Skip to content

Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

  • Avantika 

QUESTION– What are the challenges of the Indian Textile Sector? Discuss ways and means to increase domestic manufacturing and promotion of exports in the Textile Sector.


Indian textile industry is one of the largest industries in India. It is the second largest industry in terms of providing employment opportunities to more than 35 million people in the country. Indian Textile industry contributes to 7 per cent of industrial output in terms of value, 2 per cent of India’s GDP and to 15 per cent of country’s export earnings.


Challenges of the Indian Textile Sector

  1. The Indian Textile Sector is losing to competition because of lack of  FTAs (Free Trade Agreements) with the EU and the USA
  2. The small scale of business is making it difficult for textile manufacturers to compete on cost with players from outside
  3. India is facing huge competition from other countries in Ready-made Garment (RMG) Exports, particularly cotton .And while the world of fashion is moving towards “Blends”,   India is not making many blended apparel items. So on the one side our traditional items are facing competition, and on the other side we are behind in Product Diversification
  4. Textile imports from Vietnam and Bangladesh are cheaper for buyers across the world

Remedies to address the above Challenges

  1. Favorable FTAs (Free Trade Agreements) and Market Diversification Strategies will help, what is needed to grow our overall Textile Exports is bringing in a ‘Fibre Neutral Policy’. The tax rate on all textile raw materials should be same. If this change is brought about- textile companies will make and sell more blended textile items like cotton viscose, cotton polyster and our Export Competitiveness will also improve
  2. Centre has doubled the import duty on 300 plus textile products. It is a good move and will help domestic manufacturers
  3. MSP for cotton is increased- definitely more farmers will go for cotton. But the long term solution is to increase average yield. We need to catch up from 550kg/hectare levels since many countries have crossed 1000kg/hectare yield. Experts feel that India should announce a New Cotton Technology Mission to achieve this
  4. In Spinning, India is very competitive .We are able to export yarn to many countries including China, because we have the technology, size, quality, productivity and ability to manufacture at very low cost. We should work towards global benchmarks in terms of new techniques in manufacturing , particularly improving operational efficiency
  5. Industry side we are trying to introduce some best practices at farming and ginning stages


Exports are critical, but textile manufacturers should focus on the opportunities in the domestic market too .With increase in disposable income and higher aspirations, India is going to be a faster growing clothing market in the world. Through Trade Agreements such as India- Mercosur PTA (Preferential Trade Agreement)  and  Eurasia- India FTA (Free Trade Agreement) we can bring more volumes to the Export Trade.

Leave a Reply

Your email address will not be published. Required fields are marked *