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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 percentto country’s manufacturing production, 2 percent to national GDP, 10.7 percentto the country's export earnings, 7 percent to total industrial output and provides employment to around 45 million people in the country.

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. The industry’s workforce is dominated by women with more than 70 percent of the work force being women.

Capacity and Production

Indian textile industry is divided broadly in two segments. The organised sector consists of spinning, apparel and garments which apply modern technology for production and the unorganised sector which consists of handicrafts, handlooms and sericulture that are usually operated on small scale and through traditional methods.In India, Kashmir, Ludhiana and Panipat account for 80 percent of woollens in India. Ahmedabad, Mumbai, Surat, Rajkot, Indore and Vadodara are the key places for cotton industry whereas Bihar is known for jute production, parts of Uttar Pradesh are known for woollen and Bengal is famous for cotton and jute industry. Tirupur, Coimbatore and Madurai are known for the production of hosiery and Bengaluru, Mysore and Chennai are known for silk fabrics.

According to the Index of Industrial Production (IIP), compiled by the Central Statistical Organization, Government of India, the manufacturing of wearing apparel has shown growth of 4.1 percent during 2019-20 as compared to the previous year. However, the IIP for manufacture of textiles recorded a negative growth of (-)2.3 percentduring the same period. During April- June 2020, the index of textiles industry stood at 30.9 and registered decline of (-)73.2 percent as compared to corresponding period of previous year.


Exports from textile and allied sector accounted for more than 10.7 percent of India’s total exports in 2019-20 and witnessed declineof (-)8.6 percent during 2019-20 as compared to previous year. Within the textile segment, floor coverings of jute and silk carpet registered 2-digit growth of 32.6 percent and 25.97 percent, respectively, during 2019-20. Products such as, other jute manufactures, jute yarn, other textile yarn and made-up articles, coir and coir products, natural silk yarn and made-up fabrics, and cotton fabric and made-ups, also recorded growth during 2019-20. During April- June 2020, the exports from textile and allied industries stood at US$ 4.9 billion and recorded decline of (-)55 percent as compared to corresponding period of previous year. Technical textiles have received much-needed attention from government in the wake of rising demand globally. The export of technical textiles registered a CAGR of 3.24 percent during FY15-20, increasing from US$ 1682.20 million in 2014-15 to US$ 1973.51 million in 2019-20. During April- May 2020, export of technical textiles stood at US$ 160 million, registering decline of more than (-)51 percent as compared to US$ 331.5 million in corresponding period of previous year.

Trends in Export of Textile and Allied Products

(US$ Million)

Textiles & allied products 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 April-June 2020 % CAGR (FY15-20)
Manmade staple fibre 551.59 540.41 594.24 586.82 570.81 503.04 73.32 -1.83
Cotton yarn 3,937.41 3,608.12 3,337.49 3,424.92 3,895.52 2,760.51 450.45 -6.86
Cotton fabrics, made- ups etc. 5,516.42 5,266.23 5,212.53 5,482.87 5,947.20 5,967.02 762.83 1.58
Other  textile yarn, fabric made- up article 399.59 336.02 358.21 409.81 457.93 477.28 63.25 3.62
Silk raw 0.11 0.22 0.07   0.19 0.16 0.01 7.78
Natural silk yarn, fabrics, made- up 124.97 84.16 61.81 52.85 57.72 58.3 6.65 -14.14
Manmade yarn, fabrics, made- ups 5,275.03 4,621.66 4,557.08 4,826.33 4,980.51 4,820.97 475.87 -1.78
Wool, raw 0.04 0.61 0.22 0.77 1.14 0.09 0.02 17.61
Wollen yarn, fabrics, made- ups, etc 201.85 196.34 174.87 186.09 220.56 181.23 17.66 -2.13
Ready-made garmentscotton including accessories 9,282.83 9,091.58 8,513.22 8,510.76 8,694.73 8,642.88 828.97 -1.42
Ready-made garments silk 303.97 244.1 141.71 157.92 170.26 119.06 12.61 -17.09
Ready-made garments manmade fibres 3,997.13 4,181.77 5,035.94 4,746.97 3,852.96 3,506.00 328.96 -2.59
Ready-made garments wool 307.75 262.38 214.5 169.14 197.65 154.93 8.45 -12.83
Ready-made garmentsof other textile material 2,941.65 3,184.53 3,462.79 3,122.15 3,222.69 3,064.92 267.84 0.82
Coir and coir manufactures 285.13 261.59 294.96 325.77 327.38 340.42 93.37 3.61
Handloom products 369.56 368.57 359.73 355.94 343.69 319.02 24.81 -2.90
Silk waste 17.86 13.74 14.58 15.69 18.57 13.87 3.65 -4.93
Jute, raw 19.41 17.18 11.44 14.81 15.3 14.6 0.94 -5.54
Jute yarn 22.64 18.34 10.65 20.2 15.58 16.57 0.55 -6.05
Jute hessian 126 125.54 138.23 141.23 113.81 103.04 9.13 -3.94
Floor covering of jute 86.3 34.01 37.75 46.48 53.01 70.29 10.01 -4.02
Other jute manufactures 112.55 117.47 123.31 127.17 142.53 152.71 15.96 6.29
Carpet(excl. Silk) handmade 1,358.17 1,437.82 1,480.69 1,427.14 1,465.74 1,353.00 175.99 -0.08
Silk carpet 2.62 2.25 9.5 2.68 16.11 20.29 2.30 50.59
Cotton raw including Waste 1,900.19 1,938.66 1,621.11 1,894.25 2,104.41 1,057.82 158.51 -11.05
Total 37140.77 35953.3 35766.63 36048.76 36886 33718.02 4890.04 -1.92
Source: MoCI, Exim Bank Research

Foreign Direct Investments

FDI of upto 100 percent is allowed in the textile and garments sector under the automatic route.

During April 2000- March 2020, the textile segment received FDI inflow of US$ 3.44 billion, accounting for 0.73 percent of the total FDI inflows into the country.


India is one of the largest cotton producers, and almost 20 percent of the total cottonproduction is exported. Hence, the slowdown in global demand will directly impact cotton yarn manufacturers. With the slumping global demand, India’s exports to China and Bangladesh is also expected to decline, exerting pressure on yarn prices and margins. Further, weak derived demand from the domestic market would also impact cotton yarn players.

The shutting down of manufacturing units have resulted in decline of imports of yarns and impacted production as well as exports of ready- made garments. The consumption is also set to witness huge decline as a result of shift in preferences from apparel to daily needs such as food and beverages. The demand for textile exports is likely to fall further as India’s largest exports destinations- the US and Europe (which account for 60 percent of textile and allied sector exports from India in 2019-20) are facing anti-racism protests along with the pandemic.

The outlook for the industry is positive in the mid- term with government’s continuous efforts to boost the industry, especially the technical textile industry.



  • Under Union Budget 2020-21, a National Technical Textiles Mission is proposed for a period from 2020-21 to 2023-24 at an estimated outlay of ₹ 1,480 crore (US$ 211.76 million). The mission aims to position the country as a global leader in technical textiles and increase the use of technical textiles in the domestic market to build technical textile market of around US$40 - 50 billion by 2024.
  • The Government of India has taken several measures including Amended Technology Up-gradation Fund Scheme (A-TUFS), estimated to create employment for 35 lakh people and enable investment worth ₹ 95,000 crore (US$ 14.17 billion) by 2022. ATUFS is a credit linked scheme for technology upgradation projects and grants benefits up to a prescribed limit of term loans sanctioned by the lending agencies. The scheme is effective till 31st March, 2022.
  • SAATHI Scheme - The Union Ministry of Textiles, Government of India, along with Energy Efficiency Services Ltd (EESL), has launched a technology upgradation scheme called SAATHI (Sustainable and Accelerated Adoption of Efficient Textile Technologies to Help Small Industries) for reviving the power loom sector of India.
  • The Government has implemented the Scheme for Integrated Textile Park (SITP) which provides support for creation of world-class infrastructure facilities for setting up of textile units, with a Government of India grant up to 40 percent of the project cost subject to a ceiling of ₹ 40 crore. However, Government of India grant is up to 90 percent of the project cost for first two projects (each) in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, Himachal Pradesh, Uttarakhand and Jammu & Kashmir with ceiling of ₹ 40 crore for each textile park.
  • In order to facilitate modernization and up-gradation of technology in existing / new jute mills and JDP (Jute Diversified Products) units, Incentive Scheme for Acquisition of Select Machinery (ISAPM) has been launched.The Scheme provides for incentive of 20 percent of the cost of new machinery for jute mill and 30 percent for JDP-MSME units , subject to maximum of ₹ 2.50 crore per unit.