According to the CII-Kearney report, other key areas where growth is expected include fabrics, where the target is a $4 billion jump by positioning India as a regional fabric hub, starting with cotton wovens and then extending to other sub-categories. In home textiles too, the target is an increase of $4 billion by building on existing advantages to expand the global customer base.

On man-made fibre (MMF) and yarn, a $2.5-$3 billion jump is expected with a focus on gaining share in MMF products. On the other hand, in technical textiles a $2 billion jump is targeted by building capabilities in select key sub-segments on the back of potential domestic demand growth.

The report has also suggested that the government tweak the recently-announced production-linked incentive (PLI) scheme for MMF-based textiles and technical textiles, and expand it to fabric and garments made of natural products, saying the selected companies may struggle to reach the threshold investments set in the scheme. 

In September 2021 the Union Cabinet approved the PLI scheme (announced earlier with a total budgeted outlay of Rs10,683 crore), to attract investment in the MMF sector. Besides, the government, in order to boost this segment of the industry, also decided to rationalise the duty structure (RoSCTL or Rebate of State and Central Taxes and Levies and RoDTEP or Remission of Duties and Taxes on Exported Products) and came up with measures to improve the supply of raw material at competitive prices. 

Eliminating anomalies

After abolishing anti-dumping duty on PTA (the primary raw material for polyester fibre) last year, the government this year also removed the anti-dumping duty on Viscose Staple fibres (VSF), another raw material for the MMF-based textile sector.

All these measures are aimed at facilitating the MMF industry with the supply of competitive raw material towards the creation of a competitive production base for the MMF sector thus helping to build a more vibrant production base for the country’s textiles and apparel sector. 

Experts are of the view that the government has finally decided to eliminate some of the crucial anomalies existing in the textile value chain by showing a real intent to provide much-needed trust on the manmade fibre-based segment of the business and also fast-emerging technical textiles. 

“Bringing about fiscal/tax benefits (a prominent one was the removal of the anti-dumping duty on the raw material for polyester) for the MMF industry, has been quite noteworthy since the domestic MMF industry has been compromising on many aspects for many years at the expense of the cotton-based textile industry in the country. This will lead to the creation of a more vibrant and competitive production base for the textiles and apparel sector,” says DK Nair, consultant and past secretary general of CITI.

The government’s lopsided policy in favour of the cotton textile industry has been distorting the country’s textile value chain, resulting in the domestic industry in the last couple of decades not being able to make any headway in increasing its share in global trade, even as much smaller peers like Bangladesh, Vietnam and others have increased their share considerably in the last decade or so.

“This is indeed a major development that has marked the year. The PLI scheme will provide a major thrust to the MMF fabrics, garments and technical textiles which are being seen as the growth engine of the next decade and will help the Indian textiles and clothing industry to achieve its short-term as well as long-term goals set by the Government of India,” says CITI chief Rajkumar.

Currently, in India, MMF-based textiles and apparel production account for just 30 per cent of the total textiles and apparel production in the country. As against this, the global textile trade is dominated (65 per cent) by manmade fibre-based products, even as India’s textile production continues to be heavily skewed in favour of cotton.

Over the years, while global trade has shifted in favour of manmade fibres, in India, the lopsided policy interventions in favour of cotton have not allowed market forces to play their true role, leading to the creation of a production base which is failing to produce textile products at competitive prices and this has adversely impacted India’s progress in the global market. 

But now that the government has made its intention clear and shown its intent to correct the aberration, the Indian textile industry is much better placed to expand its share in the global market where the current overall situation is quite favourable. In this context, 2021 was indeed an eventful year for the textile sector, even as it is heading for a much better phase of progression in 2022.