Indian Textile Industry At Crossroads: Paving The Way Toward USD 350 Bn Milestone

India must make strategic policy interventions, foster innovation, secure financial backing, and enhance marketing strategies to propel the sector toward the ambitious target of US$ 350 billion by 2030, writes Sandeep Dangi.

The Indian textile industry, one of the oldest and most significant contributors to the country’s economy, stands at a critical juncture. With recent upheavals in world trade and global opportunities knocking at its doors, India must make strategic policy interventions, foster innovation, extend financial backing and enhance marketing strategies to propel the sector toward the ambitious target of US$ 350 billion by 2030. The right combination of governmental policies and entrepreneurial vision can transform India into a global textile powerhouse. Here are the key initiatives across different domains that can help us achieve this vision.

1. Policy Decisions: Setting the Foundation for Growth

The regulatory framework governing the textile industry plays a crucial role in determining its competitiveness on the global stage. The government needs to take cognisance of the pain points and eliminate obstacles and streamline the processes that hamper growth.

• Rationalising Non-Tariff Barriers like QCOs (Quality Control Orders) on Raw materials: The imposition of QCOs on raw materials has unintentionally created a situation where a few major domestic players gain an advantage, while the broader industry faces challenges. As a result, the cost competitiveness of domestically produced goods is reduced, severely hampering our ability to compete with other textile-producing nations. QCOs benefit a few at the cost of the majority. Eliminating such barriers will enhance import of cheap raw materials and boost exports of finished goods.
• Streamlining Value Chain (5Fs – Farm to Fibre to Factory to Fashion to Foreign): PM Narendra Modi has given the vision of 5Fs for the textile Industry. It is an integrated approach that connects raw material suppliers, manufacturers, designers and exporters seamlessly to create efficiency, reduce costs and enhance productivity. A strong impetus can be provided if a dedicated and empowered team from the Ministry of Textiles oversees the implementation and removes hurdles at every step of the value chain.
• Promoting Mega Industries to Drive Economies of Scale: Past policies like industry-specific reservations for SSI and Licensing Norms Textile Units neither aimed nor helped achieve Favourable government policies for setting up mega plants would unlock economies of scale and help compete with the world.
• Promoting and Developing Mega Textile Clusters and Parks: The textile industry in India has organically developed into clusters in several locations across the country. Today, these clusters like Surat, Bhiwandi, Bhilwara, Tirupur, Ahmedabad, etc. have created strong ecosystems in textile industry. The government’s initiatives like PM MITRA will help create world-class infrastructure, promote cluster-based manufacturing, ensure easy availability of skilled labour with specific skillsets and attract both domestic and foreign investments to set up units that can harness synergies and economies of scale to compete with the best in the world. This needs to be replicated across different sections of Industry.
• Rationalising Tariff Barriers on Raw Materials: Let us look at some of the customs duties imposed on various raw materials used in textile industry: Polyester fibre: 5.5%; Polyester filament yarn: 5.5%; Polyester and synthetic fabrics: 20%; Cotton with staple length below 32 mm: 11%; Pure cotton fabric: 11%; Blended cotton fabric: 11%. Such duties at input stage create a cascading effect on the entire value chain. Gradually reducing and finally eliminating import duties on raw materials will ensure cost competitiveness for Indian manufacturers and enable them to compete with global players.
• Strengthening Labour Laws and Skill Development: Reforming labour laws to enhance hiring flexibility and providing large-scale skill development programmes for textile workers can improve productivity and efficiency. Industries should have more flexibility in hiring and termination of workers. An independent body can be set up to oversee and monitor labour skill development and disburse incentives to factories who take this initiative.
• Encouraging FDI: Bangladesh is an example of how a combination of foreign capital, local entrepreneurs and domestic workers can come together to develop into a world class garment industry. We have entrepreneurs and workers, but lack direct FDI in textile industry. Simplifying FDI regulations and offering incentives can attract global investors, fostering mega plants for capacity building.
• Land Reforms: Textile units require significant land to set up. The exorbitant cost of land require entrepreneurs to incur huge capital costs to set up a factory. This needs to be addressed. The Chinese model of acquisition of non-productive land by state and transferring it to industries at subsidised costs has proven to be a success and can be replicated in India too.

2. Innovation: Driving Competitiveness and Sustainability

Innovation is the backbone of a thriving textile industry. By investing in research, sustainable production, quality and cutting-edge technology, India can enhance its global footprint.

• Research Support: The South Korean government provides significant subsidies for research and development (R&D) through a combination of tax credits and direct funding, particularly for SMEs that have focus on technology and innovation.It has helped South Korea to become a global leader in manufacturing. India must establish similar research funds and innovation hubs to develop advanced textile materials and processes.
• Sustainable Textiles: As the world moves towards eco-friendly textiles, adopting sustainable practices such as recycling, natural fibres, bio-degradable synthetic polymers and green production processes will become essential. However, this needs to be done in a cost-effective manner if we want to promote easy adoption by consumers. We need to break the myth that sustainable textiles are costlier than regular products.
• High-Yield Cotton Production: Historically, India has been the largest cotton producer. Investing in genetically improved seeds, better irrigation techniques and modern farming practices like HDPS (High Density Planting System) can significantly enhance cotton yield and quality. Recently, Vidharbha farmers doubled their production of cotton from 8-9 quintals per acre to upto 19 quintals per acre using HDPS in a pilot project. This needs to be replicated and adopted at the national level.
• Technical Textiles: With applications in defence, healthcare and infrastructure, technical textiles present an untapped growth avenue. Indian textile industry has proved that, given the right opportunities, it can adopt and grow quickly as evidenced during Covid-19 pandemic when the country became an exporter from a net importer of PPE kits and masks. We have the talent, but need the right direction to guide us.
• Promoting Quality Goods Manufacturing: Enhancing production standards, enforcing stringent quality checks and branding Indian textiles as high-quality products can improve India’s image in international markets. QCOs can play a major role in improving the quality of finished goods rather than focusing solely on raw materials.
• Integration of Digital and Smart Textiles: Developing textiles with embedded smart technologies, such as temperature control fabrics and health-monitoring wearables, can open new high-value market opportunities. This can also help us break free from the image of low value producer of textile goods and attract foreign capital and technology to create cutting edge products for high end customers.
• Automating Textile Manufacturing: The modernization of machinery is often delayed, resulting in incremental improvements that come too little, too late for Indian manufacturers. This is the cost we are paying for protecting the domestic industry from foreign competition and it enables inefficient production costs to perpetuate. This prevents us from being globally competitive, creating a vicious self-perpetuating cycle. Adoption of latest machinery, AI, robotics and automation in textile production can enhance efficiency, reduce costs and improve global competitiveness.

3. Finance and Subsidies: Strengthening the Industry’s Backbone

To sustain and scale up operations, the textile industry requires financial support through well-structured schemes and incentives. The need of low cost capital is higher for textile industry than other industries. To achieve USD 350 bn value, some key areas to focus on are:

• Production Linked Incentive (PLI) Scheme for Textiles: The government’s PLI scheme is designed to encourage domestic manufacturing and reduce dependence on imports. As on date, only 74 approved applicants are listed on PLI website. More efforts are required to extend and expand this scheme.
• Duty Rebates and Export Subsidies: It is essential that duties levied on imported inputs for exports should be refunded to exporters. Also, providing financial incentives for exports makes Indian products more competitive in international markets. TUFS (Technology Upgradation Fund Scheme), IES (Interest Equalisation Scheme), MEIS (Merchandise Export from India Scheme), RoSCTL (Rebate of State and Central Taxes and Levies), NIRVIK (Niryat Rin Vikas Yojana), DBK (Duty Drawback Scheme), DEPB (Duty Entitlement Passbook Scheme) are few of the ongoing schemes of the government, which need to be monitored and tweaked regularly for best results.
• Bank Financing: Ensuring easier access to credit, lower interest rates and special financing schemes for MSMEs in the textile sector are key to driving growth and expansion. While exports have IES scheme, domestic sector too needs interest subsidies. Few states do offer interest subsidies but this needs to be implemented across the country. Further, bank collateral requirements can be waived off in case substantial investments are made by the promoters.
• Venture Capital and Private Equity Investment: India today has a vibrant startup ecosystem. Encouraging venture capital and private equity investment can provide much-needed funding for startups and innovative textile firms. This can be done with promotional schemes that incentivise them to invest in certain sunrise textile sectors, such as technical textiles.

4. Marketing: Strengthening India’s Position in Global Fashion

A strong marketing push is necessary to establish India as a textile and apparel hub on the global stage. While export promotion councils do support Indian manufacturers to showcase their products globally, the need of the hour is development of Brand India. Globally, India’s perception as a low end textile manufacturer needs to change.

• Fashion Shows for High-End Apparels: Organizing global-scale fashion shows showcasing Indian textiles and designs will enhance brand value and attract international buyers. A special advisory panel can be constituted under the Ministry of Textiles which can support Indian fashion designers to showcase themselves in fashion capitals around the world.
• Expos like Bharat Tex: Large-scale domestic expos serve as platforms for Indian manufacturers to connect with international buyers, investors and designers, creating new business opportunities. At the same time, Indian brands should be supported to participate in international textile expos. It is high time to strengthen and expand the scope of schemes like Market Access Initiative (MAI).
• E-commerce and Digital Marketing: Encouraging textile firms to establish a strong online presence, leveraging e-commerce platforms and utilizing digital marketing can expand reach and boost sales of local brands. Apart from private players, government online selling platforms like ONDC can play a pivotal role in this.
• Country-Specific Branding Initiatives: Launch dedicated branding campaigns in key export markets to promote Indian textiles and create a premium perception.
• Leveraging Celebrity Endorsements: Partnering with global celebrities and influencers to showcase Indian textiles in international markets to significantly boost brand visibility.

Conclusion: The Road Ahead
The Indian textile industry stands at a defining moment. With the right mix of policy support, innovation, financial incentives, and marketing strategies, India can achieve its target of US$ 350 billion by 2030. By addressing systemic challenges and leveraging emerging opportunities, the industry can position itself as a dominant force in the global textile economy.