The textile industry has an overwhelming influence in the economic development of India and is the second largest employer after agriculture. Through its contribution to the industrial output, employment generation and export earnings, the industry plays an important role in the Indian economy. The industry is estimated to be contributing about 10% of the aggregate country’s manufacturing production, 4% of national GDP, 13% of the country's export earnings, and provides direct employment to around 45 million people.

Indian textile industry is multi-fibre based, using cotton, man-made and synthetic fibres, silk, wool, and jute. One of the key advantages of the Indian textile industry is abundant availability of raw material. Cotton is one of the major raw materials for the Indian textile industry. India is the second largest producer of cotton and silk in the world.


There are around 2008 cotton-fibre and man-made-fibre textile mills in the country as on March 31, 2017, in the organized sector. Textile mills in India had a capacity of around 47.1 million spindles and around 0.6 million rotors as on March 31, 2017. Production of yarn as a whole reached the level of 5662 million kgs in 2016-17, witnessing a marginal y-o-y decline of (-) 0.05%. Production of fibre was 1364 million kilograms in 2016-17, a y-o-y increase of 1.3%. Production of fibre has been growing consistently after witnessing a year-on-year (y-o-y) decline in 2011-12. Total fabric production was 64816 million sq. metres in 2016-17, registering a decline of (-) 1.1% over the previous year.

The power-loom sector provides a wide variety of fabric, both grey as well as processed fabrics. The estimated 25.74 lakh power-looms in the country are distributed across nearly 5 lakh units, employing nearly 64.36 lakh workers. During 2016-17, fabric production by the Indian power-loom sector witnessed a decline of (-) 2.5% to reach 36073 million sq.mts, of which more than 40% was constituted by cotton fabric. Fabric production by the power-loom sector accounted for nearly 56% of the total fabric production in India in 2016-17.

The handloom sector has been playing an important role in creating awareness about Indian cultural diversity and fashion, which is unique. The handloom sector produced nearly 8016 million sq. mts of fabric in 2016-17, registering a y-o-y growth of 4.9%.

The hosiery sector in India produced around 17541 million sq.mts of fabric in 2016-17, showing a decline of (-) 0.6% as compared to the previous year. Fabric production by hosiery sector accounted for more than one-fourth of the total fabric production in India.

According to the Index of Industrial Production (IIP), compiled by the Central Statistical Organization, Government of India, while readymade garments sectors witnessed growth during 2016-17, textiles sector recorded a decline. The index for textiles has witnessed a decline of (-) 1.6%, while wearing apparels; dressing and dyeing of fur witnessed a robust growth of 17.1%, as compared to the previous year.


During FY 2016-17, textiles and readymade garment exports (including carpets) from India amounted to US$ 35.9 billion, witnessing a decline of (-) 0.1% over the previous year. Exports of readymade garments witnessed a y-o-y growth of 2.9% in 2016-17. ‘Articles of Apparel and Clothing Accessories, Not Knitted or Crocheted’ (HS: 62) is the largest category of textile and clothing exports from India. While India’s textiles and garments are exported to more than a hundred countries, USA was the largest export destination, accounting for 20.8% of the total textile and garments exports by India in 2016-17, followed by UAE (13.0%), UK (6.0%), Bangladesh (5.8%) and Germany (4.8%).

The share of textiles and readymade garments in India’s total exports has come down in the last 15 years. In FY 2000-01, the share of textiles and readymade garments (including carpets) in India’s total exports was 25.6%, which has come down to 13.3% in FY 2016-17. However, India’s share in world exports of textiles has been increasing over the years, from 3.2% in 2001, to 5.8% in 2016, and in case of readymade garments, the share has increased from 2.7% in 2001 to 3.9% in 2016.

Foreign Direct Investments

100 percent FDI is allowed in the textile sector without any prior approval either by the Government of India or Reserve Bank of India. For the period April 2000 to March 2017, the FDI for the textile segment stood at US$ 2,471.42 million which is 0.74 percent of the total FDI inflows in the same period.


Fabric manufacturers are expected to enhance their output in 2017-18. The implementation of the seventh pay commission is expected to result in higher disposable income among the consumers. This along with a shift in lifestyle patterns, rapid urbanisation, increased retail penetration and growth in e-commerce is likely to motivate the consumers to spend more on apparel purchases. Other than the apparel segment, domestic demand for fabrics from the home textiles segment and technical textiles segment is also expected to rise. Moreover, the government extended the special textile package to the made-ups sector. This will assist home textile manufacturers to increase their exports.

Furthermore, the government has come up with a scheme by the name of PowerTex India to develop the unorganised powerloom sector in the country. As part of the scheme, the government increased the subsidy for the upgradation of powerlooms. The government also announced measures like interest subvention on working capital loans, margin money subsidy amounting to 20 per cent of the project cost,setting up of yarn banks and common facility centres and financial subsidy for setting up of solar photo voltaic plants. This is likely to aid the growth in output of fabrics in the coming years.

In 2017-18, demand for yarn in the domestic market is expected to be healthy. This is likely to be backed by an increase in yarn purchases by the manufacturers of apparels, home textiles and fabrics. Exports account for close to one-fourth of the total yarn produced by the industry. Demand for yarn from the overseas market is also expected to recover. This is likely to be backed by a revival in demand for cotton yarn from China. The reserve cotton stock auctioned by China is of poor quality (older stock) and also highly priced. Therefore, Chinese textile mills are likely to import more cotton and cotton yarn from India. Overseas demand for yarn from other countries like Bangladesh, Pakistan, Egypt and Turkey is also expected to remain healthy.

Outlook for the industry is positive in medium term.



  • A new scheme “Amended Technology Upgradation Fund Scheme (ATUFS)” has been approved by the Government, under which apparel, garment and technical textiles will get 15% subsidy on capital investment, subject to a ceiling of Rs. 30 crore over a period of five years. The remaining sub-sectors will be eligible for 10% subsidy, subject to a ceiling of Rs. 20 crore. Union Budget -2016-17 has allocated Rs. 14.80 billion to ATUFS.
  • The Scheme for Integrated Textile Parks (SITP) was launched in 2005 to provide the industry with State of the art world-class infrastructure facilities for setting up their textile units. In Union budget 2016-17, Rs. 1 billion was allocated under Scheme for Integrated Textile Parks.
  • The customs duty on readymade garments, home textiles, fabrics and cotton yarn is high at 10.3 per cent (Union Budget 2016-17) to protect the indigenous industry from imports. Consequently, there are hardly any imports of readymade garments into India. Further, basic customs duty on specific man-made fibers and yarns has been halved to 2.5% under Union Budget 2016-17.
  • Under Union budget 2016-17, excise duty on branded garments retailing at Rs. 1,000 and above was increased from 0 to 2% (without CENVAT credit) and from 6% to 12.5% (with CENVAT credit). Additionally, tariff value (presumptive) for excise/countervailing duty on readymade garments and other textile materials has been doubled to 60% of retail sale price.
  • Export credit interest subvention: The Reserve Bank of India notified increasing the rate of interest subvention on existing sectors eligible for export credit subvention to 3% from 2% with effect from August 1, 2013. Readymade garments is one of the eligible sectors covered under the benefit.



United States

The Textile Fiber Products Identification Act, the Wool Products Labeling Act, the Fur Products Labeling Act, and Federal Trade Commission require that most textile wool, and fur products have a label or tag disclosing the fiber or fur content, the business name or other identification issued and registered by the Commission of the manufacturer, importer, distributor, or seller, and the country of origin. Wearing apparel must have labels specifying content and instructions for care. All textiles must have either labels indicating the country of origin or, if this is not feasible, (yarn, thread, wool) be packaged in such a way that country of origin is discernable to the ultimate purchaser.

European Union

Textile products may only be placed on the European Union (EU) market provided that they are labelled, marked or accompanied with commercial documents in compliance with Regulation (EU) No 1007/2011 of the European Parliament and of the Council.

The main purpose of the Regulation is to ensure that consumers, when purchasing textile products, are given an accurate indication of their fibre composition.

The placing on the EU market of textile and leather articles containing certain chemical substances, group of substances or mixtures are prohibited or severely restricted, in order to protect human health and environment, according to provisions listed on Annex XVII to Regulation (EC) No 1907/2006 of the European Parliament and of the Council (REACH Regulation).

For further details on Regulations applicable in various geographies, refer to this link: http://www.standardsmap.org/identify