Context: India’s textile industry is among the largest in the world. Despite its scale, India lags behind countries like China, Vietnam, and Bangladesh in textile exports.

Background: –

• Sustainability is set to pose a major challenge for India’s textile industry, as global brands and markets tighten compliance norms. These include higher renewable energy use, water and material recycling, and stricter sourcing and traceability requirements.

Key points

• Cotton cultivation provides livelihood to nearly 60 lakh farmers, mainly in Gujarat, Maharashtra, and Telangana.
• The entire cotton textile value chain—from processing raw fibre and spinning yarn to weaving fabric, dyeing, and stitching—employs over 4.5 crore people.
• Although cotton dominates fibre consumption in India, the textile industry also utilizes wool, jute, and man-made fibres (MMF).
• India is the second-largest producer of MMF, with Reliance Industries Ltd leading in polyester fibre and Aditya Birla Group’s Grasim Industries Ltd being the only domestic producer of viscose fibre.
• Around 80% of India’s textile value chain is concentrated in MSME clusters, each specializing in different segments:
  • Bhiwandi, Maharashtra – Fabric production
  • Tiruppur, Tamil Nadu – T-shirts and undergarments
  • Surat, Gujarat – Polyester and nylon fabric
  • Ludhiana, Punjab – Woolen garments

Growth, exports in the red

• The textile and apparel industry contributes 13% to industrial production, 12% to exports, and nearly 2% to GDP. However, manufacturing in the textile and apparel industry has slightly contracted over the past 10 years, according to the Index of Industrial Production (IIP).
• The economic downturn after the Covid pandemic, caused by a combination of global and domestic headwinds, has taken a severe toll on the MSME clusters, especially in Tamil Nadu.
• Although India maintains a trade surplus in textiles and apparel, export growth has remained sluggish in recent years.

Challenges in Export Competitiveness

• India faces stiff competition from China, Vietnam, and Bangladesh, primarily due to higher production costs and fragmented supply chains.
• Lack of Vertical Integration
  • India’s cotton supply chain is scattered across multiple states, leading to higher logistical costs and inefficiencies.
  • In contrast, China and Vietnam have vertically integrated ‘fibre-to-fashion’ firms, enabling cost-effective production, consistent quality, and agility in adapting to market trends.
• Regulatory & Trade Barriers
  • Complex customs procedures in India make textile exports more expensive and time-consuming.
  • Competitor nations benefit from simpler regulatory frameworks and Free Trade Agreements (FTAs), which provide them with a price advantage in global markets.
• High Raw Material Costs in MMF Sector
  • The MMF industry in India suffers from higher raw material costs, further reducing its competitiveness.
  • Quality Control Orders (QCOs) restrict imports of polyester and viscose fibres, forcing domestic yarn makers to rely on more expensive local alternatives.

Source: Indian Express