Indian Textile Industry: A Comprehensive Overview
The Indian textile industry is one of the largest and most significant sectors in the Indian economy, contributing approximately 7% to the country's GDP and 15% to total exports. With a rich heritage spanning centuries and embracing both traditional crafts and modern manufacturing, India is the world's second-largest producer of textiles and garments.
This comprehensive guide covers everything you need to know about starting and operating a textile business in India, from registration requirements and factory licensing to government schemes like TUF, PM MITRA parks, and export incentives. Whether you're planning to set up a spinning mill, weaving unit, garment manufacturing facility, or export house, this guide provides the essential roadmap for success.
Industry Structure and Segments
The Indian textile industry operates across the entire value chain, from fiber to fashion. Understanding the different segments helps entrepreneurs identify their niche and plan accordingly.
Fiber Segment
India produces a wide variety of natural and synthetic fibers. Cotton dominates with over 60% share, followed by man-made fibers like polyester and viscose. Silk, wool, and jute are important natural fibers with significant export potential.
- • Cotton: World's largest cotton producer
- • Silk: Second largest producer globally
- • Jute: World's largest producer
- • MMF: Growing polyester and viscose production
Yarn and Fabric
The spinning sector produces yarn from various fibers, while the weaving sector converts yarn into fabric through powerlooms, handlooms, and mills. Technical textiles represent a fast-growing segment with industrial applications.
- • Ring spinning and open-end spinning
- • Powerloom and handloom weaving
- • Knitted and woven fabrics
- • Technical textiles for industrial use
Apparel Manufacturing
Garment manufacturing is a major employment generator, encompassing woven and knit apparel, innerwear, and fashion accessories. India is a preferred destination for global brands seeking quality manufacturing at competitive costs.
- • Ready-made garments (RMG)
- • Fashion apparel and accessories
- • Innerwear and activewear
- • Custom and designer wear
Processing and Value Addition
Textile processing includes dyeing, printing, finishing, and embroidery. Value-added services enhance product appeal and command premium pricing in domestic and international markets.
- • Dyeing and bleaching units
- • Screen and digital printing
- • Embroidery and embellishments
- • Special finishes and coatings
Technology Upgradation Fund (TUF) Scheme
The TUF Scheme is one of the most significant government initiatives for the textile sector, providing financial assistance for technology modernization. The scheme aims to help textile units upgrade their machinery and equipment to improve productivity, quality, and global competitiveness.
Interest Subsidy Benefits
- • 5% interest reimbursement on term loans
- • 10% for specific segments like technical textiles
- • Margin money subsidy up to 15%
- • Coverage for spinning, weaving, processing
- • Garmenting and technical textiles included
Eligible Investments
- • Modernization of existing machinery
- • Installation of new technology
- • Energy-efficient equipment
- • Quality control and testing equipment
- • IT and computerization systems
PM MITRA Mega Textile Parks
PM Mega Integrated Textile Region and Apparel (PM MITRA) parks represent the government's vision for creating world-class textile manufacturing hubs. Seven such parks are being developed with a total investment of ₹4,445 crore.
Infrastructure
Ready-to-use factory sheds, common effluent treatment plants, warehousing, and testing laboratories.
Plug-and-Play
Units can start operations immediately with pre-built infrastructure and common facilities.
Employment
Each park expected to generate thousands of direct and indirect employment opportunities.
Powerloom Sector and Registration
The powerloom sector is the backbone of Indian textile production, contributing over 60% of total fabric production. Powerloom units enjoy special benefits and simplified registration procedures.
| Registration Type | Requirements | Benefits |
|---|---|---|
| Powerloom Unit Registration | Ownership proof, machinery list, Udyam registration | Access to government schemes, subsidies |
| Weavers ID Card | Photo ID, address proof, loom details | Health insurance, welfare benefits |
| Handloom Mark | Handloom product certification | Market access, export facilitation |
| Silk Mark | Silk product authentication | Brand credibility, quality assurance |
Specialized Sectors: Silk, Wool, and Jute
Sericulture and Silk Industry
India is the second-largest producer of silk globally. The SILK Samagra scheme provides comprehensive support for sericulture development, covering mulberry cultivation, silk worm rearing, and silk processing.
- • Financial assistance for plantation development
- • Subsidy for rearing houses and equipment
- • Support for silk processing units
- • Market development and export promotion
Wool Sector Development
The Integrated Wool Development Programme supports sheep and goat rearing, wool processing, and carpet manufacturing. Key states include Rajasthan, Gujarat, and Jammu & Kashmir.
- • Breed improvement programs
- • Wool processing infrastructure
- • Carpet and rug manufacturing support
- • Market linkages for wool products
Jute Industry and Diversification
India is the world's largest producer of jute. The National Jute Board promotes jute cultivation, processing, and product diversification beyond traditional packaging.
- • Jute cultivation support schemes
- • Modernization of jute mills
- • Product diversification into geotextiles
- • Mandatory packaging norms support
Export Incentives and International Trade
RoDTEP Scheme
Remission of Duties and Taxes on Exported Products (RoDTEP) provides refund of embedded duties and taxes on textile exports, enhancing competitiveness in international markets.
- • Refund of central, state, and local duties
- • Issued as transferable duty credit scrips
- • Rates vary by product category
- • Combined with other export incentives
Export Promotion Benefits
Textile exporters can access various benefits through Export Promotion Councils like TEXPROCIL, AEPC, and SRTEPC.
- • Market development assistance (MDA)
- • Market access initiative (MAI)
- • Participation in international fairs
- • Export credit and insurance support
GST and Taxation for Textile Businesses
GST rates for textiles vary based on product type and transaction nature. Understanding these rates is essential for proper pricing and compliance.
| Product/Service Category | GST Rate | Remarks |
|---|---|---|
| Natural fiber yarn (cotton, silk, wool) | 5% | Without ITC option available |
| Man-made fiber yarn | 12% | Full ITC available |
| Fabrics (all types) | 5% or 12% | Depending on fiber composition |
| Readymade garments | 5% or 12% | 5% (up to ₹1,000), 12% (above ₹1,000) |
| Textile job work | 5% | Processing services |
Compliance and Regulatory Requirements
Factory License under Factories Act
Manufacturing units with power employing 10+ workers (or 20+ without power) must obtain a factory license. Requires compliance with safety, health, and welfare provisions.
Environmental Clearances
Dyeing and processing units require Consent to Establish (CTE) and Consent to Operate (CTO) from State Pollution Control Boards. Effluent treatment is mandatory.
Labour Law Compliance
Registration under EPF, ESIC, and Professional Tax. Compliance with Minimum Wages Act, Payment of Bonus Act, and Contract Labour Act where applicable.
Fire Safety and Building Codes
Textile units must obtain fire safety clearance from local fire departments. Building plans must comply with NBC norms for industrial buildings.
Investment Requirements and Cost Breakdown
Investment requirements vary significantly based on the type and scale of textile operation. Here's a general breakdown:
Small Scale Units
Investment: ₹25-50 lakhs
Units: Powerlooms, small garmenting
Employment: 10-50 workers
Medium Scale Units
Investment: ₹1-10 crores
Units: Processing, spinning, weaving
Employment: 50-200 workers
Large Scale Units
Investment: ₹10+ crores
Units: Composite mills, technical textiles
Employment: 200+ workers
Key Success Factors for Textile Businesses
Operational Excellence
- ✓ Invest in quality machinery and technology
- ✓ Implement lean manufacturing practices
- ✓ Maintain strict quality control systems
- ✓ Ensure timely delivery and customer service
Market Development
- ✓ Build relationships with reliable buyers
- ✓ Participate in trade fairs and exhibitions
- ✓ Leverage e-commerce and digital marketing
- ✓ Obtain relevant certifications (OEKO-TEX, GOTS)
Compliance and Governance
- ✓ Maintain all required registrations and licenses
- ✓ Comply with environmental and labor laws
- ✓ File GST and other returns on time
- ✓ Keep proper books of accounts
Technology and Innovation
- ✓ Adopt automation and Industry 4.0 practices
- ✓ Focus on sustainable and eco-friendly processes
- ✓ Develop new product designs and applications
- ✓ Invest in R&D and skill development