yet as it is not able to meet current standards, e.g. in Intellectual Property rights, set by the agreement. The TPP rule states that countries should receive imports of clothing made of yarns and fabrics in TPP member states only, which could lower product imports from India, although its quality might be better than from other countries. Therefore, industry experts as well as India Ratings and Research argue that India should become part of TPP to protect their good export status, although it has already started discussions on another Free Trade Agreement, RPEC, which would also include China.
Anyhow, the sector can still reach exports of $300 billion if there are measures like reduction of Chinese imports and focused trade policy supplies taken. There are currently a lot of workers being trained in the industry, which makes the labour pool a large one for the next years.
To read the latest news on the Textile Industry in India click Textile Newsletter.