April 9, 2001
News Release 01-046
U.S. TRADE AND INVESTMENT OPPORTUNITIES IN INDIA'S TEXTILE AND APPAREL
INDUSTRY COULD GROW UNDER INDIA'S NATIONAL TEXTILE POLICY 2000
India's National Textile Policy 2000 is expected to provide opportunities for growth in U.S. trade
and investment in India's textile and apparel industry, according to a new U.S. International Trade
Commission (ITC) staff research study.
The publication, India's Textile and Apparel Industry: Growth Potential and Trade and Investment
Opportunities, examines India's textile and apparel industry in terms of the structural anomalies and
other key factors that inhibit its growth and competitiveness, government programs designed to help
improve its competitiveness, and product sectors that offer opportunities for increased U.S. trade and
ITC staff research studies are generated by ITC staff and do not reflect the views of the U.S.
International Trade Commission or of any individual Commissioner. Highlights of the study follow:
- The textile and apparel industry is very important to the Indian economy as it accounts for
4 percent of India's gross domestic product, 20 percent of industrial output,and the largest
source of foreign exchange earnings at slightly more than 30 percent of India's export
- India has the second-largest spinning capacity in the world (after China). India's spinning
segment is fairly modernized; approximately 35 to 40 percent of India's spindles are less than
10 years old.
- India has the largest number of looms in place to weave fabrics. However, 98 percent of the
looms are accounted for by India's handloom and powerloom sectors, which use mostly
outdated equipment and produce low-value unfinished fabrics. The fabric processing (dyeing
and finishing) segment, the weakest link in India's textile supply chain, consists of a large
number of small hand- and power-processing units. The proliferation of small independent
units in the weaving and processing segments is due to the Indian government's fiscal
policies, which favor small independent units over composite mills with modern weaving and
- The production of apparel in India was, until recently, reserved for the small-scale industry
sector, which limited investment in the apparel sector and resulted in a highly fragmented
industry characterized by low levels of technology use. Only export-oriented units were
allowed to operate in this sector with larger investment.
- As India steps into a quota free regime by January 1, 2005, and removes market access
barriers at home under its WTO commitments, the Indian government has taken measures to
enhance the competitiveness of the Indian textile and apparel industry. These measures
include establishing a $6 billion Technology Upgradation Fund to upgrade the technology at
subsidized interest rates, allowing foreign investment of up to 51 percent in the textile
industry, and creating a $16 million "cotton technology mission" to increase research on
improving cotton productivity and quality.
- The Indian government's recently unveiled National Textile Policy 2000 (NTP 2000) opens
the country's apparel sector to large firms and allows up to 100 percent foreign investment in
the sector without any export obligation.
- The goal of the NTP 2000 is to improve the global competitiveness of the Indian textile and
apparel industry and enable the industry to quadruple its exports to $50 billion by 2010. The
NTP 2000 also aims to liberalize remaining controls and regulations, eliminate targeted tax
and fiscal benefits for small firms, and encourage strategic alliances with international textile
firms to set up large integrated mills and processing facilities. The NTP 2000 also provides
for additional fiscal incentives for investors in technical textiles.
- India's huge domestic market, with a middle class estimated at 200 million people, offers the
prospect of significant growth opportunities in domestic textiles and apparel consumption.
The study identifies technical textiles, home textiles, specialty yarns and fabrics, and apparel
as having the greatest growth potential where opportunities exist for greater foreign
investment and trade.
India's Textile and Apparel Industry: Growth Potential and Trade and Investment Opportunities
(SRS-27, USITC Publication 3401, March 2001) will be posted in the Publications area of the ITC
Internet site at www.usitc.gov. A printed copy may be requested by calling 202-205-1809 or by
writing the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW,
Washington, DC 20436. Requests may also be made by fax to 202-205-2104.
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