Unlocking India’s Textile and Apparel Export Potential by 2030
India aims to boost its T&A exports from $34.8 billion in FY24 to $100 billion by 2030. Current growth is modest, with significant challenges from competitors like Bangladesh and Vietnam. Key factors hindering growth include declining cotton production, high raw material costs, and ineffective trade agreements. Strategic reforms and increased investment are essential for India to capitalize on the expanding global apparel market.
India has set an ambitious goal to increase its textile and apparel (T&A) exports from $34.8 billion in FY24 to an impressive $100 billion by 2030. However, this leads to a critical inquiry about the feasibility of this target given the current export growth trajectory, which rose from $11.5 billion in FY01 to $34.8 billion in FY24, and only accounts for 4% of global exports valued at $774.4 billion.
The apparel segment, representing about 42% of T&A exports, demonstrates modest growth from $5.5 billion in FY01 to $14.5 billion in FY24. Notably, India’s share in global apparel exports has remained stagnant at approximately 3% throughout this timeframe. Meanwhile, competitors like Bangladesh and Vietnam have significantly increased their global exports, which poses a challenge for India in claiming market share left by China after its trade war with the United States.
A closer examination of the textile value chain reveals obstacles at the farm level. Following the introduction of genetically modified (GM) Bt cotton by former Prime Minister Atal Bihari Vajpayee in 2002, India experienced a remarkable increase in cotton production, surging from 13.6 million bales in 2002-03 to 39.8 million bales by 2013-14. Unfortunately, production has since declined, with forecasts indicating a drop to 30 million bales by FY25, marking a 15-year low, potentially necessitating cotton imports.
The decline results from the lack of approval for advanced herbicide-tolerant Bt seed variants despite regulatory clearance. While India produces various fibres, the ratio of cotton to man-made fibre (MMF) is 60:40, contrasting sharply with the global standard of 30:70, thus necessitating a shift towards MMF fibers. Despite an extensive garment industry, with 80% in the decentralized sector, exports remain significantly below their potential due to slow technological adoption and weakened value chain integration.
The global apparel market, projected to reach $2.37 trillion by 2030, presents a substantial opportunity. The Government of India’s Pradhan Mantri Mega Integrated Textile Region and Apparel (PM-MITRA) scheme aims to establish integrated textile parks; however, its high land requirements could limit participation from micro, small, and medium enterprises (MSMEs).
To realize its export target by 2030, India requires a strategic approach, incorporating ambitious policy reforms. Transitioning the garment sector towards a fashion-driven paradigm is essential, necessitating incentives for MMF-based apparel and the removal of non-tariff barriers. Currently, India’s raw material costs for MMFs are approximately 20% higher than those of competitors such as Bangladesh and Vietnam.
Additionally, the PM-MITRA initiative should be expedited to create integrated textile hubs, enhancing efficiency in the textile production process. Negotiating free trade agreements (FTAs) with the European Union and the United States could significantly support export growth, given their collective contribution of nearly 66% to India’s apparel exports. The existing tariff rates present competitive disadvantages that need to be addressed through swift trade negotiations.
Emerging markets like Japan, Russia, Brazil, and South Korea also represent significant expansion opportunities for Indian apparel. Enhancing cotton productivity and improving fibre quality must be prioritized, leveraging India’s strong base of natural fibre production. Streamlining GM crop approvals and establishing a single-window clearance system can facilitate the adoption of tailor-made solutions for yield enhancement.
In addition, expanding irrigation, promoting high-density planting methods, and investing in precision agriculture are pivotal strategies to enhance productivity, hopefully aligning India closer to global leaders in cotton yield. Addressing these aspects is vital for propelling India towards its T&A export ambitions, yet success hinges on the government’s commitment to enacting these substantial reforms.
In summary, India’s target to escalate T&A exports to $100 billion by 2030 remains contingent on overcoming significant hurdles within the textile value chain. Key focus areas include advancing cotton productivity, adopting modern production techniques, pursuing beneficial international trade agreements, and investing in strategic reform initiatives. The ability to effectively address these challenges will largely determine whether India can realize its ambitious export aspirations or continue to face stiff competition from other global players.
Original Source: www.financialexpress.com
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