Editorial 1 : Thread and Weave of Reform
Context: Textile industry in India
Introduction: India’s ambitious target to elevate its textile and apparel (T&A) exports from $34.8 billion in 2023-24 to $100 billion by 2030 raises the question on feasibility of the target.
Current Status and Global Context
- Historical Growth: From $11.5 billion in FY 2001 to $34.8 billion in FY24. This is a steady growth but is insufficient for the $100 billion target.
- Competitor Performance
- Bangladesh: Global apparel share rose from 2.2% (2000) to 9.6% (2023).
- Vietnam: Global apparel share jumped from 1% (2000) to 5.8% (2023).
- China: Lost market share (34.8% to 29.8% post-2010), creating opportunities which others captured.
Key Challenges in the Textile Value Chain
- Farm-Level Issues: Decline in Cotton Production
- Bt cotton adoption (2002) boosted production from 13.6 million bales (2002-03) to 39.8 million bales (2013-14).
- Current Crisis
- Production projected to drop to 30 million bales (2024-25), which is lowest in 15 years.
- India is set to become a net cotton importer (2.6 million bales imported vs. 1.5 million exported in 2024-25).
- Cause: Delayed approval of next-gen GM seeds (e.g. herbicide-tolerant Bt cotton) despite GEAC clearance.
- Structural Weaknesses in the Textile Industry
- Cotton vs. MMF Imbalance
- India’s cotton-to-man-made fibre (MMF) ratio is 60:40, compared to global average of 30:70.
- High MMF raw material costs (e.g. polyester, viscose) i.e. 20% costlier than competitors.
- Fragmented Garment Sector
- 80% of garment factories are decentralized, leading to inefficiencies.
- Slow adoption of modern technology and weak value chain integration.
- Policy and Market Access Barriers
- Tariff Disadvantages
- EU tariffs: 9.7% on Indian apparel vs. 0% for Bangladesh (GSP Everything but Arms” arrangement) and 1.66% for Vietnam (EU-Vietnam FTA).
- US tariffs: 11.47% on Indian apparel.
- Limited FTAs: Lack of agreements with key markets (EU, US) restricts competitiveness.
Growth Opportunities
- Global Apparel Market: Expected to reach $2.37 trillion by 2030.
- Emerging Markets: Japan, Russia, Brazil, and South Korea offer potential for niche products (western wear, swimwear, etc.).
- PM-MITRA Scheme: Aims to develop integrated textile parks, but challenges persist (e.g. exclusion of MSMEs due to high land requirements).
Way Forward: Strategic Recommendations
- Boost MMF-Based Apparel
- Remove non-tariff barriers (e.g. quality control orders on MMF).
- Incentivize investment in MMF production to align with global trends.
- Fast-Track PM-MITRA Scheme
- Create integrated textile hubs for scalability and efficiency.
- Address MSME exclusion by revising land requirements.
- Negotiate Critical FTAs
- Prioritize agreements with EU and US to reduce tariff disadvantages.
- Explore partnerships with emerging markets to diversify exports.
- Revive Cotton Productivity
- Streamline GM seed approvals: Accelerate adoption of next-gen pest-resistant cotton varieties.
- Invest in farming techniques: High-density planting, precision farming, and irrigation expansion.
- Bridge productivity gap: India’s cotton yield (435 kg/hectare) lags behind China (1,945 kg/hectare) and Brazil (1,839 kg/hectare).
- Transition to a Fashion-Driven Industry
- Focus on high-value segments (e.g. women’s western wear, intimate wear).
- Leverage India’s design and craftsmanship strengths.
Conclusion: The target of $100 billion textile and apparel (T&A) exports by 2030 will only be achievable by bold reforms and policy agility. Failure to reform could leave India’s T&A exports stagnant, with competitors further consolidating their global dominance.