India is the second largest manufacturer of textiles and apparel in the world. Indian textile and apparel market is estimated at US$ 142 Bn., 74% of which is domestic consumption while exports constitute the rest 26%. The sector in India has been growing in double digits for the last many years despite global uncertainties and demand slowdown.

As a sector specialist consultant, Wazir Advisors has been an active participant in the evolution of sector as an advisor, a thought leader and an implementation partner. Looking at the macro economic factors and emerging trends, we believe that the real growth phase of industry is about to start. Our bullish thoughts are rooted in few fundamental reasons which are somewhat unique to India. In the following narrative, we explain why India is poised to be the powerhouse for textile and apparel manufacturing, exports and consumption in near future.

1. Abundant Availability of Raw Material — India has a large raw material base covering all types of natural and synthetic fibres which has helped it to achieve a global stature. It is the second largest cotton producer in the world with a share of approx. 21% of the global cotton production. India is also the second largest producer of polyester globally. Viscose is another key textile fibre for which India is a major producer in the world.

Many other Asian and African countries such as Bangladesh, Vietnam, Myanmar, Ethiopia, Kenya, Cambodia and Sri Lanka lack such a diversity. Their value chain remains dependent on imports from other countries which has its fair share of business risks. India, however, stands self-reliant in fulfilling its raw material requirements for textile and apparel manufacturing.

2. Presence in Complete Value Chain — India is one of the few textile manufacturing countries in the world which has presence across the value chain i.e. from fibre and filament to garment and made-ups manufacturing. In contrast, countries such as Bangladesh, Vietnam, Sri Lanka, Myanmar, Ethiopia and Cambodia have fragmented value chains; mostly focused on end-product and dependency on the other countries for fabric and yarn.

3. Competitive Cost of Manufacturing — India is not a low-cost manufacturing destination, but remains competitive due to a number of factors. The wage cost in India is higher than Bangladesh but lower than that in China and Vietnam. In terms of power cost, India is comparable to low cost destinations like Bangladesh, Vietnam, Myanmar, Kenya, etc. India has strengthened its position as an alternative to China resulting from a favorable ease of doing business ranking, better compliance and political stability.

4. Availability of Readymade Infrastructure — India has a long tradition of textile and apparel manufacturing with infrastructure spread across the country in various clusters. In addition to the traditional manufacturing clusters, new virtual clusters are being developed with support from Indian central and state governments in form of textile and apparel parks.

5. Availability of Large Pool of Skilled & English Speaking Manpower — India has the largest youth population in the world with 65% of its population below 35 years of age. The demographic dividend will allow India to successfully lead as a manufacturer of labour intensive products such as textile and apparel in foreseeable future.

6. Large and Growing Domestic Market — The Indian domestic consumption of textile and apparel is valued at US$ 106 bn. in 2019-20. Within this, apparel retail contributes US$ 74 bn., technical textiles contribute US$ 17.4 bn. and home textiles contribute US$ 6.2 bn. Due to presence of strong fundamentals, the domestic market size of India is expected to reach a level US$ 220 bn. by 2025.

7. Government Support — Government of India has launched various support schemes for textile and apparel manufacturers to make them globally competitive. The schemes target technology upgradation, infrastructure development, export promotion etc. Some of these schemes include Rebate of State and Central Taxes and Levies (RoSCTL), Amended Technology Upgradation Scheme (ATUFS), etc.

8. Preferential Access in Specific Markets — India currently enjoys preferential market access to 43 countries under 15 trade agreements. EU has granted India with GSP status for garments under which Indian garment exports to EU attract 20% less duty than the MFN rate.

9. Presence of Large Integrated Players — Indian textile industry is marked by presence of large scale manufacturers across the value chain i.e. from yarn to finished goods. These diversified textile conglomerates have huge manufacturing capacities, compliant set-ups for high quality goods manufacturing and are well-recognized by world-wide buyers.

10. Social, Political & Economic Stability — India is a land of cultural diversity with amalgamation of many cultures and religions. It is the biggest democracy in the world with a large and growing middle class. India has a stable and a supportive government which has been instrumental in developing business friendly policies.

With the increasing support from Indian government and focused efforts by large integrated and private players, the country is expected to lure significant global businesses to India. It is envisaged that Indian market will continue its upward trajectory in years to come leveraging its inherent strengths and macro-economic drivers.