A s one of the earliest businesses to come into existence in India, the well-established textile industry plays a crucial role in the nation's economy. According to the Ministry of Textiles' 2007-08 Annual Report, its total market size is valued at US$52 billion, with the industry's potential foreseen to reach US$115 billion by 2012. The textile industry represents 26 percent of the manufacturing sector, 20 percent of industrial production and 18 percent of industrial employment, and adds 15 percent to India's gross export earnings and 4 percent to the national gross domestic product (GDP). The government of India's National Manufacturing Competitiveness Council has recognized textiles and apparel as a priority sector that has high potential for growth and even greater multiplier effects for job creation. More than 35 million people currently are employed directly in the Indian textiles sector, which is the second-largest employment provider behind agriculture.

Per the latest available World Trade Organization data on global textile and apparel trade, India ranks seventh in textiles and fifth in apparel. The Indian textile industry boasts impressive statistics: According to the Ministry of Textiles, it not only was the second-largest producer of cotton in the world during 2006-07 - with its 4.76 million metric tons comprising 18.45 percent of global production - but globally also is the largest producer and second-largest exporter of jute goods, as well as the second-largest producer of silk, accounting for 18 percent of total raw silk production.

The Indian textile industry covers a wide spectrum of activities, with the decentralized powerlooms/hosiery and knitting sectors constituting the largest section. The powerlooms sector in India accounts for about 62 percent of the country's total fabric production, and more than 60 percent of fabric for export. The major textile industry sub-sectors include organized cotton/man-made fiber textile mills, man-made fiber/filament yarn, wool and woolen textiles, sericulture and silk textiles, jute and jute textiles, handloom textiles, handicrafts, and textile exports.


Exports And The Rupee

According to India's Foreign Trade Ministry of Commerce and Industry, the country realized a 1-percent share in global merchandise exports, totaling US$126 billion during 2006-07. These exports have been growing steadily at a rate of more than 20 percent since 2004-05, and rose by 22 percent from April 2007 to December 2007, compared to the analogous period in 2006. India's exports have become competitive globally and have entered new markets, allowing this kind of growth to occur - good news for India's economy, because more than one-third of the country's GDP comes from foreign trade.

However, in the 2007-08 financial year, the Ministry of Textiles reports that the growth of textile and apparel exports has slowed, which the industry attributes to the rupee's appreciation in value. From mid-2006 until early 2008, the Indian rupee appreciated considerably against major freely convertible currencies - in particular, the US dollar - although the trend has reversed in more recent months. In August 2008, the rupee was lower in value against the US dollar than it has been since April 2007. India's textile products are exported to more than 100 countries, contributing significantly to India's export earnings, and the United States is one of the most critical markets for India. That country was the largest single market for India's textile products, with a share of 24.72 percent of India's exports, during 2006-07; and for the April 2007 to February 2008 period, it ranked second, with a 21.26-percent share, following the United Kingdom, which accounted for 22.78 percent.

The Ministry of Textiles Economic Research and Market Intelligence Unit/Economic Division's latest export figures, from April 2007 to February 2008, indicate an overall decline of 1.05 percent in rupee terms, compared to the corresponding period of the previous year. At the same time, textile exports grew by 11.29 percent in US dollar terms against the corresponding period of the previous year, because the dollar lost value and the rupee became more valuable. The impact of rupee appreciation has been felt strongly by the exporting community, especially as transportation has become more and more expensive, making exports more costly. And the surge of crude oil prices to record-high levels puts upward pricing pressure on energy and raw material costs.

Even large corporations - such as Mumbai-based Welspun India Ltd., one of the top global players in the home textiles market - have been affected by the rising rupee. "Our expectation is that the rupee is only going to appreciate in the long term, due to one of the strongest [periods of] economic growth in India," said B.K. Goenka, Welspun's vice chairman and managing director, in February 2008. "Our operating margins have come down to 250 basis points year-on-year to 15 percent in 9MFY08 due to the rising rupee and higher oil prices (leading to higher power costs). Margin pressure will continue for one to two more quarters and profitability in FY08 will be subdued." However, Goenka added that profitability was expected to improve from FY08 onward, and the turnover is expected to increase by 30 to 40 percent in the next three years. Despite the challenge of the rising rupee, Welspun is investing and expanding to utilize the growing industry opportunities and strengthen its position.

Focus On Technical Textiles

Technical textiles - defined by the Ministry of Textiles as textile materials and products used primarily for their technical performance and functional properties rather than their aesthetic or decorative characteristics - presently are garnering a great deal of attention in India. Because of considerations related to cost-effectiveness, customization, durability, high strength, light weight, versatility, user-friendliness and eco-friendliness, they are gradually but surely rising in importance. In the past year, India has taken a number of steps to promote this growing sector of its textile industry.

At the September 2007 TexSummit, Prime Minister Dr. Manmohan Singh announced the formation during the 11th Five Year Plan of the National Technology Mission on Technical Textiles, titled "Development and Growth of Technical Textiles Scheme." He also announced that a core committee comprised of the Ministry of Textiles, Ministry of Commerce, Ministry of Finance and the National Manufacturing Competitiveness Council would be formed to research the difficulties affecting the textile industry and promised support for industry development.

In April 2008, the Federation of Indian Chambers of Commerce and Industry held a conference to increase awareness of technical textile applications, discuss the promotion of the industry's growth and development, and assemble key sector players and stakeholders. At the conference, titled "India Technical Textiles Industry - Stimulating Demand and Promoting Development," Union Minister of Textiles Shankersinh Vaghela announced the government would be setting up four Centers of Excellence to provide infrastructure support - such as testing and training facilities, a computer-based information center and other support - in one location for targeted technical textile areas.

Soon after the conference, the Ministry of Textiles began taking action to increase its focus on technical textiles and encourage technical textile production in India. A 680 crore-rupee National Technology Mission on Technical Textiles is being created to provide industry development support with regard to manufacturing capacity building, including standardization, product development, accredited testing facilities, domestic and export market development, skill development, and other support. A development council consisting of representatives for manufacturers, raw material suppliers, academic institutes and research associations is being formed to identify obstacles in the industry and suggest counteractive measures. A baseline survey of the technical textile industry is being conducted to collect data on the number and type of units, products produced, investment, turnover, machinery, technology level, export and import, and growth and investment potential. And, during the 11th Five Year Plan, the Technology Upgradation Fund Scheme (TUFS) is providing a 10-percent subsidy upfront for new technical textiles projects necessitating new machinery, as well as a 5-percent interest subsidy on the loans.

A report recently released by Texas Tech University, titled "India Rising: Opportunities in Nonwovens and Technical Textiles," by Dr. Seshadri Ramkumar and Appachi Arunachalam, predicts that within two years, India's technical textile industry will grow even more quickly than the United States' and Europe's industries did in the last three decades. According to the study, the government's support programs, including the National Technology Mission for Technical Textiles and TUFS, along with factors such as middle-class population growth and rising income levels, will change the nature of the technical textile industry in just five to 10 years. Although India's technical textiles industry is in the beginning stages of development, the report predicts it will be worth 10 percent of the global value by 2012. The study also states that the years between 2010 and 2035 will be critical for the industry, offering plentiful opportunities for both domestic and international participants.

Secretary of Textiles A.K. Singh has noted that although conventional textiles are expanding and have become very competitive, the technical textile industry's competition level is very low. Speaking at the technical textiles conference in April, he said: "Technical textiles are the emerging area of investment in India. And it has immense potential which needs to be tapped." According to the Technology Mission, the global technical textiles market had an estimated value of approximately US$107 billion during 2005, and is predicted to increase to US$127 billion by 2010. With India expected to play a major role in the future growth of the industry, the years ahead should hold promise for the country's technical textiles business.

An Amended TUFS

In order to strengthen and support the textile industry so it can face the challenges that have arisen, the government is implementing several measures - in particular, the continuation of TUFS, the leading program of the Ministry of Textiles. TUFS originally was created in 1999 to dispense funds to upgrade technologies of existing textile operations and bring online new operations with innovative technology to strengthen their competitive positions both in India and globally. The initial TUFS term ended March 31, 2004, and the program was extended until March 31, 2007.

After receiving a formidable response from the textile industry, the government extended the scheme for the 11th Five Year Plan for 2007-11, reviving the modernization efforts that were carried out over the past several years. It has redefined the scheme's technological-financial parameters to provide capital investment to the industry and help it profit from expanding global and domestic markets through technology upgradation, cost-effectiveness, quality production, efficiency and global competitiveness. According to ministry estimates, the sector will grow by 16 percent under this plan. The revised TUFS structure also centers on further capacity building and improved adoption of technology, and supplies additional assistance to the segments that have increased growth potential, such as apparel, technical textiles and processing. Because apparel is the cornerstone of India's textile exports, the ministry has adopted a growth strategy centered on apparel to help pull up the entire textile value chain.

A Promising Future

One recently developing aspect supporting the industry is India's accelerating domestic demand for textiles and apparel. A growing GDP has led to increasing disposable incomes among India's considerable population of young people, who spend a substantial amount of money on ready-to-wear clothing. Along with the appearance of shopping malls has come increased textile and apparel consumption in the country. Indian consumers not only are purchasing general apparel, but also are shopping for home textiles, thermalwear, sportswear, intelligent textiles and other specialty products. Consequently, this recent domestic demand has further increased the domestic industry's need for the latest in textile and apparel machinery.

At a press conference in July, Vaghela said the Indian textile industry more and more is implementing modern technology and work processes, becoming more competitive, establishing strong product brand equity, and consistently growing at ever-higher growth rates. He also said that funding for the textile sector is anticipated to climb to 1,50,600 crore rupees by 2012, creating 17.37 million new jobs in the sector.

Vaghela recently reported that 40 integrated textile parks have been approved under the Scheme for Integrated Textile Parks (SITP), which is being continued in the 11th Five Year Plan because of the growth opportunities it affords. He said that once the parks begin operations, the government will invest 21,502 crore rupees, and these parks will provide 5.75 lakh jobs and textile products worth 38,115 crore rupees annually.

Strong domestic and export market demand, as well as good potential in technical textiles - combined with the conducive policy environment the government has provided - will allow for India's textile industry to continue its upward growth and play a major role in the world of textiles and apparel.

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Republic of India At A Glance
•    Capital:  New Delhi
•    Currency:  Indian rupee
•    Gross domestic product (GDP):  US$3 trillion (2007 estimate) on a purchasing-power-parity basis
•    GDP real growth rate:  9.2% (2007 est.)
•    Population:  1.15 billion (July 2008 est.)
•    Population growth rate:  1.6% (2008 est.)
•    Median age:  25.1 years
•    Labor force:  516.4 million (2007 est.)
•    Total area:  3.3 million km2
•    Natural resources: coal (fourth-largest reserves in the world), iron ore, manganese, mica, bauxite, titanium ore, chromite, natural gas, diamonds, petroleum, limestone, arable land
•    Exports:  US$150.8 billion free on board (f.o.b.) (2007 est.)
•    Export partners: United States (US), 17%; United Arab Emirates, 8.3%; China, 7.7%; Singapore, 5.3%; United Kingdom, 4.3% (2006)
•    Imports: US$230.2 billion f.o.b. (2007 est.)
•    Import partners: China, 8.7%; US, 6%; Germany, 4.6%; Singapore, 4.6%; Australia, 4% (2006)
•    Telephones, main lines in use: 49.8 million (2005)
•    Cellular phones: 166.1 million (2006)
•    Internet users: 60 million (2005)

Source: The World Factbook, Central Intelligence Agency (CIA)

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2006 & 2007 International Textile Machinery Shipments To India

Shuttleless looms     5,662    3,994
Rapier/projectile     2,732     2,066
Air-jet     1,983    1,812
Water-jet     947    116
Shuttle looms     628    141
False-twist spindles, double heater     31,088    57,328
Short-staple spindles     2,779,215    3,743,542
Long-staple spindles     11,368   
Open-end rotors     32,832    44,172
Knit finishing machinery     21    5
Woven finishing machinery     60    70
Flat knitting machinery     1,046    960
Hand knitting/semi-automatic     982    763
Flatbed electronic     61    162
Trimming     3    35
Circular knitting machinery, large (>165mm)     1,198    1,130
With jacquard electronics     43    7

Source: ITMF International Textile Machinery Shipment Statistics, Vol. 29, 2006, and Vol. 30, 2007

September/October 2008