Uncovering Textile Industry and its Future Growth

India is a growing country and has seen a surge in the population over the years. This has led to an increase in demand for textiles and apparel. The major part of textile is dominated by the cotton industry and it will continue to do so as it is a high quality product. Let us explore the growth of the Indian textile market in previous as well as in the coming years to help investors know the actual potential of the industry.

A glimpse of Textile Industry in India

India is among the top producers of textiles and apparel and contributes approximately 2.3% towards the GDP of India with 12% exports. The textile industry is one of the largest industries which have provided employment to approximately 45 million people in the country and the industry in India is expected to grow at 10% CAGR. The country is the largest producer of jute and silk in the world as well as the second largest producer of silk in the world. The industry offers massive employment as 95% of the world’s hand woven fabric comes from India only.

Segments of Textile Industry in India

Textile industry in India is segregated into several parts which cater to the different sections of the society.

Handloom Industry in India

Handloom industry has been an integral and important part of Indian culture for centuries which influences the Indian economy and trade to a major extent. Each and every year growing demand for traditional and ethnic wear has increased the popularity of handloom fabrics. The new era of handloom fabrics with the introduction of new textile technologies has ensured immense growth of the sector. Further, the Indian government is providing constant support to the industry through schemes and programs to boost the development and encourage investment.

Cotton Textile Industry in India

The Indian cotton textile industry is one of the oldest and essential industries in the country which employs millions of workers and is a significant part of textile export earnings for the country. This industry is renowned all over the world due to the high quality products that it provides and is known for durability, comfort and style.

Muga Silk Industry in India

Muga silk is a type of silk that is native to Assam, an eastern state in India. It is a quality product that is only found in Assam which is quite labor intensive and takes years to form. This industry alone is responsible for generating $100 million revenue each year.

Future of Indian Textiles

The future of the textile industry looks bright and vibrant buoyed by strong domestic consumption as well export demand. The Indian government is taking a major initiative in order to boost the technical textile industry with the help of funding, machinery sponsorship, and encouraging investment from the private sector. Therefore, the industry is a booming one with a lot of growth potential. India capitalizes in the textile industry because of cheap labor, vast land resources with a consistent increase in domestic and international consumption.

Some of the Best Textile Stocks

• Arvind Fashion
• Aditya Birla Fashion  
• Sutlej Textiles
• Raymond
• Bombay Dyeing
• Indian Terrain

Pros of Investing in Textile Industry

Textile industry is booming in India and will continue to expand in the future looking at the growth of the country. Here are the potential reasons why investors can invest in the textile industry to gain maximum returns in future.

Growth Potential

India’ economy is ever growing and the textile industry has a major role to play in the market as it has seen a surge in demand driven by young population and increasing disposable income. The demand is increasing immensely in textiles and apparel which has made the country to be one of the largest exporters of textiles and garments. Major importers of textiles from India are the US, Europe and the Middle East.

Also Read: Ethanol Fuel

Product Diversification

India produces a variety of textile products as we have discussed in the above section. It produces several ranges of products like cotton textile, silk, wool, and synthetic fibers which cater to different segments of the society.

Government Support

The Indian government has provided support to the industry through schemes and initiatives such as Production Linked Incentive scheme, technology upgradation fund scheme, and integrated textile parks. Investment in this sector is promoted through policies like Make in India and Skill India which has expanded the manufacturing and skill development in this industry.

Labor and Craftsmanship

The USP of textile manufacturing in India is that the country has a cost efficient labor force and is skilled in traditional crafts. Labor adds differentiation in the textile industry giving them a unique value which is why the products standout as it includes handlooms and traditional crafts.

Cons of Investing in Textile Industry

Apart from the pros that the textile industry has, investors need to make themselves aware about the market fluctuations, and other factors that can have a significant impact on the operations of the company.

Competition

In India the textile industry faces huge competitions as several players like looms produce at lower costs. So, domestic competition is increasing each day making it difficult for a new player to survive in the market. Not only domestic but also international competition is increasing day by day from countries such as Bangladesh, China and Vietnam in terms of cost and scale.

Regulatory Challenges

Textile business in India has to go through several legal complications such as tax structures and GST compliances. Apart from this, textile business owners face challenges related to operational costs as they need to comply with environmental and labor regulations as well.

Raw Material Cost

The prices of raw materials like cotton, synthetic and silk can be volatile enough which can dramatically impact the profitability of textile business.

Conclusion

Investing in the textile industry can be beneficial and profitable for investors as the industry is booming and the economy continues to grow consistently. However, technicals must not be ignored before investing, a top down approach is necessary as per demand and supply theory. GTF offers Trading in the zone course for technical analysis that helps investors to pick best investments.

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