The Textile industry plays an important role in the Indian economy. It contributes 14% to the Industrial production and 4% to the GDP. It is the second largest source of employment generation in the country. The historical growth path of many countries has been intrinsically tied to textile manufacture and export- US, UK, China for example. Textile industry being employment intensive has the potential for employing much of the unskilled and semi-skilled labour force. Also, the industry is more or less shielded from business cycles, as the demand is almost always there. Hence, the focus.

There is a huge potential for growth in textiles and apparels industry which is driven by following factors:

1. Availability of raw material and workforce: India is the largest cotton producing and second largest cotton exporting country. India’s demographic potential and semi skilled workforce in unorganized sector is a boon for textile sector.
2. Consumerism and disposable income: There is a significant rise in demand for products creating a huge domestic market.
3. Government incentives and favorable policies: Incentives under schemes, like the Merchandise Exports from India Scheme (MEIS), 100% FDI in the textile sector under automatic route, and the Scheme for Capacity Building in Textile sector are major drivers of growth.
4. Favourable policies: such as Technology Upgradation for Funds Scheme as well as the Scheme for Capacity Building in Textile sector are major recent drivers of growth.
5. Large workforce: the textile industry employs about 105 million people directly and indirectly across organised as well as unorganised sector.
6. Increased penetration of organised retail, favourable demographics and rising exports are likely to drive demand for textiles.
7. Integration of fashion and technology: increasing access to digital devices and internet is enabling the masses to have online shopping experience irrespective of where they live.

Challenges faced by the industry:

1. Obsolete Machinery and Technology: Paucity of domestic producers of shuttle-less looms and spindles greatly affects the industry. Lack of research and investment in the area of textile machinery is a cause of concern.
2. Threat to handloom industry: Stiff competition from mechanized mills and changing consumer preferences have threatened the vibrancy of handloom industry. Traditional hand-woven products are in danger of becoming obsolete and weaving skills face threat of dilution.
3. Power shortage: Textile SMEs are severely affected by power shortage.
4. Illicit markets: Counterfeit products often sold at much lesser prices than the original value aggravated by lack of anti-counterfeiting measures adopted by enforcement agencies.
5. Labour issues: Threat to safety and health of workers, poor working environment and exploitation of children, strict labour laws and skill gap pose a major challenge to the industry.
6. Shortage of raw material: Fluctuating prices and uncertainties in the availability of raw materials leads to low production and sickness of mills.
7. Adverse impact on environment requires investment in environment friendly technologies.

Suggestions to overcome the challenges are:

1. Infrastructure development on the lines of Integrated Textile Parks as envisaged by the government in a scheme.
2. Skilling workforce through the Make in India programme.
3. Enhancing raw material availability and management.
4. Financial support and branding of handlooms.
5. Developing strong coordination of supply chain by utilizing free trade agreements with other countries.
6. Upgrading India’s capacity and capabilities to meet the competition not only from China but also from smaller countries like Bangladesh and Sri- Lanka.
7. Safeguarding duty on imports to ensure that the lower duty does not result in dumping by Far East and China.
8. Sustainable textile manufacturing through application of innovation and technology.