Context: India has set an ambitious target to elevate its textile and apparel (T&A) exports from $34.8 billion in 2023-24 to an eye-popping $100 billion by 2030. This requires game-changing reforms in the textile sector.
Relevance of the Topic: Mains: Challenges in India’s Textile Sector and way forward
Key Stats in the Textile Sector
- India has set an ambitious target to increase its textile and apparel (T&A) exports from $34.8 billion in 2023-24 to $100 billion by 2030.
- India’s Textile and Apparel exports have grown steadily from $11.5 billion in FY2001 to $34.8 billion in FY24, accounting for only a 4% share in global exports of $774.4 billion.
- India's apparel export growth has remained stagnant at around 3% of global apparel exports from FY2001 to FY24, despite an increase in export value from $5.5 billion to $14.5 billion.
- In contrast, competitors like Bangladesh and Vietnam have significantly increased their global share during the same period.
- At this pace, achieving the $100 billion target by 2030 seems a tall order, unless dramatic, game-changing reforms are introduced.
Challenges in the Textile Sector
- Stagnation in Cotton Production:
- India’s cotton production surged after introducing Bt cotton hybrids (2002), but has declined since 2014. Production is projected to fall to 30 million bales (2024-25), the lowest in 15 years.
- India may become a net importer of cotton, with imports (2.6 million bales) surpassing exports (1.5 million bales).
- Next-gen Ht Bt seeds not approved despite the clearance from Genetic Engineering Appraisal Committee (GEAC).
- Outdated Fibre Mix: India’s cotton-to-Man Made Fibre ratio (60:40) contrasts with the global average (30:70), indicating an outdated fibre mix, and the global shift towards man-made fibres.
- Raw Material Cost: MMF (Man-Made Fibres) such as polyester and viscose are 20% costlier in India compared to competitors (Bangladesh, China, Vietnam). Non-tariff barriers like quality control orders hinder MMF-based apparel growth.
- Decentralised Production: 80% of India's garment factories are in the decentralised sector, leading to inefficiency and low export potential.
- Lack of Modernisation: Slow adoption of modern technology and weak value chain integration.
- Trade Barriers: High tariff rates on apparel exports to key markets: EU (9.7%) and US (11.47%). In contrast, the EU offers zero-duty access to Bangladesh under the “GSP Everything but Arms” arrangement and imposes a 1.66% tariff on Vietnam’s apparel exports under the “EU-Vietnam FTA” this creates a competitive disadvantage for Indian exports.
Reforms needed in India’s Textile Sector
- India’s garment sector needs to transition into a fashion-driven industry. To support this transformation, it is crucial to incentivise and invest in MMF-based apparel while removing non-tariff barriers, such as the quality control orders on MMF.
- The PM-MITRA scheme must be fast-tracked to create integrated textile hubs, which will enhance scalability and efficiency in fabric and garment manufacturing.
- India needs to negotiate Free Trade Agreements (FTAs) with the EU and the US — key markets that account for nearly 66% of India’s apparel exports.
- India should explore emerging markets like Japan, Russia, Brazil, and South Korea, which offer significant opportunities for products like women’s western wear, intimate wear, swimwear, and outerwear.
- Improving cotton productivity and fibre quality. Expanding irrigation, promoting high-density planting techniques, and investing in precision farming can help India bridge the productivity gap (435 kg/hectare) with global leaders like China (1,945 kg/hectare) and Brazil.
- Streamlining the approval process for GM crops and establishing a single-window clearance system to speed up the adoption of high-yield, pest-resistant, next-generation cotton varieties.
To achieve the ambitious target of $100 billion in textile and apparel exports by 2030, India must address the challenges hampering the sector. This requires modernising production, adopting MMF-based apparel, enhancing value chain integration, removing trade barriers through strategic FTAs and capitalising on emerging markets.