27 January 2023, Mumbai
The abolition of textile and clothing (T&C) quotas in 2005 opened up significant prospects for India, but it also highlighted some significant structural growth barriers. India had been subject to quotas.
Therefore, it should gain from its elimination under the Agreement on Textiles and Clothing in January 2005. (ATC). On the other hand, China and other countries are today more competitive than ever before with India.
The National Textile Policy sets a goal for T&C exports to increase by fourfold to $50 billion by 2010; however, the real question is whether the rules are in place to support such success.
The Indian textile industry has many benefits, but there are also many obstacles in the way of its full potential. India has a competitive advantage thanks to its sizable and relatively inexpensive labor force, domestic fabric supply, and the industry's capacity to produce various goods.
Policy Intervention
Lok sabha sources confirmed," The Textile Sector got FDI worth $1522.23 Mn in the period between 2017-2022. Also iterating the efforts undertaken by the central govt to uplift the spirit in this enormous job-creating sector approving the Production Linked Incentive (PLI) scheme for textiles on the back of having evinced success in a range of sectors, with an approved estimated outlay of Rs 10,683 crores.
India’s strong foot in the textile industry
Given that Post-Covid India is a beacon of stability and, today it also boasts a robust and varied supply of raw materials for producing synthetic and natural fibers. The bright side of textile heritage is the demonstrability of female skillful weavers around the rich, vibrant, and diverse lineage/culture.
India also has a vast spinning and textile production capacity, and its textile industry covers the entire supply chain. However, how much of the current restrictions are lifted will determine whether India can gain from removing quotas.
These include strict regulations on the labor market, inadequate infrastructure, insufficient investment, and a history of adverse public policies. T&C is a significant industry in India. Nearly 25% of Indian exports and about 3% of global T&C exports in 2003 were made of textiles and garments, making them essential components of India's export mix.
Additionally, this industry is the second-largest employer, employing 35 million people, or roughly 10% of the labor force. As a result, the T&C sector will be crucial in India's efforts to generate employment for its fast-expanding labor population.
The export of textiles and apparel, which adds 4 percent and 14 percent, respectively, to the GDP and value-added in manufacturing, is another vital source of foreign currency.
India is the sixth-largest economy in the world, with a US $ 2.6 trillion GDP. India can potentially have a US $ 5 trillion GDP by 2025 as one of the major economies with the fastest growth rates.
It estimates that growth will continue to be optimistic over the medium term. Several government departments and organizations, and industry groups are prepared to create a plan to reach this challenging goal. Given the current economic structure, the manufacturing sector is anticipated to contribute US $ 1 trillion to accomplish this goal.
The Working Group of the Department of Industrial Policy and Promotion (DIPP) has also proposed a three-pillar approach to increase the manufacturing sector's output. Along with numerous other industries, the readymade garment (RMG) industry is recognized as having a substantial effect.
The growth chart of the textile market
Even the $300 billion goal seems highly challenging given that the government's annual targets for the textile and apparel sector have been continuously missed for at least the last three fiscal years, starting in 2014–15.
The current size of the Indian textile and clothing sector is USD 150 billion, with an export share of about 30%. In 2017, India exported $ 37.25 billion worth of textiles and clothing. India's apparel exports dropped by 4% to US $ 16.72 billion in FY18. The domestic apparel market was predicted to be worth US $ 67 billion in 2017.
It increased at a compound annual growth rate (CAGR) of 10% over the previous 12 to 13 years. It is also anticipated to expand at a CAGR of 11–12% and reach roughly US$ 160 billion by 2025. So it makes sense that $300 billion is a long shot.
