1- Textile Sector- Global scenario

• The current global apparel market size is US$ 1.7 trillion and it constitutes about 2% of the world’s GDP

• EU, USA & China are the world’s largest apparel markets with a combined share of approximately 54%

• The global apparel market size is expected to reach US$ 2.6 trillion in 2025 growing by a projected rate of 4%.

• The major growth drivers of the global apparel market will be the developing economies, mainly China & India, both growing in double digits

• China will become the biggest apparel market adding more than US$ 378 bn. in market size by 2025 while India will be the second most attractive apparel market adding around US$ 121 bn. by 2025

Global textile and apparel trade (export value) (US $ in billion)

• The global textile and apparel trade stood at US$ 820 bn. in 2014 grown at a CAGR of 5.6 % over the last decade. Apparel categories had a larger share of 56% while textiles categories had the remaining share of 44% in the overall trade

• China is the leading textile and apparel exporting country with a share of 42% of the total global exports in 2016, followed by India with a 5.4% share and Germany and Italy with a share of 5% and 4.9%, respectively

Market share of major exporting and importing nations

The top 5 textile and apparel exporting nations are China, India, Italy, Germany and Turkey. China, the largest exporter, has a share of 39% while India is distant second with 5% share.

The top 5 textile and apparel importing nations are USA, China, Germany, Japan and United Kingdom. USA is the single largest importer with a share of approx. 14% of the total global trade.

Major textile and apparel exporters

Major textile and apparel importers

Per capital spend on apparel

Per capital spend on apparel in USD

• Per capita apparel consumption in developing countries like India and China is expected to increase by more than 2 times in next 10 years (CAGR of 9-11%) and will make developing countries the drivers of incremental growth, while the developed markets will still remain important because of their large size.

• Growing urbanization and rising per capita income of India continue to grow would impact in increased purchasing power and change in lifestyle

• The expenditure on apparel never goes down in absolute terms and increased purchasing power will lead to higher spend on apparels

• The growth rate is likely to remain higher for developing countries while developed countries will show a moderate growth. But developed markets will provide huge opportunity to textile exporters on account of their large size despite moderate growth in demand

2- Textile Sector- India scenario

• Textile sector plays major role in Indian economy.

o The sector contributes ~4% of country’s GDP & ~14% to total industrial production
o The sector is one of the largest source of employment, employing ~45 million

• The size of India’s textile market as of July 2017 was around US$ 150 billion, which is expected to touch US$ 250 billion market by 2019, grown at a CAGR of 23% per cent between 2011-2016

• India’s textile and apparel exports reported a CAGR of 8.1% over 2005-2016 and stood at ~USD 40 bn in 2016. Going forward India’s T&A exports are projected to grow at a CAGR of 18.5% over 2016-2025E to reach USD 185 bn by 2025.

• Apparel exports with an expected CAGR of 21% are likely to play a major role in deriving the higher growth in T&A export.

• India’s T&A export market share is likely to increase from 5.2% in 2015 to 12% in 2023E

• India’s market share in textile and apparel trade has increased from 3.7% in 2006 to 5.2% in 2015. India’s share in world textile export in 2015 increased to 7% while in apparel export, it was reported

Structure of Industry

• The textile and apparel value chain broadly comprises four stages — ginning and spinning, weaving and knitting, processing and apparel manufacturing.

• The industry structure is vertically integrated across the value chain, extending from fibre to fabric to garments. At the same time, it is a highly fragmented sector and comprises small‐scale, non-‐integrated spinning, weaving and finishing and apparel-‐making enterprises.

Cost advantage for setting up industry

• India is one of the most cost competitive textile manufacturing base for entire value chain of T&A. Labour cost in India is lower than most of the competing countries except Bangladesh, Ethiopia and Kenya. Although power cost is on the higher side but still cheaper than China and Cambodia. Importers look at India as an alternative of China due to quality, its cost competitiveness, better adherence to compliance and political stability.

• Potential for India to grow in T&A exports is immense particularly as the China, the global leader is facing higher cost of production with increase in wages and focusing on a shift to services, and some of the other competing countries like Turkey, Bangladesh etc witnessing political instability, high inflation, currency appreciation and concerns over workplace conditions

Cost Advantage in India amongst the other nations
Country	Unit	India	Bangladesh	China	Vietnam	Combodia	Ethiopia	Kenya
Labour Cost	US$/ month	140-160	100	500-550	180	190	50-60	125-150
Power cost	US cents/Kwh	10-12	9-12	15-16	8	22	4	9
Lending rate	%	10-12%	13%	5-6%	6-7%	15%	8.5-9.5%	16-18%
Water cost	US cent/ m3	18	20.5	57	50-80	70-90	30-40	150-180
Backward Integration	India and China have complete value chain of textile business i.e. from fibre to finished products. Bangladesh and Vietnam have strong garment manufacturing capacity but very limited backward linkages to support the competitiveness

• The Indian textiles industry is set for strong growth, buoyed by strong domestic consumption as well as export demand

• Rising per capita income, growing middle classes and shift in preference to branded products to boost domestic demand of textile and apparels

• India’s per capita consumption on garment is expected to increase from USD 37 in 2013 to USD 129 by 2025. The growth rate of per capita spend on garment is highest for India and China at ~11%

• Domestic market’s 74% T&A demand comes from apparel, 7% from home textile and 19% from Technical textiles. Apparel and technical textiles are likely to grow at a rate of 15-20% over next few years

• Increasing outsourcing over the years as Indian players moved up the value chain from being mere converters to vendor partners of global retail giants. With global retail brands assured of a domestic foothold, outsourcing will also rise significantly

Indian textile market growth
	2016 (USD Mn)	2025 E(USD Mn)	Growth
Domestic	97	285	13%
Exports	40	187	19%
Total	137	470	15%

• Indian textile industry experienced noticeable growth in FY17, as FDI in the sector increased to US$ 2471.42 million in FY17 from US$ 1852.47 million in FY16

• During FY10-16, FDI in textiles and apparel industry grew at a CAGR of 14.6%

Policy Support:

Government of India Schemes for textile sector:

Scheme	Key Feature
Scheme for Integrated Textile Parks (SITP)	Grant/Equity up to 40% of the textile park development project cost subject to a ceiling of Rs. 40 Crores. GOI support under the Scheme will be generally in the form of grant to the SPV unless specifically decided by the PAC to be equity. However, the combined equity stake of GOI/State Government/State Industrial Development Corporation, if any, would not exceed 49%
	• 15% capital subsidy on eligible machinery in garmenting and technical textile sector with a cap of Rs. 30 Cr. per individual entity • 10% capital subsidy on eligible machinery in weaving for brand new shuttle less looms (including weaving preparatory and knitting), processing, jute, silk and handloom sector with a cap of Rs. 20 Cr. per individual entity • 15% capital subsidy on eligible machinery for composite units with a cap of Rs. 30 Cr. per individual entity (if the eligible capital investment in respect of garmenting and technical textiles is more than 50% of the project cost) • 10% capital subsidy on eligible machinery for composite units with a cap of Rs. 20 Cr. per individual entity (if the eligible capital investment in respect of garmenting and technical textiles is less than 50% of the project cost)
Integrated Skill Development Scheme (ISDS)	• Assistance up to 75% of the cost of the project, within an overall ceiling of Rs. 10,000 per trainee.
Comprehensive Powerloom Cluster Development Scheme (CPCDS)	• Grant up to 40% of the with a ceiling of Rs 70 Cr per cluster towards the development of Core Infrastructure, Common Facilities, H R Development Facilities & Training Centre,Weaving support Services & Commercial Area, Textile Export Service & Marketing Centre, Common facilities, and R&D facilities
Technology Mission on Technical Textiles (TMTT)	• Upgrade existing Centre of Excellences and set up of four new COEs • Support for business start‐up • Providing fund support for organizing workshops • Support for standardization • Market development Support for sale to the institutional buyers • Market development Support for export sales • Grant for conducting Contract Research and Development in identified institutes

Value drivers of the Industry

► Urbanization and increasing disposable income: Increase in urban population implies growth in affordability and changing lifestyle. Expanding working class, rising status quotient, increase in number of working women, along with awareness about brands, styles and designs are adding to the demand for branded textile products and apparel (woven and knitted) in the country.

► Government initiatives: GOI is providing continued policy support to provide an impetus to the textile and apparel sector. It has allowed 100% FDI in the Indian textile manufacturing sector through the automatic route. The government scheme for growth and development of technical textiles is encouraging indigenous manufacturers to leverage global opportunities and cater to domestic demand.

► Rising exports: India has emerged as a low-cost sourcing destination with rising textile and apparel exports driving the sector. Indian textile and apparel exports grew at a CAGR of 9.5% during 2009–2016 to reach US$36.6 billion in 2016-17.

► Rise of organized retail: The share of organized retail in the overall retail market has increased from 5% in 2009 to 8% in 2015. Furthermore, driven by the emergence of shopping malls and the growing middle class, organized retail segment is expected to grow at 17% CAGR during 2014–2019 and constitute ~10% of the total retail sector by 2019.

► Raw material base: India has a supply base for almost all man-made and natural yarns and fabrics, including cotton, polyester, rayon and others. This abundance of raw material is a big advantage for India due to its beneficial impact on cost and operational lead time. India is the second-largest producer of cotton after China, largest producer of jute, second -largest producer of silk and fifth-largest producer of synthetic fiber/yarn.

Key Stakeholders

• Development commissioner (Handlooms)

• Development Commissioner (Handicrafts)

• Textile Commissioner

• Jute Commissioner

Key Players

3- Uttar Pradesh scenario

• Textile sector is one of the important traditional industries in the state.

• Uttar Pradesh is 3rdhighest fabric producing state of India producing 13.24% of national production.

• The State ranks 5th in total silk production in the country.

• Uttar Pradesh has about 2.58 lac Handloom weavers and about 4.21 lac power loom weavers .

• Home to 6.71% of the total handlooms in India, the state has fifth highest number of handlooms in India

• The state is also known for its carpets and produces around 90% of India’s carpets.

• Uttar Pradesh is the biggest market for Textile and Handloom, with a consumer base of over 200 million people.

Uttar Pradesh Exports in Textile (in INR Cr)
Sector	2015-16	2016-17
Handloom	880.38	417.24
Carpet &Mats	4,547.54	4,648.89
Readymade Garments	15,194.26	10,866.70

4- Key Investment Enablers in Uttar Pradesh for Textile

a. Abundance of Raw material andskilled labour-

Major Handloom Production Centres in Uttar Pradesh
Centres	Products
Amroha	Picnic Mats
Azamgarh	Silk Sarees, mixed sarees and fabrics, KharriMats
Agra	Mats, bedsheets, furnishings, heavy dress materials, chenille cotton carpets.
Barabanki	Stoles, scarves, lungis.
Etawah	Bedsheets, dress materials, Mats, mixed fabrics
Farrukhabad	Cotton prints, bedsheets, dress materials, Mats, chenille cotton carpets, mixed fabrics
FatehpurSikri	Heavy cotton fabrics, dress materials, Mats, chenille cotton carpets, mixed fabrics.
Ghaziabad	Jacquard furnishings, bedspreads, terry towels, linen, home furnishings.
Gorakhpur	Terry towels, toweling, furnishing, dress material.
Hathras	Chenille rugs, cotton carpets, fabrics
Kanpur	Mats, Dusters, Cotton fabrics
Lucknow	Chikankari work
Sitapur	Cotton mats
Varanasi	Silk sarees, sarees, mixed fabrics, cut work items, dress materials, furnishings, stoles, scarves, gauze and leno fabrics, brocades.

b. Key Handloom and Textile Clusters

Most significant Clusters for Handloom and Textile in Uttar Pradesh include -

1. Carpet cluster Mirzapur-Bhadohi –

o Bhadohi is known as the ‘carpet city’ of India. It is the largest manufacturer and exporter of hand-knotted carpets in India.
o The region is the largest handmade carpet weaving cluster engaging 3.2 million people and 22,00,000 artisans in its export units.
o Bhadohi region accounts for at least INR 2,000 crore of India's estimated INR 3,500-4,000 crore carpet export industry.

2. Silk cluster Varanasi –

o Varanasi Silk Handloom Cluster is world famous and its dominance continues in producing best quality silk fabrics, particularly sarees in India.
o Varanasi silk saree/ fabric with heavy embroidery work provides several variations in designs and color making it exclusive .
o Other products produced in the cluster include – Dress Materials and fashion accessories such as stole, scarves, etc.
o Besides export of sarees, other exports from the cluster include furnishing fabrics and Buddhist brocades.

Other Handloom Clusters Approved by GoI in UP

Year

District -Number of Clusters approved

2015-16

1. Moradabad – 01	2. Aligarh – 01	3. Lucknow – 01
4. Varanasi - 01

2016-17

1. Moradabad – 04	2. Aligarh – 01	3. Lucknow – 02
4. Bareilly – 01	5. Mau – 10	6. Meerut – 01
7. Varanasi – 10	8. Etawah – 01	9. Jhansi – 01

2017-18

1. Lucknow – 01

2. Kanpur – 01

Textile Industrial Areas	Regions	Details
Trans Delhi Signature City	Ghaziabad	Apparel Park – Around 44000 SQM land available.
Malwan	Fatehpur	Textile Mill – Around 38000 SQM land available.
SEZ, Moradabad	Moradabad	Textile Units – Around 1,48000 SQM land available.
G.C. Jainpur	Kanpur Dehat	Textile Mill – Around 18000 SQM land available.

c. Availability of Skilled, Semi-Skilled Human Resource -

• With a total population of more than 200 Million, Uttar Pradesh boasts of a labourforce of over 70 Million of which over 40 million are non-agricultural labour force

• Rich in traditional arts, the State has abundance of skilled labour readily available at competitive cost for textile sector.

• Premier institutes such as National Institute of Fashion Technology,Raebarelioffers courses in textile design, leather design and fashion technology and management; Uttar Pradesh Textile Technology Institute, Kanpur offers undergraduate and postgraduate programmes in textile technology and engineering; Indian Institute of Handloom Technology, Varanasioffers diploma courses in Handloom technology; etc.

• Integrated skill development scheme(ISDS) –Centrally sponsored scheme is successfully running in the State to address the skilled man power of textile Industry. So far total 9922 persons have been trained under this scheme in the state.Total INR 7.75 crore funds have been released under the scheme to UPICA, GoUP in 2016-17.

Government support to Industrial Infrastructure under Industrial Investment and Employment Promotion Policy (IIEPP) 2017

a. Besides providing various attractive fiscal incentives, IIEPP 2017 also has provision to facilitate industrialization in Handloom and Textile sector.
b. The Policy ensures that the state government will assist in developing infrastructural facilities in the textile parks proposed under Scheme of Integrated Textile Parks (SITP) of Ministry of Textiles, Government of India.
c. For increasing the production of silk in the State, GoUP will developclusters for farming of Mulberry. Establishment of cocoon threading units will also besupported in the state.
d. Handloom, textile and silk related units, garment production and packaging and other activities related to technical textiles will be provided incentives like stamp duty exemption, rebate on commercial taxes, etc.
e. Textile units in Bundelkhand, Poorvanchal and Madhyanchal will be provided special incentives. Mega units in textile sector will be provided incentives on case to case basis.
f. GoUP will organise as well assist handloom weavers for participating in fairs both domestic and international, to promote their produce, nationally and internationally, through a marketing promotion scheme.
g. Pradhan Mantri Mudra Yojana will be optimally utilised to fulfil the capital investment required for marketing of textile produce. GoUP will also work towards linking Pradhan Mantri Mudra Yojana for assisting farmers producing silk cocoon with working capital.

Incentives underTextile Policy (Draft stage)

a. Development of Infrastructure for Textile –
a. Allotment of land by Government agencies will be subsidized - 30% In GB Nagar and 50% elsewhere – UPSIDC etc; Limited to 5% of the total project cost. After commercial production begins

b. Incentive to private textile industrial estates or parks - minimum 25 acres.

c. Ready to use plug and play infrastructure - Sheds after investor’s commitment.

d. Incentives for the construction of staff quarters/hostels/ dormitories – includes Reimbursement of 60% interest for 7 years (except GB Nagar); Maximum INR 5.00 crore/year & INR 30 crores total.
b. Fiscal Incentives –
a. Stamp Duty Exemptions - 100 % exemption except GB Nagar; 75% exemption in GB Nagar; 50% exemption for first buyer in a textile park/estate developed by SPV.

b. SGST reimbursement for 10years - MSME Textile Units - @90%; Textile units (other than MSME); Poorvanchal and Bundelkhand @90%;Madhyanchal and Pashchimanchal (except GB Nagar) @75 %;GB Nagar @60%.Mega and Super-Mega textile units @80%.
c. Other Subsidies –
a. Capital Interest Subsidy - @ 7% for 7 years with a cap of INR 1.5 crore/ year/unit; Cap of INR 75 lakhs/year/ unit in GB Nagar.

b. Infrastructure Interest Subsidy - @ 5% for 5 years with a cap of INR 1 crore/unit.

c. Quality Development Subsidy - @ 5% for 5 years with a cap of INR 1.00 crore per Lab/Tool-Room.

d. Capital Subsidy - @ 25% of plant and machinery to textile and garmenting units.

e. Working Capital Interest Subsidy - For Silk reeling units @ 5% for 5 years with a cap of INR 50,000/ year.

Support to Skill Development and Training

a) Scholarship of INR 500/month/students of vocational subjects of textiles.
b) A grant of INR 5 Lakhs per college for the purchase of new handlooms, accessories and raw-materials.
c) Honorarium to assistant of handloom weavers - INR 1000 per month for two years,
d) Top-up in the GOI’s Scheme by the State Government
• ‘Integrated Skill Development Scheme for the Textiles and Apparel Sector Including Jute and Handicrafts’ Scheme -- 25% additional grant.

• Easy loans to weavers under the ‘P.M. Bunkar Mudra Yojna’.

• “Standup India” scheme tapped extensively for potential SC and ST entrepreneurs, especially in silk reeling.

5- Investment opportunities

There are numerous investment opportunities across value chain in Garmenting, Dyeing, Fabric production, Spinning etc.

a. FibreProduction – In India, Uttar Pradesh offers huge scope for manmade fibre and filament manufacturing.

b. Spinning – The spinning sector in UP is highly advanced and competent globally in terms of price, quality and standards, offering cheap skilled labour. It is likely to grow further and adopt new technologies.

c. Weaving – India forms world’s highest installed weaving capacity, and UP holds a strong position. There is already achieved strength in manufacturing of knitted and woven fabric however opportunities in value added and specialty fabrics still need to be explored.

d. Stitching – Given the abundant labour force with high rates of female labour force participation in the textile sector, the state has potential to be part to global value chain through stitching for the apparel industry.

e. Apparel – It is estimated that apparel sector generates 56-84 jobs per INR 97.5 lac investment as compared to any other industry average of 6 jobs generated per INR 97.5 lacinvestment. Looking at the high employment generating potential, Government of India has extended various benefits to this sector. In Uttar Pradesh, investors can benefit from the market access arrangement in lndia with countries like Japan, South Korea, ASEAN, Chile, Netherlands, etc.

f. Technical Textiles is a knowledge based industry at a nascent stage in India, which offers tremendous opportunities for joint ventures and FDI. There are several segments under Technical textiles including Agrotech, Meditech, Buildtech, Mobiltech, Clothtech, Oekotech, Geotech, Packtech, Hometech, Protech, Indutech and Sportech.

Sr.No.	Sub-Segment	Opportunity
1	InduTech	Glass fiber battery separator, fusing belts, high mesh filters, industry felt, woolen felt, fire resistant fabric, slings for bulk handling
2	HomeTech	High quality upholstery fabric, narrow width fabric for furniture application, wipes for house hold use, fiber foam & wadding, fiberfill products
3	AgroTech	Agro shading net, packing net for agro products
4	GeoTech	Woven & non-woven geotextiles
5	ClothTech	Narrow width fabric as fashion accessories like belt
6	BuildTech	Scaffolding net
7	ProTech	Fire retardant clothes
8	MobilTech	Interior carpets & NVH components
9	PackTech	Jumbo bags, FIBC, coated fabric for soft luggage
10	OekoTech	PP nonwoven liners for land fill sites of MSW
11	MediTech	Nonwoven disposables like apron, mask, caps, draper etc

The market size of Technical Textiles in India was estimated to be INR 1.5 lakh crores for the year 2016-17 with a growth rate of 20% per annum. Uttar Pradesh can be a promising destination to invest in manufacturing technical textiles in India.

g. Integrated Units - There is also scope for integrated factories from spinning to weaving and garmenting with high automation, especially for the domestic fashion market. Integrated units can leverage economies of scale and market access benefits of set up in Uttar Pradesh and cater to the fast fashion requirement of consumers.

h. Establishment of textile parks in Uttar Pradesh will not only create maximum job creation but also contribute to textile exports of India. Proposed Textile park regions include - Fatehpur, Kanpur, Bareilly and Farukkhabad in the state.

i. Retail Brands – Since Uttar Pradesh is country’s largest consumer base, investment in multi brand retail. Now that the capital market in multi brand retailing allows 51% FDI in India, Uttar Pradesh is one the most promising destination to set up multi brand retail businesses through Joint Ventures.

j. E-Commerce – With boom in e-commerce sector, investment in e-commerce for handloom and textileproducts manufactured in Uttar Pradesh is a promising opportunity. There is popular demand for the traditional art and finesse of UP-handloom products across the globe.

k. Textile R&DCentres – Investment in R&D for new product development by way of establishing hi-tech production centres, design studios, training centresin another promising opportunity in Uttar Pradesh in this sector. These centres can be started as incubation centres in existing textile institutes and textile parks, already equipped with skilled and semi labour and abundance of raw materials.