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Background Paper : Textiles and Apparel Sector

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Background – Textiles and Apparel:- Offering 30 % of all manufacturing jobs in India; Employ 45 – 50 million people both in organized and unorganized sector.

Only sector, where Women constitute at least 60 % of workforce, potential for social transformation.

Apart from China, India is the only country which has the presence of complete value chain.

Advantage India:- Potential Due to rising labour cost, large companies are shifting base from china creating a potential market of USD 280 + billion. India can achieve the breakout growth and add 50 million jobs by 2025.

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Background Paper : Textiles and Apparel Sector

  1. 1. Background Paper Focus : Textiles
  2. 2. © Confederation of Indian Industry Table of Contents  Background of sector  Existing Enablers  Future Potential  Challenges faced 2
  3. 3. © Confederation of Indian Industry 3 Background – Textiles and Apparel Offering 30 % of all manufacturing jobs in India; Employ 45 – 50 million people both in organized and unorganized sector; Only sector, where Women constitute at least 60 % of workforce, potential for social transformation Apart from China, India is the only country which has the presence of complete value chain Potential to generate another 50 million job by 2025 Yarn, Fabric, Made-ups, Apparels are important segments Second largest exporters of textiles, apparels, Made-ups
  4. 4. © Confederation of Indian Industry 4 Existing Enablers – Strategies adopted – Current Growth Drivers Policy and Eco-system • Govt has announced Rs 6,000 cr package to promote Apparel sector and create one crore jobs in next 3 years. • Government to bear 3.67% of EPF contribution for new workmen in addition to existing 8.33% employer contribution • Fixed term employment introduced • Drawback at all industries rate to be given for domestic duty paid inputs even when fabrics are imported under Advance Authorization Scheme Industry Evolution and Capabilities • India has complete value Chain – Fibre to fashion • 2nd largest exporter of Textiles in the world • India is creative and innovative with its designs • Strong raw material base from cotton to MMF • Share of yarn increased in global trade form 17% to 29% Markets • Global markets shifting towards apparel and made-ups and moving from cotton to synthetics • Growing domestic markets
  5. 5. © Confederation of Indian Industry 5 Advantage India – Potential , Opportunities and growth – Future focused Reason 1 Reason 2 Reason 4 - Abundant young labour force, vibrant domestic market Reason 3 Why Focus on India? Potential Due to rising labour cost, large companies are shifting base from china creating a potential market of USD 280 + billion. India can achieve the breakout growth and add 50 million jobs by 2025. - India has complete value Chain – Fibre to Fashion. - Conducive Policy environment – EDB, MII initiatives - Vibrant domestic market and good starting point in exports
  6. 6. © Confederation of Indian Industry 6 Challenges faced by sector  Setting up/ Scaling up Business - Lack of big facilities as compared to China, Bangladesh. - Scale creation efforts (e.g SITP) have not yet created sufficient investor appetite. Hassles in clearances, operations, labour  Running Operations - sharp wage increases in key states (> 20%) - high input material cost, high energy cost, - uneven excise duties between cotton & MMF - low productivity  Selling into key markets - Low export subsidies compared to China - Poor logistics leading to high domestic transport time - Unfavorable market access  Investing / Financing entrepreneurship - high working capital cost, high cost of upfront investment, limited efforts on innovation

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