Role of Textile Industry in Indian Economy

Role of Textile Industry in India GDP has been quite beneficial in the economic life of the country. The worldwide trade of textiles and clothing has boosted up the GDP of India to a great extent as this sector has brought in a huge amount of revenue in the country.

The Textile industry in India traditionally, after agriculture,is the only industry that has generated huge employment for both skilled and unskilled labor in textiles. The textile industry continues to be the second largest employment generating sector in India. It offers direct employment to over 35 million in the country. The share of textiles in total exports was 11.04% during April–July 2010, as per the Ministry of Textiles. During 2009-2010, Indian textiles industry was pegged at US$55 billion, 64% of which services domestic demand. In 2010, there were 2,500 textile weaving factories and 4,135 textile finishing factories in all of India.

In the past one year, there has been a massive upsurge in the textile industry of India. The industry size has expanded from USD 37 billion in 2004-05 to USD 49 billion in 2006-07. During this era, the local market witnessed a growth of USD 7 billion, that is, from USD 23 billion to USD 30 billion. The export market increased from USD 14 billion to USD 19 billion in the same period.


The archaeological surveys and studies have found that the people of Harrapan Civilization knew weaving and the spinning of cotton four thousand years ago. Reference to weaving and spinning materials is found in the Vedic Literature also.

There was textile trade in India during the early centuries.A block printed and resist-dyed fabrics, whose origin is from Gujarat is found in tombs of Fostat, Egypt. This proves that Indian export of cotton textiles to the Egypt or the Nile Civilization in medieval times were to a large extent.Large quantity of north Indian silk were traded through the silk route in China to the western countries. The Indian silk were often exchanged with the western countries for their spices in the barter system. During the late 17th and 18th century there were large export of the Indian cotton to the western countries to meet the need of the European industries during industrial revolution. Consequently there was development of nationalist movement like the famous Swadeshi movement which was headed by the Aurobindo Ghosh.

There was also export of Indian silk, Muslin cloth of Bengal, Bihar and Orissa to other countries by the East Indian company. Bhilwara is known as textile city.

The textile industry is one of the leading sectors in the Indian economy as it contributes nearly 14 percent to the total industrial production. The textile industry in India is claimed to be the biggest revenue earners in terms of foreign exchange among all other industrial sectors in India. This industry provides direct employment to around 35 million people, which has made it one of the most advantageous industrial sectors in the country.

Indian Textile Policy

Government of India passed the National Textile Policy in 2000

Textile Organisation

The Indian Textile industries is mainly dominated by some government, semi government and private institutions.

The major functions of the ministry of Textile are:

  • Bhilwara Textiles Industry
  • Textile Policy & Coordination
  • Man-made Fiber Industry
  • Cotton Textile Industry
  • Jute Industry
  • Silk and sericulture Industry
  • Wool Industry
  • Decentralized Powerloom Sector
  • Export Promotion
  • Planning & Economic Analysis
  • Finance Matters
  • Information Technology(IT)

The advisory boards include:

  • All India Handlooms Board
  • All India Handicrafts Board
  • All India Power looms Board
  • Advisory Committee under Handlooms Reservation of Articles for Production
  • Co-ordination Council of Textiles Research Association
  • MM cotton industry

The major export promoting councils include:

  • Apparel Export Promotion Council, New Delhi
  • Carpet Export Promotion Council, New Delhi
  • Cotton Textiles Export Promotion Council, Mumbai

The major PSU or Public Sector Undertaking are:

  • National Textile Corporation Ltd. (NTC)
  • British India Corporation Ltd. (BIC)
  • Cotton Corporation of India Ltd. (CCI)
  • Jute Corporation of India Ltd. (JCI)
  • National Jute Manufacturers Corporation (NJMC)
  • Handicrafts and Handlooms Export Corporation (HHEC)
  • National Handloom Development Corporation (NHDC)
  • Export Promotion Council for Handicrafts, New Delhi
  • Handloom Export Promotion Council, Chennai
  • Indian Silk Export Promotion Council, Mumbai
  • Power loom Development & Export Promotion Council, Mumbai
  • Synthetic & Rayon Textiles Export Promotion Council, Mumbai
  • Wool & Woolen Export Promotion Council, New Delhi

Other autonomous bodies in this industry are:

  • Central Wool Development Board, Jodhpur
  • National Institute of Fashion Technology, New Delhi
  • National Centre for Jute Diversification

The textile Research Associations are:

  • South India Textiles Research Association (SITRA), Coimbatore
  • Ahmedabad Textiles Industry’s Research Association
  • Bombay Textiles Research Association, Mumbai
  • Indian Jute Industries Research association, Kolkata
  • Man-made Textiles Research Association, Surat
  • Synthetic and art silk –Mills Research Association, Mumbai
  • Wool Research Association, Thane
  • Northern India Textiles Research Association (NITRA), Ghaziabad

Some of the important benefits offered by the Indian textile industry are as follows:

  • India covers 61 percent of the international textile market
  • India covers 22 percent of the global market
  • India is known to be the third largest manufacturer of cotton across the globe
  • India claims to be the second largest manufacturer as well as provider of cotton yarn and textiles in the world
  • India holds around 25 percent share in the cotton yarn industry across the globe
  • India contributes to around 12 percent of the world’s production of cotton yarn and textiles

Role of Textile Industry in Indian Economy

The Role of Textile Industry in India GDP had been undergoing a moderate increase till the year 2004 to 2005. But ever since, 2005-06, Indian textiles industry has been witnessing a robust growth and reached almost USD 17 billion during the same period from USD 14 billion in 2004-05. At present, Indian textile industry holds 3.5 to 4 percent share in the total textile production across the globe and 3 percent share in the export production of clothing. The growth in textile production is predicted to touch USD 19.62 billion during 2006-07. USA is known to be the largest purchaser of Indian textiles.

Following are the statistics calculated as per the contribution of the sectors in Textile industry in India GDP:

  • India holds 22 percent share in the textile market in Europe and 43 percent share in the apparel market of the country. USA holds 10 percent and 32.6 percent shares in Indian textiles and apparel.
  • Few other global countries apart from USA and Europe, where India has a marked presence include UAE, Saudi Arabia, Canada, Bangladesh, China, Turkey and Japan
  • Ready made garments accounts for 45 percent share holding in the total textile exports and 8.2 percent in export production of India
  • Export production of carpets has witnessed a major growth of 42.23 percent, which apparently stands at USD 654.32 million during 2004-05 to USD 930.69 million in the year 2006-07. India holds 36 percent share in the global textile market as has been estimated during April-October 2007
  • The technical textiles market in India is assumed to touch USD 10.63 billion by 2007-08 from USD 5.09 billion during 2005-06, which is approximately double. It is also assumed to touch USD 19.76 billion by the year 2014-15
  • By 2010, India is expected to double its share in the international technical textile market
  • The entire sector of technical textiles is estimated to reach USD 29 billion during 2005-2010

The Role of Textile Industry in India GDP also includes a hike in the investment flow both in the domestic market and the export production of textiles. The investment range in the Indian textile industry has increased from USD 2.94 billion to USD 7.85 billion within three years, from 2004 to 2007. It has been assumed that by the year 2012, the investment ratio in textile industry is most likely to touch USD 38.14 billion.