Introduction

The Indian textile industry contributes 2.3% and 10% of the country’s Gross Domestic Product (GDP) and exports, respectively. According to reports by Confederation of Indian Industry (CII), its contribution to the GDP is believed to double in the next couple of years and will be worth around $250 billion by 2030. The Government has set a lofty goal of achieving $600 billion from textile exports by 2047. This resurgence is associated with increasing demand, strategic market shifts, competitive pricing, and government initiatives.

Read on to learn more about the reasons for this spinning success of the textile industry.

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Reasons for Resurgence of the Textile Sector

Here are the factors responsible for the resurgence of the textile sector in India.

• Raw materials including all synthetic and natural fibres are readily available in India. It accounts for 27% and 8% of the world’s cotton and polyester production, respectively.
• The presence of a complete value chain from the filament to garment levels sets India apart from most textile-producing nations.
• The low cost of manufacturing, coupled with the availability of labour and readymade infrastructure, has further improved this industry’s performance.
• Increasing brand preferences, per capita income, and disposable incomes fuelled a large and steadily growing domestic market.
• A variety of government initiatives, such as the SAMARTH and Silk Samagra Schemes, PM MITRA Parks, and the Scheme for Integrated Textile Parks, have given this sector a much-needed boost. The current budget allocates ₹4,417.09 crores to the textile sector. The schemes and initiatives cover various crucial areas in this industry, including skill and infrastructure development, export promotion, and modernization.
• India currently holds 14 Free Trade Agreements (FTAs) with over 40 countries, which give its textile sector preferential access to international markets.
• Another reason for this sector's resurgence is the emergence of large integrated players across the value chain at all levels. Most are well-diversified conglomerates with profitable partnerships, which have resulted in rapid growth and development of this sector.

Trends in India’s Textile Sector

A variety of factors are responsible for the resurgence of the Indian textile sector—the civil unrest in Bangladesh, the Government’s focus on domestic self-reliance, or the China Plus One strategy. All these factors have contributed to this sector's significant growth and expansion.

According to news reports, the PM MITRA Parks and PLI schemes are believed to attract an approximate investment of ₹95,000 crores. Another report suggests Tirupur rising to the top as India’s premier textile hub for the international market due to the unrest in Bangladesh. Similarly, the FTA between the UK and India brings more good news for the home textile export industry.

As mentioned, India is one of the few countries with a complete value chain. This includes four levels: fibre (manufacturers and growers), spinning (thread and yarn makers), knitting (cloth and fabric makers), and garments (apparel manufacturers and retailers). The first three have a B2B operating model, while the fourth has a B2C model. The first three have a volatile margin profile due to government intervention and price fluctuations of raw materials. However, the fourth benefit is direct consumer consumption. Due to the factors discussed in the previous section, all four segments are experiencing a resurgence.

This sector's primary opportunities for growth and expansion are due to the increase in demand for sustainable and eco-friendly textiles, demand for fast fashion, digital transformation, and the growth of e-commerce. For instance, Zudio started out as a part of Trent Retail and had only seven standalone stores as of 2018. However, moving forward to 2024, it has over 500 stores across India. Its upward trajectory is projected to increase further. Likewise, Welspun Living, Gokaldas Exports, Raymond Lifestyle, and similar companies are optimistic about their growth prospects in the coming years.

Considering all the factors mentioned above, it is clear that the Indian textile stocks are on the road to revival. Analysts and industry experts also have a positive outlook toward the favourable performance of the textile industry players in the near future.

Conclusion

The Indian textile sector’s robust growth in the past decade is associated with increasing domestic and global demand and government support and initiatives. This upward trend is believed to continue in the foreseeable future. Growth opportunities, portfolio diversification, sustained demand, stability, and market responsiveness are some compelling reasons to invest in this sector. As with any other investment, consider your risk tolerance and investment objectives to ensure the textile sector fits your portfolio.

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