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Textiles

POLICY REVIEWS 2020

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FOREWARD

I am pleased to present the Textiles Policy Review. It comprises diverse points of view

across different industry sectors, this report provides a perspective of the economy in

this sector in India. Through this report, we aim to highlight the upcoming events and

possibilities with the objective of doing business in India.

I hope that this report will help business leaders navigate the increasing complexity

around value delivery in today’s environment. I would like to express my sincere

gratitude to all the participants of the survey.

I hope you find the report useful and insightful.

Best regards,

Priyanka Prajapati

CEO, LawDocs.

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INDEX

Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5

Evolution of the textile sector. . . . . . . . . . . . . . . . . . 6

Reasons to invest. . . . . . . . . . . . . . . . . . . . . . . . . . . .7 .

Statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 8

Trends in textile sector. . . . . . . . . . . . . . . . . . . . . . . 9.

Strategies adopted . . . . . . . . . . . . . . . . . . . . . . . . .10

Financial Support. . . . . . . . . . . . . . . . . . . . . . . . . . .11

Investment Opportunities. . . . . . . . . . . . . . . . . . . .12

Achievements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

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SUMMARY

• The Textile industry in India is one of the largest in the world with a huge raw materi-

al base and manufacturing strength across the value chain.

• India is a worldwide leader in jute production, accounting for about 70% of estimat-

ed world production

• The domestic textile industry in India is projected to reach US$ 250 billion by 2019

from US$ 150 billion in July 2017.

• The Textile industry in India is one of the biggest sources of employment generation

in the country with more than 45 mn people employed directly in 2017-18.

• total number of looms installed in jute industry was 48,322, as on 01 January 2018.

Installed spindles in jute mills other than 100 % export oriented units were 7,48,612. Maxi-

mum installed capacity in jute mills other than 100% export oriented is about 2.75 mn

tonnes annually.

• The industry contributes to 7% of industrial output in value terms, 2% of India’s GDP

& 15% of the nation’s export earnings.

• The Textile industry in India is dominated by 70% of women workforce and balance

male workforce.

• India is:

-The largest producer of cotton in the world

-Leading consumer of cotton

-The second largest exporter of cotton in the world

-The second largest producer of silk in the world

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EVOLUTION OF THE INDIAN TEXTILE SECTOR

Pre 1990s-

• The 1st cotton textile mill of Mumbai was established in 1854 .

• The 1st cotton mill of Ahmedabad was found in 1861; it emerged as a rival centre to Mum-

bai

1901–2000-

• Out of 423 textile mills of the undivided India, India got 409 after partition and the remain-

ing 14 went to Pakistan .

• TMC was launched to address issues related to low productivity and infrastructure

• Number of mills increased from 178 in 1901 to 417 in 1945

• In 2000, NTP was announced for the overall development of the textile and apparel indus-

try

• In 1999, TUFS was set up to give easy access to capital for technological up gradation .

2000-2015-

• After MFA cotton prices are aligned with global prices

• Technical textile industry will be a recent growth avenue

• SITP was implemented to facilitate setting up of textile units with suitable support infra-

structure.

• Restructured TUFS was launched attracting a subsidy cap of US$ 420.65 Million.

• Free trade agreement with ASEAN countries and proposed agreement with EU under dis-

cussion.

2016 onwards

• Technology Mission for Technical Textile has been continued.

• 1,399 operational textile mills (Non-Small Scale Industry) in the country in 2017.

• Make in India campaign was launched to attract manufacturers and FDI.

• Under Union Budget 2018-19, Government of India allocated around Rs 7,148 crore for

the textile industry.

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REASONS TO INVEST

• Investments opportunities in India in many areas are enormous. Regional Compre-

hensive Economic Partnership (RCEP), is an ambitious free trade agreement (FTA) con-

necting countries for extra business and tourism prospects. FTAs give an entry to these

manufacturing nations for the development & investment in the industry.

• The Indian market has favourable demographics, rising income levels and brand as

well as quality oriented customers.

• The 7th Regional Comprehensive Economic Partnership Intersessional Ministerial

Meeting took place in Siem Reap, Cambodia on 02 March 2019. Participating countries of

the RCEP are the 10 ASEAN member states & those nations which have existing FTAs with

ASEAN – China, India, Australia, Japan, Republic of Korea and New Zealand.

• An abundance of raw materials such as cotton, wool, silk, jute and manmade fibres.

• The Government of India announced a unique Package to create 10 mn job oppor-

tunities and increase textile exports by US$ 31 bn, attracting investments worth US$ 11.93

bn during 2018-2020.

• India also sees a tremendous amount of skills in the traditional skill sector like

handloom and handicraft

• India’s policies are focused and promising, which give a boost to the overall textile

market.

• India’s value chain starting from production of natural fibre to the production of

fabric, yarn and apparel gives India an edge over other countries.

• There is a comparative advantage seen in terms of skilled manpower & production

cost over majority of textile producers globally.

• The following government policies are favourable which provide attractive incen-

tives to the manufacturers:

-Amended Technology Upgradation Fund Scheme (ATUFS)

-Scheme for Integrated Textile Parks (SITP)

-Technology Mission on Technical Textiles (TMTT)

- Swarnjayanti Gram Swarozgar Yojana (SGSY)

-Integrated Skill Development Scheme (ISDS)

-Market Development Assistance (MDA)

- Market Access Initiative (MAI)

- Integrated Processing Development Scheme (IPDS)

-Merchandise Exports from India Scheme (MEIS)

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STATISTICS

• The Textiles industry in India is estimated at approximately US$ 150 bn and is

expected to reach US$ 250 bn during 2019

• India produced an estimated 6.5 mn tonnes during 2017-18.

• India has the largest acreage with 12.2 mn hectares under cotton cultivation,

which is approximately 42% of the world area of 29.3 mn hectares.

• The production of raw cotton in India is estimated to have reached 36.1 mn

bales in FY19.

• India's overall textile exports have been US$ 31.65 bn in FY19 and are ex-

pected to raise to US$ 82.00 bn by 2021

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NOTABLE TRENDS IN INDIA’S TEXTILE SECTOR

Increasing investment in TUFS-

• Ministry of Textiles is encouraging investments through increasing focus on schemes for

example Technology Up-gradation Fund Scheme & cluster development activities .

• TUFS for the textile industry to continue in the 12th 5 Year plan with an investment tar-

get of USD24.8 billion.

Public-Private Partnership (PPP)

• The Ministry of Textiles commenced an initiative to establish institutes under the Pub-

licPrivate Partnership model to encourage private sector participation in the development of the

industry.

Multi-Fibre Arrangement (MFA)

• With the expiry of Multi-Fibre Arrangement in January 2005, cotton prices in India are

now fully integrated with international rates. In 2014, government has cleared 13 proposal of

new textile parks in different st+ates.

Technical textiles

• USD70.83 million has been allocated to promote the use of geotechnical textiles in the

North East states.

• Technical textiles, which has been rising at around twice the rate of textiles for clothing

applications over the last few years, is now expected to post a CAGR of 20 % over FY11-17.

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STRATEGIES ADOPTED

Focus on high growth domestic market-

• In order to increase domestic handloom & handicraft exports, the Ministry of Textiles is eyeing for

niche overseas market, with a number of worldwide companies willing to tie-up with Indian weavers &

artisans

• In March 2017, Amazon India Fashion Week ,is set to feature “Golden Threads of Assam,” with a

view to preserve and promote Muga culture. This show will held at the National Rail Museum in New Del-

hi

• As of November 2016, the Ministry of Textiles signed MoUs with 20 e-commerce firms to engage

with a variety of handloom & handicraft clusters. This would also provide them a direct marketing

platform.

• In strategic alliance with importers from UAE, the 1st ever exhibition of, “Incredible Indian Tex-

tiles” was held in Dubai in February 2017. Event was organized by Synthetic & Rayon Textiles Export Pro-

motion Council of India, and witnessed participation of 19 Indian companies.

Focus on forward integration

• Vardhman Textiles Ltd has entered into garment manufacturing business through a collaboration

with Nisshinbo, Japanese manufacturer of yarns

• In February 2017, Future Retail, entered into an contract with UK based home furnishing brand -

Laura Ashley, to operate and own stores & websites in India.

Focus on backward integration

• Welspun India said in a BSE filing that three MoUs are being signed with state government at the

ongoing Vibrant Gujarat Summit 2017. The group, which has presence in home textiles, infrastructure,&

line pipes will invest USD307 million in setting up an integrated textile manufacturing zone. This will invest

approximately USD153 million on capacity enhancement of its technical textile business, while a similar

amount has been earmarked for its superior textile arm that makes specialised materials for aerospace,

defense & automobiles.

Diversification

• Raymond group under its group company J.K.Helene Curtis is looking to ramp up male grooming

segment by unleashing latest variants of shampoos and deos.

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FINANCIAL SUPPORT

JUTE-SMART:

• Jute-Smart is an e-Governance Initiative for Procurement.

• JUTE-SMART software has become operative since 01 November 2016. Indents for a total

quantity of approximately 3.85 mn bales, worth US$ 1.32 bn, have already been placed through

JUTE-SMART, from the month of November 2016 to March 2018.

INTEGRATED SKILL DEVELOPMENT SCHEME:

• Ministry of Textiles is implementing the Integrated Processing Development Scheme to en-

able the textile processing sector in meeting environmental standards. It will be achieved through

appropriate technology including marine, riverine and Zero Liquid Discharge .

• The Government of India provides financial assistance up to 50% of project cost for Com-

mon Effluent Treatment Plants subject to a ceiling of US$ 11.5 mn. The ministry has approved 4

projects in Rajasthan and 2 projects in Tamil Nadu.

UPGRADATION FUND SCHEME:

• An outlay of US$ 2.7 bn has been accepted for 7 years to meet the committed liabilities of

US$ 1.9 bn and US$ 800 mn for new cases under ATUFS.

• There is a provision of one-time capital subsidy for eligible benchmarked machinery for the

following:

-For weaving, processing, jute, silk and handloom segments, at the rate of 10%, with a

cap of US$ 3 mn

-For garments and technical textiles segments, at the rate of 15%, with a cap of US$

4.6 mn

INFRASTRUCTURE DEVELOPMENT SCHEMES

• Integrated Processing Development Scheme

• Mega Textile Clusters Scheme

• Scheme for Integrated Textile Park (SITP)

INTEGRATED SCHEME FOR DEVELOPMENT OF SILK INDUSTRY:

• Integrated Scheme for Development of Silk sector is implemented with an outlay of US$ 300

mn from 2017-18 to 2019-20. This Scheme has 4 components:

1. Seed organizations and farmers’ extension centres

2. Research & Development training, transfer of technology and IT initiatives.

3. Quality Certification System by creating amongst others a chain of silk testing facilities.

4. Coordination and market development for seed, yarn and silk products

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INVESTMENT OPPORTUNITIES

• The Textile industry in India has a robust presence in the entire value chain

• India has an extensive custom of textile and apparel manufacturing with infrastruc-

ture spread across the nation in numerous clusters

• All levels of textile value chain i.e. from fibre/ filament to garment/speciality fabrics

manufacturing at huge scale are available.

• Fabric processing set-ups are for all kind of natural, synthetic and speciality textiles.

• Opportunities for investments in retail brands are immense.

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KEY ACHIEVEMENTS

• India reported a growth of 5.37% with exports rising from US$ 35.52 bn in Jan-Dec

2016 to US$ 37.43 bn in Jan-Dec 2017

• Apparel and garment manufacturing centres have been set up in the north-eastern

region.

• The Textiles industry in India (including dyed and printed) attracted Foreign Direct

Investment worth US$ 3.12 bn from April 2000 to March 2019.

• Integrated Textile Office Complex set up at the Indian Institute of Handloom Tech-

nology in Varanasi

• Special Textile Package of US$ 850 mn is permitted, to attract investment of US$ 11

bn and to create 10 mn jobs

• Overall 11,14,545 persons were trained under Skill Development, mostly in apparel

and garment (86%), of which 8,43,082 persons (75.64%) were given employment in the

textile sector.

• India Handloom brand has been launched by the Prime Minister of India on the

occasion of the first National Handloom Day on 07 August 2015

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FOREIGN INVESTORS

• Rieter (Switzerland)

• TrUtzschler (Germany)

• Soktas (Turkey)

• Zambiati (Italy)

• Monti (Italy)

• CMT (Mauritius)

• E-land (S. Korea)

• Bilsar (Turkey)

• Nissinbo (Japan)

• Marubeni (Japan)

• Skaps (USA)

• Ahlstorm (USA)

• Marks & Spencer (UK)

• Zara (Spain)

• Mango (Spain)

• Promod (France)

• Terram (UK)

• Strata Geosystems (USA)

• Benetton (Italy)

• Espirit (USA)

• Levi’s (USA)

• Forever 21 (USA

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N O T E S

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