India's textiles sector faces several challenges despite possessing a complete value chain, said the Economic Survey 2024-25 on Friday, pointing out that the sector has attracted limited foreign direct investment, hindering technological advancements and leading to reliance on imported textile machinery.
The dominance of MSMEs limits the textile sector's scale and efficiency, while its fragmented nature increases logistical costs, it said.
The survey also flagged the reliance on cotton, unlike the global shift towards manmade fibre, which limits the domestic textile sector's competitiveness in international markets, stressing the need to focus on manmade fibre along with cotton to improve its global competitiveness.
Highlighting the persistent significant skill gap and hindering productivity and innovation, the survey observed that addressing these challenges is crucial for India to realise its full potential as a global textile powerhouse.
"After having recorded a high of $44.44 billion in FY22, India's export of textiles and apparel, including handicrafts, stood at $35.87 billion in FY24, compared to export of $36.69 billion in FY23. India is looking to diversify its export market to other regions.
"India has traditionally focused on cotton textiles. Globally, manmade fibre consumption is dominant. Hence, in order to move towards a higher global MMF share, it is essential to simultaneously focus on MMF along with cotton textiles," said the survey tabled in Parliament by Finance Minister Nirmala Sitharaman.
Technical textiles are another area of potential growth, it said, adding that India's technical textile industry is rapidly growing, ranking fifth globally.
Indian technical textiles market stands at $26.8 billion in FY24. India is a net exporter of technical textiles, with exports valuing $2.58 billion in FY24. To assist the technical textiles manufacturing ecosystem, the government has introduced several initiatives, including the Production Linked Incentive scheme.
"Despite possessing a complete value chain, textiles face several challenges. The dominance of MSMEs limits scale and efficiency, while its fragmented nature increases logistical costs.
"India's reliance on cotton, unlike the global shift towards MMF, limits its competitiveness in the worldwide market. The sector has attracted limited foreign direct investment, hindering technological advancements and reliance on imported textile machinery," the survey said.
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