Wazir Advisors latest report gives a detailed an insight into the way forward for the Indian textile and apparel (T&A) sector. Indeed, the growth figures show a very positive outlook.
Positive outlook ahead for both textiles and apparels
In 2021, the Indian T&A sector were valued at $153 billion, with the domestic market being the lion’s share at $110 billion and exports at $43 billion. The report goes on to say, t a compounded annual growth rate (CAGR) of 10 per cent, the total value is expected to reach $350 billion by 2030, with the domestic market taking in $250 billion and exports $100 billion. Wazir Advisors, the Indian research and analysis agency dedicated to the textile and apparel sector latest report “The US$100Bn Investment Opportunity” was released yesterday.
It goes on to states, apparel the largest product of the sector is predicted to increase CAGR of 9.6 per cent, whereas technical textiles are predicted to have a CAGR of 10.5 per cent. In domestic consumption, home textiles are predicted to grow at a CAGR of 8.6 per cent and by 2030, to reach a value of $16 billion. As the growth of global trade is expected to pick up, India can move from its current 5 per cent market share to 8 per cent by the end of the decade. Most growth will be in apparel, which will grow by 12.1 per cent and touch $45 billion by 2030. However, whilst textile’s growth rate will be 8.2 per cent, the value will be higher than apparel, at $55 billion.
2022 sees a flurry of bilateral agreements
This year has been an exceptional one in terms of the Indian government finalizing and sealing deals with two countries that will greatly benefit exports including sector. The India-UAE CEPA was signed in February and the India-Australia ECTA was signed in April. India already has had the India-South Korea IKCEPA since 2009 and the India-Japan JICEPA since 2011. In all four cases, the agreements offer no import fees.
While new FTAs with the UAE and Australia are significant as these are two large markets for the Indian T&A sector, the potential of the South Korean and Japanese FTAs were not fully realised and the government has been reworking the impetus to fully leverage these two FTAs since 2016 – the major development here has been product realignment based on South Koreas and Japan’s market requirements.
The upcoming FTAs with the US, the UK and the EU will further strengthen India’s ambition as it can leverage very strong markets for products it has the expertise in manufacturing. Once fully utilized, India can easily add another $15 to $20 billion to its earning through T&A exports. As the world wants to move away from complete dependency of China in terms of textiles, the concept of China + 1 is growing, providing India the natural advantage of being the + 1. Currently, China is in the enviable position of having 25 per cent of the global market share and if India plays its cards right, it can aim to capture 15% of market share under the emerging concept of China + 1.
The Ministry of Textiles is a key part of the recently launched Production Linked Incentive (PLI) scheme. This is expected to drive investments in the textile value chain, particularly in garmenting and synthetic textiles. If implemented well, India can expand its exports product basket in the T&A sector and be thoroughly cost competitive. Additionally, the already present incentives such as Duty Drawback and ROSCTL can further aid in the country not only being cost competitive but also tap more global markets for the opportunity of exporting textiles and garments.