Manufacturing: Over US$ 130 billion of investment opportunity in 5 years
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OVERVIEW | OPPORTUNITIES

Total estimated investment opportunity of US$ 30 billion in 5 years    Photograph of Indian cloths

Textiles & Garments

 

OVERVIEW

SIZE

  • Textiles is a $49 billion industry in India and constitutes about 4% of GDP
  • India’s share of the world trade in textiles (3.9%) and apparel (3%) is increasing
    • Exports grew by 8% in 2006-07 over the last year
  • India is amongst the largest producers of:
    • Raw cotton – 24.46 million bales in 2006-07 (16.5% of world production)
    • Yarn – 3,827 million kgs. in 2006-07
    • Fabrics - 52,124 million sq.mts. in 2006-07
  • Textiles is the second largest employer after agriculture, with about 35 million people directly employed
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STRUCTURE

  • The Indian textile industry is fragmented with only a few large, and numerous small and medium companies
  • Most domestic companies lack a global presence but are cost-competitive due to the ready availability of raw material and low-cost manpower
    • Major expansions are now underway or planned by almost every large Indian manufacturer
  • Cotton and synthetic fibre is available in large quantities with players across the entire value chain
  • India has become a sourcing base for many international labels such as GAP, Tommy Hilfiger, Benetton, G Star, Levi’s and Marks & Spencer and for retailers like Wal-Mart and Tesco
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POLICY

  • 100% FDI is allowed through the automatic route
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Major players and presence in value chain
  Revenue
US$ million (2006-07)		 Value Chain Presence
    Yarn Weaving Processing Garmenting
Domestic Private Players
Indo Rama Synthetic 525      
Vardhman Textiles 524    
Arvind Mills 451
Alok Industries 453
Raymond 318  
Source: Capitaline
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OPPORTUNITY

India boasts several advantages for textiles and
garment manufacture
  		Visibility of Indian textiles has increased over the
years adding to its popularity internationally
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OUTLOOK

  • High growth is expected in the domestic market as well as exports
    • The industry is expected to grow to US$120 billion by 2012
  • The domestic market growth is driven by a large consuming class and increasing per capita consumption (currently only 3 kg. of fibre per capita: 1/3rd of world average)
  • India aims to become the second largest exporter of apparel among LCCs by 2010, next only to China
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POTENTIAL

  • The removal of international quota restrictions should allow India to convert its cost advantages into a larger share of the global market
  • Opportunity to exploit India’s large and growing consumer market with increasing spending power
  • Cost advantages of manufacturing textiles and garments in India derive from:
    • Abundant supply of inputs at competitive prices
    • Low-cost manpower with a range of skill levels – from unskilled labour to fashion design
  • SEZs being set up will build on these advantages by:
    • Exemption from domestic taxes or import duties
    • A 5-year income tax holiday followed by income taxes at 50% of the normal rate for as long as 10 years
    • Reduced transaction costs
    • Better infrastructure
  • The Ministry of Textiles plans to set up 30 integrated textile parks by March 2008 at an investment of US$3.2 billion
  • Total investment opportunity of over US$57 billion for capacity expansion and modernisation
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For additional information: Ministry of Textiles (http://texmin.nic.in), Indian Cotton Mills Federation, Textile Associations India (http://www.icmfindia.com, Textile Associations India ( http://www.textileassociationindia.com)
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