Industry And Cluster | News & Insights

Fund allocation a major limitation for Indian textile industry

Published: November 12, 2021
Author: Manali bhanushali

A report by Delhi-based Infomerics Valuation and Rating, a Credit Rating Agency, has said that fund allocation is a major limitation for the Indian textile industry as the Finance Ministry approved only Rs. 3,631.64 crore for the Textile Ministry as against proposed outlay of Rs. 16,883 crore during the FY22.

The report titled Textile Industry: Trends and Prospects says that the industry has been lately witnessing low manufacturing activity accompanied by high prices for the final product reflected in the annual NIC-2 digit and sectoral indices of industrial production wherein the index for ‘manufacturing of textiles’ has fallen below the 100 marks, settling at 91.1 for the first time in almost a decade. The yearly wholesale price index for ‘manufacturing of textiles’ has been nearing the 118-point mark, which is 6-7 notches above the decadal average of approximately 112.

The report also highlights other generic factors like weakened consumer demand or production networks, obsolete technology, inflexible labour laws, infrastructure bottlenecks and fragmented industry, major role of the unorganised and small players hit by triple whammy of demonetisation, rolling out of GST and the COVID-19 pandemic.

More specifically, it outlines industry-risk factors, which relate to GST issue, gap in proposed outlay and amount approved, low performance and high price.

The report insists that the industry needs to command premium prices, target niche products and markets, and redesign products in higher value-added segments. It also needs to focus on regional and cluster subsidies, technology upgradation and skill development subsidies for sustained development. Investment in value-added services, e.g., marketing, warehouse rentals, logistics, courier, other product fulfilment costs, constitutes a pre-requisite for the sector going to scale.

During the pandemic, the domestic textiles and apparels industry slumped to US $ 75 billion after peaking at US $ 106 billion in FY2020. However, Government initiatives to bolster the sector have raised hopes of the sector growing to US $ 300 billion by 2025-26, a growth of 300 per cent in next 2 years.

There has been a remarkable turnaround in technical textiles. In terms of value of technical textiles, imports exceeded exports by Rs. 1,058 crore in FY20 while in FY21 exports exceeded imports by Rs. 2,998 crore.

“Logistics is one of the major constraints with Indian exporters. For comparative purposes, the turnaround time (from order to delivery) is 50 days for Bangladesh and 63 days for India, whereas time taken to reach port is 1 day for Bangladesh and 7-10 days for India,” the report reads.

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