India’s textiles sector has witnessed a spurt of investment in the last five years. The industry attracted FDI worth $2.97 billion from April 2000 to June 2018. Some of the major investments include a new skill development scheme named 'Scheme for Capacity Building in Textile Sector (SCBTS)' by the Cabinet Committee on Economic Affairs (CCEA), with an outlay of Rs 1,300 crore ($202.9 million) from 2017-18 to 2019-20. Investments worth Rs 27,000 crore ($4.19 billion) recorded by the industry from June 2017-May 2018.
Strong domestic consumption leads to promising future
The future looks promising, buoyed by both strong domestic consumption and export demand. The domestic textile industry is estimated to reach $250 billion by 2019 from $150 billion in November 2017, while cotton production in India is estimated to have reached 34.9 million bales in FY18. In FY19, growth in private consumption is expected to create strong domestic demand for textiles.
Textile and apparel exports are expected to increase to $82 billion by 2021. Exports of textiles and apparels from India reached $13.0 billion in FY2019. Manmade garments remain the largest contributor to total textile and apparel exports from India, contributing 24.53 per cent to total textile.
Favorable initiatives lead to growth
The Textile Ministry earmarked Rs 690 crore ($106.58 million) for setting up 21 RMG manufacturing units in seven states for development and modernisation of textile sector. Additionally, the Directorate General of Foreign Trade (DGFT) revised rates for incentives under the Merchandise Exports from India Scheme (MEIS) for two subsectors of the industry – RMG and Made ups -- from 2 to 4 per cent.
As of August 2018, the government has increased basic custom duty to 20 per cent from 10 per cent on imports of 501 textile products, to boost Make in India and indigenous production.
The government also announced a special package to boost exports by $31 billion, create one crore jobs and attract investments worth Rs 80,000 crore ($11.93 billion) during 2018-2020. As of August 2018 it generated additional investments worth Rs 25,345 crore ($3.78 billion) and exports worth Rs 57.28 billion ($ 854.42 million). It has taken several measures including Amended Technology Up-gradation Fund Scheme (ATUFS), scheme is estimated to create employment for 35 lakh people and enable investments worth Rs 95,000 crore ($14.17 billion) by 2022.