Exploring Untapped Opportunities in Indian Textiles
18 May 2023, Mumbai
The time is now for change. Success & Change go hand in hand. As a result of recent leadership changes, India's appearance is changing. The storied Indian textile industry has finally come to terms with the fact that change is unavoidable and moving in a new direction.
One of India's oldest businesses, Indian textiles have a rich history dating back to ancient times, with a diverse range of techniques and styles. The sector enjoys a clear-cut credible distinction of playing a considerable role in building India's economy and cultural identity.
Technical textiles in the sweet spot
Entrepreneurs are already turning away from traditional textiles and considering investing in technical textiles, which are the future textiles. Many technological textile projects have recently come to mind. Even though India is the world's second-largest textile economy behind China, our contribution to the rapidly expanding technical textile market is insignificant.
Case of missed opportunity
This is a sobering reminder of how far behind the technical textile sector's curve is. The penetration of our roots into technical textile areas like pack tech (36%), clothtech, and hometech is another sobering reality about the Indian specialized textile market.
Even though these categories produce highly technical textile items with significant growth, the final products' monetary value is relatively modest. On the other hand, Mobitech, a high-value product, dominates the global market for technical textiles with a 23% share, followed by Indutech and Sportech.
Use case
Given the enormous expansion in the automobile industry, the vast potential of the Mobitech sector is clear to the layperson when it comes to demand-supply analysis. The demand for cars is rising daily due to a developing economy, increased disposable income, and a rising standard of living.
While 36 lakh automobiles were created in India in 2016, approximately 7.2 crore cars were made worldwide. One of the biggest automobile industries in the world is in India. Its share of the nation's Gross Domestic Product (GDP) is 7.1%. During FY06–16, the commercial vehicle segment grew at a CAGR of 9.4%, and the passenger vehicle segment at a CAGR of 10.09%.
Since cars are considered a status symbol in India, there is an ever-increasing demand for them. Recently, this demand has intensified due to the introduction of rental car services, as more people have access to them.
Sunrise sector
In addition to the enormous demand for automotive necessities like seat covers, car flooring, seat belts, etc. The need for airbags has recently increased along with people's awareness of their safety. Today, people place a high priority on security.
Gone are the days when people insisted on buying cars without airbags to get them for a reasonable price. There are cars on the market right now that are only advertised based on how many airbags they have, protecting as many passengers as possible.
In India, the government recently mandated that all cars have airbags and three other safety features starting in October 2017 to protect the occupants from accidents.
Due to the lack of airbags in most of today's cheap cars, like the Alto, Aeon, Santro, Nano, and the Datsun GO, this need will drastically boost the demand for airbags.
A minimum requirement of 2 airbags per automobile in vehicles with the highest market dominance in India may ultimately result in a sizable market for airbag manufacturers.
Sunset or sunrise? Context setting; All is not hunky dory here in India's textile space, once upon a time the sector which was construed to be a global leader is losing its sheen/colour owing to ever-increasing competition and lack of innovations required to keep its growth and help maintain its existing status.
Differentiability
PLI Scheme for textiles is designed to fuel & spur the sector's growth prospects augmenting India's Textile Sector producing capabilities and harnessing exports' heft with an allocated capital outlay of Rs 10,683 crore through the next five-year period we have to stress here that it has been the game changer in some of the sectors where PLI schemes have been introduced.
Textile Industries Poised for Growth: PLI Scheme to Generate Jobs and Boost Turnover
India's textile industries are set to experience a significant upturn with the implementation of the Production Linked Incentive (PLI) Scheme. This strategic move by the government aims to reestablish India's dominance in the global textile trade while creating a favorable environment for Indian companies to emerge as global champions.
Potential limitless; One of the key benefits of the scheme is the generation of over 7.5 lakh jobs directly, with the potential to create several lakhs more employment opportunities in supporting activities. Notably, the scheme is designed to encourage the active participation of women, paving the way for their increased involvement in the industry.
The PLI Scheme comes with substantial incentives, amounting to Rs. 10,683 crores over a span of five years. These incentives will act as a catalyst for fresh investments, projected to exceed Rs. 19,000 crores. Moreover, the scheme is expected to drive an additional production turnover of over Rs. 3 lakh crore in the span of five years, further boosting the textile sector's economic growth.
Inclusive growth
With a focus on inclusivity, the scheme prioritizes investment in Aspirational Districts and Tier 3/4 towns, ensuring that the benefits reach regions beyond major cities. States such as Gujarat, Uttar Pradesh, Maharashtra, Tamil Nadu, Punjab, Andhra Pradesh, Telangana, Odisha, and others are expected to experience significant positive impacts from the scheme, revitalizing their textile industries.
Through leveraging economies of scale and providing a supportive ecosystem, the PLI Scheme sets the stage for a thriving textile sector in India. With increased investments, job creation, and enhanced turnover, India is poised to regain its position as a global leader in the textile trade, benefiting both the industry and the economy as a whole.
COVID-19's Impact on Indian Textiles
The COVID-19 pandemic has caused widespread disruption and challenges across various sectors, including the textile industry in India. This study aims to examine the implications of the pandemic on the demand and supply sides of the textile sector, highlighting major issues and challenges faced. By analyzing secondary data from reputable sources, the study emphasizes the need for innovative approaches to navigating this crisis.
Incentives galore
Suggestions include providing tax compliance relaxation for small-scale segments and implementing comprehensive financial relief packages tailored to the export- and labor-intensive nature of the industry.
Future research is encouraged to further explore the long-term effects of the pandemic and develop effective strategies. This study serves as a foundation for future investigations and supports policymakers in preparing for unforeseen crises in the textile industry.
Global tailwinds
Can India pull it off as the 'China Plus One Global Strategy' is putting India on an Upward Growth trajectory provided all the hands are on deck? With increasing demand from sectors such as healthcare, automotive, and construction, the industry is projected to generate exports worth $40 billion by 2025.
