India is the world's second largest exporter of textiles and clothing. With readymade garments remaining the largest contributor to total textile and apparel exports from India, textile and apparel exports from India are expected to increase to US$ 82 billion by 2021. Among many growth drivers, increased penetration of organised retail, favourable demographics, and rising income levels have been the major causes of growth in textiles. However, the key highlights of the textile industry's big success have been:
Foreign Investments and FDI
The hike in FDI limit in multi-brand retail is a boon in disguise for the textile industry which will not only bring in more players, but even provide more options for consumers. Also, it will bring greater investments along the entire value chain. With global retail brands assured of a domestic foothold, outsourcing will also rise significantly. Interestingly, government's new initiatives to attract foreign investments in the textile sector through promotional visits to other countries have proven beneficial. FDI inflows in textiles sector, inclusive of dyed and printed textile, stood at US$ 2.68 billion from April 2000 to September 2017.
Retail sector offers growth potential
With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with several international players like Marks and Spencer, Guess and Next having entered Indian market. The organised apparel segment is expected to grow at a CAGR of more than 13% over a 10 year period. Future Group has robust plans to expand and this would also add to the increasing portfolio of the brand.
Private sector participation
Not only have the government policies and initiatives been growth drivers for the textile industry, private players also have significantly upped the ante for this industry. The Central Silk Board's targets for raw silk production is a key example and to achieve these targets, alliances with the private sector, especially major agrobased industries in pre-cocoon and postcocoon segments has been encouraged.
India's growing population has been a key driver of textile consumption growth in the country. Moreover, according to World Bank, urban population accounts for 32.7% of the total population of India. This also works as demand driver due to changing taste and preferences in the urban part of India. This trend has been complemented by a young population which is growing and at the same time is exposed to changing tastes and fashion. As a result, the textile industry has seen high volume demand not only within the country, but in exports too. The rising demand has been one of the imperatives for the steady growth of this industry.