Textile sector is set for robust growth, if it takes competition seriously

Govt needs to give better incentives to industry especially for machinery upgradation & power rates

2 min read Last Updated : Apr 12 2019 | 11:35 AM IST

India is now a fast emerging market inching to reach half a billion middle income population by 2030. All these factors are good for the Indian textile industry in a long run. Even though the global economic crisis seems to be worsening day-by-day, as long as economies are emerging and growing as those in South and South East Asia, textile industry is here to grow provided it takes competition and innovation seriously.

The Indian textiles industry, currently estimated at around $ 108 billion, is expected to reach $ 223 billion by 2021. The industry is the second largest employer after agriculture, providing employment to over 45 million people directly and 60 million people indirectly. The Indian textile industry contributes approximately 5 per cent to India’s Gross Domestic Product (GDP), and 14 per cent to overall Index of Industrial Production (IIP).

Due to demonetisation, there was a considerable slowdown in consumer demand for apparel in December. However, there was no demonetisation impact on textile exports. There have been cash flow issues for various textile producers but we feel the situation will improve soon.

The industry is facing challenges such as the current bull run of cotton prices, the possible devaluation of the US Dollar called for by President Trump, strength of the export demand and global economic conditions.

On the other hand, new textile markets and innovation (fueled by the developments in textile chemicals & auxiliary segment) are providing new opportunities to the companies in this sector.

Budget expectations

This budget is going to be the most widely watched budget in a long time due to factors such as change in the day of the presentation to the 1st day of February, merger of the railways budget into the union budget, expected tax sops after demonetisation, etc. From the textile and allied industries point of view, the government needs to boost domestic demand and reduction in income taxes would definitely help.

Indian textile exports is facing increasing competition from Bangladesh and Vietnam, which have robust government policies supporting the local textile industry. The government also needs to give much better incentives to the textiles industry especially for machinery upgradation and preferential industrial power rates.

M S Mohan is the managing director of Resil Chemicals