The Indian textile industry, one of the largest sources of job creation in the country, with over 4.5 crore people employed directly, has been under stress in recent months. The disruption in the supply chain and the slowdown in demand in Western markets have resulted in several challenges for the industry.
Rakesh Mehra, Chairman of the Confederation of Indian Textile Industry (CITI), highlighted these challenges and outlined the growth potential of the industry in an interview. Mehra emphasized the need for a more comprehensive Production Linked Incentive (PLI) scheme to support the textile sector.
The industry has been grappling with issues such as volatility in raw material prices, inflationary pressure impacting demand, and bottlenecks in the supply chain. Additionally, the increasing focus on sustainability in key markets like the European Union poses further challenges.
Despite these obstacles, the industry remains optimistic about its growth prospects. It is estimated that India’s textile industry will reach a size of $350 billion by 2030.
In terms of exports, there have been recent signs of improvement. Many companies are reporting a strong order book for the coming months, and exports of textiles and apparel have shown a rise of 14% year-on-year in August after a prolonged decline. New free trade agreements with the UAE and Australia, along with anticipated agreements with the UK and the European Union, are expected to boost India’s exports.
However, there has been a weakness in textile exports in recent months due to factors such as volatile raw material prices, geopolitical conflicts, supply chain reorientation, and inflationary pressures in the West. Trade data shows a decline of 10.51% in cumulative exports of textiles and apparel during April-August 2023 compared to the same period last year.
In terms of domestic demand, there are high hopes for an increase in textile product demand during the festive season. With one of the largest domestic markets in the world, India’s textile industry relies on strong domestic demand to compensate for slow export demand.
To support the sector, the Chairman of CITI called for accelerated free trade agreements, including those with the EU and the UK. Additionally, the second round of the PLI scheme should be announced with lower investment thresholds and broader product coverage. The removal of the 11% duty on cotton is also crucial to enhance the competitiveness of the Indian textile industry.
The government has taken various policy measures, such as the PLI scheme and the establishment of PM MITRA parks, to strengthen the textile industry. However, there is still more to be done to overcome the existing challenges and ensure the sustainable growth of this vital sector.
