The proposed trade deal with the 27-nation European Union (EU) is expected to provide zero-duty access to the $95 billion European market for Indian textile and apparel manufacturers. Currently, India's share of the European market is just 6 per cent, or $5.5 billion.
Businesses are testing new markets, tapping into domestic demand, and pushing the government for relief.
The textile and apparel sector is India's second-largest employment provider, after agriculture, and it is now caught in a wave of uncertainty following the Donald Trump administration's tariff policy.
From labelling India the 'Tariff King' to slapping sweeping import duties, US President Donald Trump has steadily hardened his trade stance on India. These announcements are being seen as a pressure tactic to get New Delhi to agree to demands made by the US in the proposed Bilateral Trade Agreement (BTA).
With cotton still figuring in the list of commodities that are produced using practices such as child labour, the Confederation of Indian Textile Industry (CITI) has entered into an understanding with the International Labour Organisation (ILO) to create awareness, share technical know-how and knowledge about better labour standards. These standards, which are part of ILO Fundamental Principles and Rights to Work (FPRW), will be tried on a pilot basis in major cotton-growing districts of Madhya Pradesh for one year starting in 2024.
Textile stocks have exhibited a mixed performance so far this calendar year (CY23), amidst higher domestic cotton prices and tepid global demand. Shares of Page Industries, Dollar Industries, Lux Industries, and VIP Clothing have declined up to 13 per cent so far in CY23, as against a 9 per cent jump in the S&P BSE Sensex. On the contrary, shares of Arvind, Welspun India, Raymond, and Gokaldas Exports have gained up to 51 per cent, during the same period.
A few days back, Atul Ganatra, president of the Cotton Association of India, presented a grim scenario of the crop's prospects in the 2024-25 season that starts in October. Addressing the association's annual general meeting, Ganatra said the area under the crop could go down by at least 10 per cent in the coming season due to falling yields and realisation, leading to farmers losing interest. The fear of a decline in acreage comes against the backdrop of India's cotton production probably falling to its lowest in a decade, according to estimates.
It argued that the duty reduction will not lead to revenue loss for the government.
Acknowledging that the rupee appreciation has created some problems for exporters, the government on Tuesday assured the textile industry of addressing all its legitimate concerns to generate more employment. "I am aware that the strengthening of the rupee has created some strains for our exporters," Prime Minister Manmohan Singh said at the golden jubilee celebrations of the Confederation of Indian Textile Industry.
Since September last year, when everyone realised that the global economic meltdown could not be wished away, industry groups have been dishing out data on job losses. Among these is the Confederation of Indian Textile Industry, which said a million jobs had been lost in the last financial year. Most textile companies expect the situation to improve by October this year.
Vidarbha, the land of farmers' suicides, may soon witness changes in cultivation methods.
In order to modernise the Indian textile industry, the finance minister has increased the allocation to the Technology Upgradation Fund Scheme (TUFS) by 188 per cent to Rs 3,140 crore (Rs 31.40 billion) for 2009-10 as against Rs 1,090 crore (Rs 10.90 billion) for the corresponding period last year.
This comes in the background of claims by the Confederation of Indian Textile Industry, an industry body, that about 700,000 jobs have been cut in the last six months. The industry lobby group has also forecast a further loss of half a million jobs in the next five months.
Having already witnessed a job cut of around seven lakhs so far in the year, the textile industry may see a further reduction in manpower by five lakhs, given in a decline in business by 1.5 per cent.
Backed by the China-plus-one policy, India's textile and apparel exports have seen a 53 per cent growth during the April-November period of the current fiscal year at around $26 billion. This compares to the figure of $17 billion during the same period in FY21. According to Wazir Textile Index, all major companies including Welspun, Vardhman, Trident, KPR Mills, Indo Count, RSWM, Filatex, Nahar Spg and Indorama have posted higher sales during the first half of the current fiscal year compared to the pre-pandemic year.
India's Textiles Minister Shankersinh Vaghela Thursday stressed the need for Asian countries to come together to enhance competitiveness and harness their advantages to withstand global competition.
Indian production this season (Oct 2006-Sept 2007) is estimated at 280 lakh bales of 170 kg (against 245 lakh bales last season) and for the next season, it has been projected at a minimum 300 lakh bales.
A decline in exports, which is a distinct possibility at the moment, would affect employment in the sector and even lead to a loss of existing jobs.
Indian firms feared they would lose business if US ratified the Trans-Pacific Partnership agreement with 11 other countries.
Even as the industrial cycle has ground to a halt during the 21-day lockdown, the industry has been hit hard by foreign orders from major clients in the US and Europe being cancelled. Also, a sudden lack of labour has crippled the sector because of a mass exodus of workers from industrial units to the hinterland.
Despite the onset of wedding season, the situation in apparel retail market remained unchanged and saw sharp decline in sales
The country's textile industry is concentrated in a few pockets of Gujarat and Maharashtra in the west and Tamil Nadu and Karnataka in the south.
With exporters' claim for over five months still pending, liquidity has been wiped out and the process of finalising new contracts has been held up.
Particularly hit has been the apparel sector, where the time taken by the industry to adjust to the Goods and Services Tax regime, downward revision of export incentives, and a credit squeeze faced by small and medium scale enterprises, has pushed production downwards.
A combination of externalities such as global trade wars and slowing growth, continuing glitches in accessing offsets under the GST regime, which has created a liquidity crunch for smaller exporters, and the growing competitiveness of smaller countries are causing the slowdown.
'The package will help in realising the true potential of employment generation in the textile and apparel sector.'
India Inc had cheered Donald Trump's decision to scrap TPP, but now there is a growing sense that it won't really lead to positive growth in trade with the US. Subhayan Chakraborty reports.
Despite the recent Western criticism on Bangladesh's labour standards, India has a long way to go before it overtakes the neighbour in global exports.
A delayed monsoon and abundant cotton in the international market could spell trouble in the state's suicide zone.
© 2026 Rediff.com - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances