India’s Textile Industry

India’s Textile Industry

Why in News?

India’s textile industry holds significant potential to become a global leader, driven by a growing domestic market and increasing global interest. However, challenges such as high production costs, fragmented supply chains, and sustainability issues are hindering its growth and exports.

Key Facts About India’s Textile Industry:

• Economic Contribution:
  The textile industry contributes 2.3% to India’s GDP, with projections to reach 5% by 2030.
  As of FY24, it accounts for 13% of industrial production, 12% of exports, and employs 4.5 crore workers.
  Textile exports in FY24 stood at USD 35.9 billion, with major markets including the US, EU, and UAE.

• Global Position:
  India has the world’s second-largest textile manufacturing capacity and ranks as the 6th largest exporter of textiles and apparel in 2023, contributing 3.9% to global trade.
  India is the second-largest cotton producer globally (23.83% of world cotton production) and is expected to reach 7.2 million tonnes of cotton production by 2030.
  India is the largest producer of jute and the second-largest producer of man-made fibres (MMF), including polyester, viscose, nylon, and acrylic.

• Market Growth Projections:
  India’s textile and apparel market is expected to reach USD 350 billion by 2030.

• Government Initiatives:
  Key initiatives include PM Mega Integrated Textile Region and Apparel (MITRA) Parks, the Production Linked Incentive (PLI) Scheme for Textiles, and the National Technical Textile Mission (NTTM).
  The government also allows 100% Foreign Direct Investment (FDI) in textiles under the automatic route to attract foreign investment.

Key Challenges Facing India’s Textile Industry:

• Lack of Trade Agreements:
  Unlike countries such as Vietnam and China, which benefit from Free Trade Agreements (FTAs) with major markets, India lacks such agreements with key textile-consuming regions like the US.

• Stagnant Growth and Declining Exports:
  The textile sector contracted by 1.8% annually from FY20 to FY24, with the apparel sector shrinking by 8.2% per year. Apparel exports declined from USD 15.5 billion in FY20 to USD 14.5 billion in FY24.

• Expensive Raw Materials:
  Government-imposed Quality Control Orders (QCOs) on polyester and viscose limit imports, forcing domestic yarn makers to rely on more expensive local alternatives. Polyester is 33-36% costlier in India than in China, while viscose is 14-16% more expensive.

• Low Export Competitiveness:
  India’s textile exports are more expensive than those of China and Vietnam due to fragmented supply chains and higher logistics costs. Unlike China, which has vertically integrated supply chains, India’s supply chains are spread across states and involve complex customs procedures. Additionally, Bangladesh, as a Least Developed Country (LDC), benefits from duty-free exports, which gives it a competitive edge over India in several markets.

• Sustainability Pressures:
  Global brands are enforcing stricter environmental norms, pushing for greater renewable energy use, waste recycling, and raw material traceability. The European Union has introduced several regulations affecting the fashion industry, which impacts about 20% of India’s textile exports.
  The textile industry is responsible for 6-8% of global carbon emissions (~1.7 billion tonnes/year), and textile production accounts for 20% of global water pollution from dyeing and finishing processes.

Way Forward:

• Strengthening Supply Chains:
  India should focus on developing vertically integrated textile parks that cover the entire production cycle, from fibre to finished apparel, to reduce logistics and production costs.
  Reassessing the QCOs on polyester and viscose could help lower domestic costs by allowing controlled imports.

• Leveraging Labour Pools:
  Establishing more PM MITRA parks in regions like Uttar Pradesh, Bihar, and Madhya Pradesh, where job demand is high, can help boost employment. Housing near factories, similar to China’s model, can improve productivity, raise take-home salaries, and reduce attrition.

• Policy Reforms:
  India should work on securing preferential trade agreements with the EU, US, and other key markets to improve its competitiveness.

• Boosting MMF Production:
  Offering incentives for MMF-based textile production can encourage greater domestic consumption of MMFs.

• Sustainability Initiatives:
  Financial incentives should be provided to MSMEs to promote sustainable manufacturing and renewable energy adoption. With increasing demand for recycled textiles, strengthening waste management infrastructure will be key to supporting sustainable growth.

---

Drishti Mains Question:

How does the textile industry contribute to India’s economic growth, and what measures are needed to make it globally competitive?

---

UPSC Civil Services Examination, Previous Year Question (PYQ)

Prelims
Q. Consider the following statements: (2020)

1. The value of Indo-Sri Lanka trade has consistently increased in the last decade.
2. “Textile and textile articles” constitute an important item of trade between India and Bangladesh.
3. In the last five years, Nepal has been the largest trading partner of India in South Asia.

Which of the statements given above is/are correct?

(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1, 2 and 3

Ans: (b)

---

Mains
Q. Analyze the factors for the highly decentralized cotton textile industry in India. (2013)

Tags : UPSC 2025 current affairs preparation, UPSC current affairs January 2025, UPSC 2025 daily current affairs, Best sources for UPSC current affairs 2025, UPSC 2025 current affairs for prelims, UPSC 2025 current affairs for mains, Important current affairs for UPSC 2025, UPSC current affairs strategy 2025, UPSC 2025 current affairs notes, UPSC current affairs PDF 2025, Current affairs for UPSC 2025 preparation, UPSC 2025 current affairs online classes, UPSC current affairs quiz 2025, How to study current affairs for UPSC 2025, UPSC 2025 current affairs magazines, Current affairs for UPSC 2025 prelims and mains, Current affairs updates for UPSC 2025, UPSC 2025 current affairs analysis, Current affairs for UPSC 2025 PDF download, UPSC 2025 current affairs important topics, UPSC reading comprehension tips, UPSC reading comprehension practice papers,  UPSC reading comprehension strategy, UPSC reading comprehension questions,  UPSC reading comprehension exercises,  How to improve reading comprehension for UPSC, UPSC reading comprehension question papers PDF,  Important reading comprehension topics for UPSC, UPSC reading comprehension passage solutions, UPSC reading comprehension best books, UPSC GS reading comprehension examples, UPSC Prelims reading comprehension preparation,