- Increase in household income
- Fallin average age of consumers
- Rising aspirations and increasing preference for brands
- Expansion of modernretail
The Indian textiles industry is extremely varied, with the hand-spun and hand woven
sector at one end of the spectrum, and the capital intensive, sophisticated mill sector
at the other. It is fragmented with a few large players and numerous small and medium
sized companies. The Industry is a vertically integrated industry which covers a large
gamut of activities ranging from production of its own raw material namely, cotton,
jute, silk and wool fo providing to the consumers high value added products such as
fabrics and garments. India also produces large varieties of synthetic and man made
fibres such as filaments and spun yarns from polyester, viscose, nylon and acrylic which
are used to manufacture fabric as well as garments. The decentralized powerlooms/
hosiery and knitting sectors form the largest section of the Textiles Sector. A significant
increase in cotton production during the past few years has increased the availability
of raw cotton to the domestic textiles industry at competitive prices, providing it with a
competitive edgein the global market.
The Government has also provided industry a conducive policy environment and
initiated schemes which have facilitated the growth of the industry. The Technology
Upgradation Fund Scheme (TUFS), the "flagship Scheme of the Ministry of Textiles,
was launched on April 1, 1999, with the objective to make funds available to the
domestic textiles industry to upgrade the technology of existing units, and also to set
up new units with state-of-the-art technology to enhance their viability and
competitiveness in the domestic and international markets. Initially, the term of the
Technology Upgradation Fund Scheme was upto March 31, 2004, and it was
extended till March 31, 2007. Due to overwhelming response from the industry, the
Government decided to extend the Scheme upto the Xlth Five Year Plan, and
reframed some of the financial and operational parameters in respect of new loans.
In the Xth Five Year Plan (2002-07), Rs. 1,270 crores was earmarked for the scheme.
However, the net utilisation of funds was Rs. 2,044.17 crores. The modified technofinancial
parameters of the Scheme has lead to the infusion of capital investment
into the textiles sector, and has helped it to capitalize on the vibrant and expanding
global and domestic markets, through technology upgradation, cost effectiveness,
quality production, efficiency and global competitiveness.
Apart from TUFS, the Government has also taken various initiatives fo ensure growth of the Industry:
- 100 per cent FDI allowed through the automatic route.
- De-reservation of readymade garments, hosiery and knitwear from the small-scale industries sectorin end-2000.
- The Technology Mission on Cotton has increased cotton production and reduced contaminationlevels
- Implementation of Scheme For Integrated Textiles Parks (SITP), to provide the industry with world-class infrastructure facilities for setting up their textiles units.
Textile sectorto witness investments worth Rs. 206 billion by 2011-12
CRISIL Research expects investments fotaling fo Rs.206 billion during the period 2009-10 to
2011-12in textiles which includes segments such as Cotton yarn, Man Made Fibres (MMF),
Ready-made garments (RMG) and weaving & processing. These investments are being
supported by government incentives such as the TUFS and SITP scheme. Demand too is
expected to recover after witnessing a sharp decline in 2008-09 following the worsening
demandin key exporting destinations of US and Europe.
Nearly 50 per cent of these investments are projected to take place in the RMG segment.
QOur forecasts are based on our assessment of the current demand - supply situation and
the availability of government support.