The Indian textile industry exhibits rich cultural heritage of India with wide variety of fabrics, techniques and hues that reflect the diverse set of people and traditions across the country. One of the oldest industries in India, it covers an extensive spectrum of segments, from hand woven/hand-spun, unorganized segment on one end to capital and technology intensive organized segment on the other. India is the largest producer of Jute in the world and is the second largest producer of silk and cotton globally.
This sector offers tremendous employment opportunities for people, especially in the rural regions. The textile sector in India accounts for 10% of the country’s manufacturing production, 5% of India’s GDP, and 13% of India’s exports earnings. Textile and apparel sector is the second largest employment provider in the country employing nearly 51 million people directly and 68 million people indirectly in 2015-16.
Efforts are being made to restore glory of cottage based traditional sectors like handlooms, handicrafts, jute and wool through an integrated approach covering entire value chain.
To provide encouragement to textile manufactures and farmers of raw materials, the government has been providing incentives like minimum support price to cotton farmers, upgrading the technology for handloom weavers and providing centres for trade facilitation. The emphasis on the handloom brand, such as through the National Handloom Day and launch of the ‘India Handloom Brand,’ has been pivotal in reviving the sector, making it technology driven, and positioning it in mainstream fashion. This is encouraging the youth to wear more handloom products, hence increasing the market reach for these products.
The power-loom industry is also growing, with incentives like financial assistance for upgrading the technology. Funds up to 50% of the cost of the up gradation is being provided by the Government.
100% FDI is allowed under the automatic route in the sector.
Between March 2014 and March 2016 the FDI equity inflows in the Textiles sector added up to USD 427.55 million. FDI equity inflow, grew by 16% in FY 2015-16 over FY 2013-14.
Details of major foreign investments during April 2014 to March 2016 in the sector are provided in Annexure I.
In 2015-16, the share of textiles and apparel in total exports increased to 15% from 13% in 2013-14 The categories that had the most growth were ready made garments, wool & woolen textiles, silk, carpets, coir & coir products and handicrafts. Textiles and Apparel exports are estimated to reach USD 62 billion by 2021 from the USD 38 billion in 2016.1 Traditionally, India’s key export demand has been driven by Europe and America, but new markets such as Iran, Russia and South America are opening up new possibilities for growth.
A variety of tax reforms and benefits have been introduced in the past two years to promote the sector:
- Merchandize Exports From India Scheme
(MEIS): Launched in April 2015, the MEIS provides duty rewards to eligible textile and apparel categories to an extent of 2-5% of Free on Board (FOB) value. This has now been extended to all countries and covers the entire textiles sector. The list of eligible products and the rewards are at Annexure II.
- Interest Equalization Scheme The
Government has approved Interest Equalization Scheme on pre and post shipment rupee export credit for five years, starting from April 1, 2015. This will provide relief to the Indian exporters who were facing considerable competition due to interest rates being higher than in competitive countries like Vietnam, China etc.
- Basic Customs Duty (BCD)
- Basic Customs Duty has been reduced to 5% for raw materials used in the manufacture of technical textiles and specialty fibers and yarns.
- BCD has been exempted on the import of certain fabrics of value equivalent to 1% of FOB value of exports in the preceding year for the manufacturing of textiles meant for exports, thus helping reduce the import cost of such fabrics and enabling Indian exporters to be more competitive. The list of fabrics exempted from BCD are at Annexure III.
- Tex-Venture Capital Fund
The fund which was set up in June 2014 as a SIDBI venture, to last for a period of seven years with a corpus of INR 35 crore, has chosen 5 companies for investment and a sum of INR 13.43 crore has been committed.
Upward revision of duty drawback rates:
All Industry Rates (AIR) of Duty Drawback has been revised for various products from November 23, 2015. The revised rate encourages the industry to follow the CENVAT route as exporters opting CENVAT facility would get enhanced drawback rate and value. This will prepare the textile and apparel industry for GST when it comes into force.
Special Textiles Package
The government has approved a INR 6,000 crore `special package’ for the textiles sector with the aim of creating one crore jobs in the next three years and to attract investments worth USD 11 billion and generate USD 30 billion in exports.
Facilitating Technology up- gradation
With an eye on attracting investment of up to 1 lakh crores and gainfully employing 35 lakh people, the Government has modified the Revised Restructured Technology Fund Scheme (RRTUFS) and has launched the Amended Technology Upgradation Fund Scheme (ATUFS), which provides a one-time capital subsidy for ‘eligible machinery’ for a period of seven years (starting January 13, 2016). The scheme has a budget provision of INR 17,822 crore for seven years. INR 3,277 crore have been released in the form of subsidy over the last two years. An additional incentive of 10% subsidy is provided to garmenting units which avail the Capital Investment Subsidy (CIS) under ATUFS. The upper limit on the cap on capital investment subsidy has been increased from Rs.30 crore to Rs.50 crore. An online monitoring system to provide a transparent MIS platform to all stakeholders, i-ATUFS, was launched on April 21, 2016 for online implementation and monitoring of A-TUFS.
Under ATUFS, 1001 UIDs have been issued with a project cost of INR 2,703.60 crore and subsidy amount of INR 217.14 crore.
Scheme for Integrated Textile Park (SITP)
19 new textile parks have been sanctioned over last two years with potential to facilitate investment up to INR 3,300 crores and employment for 60,000 people when fully operational under the scheme. 200 new production units have come up in existing textile parks (47) in the last two years with fresh investment of INR 1500 crore and additional employment generation of 11,000 persons.
Integrated Processing Development Scheme (IPDS) which provides assistance to textile processing clusters for setting up Common Effluent Treatment Plants (CETP) with environment compliant effluent treatment technology, have sanctioned 7 projects in the last two years with an assistance of INR 419 crore covering 3000 SME units.
Mega Textile Clusters
Aimed at setting up permanent marketing infrastructure, three new Mega Textile Clusters in Bareilly, Lucknow and Kutch have been sanctioned and INR 18.30 crore has been released. Under Handicrafts Mega Cluster Mission (HMCM), 9100 artisans have been directly benefited. Two Urban Haat have been launched in Mammallapuram (Chennai) and Eluru (AP).
Promotion of organized textile industry in North East
Ministry is implementing North East Region (NER) Textile Promotion Scheme (NERTPS) , an umbrella scheme (across silk, handloom, handicrafts, apparel etc.) with a total outlay of INR 1038.10 crore to promote employment and encourage entrepreneurship especially amongst women in the garment sector on a project based approach. Eight Centres have been set up in all NER States and Sikkim out of which Centres in Nagaland, Tripura, Arunachal Pradesh and Mizoram have been inaugurated.
Scheme for promoting Geotechnical Textiles in North East Region (NER)
The scheme promotes and utilizes Geo textiles in development of the infrastructure in the NER states by providing technological and financial support for meeting additional costs, if any, due to the usage of Geo textiles in existing/ new projects in road, hill/ slope protection and water reservoirs. The scheme was approved with a budget of Rs. 427 crore for five years from 201415. Projects worth Rs. 33.83 crore have been sanctioned for Manipur, Tripura, Maghalaya and Arunachal Pradesh.
Innovation through Technology
Six Focus Incubation Centres (FIC) under Technology Mission on Technical Textiles at a cost of INR 17.4 crore have been set up to help budding entrepreneurs develop innovative technical textile products.
FICs are provided with a “Plug and Play” model and mentored for taking up the innovation on commercial scale. Industrial sheds with basic infrastructure/basic machineries are also provided. The list of these FICs are at Annexure V.
A Focused Incubation Centre has also been set up in Guwahati to promote digital printing for Jute products.
Promotion of Handloom
Handloom forms one of largest unorganized sub-sectors and is an integral part of India’s textile sector. It employs around 4.3 million people and the sector has around 2.37 million handlooms. The country is seeing a resuscitation of handloom and the Ministry has undertaken several initiatives to support this revival. Some of the initiatives are as below:
- The Hon’ble Prime Minister launched the first National Handloom Day on August 7, 2015 in Chennai and the ‘India Handloom Brand’ to provide brand value to handloom products.
- Foundation stone for a Trade Facilitation Centre and Crafts Museum was laid by the Hon’ble Prime Minister on November 7, 2014 in Varanasi.
- An Integrated Textile Office Complex has also been setup at the Indian Institute of Handloom Technology (UHT), Varanasi to provide a common platform to all stakeholders including weavers, exporters and marketing agencies.
- Indian Handloom Website was launched on February 11, 2016 as a one stop platform for all services to consumers, bulk buyers and handloom producers and provides details of all registered India Handloom producers, which will enable verification of genuine India Handloom products by customers.
- A policy framework to promote e-marketing of handloom products has been developed to promote marketing of handlooms in general and to reach the younger customers, in Under the policy framework, the Ministry would collaborate with approved e-commerce entities in promoting e-marketing of handloom products thus widening the existing ambit of institutional collaboration between the Ministry and e-commerce players.
Ease of Doing Business initiatives
Textiles and Textile Articles imported from specific countries (European Union, Serbia, Poland, Denmark, China) are exempted from testing of samples for presence of Azo Dyes. (Directorate General of Foreign Trade (DGFT), September 4, 2015)
Under the Integrated Skill Development Scheme (ISDS), the Ministry has trained more than 5.3 lakh youth in textile trades over the last two years, particularly in the garmenting segment. More than 81 % of persons trained have been placed including 79 % of the trained women.
Under prime Minister kuashal vikas Yojana, Sector Skill Councils of Textile, have completed following training during 2015-16
Major investment in the sector during April 2014 to March 2016
|Foreign Collaborator||Indian Company||FDI inflow (USD million)|
|E-Land Asia Holdings PTE Limited||Fashion India Private Limited||51.94|
|Procter & Gamble Overseas India B.V., Netherlands,||Procter & Gamble Home Products Ltd.||37.58|
|Ramunia Investments Limited, Mauritius||VAS Data Services Private Limited||29.28|
|Seiren Co. Limited||Seiren India Private Limited||19.57|
|General Atlanti Singapore Fund PTE Ltd.||AND Designs India Limited||17.07|
|Celio International S.A., Brussels||Celio Future Fashion Limited||16.53|
|Ahlstorm, Finland||Ahlstrom Fiber Composites India Pvt Ltd.||16.42|
|Toray Industries Inc., Japan||Toray Kusumgar Advanced Textile Private Ltd.||15.61|
|Everstone Capital Partners II LLC||Ritika Private Limited||10.49|
|HEP Mauritius Limited||Genesis Colors Pvt Ltd||9.61|
|PBR INC d/b/a SKAPS IND||Skaps Industries India Pvt. Ltd.||9.51|
|India Business Excellence Fund-II A||Kurlon Enterprise Ltd||8.56|
|Helion Venture Partners II LLC||Vas Data Services (P) Ltd||8.10|
|Sequoia Capital India Investments IV||GO Fashion India Private Limited||7.23|
|Holidings Ltd||Spykar Lifestyles Pvt||6.92|
|Orange Mauritius Investment Ltd||Chiripal Industries Ltd||6.87|
|OOSTROFIL NV||Global Textile Alliance India Pvt Ltd, M/S Global Textile Alliance India Pvt Ltd||6.30|
|Tormore Investments Ltd||Chiripal Industries Ltd||6.00|
List of eligible products and rewards under MEIS:
|Eligible Products||Reward Rate||Country Coverage as on April 1, 2015||Amendment in Country Coverage on 14th July, 2015||Amendment in Country Coverage on 3rd Nov, 2015|
|HS Code 50-60: eligible lines||2%||Cat. A –all countries Cat. B –only Japan||Cat. C –For 112 fabric lines, reward was extended to Bangladesh and Sri Lanka||Cat. A –all countries |
Cat. B –all countries
Cat. C –all countries
|HS Code 61-63: eligible lines||2%||Cat. A –all countries |
Cat. B –only Japan
|–||Cat. A –all countries |
Cat. B –all countries
|All handloom & handicraft items||5%||All countries||–||–|
|All jute, ramie and coir based items||5%||All countries||–||–|
The list of fabrics exempted from BCD are as follows:
- Cotton and Elastane blended printed fabrics
- Cotton and metallic yarn dyed blended fabrics
- Cotton and Spandex and metallic blended fabrics
- Cotton and Elastane printed fabric
- Cotton and silk lining fabric
- 100% linen Chambray woven/ dyed fabric
- 100% ramie dyed/ blended printed yarn dyed fabric
- Nylon and spandex lining fabrics
- 100% polyester velvet dyed fabric
- Cotton/ Nylon/ Embroidery crochet lace lining fabric
1) Department of Industrial Policy and Promotion,
Ministry of Commerce and Industry,
Udyog Bhawan, Rafi Ahmed Kidwai Marg,
Rajpath Road Area, Central Secretariat,
New Delhi, Delhi 110011
2) Ministry of Textile
Udyog Bhawan, Rafi Ahmed Kidwai Marg,
Rajpath Road Area,
New Delhi, Delhi 110011
3) Knowledge Partner : KPMG
Building No. 10, 8th Floor, Tower B & C,
DLF Cyber City, Phase II,
Gurgaon, Haryana 122 002