Textile Industry Contribution in Indian Economy
India’s textile industry is one of the country’s most important industries in driving the economy. Economical analysis shows that the industry accounts for approximately 4% of the GDP, 14% of industrial production and up to 17% of total export earnings in the country. In addition, the sector offers more than 35 million job opportunities to Indians. This makes it the second largest employer in India after the agricultural industry. The textile industry contribution in Indian economy largely depends on the availability of unskilled and skilled labor, cheap labor and a strong base of raw materials.
The textile industry has a range of advantages including a high domestic demand and the ability of the industry’s units to deliver customized orders to customers across the country. The industry is highly diverse with hand-spun and hand woven sections on one end and, and capital-intensive, and sophisticated mills on the other end of the spectrum.
Sector structure and the textile industry contribution in Indian economy
India’s textile industry is vertically integrated, extending from fiber to fabric to garments. The sector is also highly fragmented, with small-scale enterprises for spinning, weaving, processing, and cloth manufacturing.
Over the years, majority of Indians have relied on the industry. Before industrialization, the growth of the industry was attributed to the efforts by hand weavers and handloom workers. However, between 1950 and 1970, the government launched reforms and policies, which triggered massive growth in the industry. This restructuring led to the decentralization of small and medium enterprises.
Between 2003 and 2004, textile exports in India amounted to $11,698.5 million against $11,142.2 million in the previous financial year, representing about 5% growth.
Today, over 9.5 hectares of land is under cotton cultivation to meet the demand for raw materials. Thus, textile industry contribution in Indian economy cuts across many facets of life, with almost every Indian depending on the sector directly or indirectly.
Why textile industry contribution in Indian economy is important
It is doubtless that textile industry contributes immensely to India’s economic growth. It is one of the leading sources of revenues for the government, making it an economic pillar. Recently, the industry has witnessed growth. For example, the industry expanded from $37 billion in 2004-05 to $49 billion in 2006-07.
The textile industry in India offers the following benefits:
- India controls about 61% share of the international textile market
- India enjoys 22% of the world market
- India is the world’s third largest manufacturer of cotton
- India is the world’s second largest manufacturer and provider of cotton yarn
- India controls 25% of cotton yarn market in the world
These far-reaching benefits signal how textile industry contribution in Indian economy remains a source of wealth for the country.
Investments that drive Textile Industry in India
Over the last five years, India has witnessed massive investments in the textile industry. Between April 2000 and May 2015, the sector attracted an average of US$ 1,647.09 million Foreign Direct Investment (FDI). Some of the top investments in the industry include the following:
- A planned joint venture between Reliance Industries Ltd (RIL) with China-based Shandong Ruyi Science and Technology Group Co is set to transform the industry in a great way. This JV will allow leveraging of RIL’s current business network in the country and Ruyi’s modern technology and its global reach.
- Dupont has collaborated with RIL and Vipul Sarees to use Sorona, its renewable fiber product to produce an environmentally friendly version of the Indian sarees, which is a famous ethnic women wear.
- Snapdeal and India Post have signed an agreement that will allow thousands of laborers, including weavers and artisans through its website from Varanasi.
Apart from these investments, government initiatives also enhance textile industry contribution in Indian economy. For example, the government has launched several export promotion policies for the sector. This is aimed at marketing India globally and winning buyers from all over the world.
The government is also set to announce a new National Textiles Policy. This will create more than 35 million jobs in the industry by increasing FDI.
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