Challenges faced by India’s textile and apparel industry

Source: The post challenges faced by India’s textile and apparel industry has been created, based on the article “Why is the textile industry struggling to perform better?” published in “The Hindu” on 9th October is 2024

UPSC Syllabus Topic: GS Paper 3- Economy- Growth and Development

Context: The article discusses challenges faced by India’s textile and apparel industry, including export slumps, rising raw material costs, and shifts in consumer preferences. It highlights the need for investments, competitive pricing, and technological improvements to achieve future growth.

For detailed information on Challenges faced by India’s textile and apparel industry read Article 1, Article 2

What is the current state of India’s textile and apparel industry?

1. The Indian textile and apparel sector aims for a $350 billion business by 2030, creating 3.5 crore jobs.
2. The industry size was $153 billion in 2021, with $110 billion from domestic business.
3. India ranked third in textile exports globally in FY22, with a 5.4% share, exporting $43.4 billion.
4. The sector contributed 2.3% to GDP in FY21 and 10.6% to manufacturing Gross Value Added (GVA) in FY23.

What challenges is the industry facing?

1. Export Decline Due to Geopolitical Tensions: Export units were hit by geopolitical tensions and reduced demand in key markets, causing significant drops in business, particularly in FY23 and FY24. For example, Tiruppur saw a 40% decline in business.
2. High Raw Material Costs: High prices for cotton and Man Made Fibres (MMF), combined with a 10% import duty on cotton, made Indian products less competitive internationally.
3. Disrupted MMF Supply: Quality control orders on MMF have disrupted raw material availability, leading to price instability and impacting the industry’s ability to meet demand.
4. Changing Market Dynamics: The rise of e-commerce and sustainability demands from international brands, along with increased preference for comfort wear, are reshaping the traditional business landscape.

What does the industry need to move forward?

1. Investment: The industry requires $100 billion by 2030 to boost production capacities and meet the $350 billion business target.
2. Raw Material Availability: Removing the 10% import duty on cotton during off-season months (April to October) is crucial for competitive pricing.
3. Technology & Skilling: The sector must adopt technology and train its workforce to improve productivity and reduce costs, with workers earning ₹550 per day.

Question for practice:

Examine how geopolitical tensions, rising raw material costs, and changing market dynamics have impacted India’s textile and apparel industry in recent years.