This report profiles India’s textile and garment industry, discussing market trends through 2013 and outlook for 2014 and beyond. The report also highlights leading players in the sector including Alok Industries Limited, Welspun India Limited and Arvind Limited.

The textile and garment sector is one of the pillars of the Indian economy. The sector accounts for 14% of the industrial production and 4% of the GDP. Besides, the sector also employs close to 45mn people and is the second largest employer after agriculture. It is a diversified sector consisting of many industries including cotton textiles industry, jute industry, silk textiles industry, woolen textiles industry, apparel industry, fibre industry, handicrafts as well as handlooms.

While India’s overall industrial growth remained grim in FY14, it was a good year for the country’s textile sector backed by a recovery in exports. Depreciation of the rupee helped in making Indian exports more competitive amidst competition from emerging markets like Bangladesh and Vietnam. The three largest export segments, namely ready-made garments, cotton textiles and man-made textiles, each recorded a double digit growth in USD terms during the year.

The demographic dividend and comparatively lower cost of manufacturing bodes well for the textile and garment sector in the long term. However, exchange rate fluctuations and costly working capital loans are the biggest challenges for the sector.

Key Points:

• According to the Ministry of Textiles, the sector accounted for 11.3% of the country’s total exports during FY14. The sector acts as one of the country’s major foreign exchange earners, with export earnings growing at a CAGR of 8% in dollar terms during 2008-14.

• As of FY14, ready-made garments were the largest segment in terms of export contribution accounting for 42% of total export earnings. Cotton textiles were the next with a contribution of 25%. Manmade textiles were the third largest segment with a contribution of 16%. Together these three segments accounted for 83% of India’s textile exports as of FY14.

• According to UN Comtrade, India became the second largest textile exporter in the world just behind China in 2013. India also recorded the highest growth (21% y/y) among the top five markets. Meanwhile, world textile exports grew by 5% y/y in the same period.

• In FY14, the sector export earnings grew by 25.9% in INR terms and 12.8% in USD terms, recording a strong recovery after the decline witnessed in FY13.