Issues And Solution For The Indian Textile Industry 

The Indian textile industry has been earning its fame and popularity since ancient times. No apparel industry and craft is as vibrant as the Indian fabric industry. However, even after having so many positive points, there are some issues in the industry that need to be addressed. We are consistently facing issues of lack of material for production for wholesale fabrics, labor is cheap and not receiving enough money for hard work. Here we will discuss the challenges that are hampering fabric manufacturers in India Indian fabric industry. 

The Indian textile industry has some deep-rooted problems which need to be addressed with long-term sustainable solutions.

Potential of Indian textile industry 

India’s textile and apparel market is estimated to be worth $127 billion.

The industry employs the second-largest number of people in the nation (after the agricultural sector) and generates a significant amount of foreign currency.

In addition to the availability of cheap and plentiful labor, the industry in India benefits from the presence of the whole value chain from fiber, yarn, fabric, and clothing.

As a result, the textile industry in India is crucial not just for absorbing labor and providing foreign cash, but also as a representation of the country’s rich cultural legacy.

Current status of Indian textile 

One of the oldest sectors of the Indian economy, textiles, is having a hard time competing with considerably less developed nations like Bangladesh and Vietnam.

Nevertheless, despite these advantages, India only accounts for 5% of global textile exports, a negligible amount when compared to China’s 38% share.

With a combined 3% of world exports, far smaller competitors like Bangladesh and Vietnam are posing a rising threat to India’s exports.

The sector’s exports are estimated to be worth $37 billion, or 13% of all exports from India.

From a peak of 25% in FY02, textiles now make up a far smaller portion of India’s overall exports.

It would have been the ideal time for India to grow its market share in the global textiles sector, given the surge in labor costs in China.

Problems of Indian textile 

Reality of the Market: India’s textile sector struggles with local problems including outmoded technology, rigid labor rules, infrastructural impediments, and a fragmented industry.

Demonetization and the introduction of the goods and services tax had a significant negative impact on India’s textile industry, which is mostly controlled by unorganized and small firms (GST).

Global Policies – The WTO’s Agreement on Subsidies and Countervailing Measures states that a nation must gradually eliminate export subsidies for a product when it reaches export competitiveness, which is defined as 3.25% of global commerce, and as its per-capita income exceeds $1,000 per year.

According to this agreement, India must stop providing export subsidies to the textile industry by 2018.

This suggests that the current subsidy programmes, such as the Export Promotion Capital Goods (EPCG) Scheme and the Merchandise Export from India Scheme (MEIS), may be impacted.

Demand for MMF – With the consumption of cotton to man-made fibers at 30:70, man-made textiles and apparel are in great demand globally.

India is the world’s second-largest exporter of textiles, however it falls behind in this area due to the lack of affordable synthetic fibers.

Need of sustainability 

In order to help all producers, the government has to shift its attention away from export-specific subsidies, which are against WTO rules, and toward regional and cluster subsidies, technology upgradation and skill development subsidies.

In India, manufactured fibers (MMF) and cotton are taxed differently; fiber neutrality in this country would help the sector.

Cotton is taxed at 5% under differentiated tax treatment, whereas man-made fibres are taxed at 12%.

In reality, cotton makes up over 75% of all textile and apparel exports from India; thus, output has to be increased to keep up with global demand trends.

India has a plentiful supply of workers, but the textile sector would benefit greatly from flexible labor rules and proper skilling.

For instance, after considering proper safety precautions, women should be permitted to work in all three shifts.

Indian athletes would benefit from technology upgrade programmes by becoming more productive and competitive.

The government must also carefully consider the prospects presented by the numerous trade agreements, through which Bangladesh and Vietnam get preferential access to important markets for garments.

While putting more of an emphasis on technological advancement and talent development locally, the government also has to take another look at fiber neutrality and assess potential trade agreements.


I hope from the above write up, you are clear about the Indian textile industry and what is hampering its from getting sustainable. Market reality of the Indian textile industry is far away from what we can see. Further, global policies are not supportive or in favor of the Indian textile industry. There are several unorganized sectors that are preventing sustainable concepts from getting promoted. Our fabric manufacturers in India need something organized and supported from the government. If you are  looking for wholesale fabric suppliers then fabriclore is a suitable platform for you. Here, you can get end to end textile solutions under the guidance of textile experts. From cotton to polyester, we offer specialized services for every kind of fabric. 

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