Textiles and Garments


  • Second largest textile fiber producer in the world
  • India is the largest cotton and jute producer in the world
  • Second largest textile manufacturing capacity globally
  • India accounts for 18% of the world’s spindles and 9% of the world’s rotors
  • 5% share in global textiles and apparel trade
  • Abundant availability of raw materials such as cotton, wool, silk, jute and man-made fibers
  • Comparative advantage in terms of skilled manpower and cost of production over major textile producers across the globe
  • Largest producer of Jute in the world with 1,710 million kg production in 2013-14
  • Second largest producer of Silk in the world with 29 million kg production in 2014-15
  • One of the major producers of Wool in the world with 48 million kg production in 2014-15
  • Second largest producer of Man-made Fiber and Filament in the world with 2,511 million kg production in 2015-16
  • Second largest installed spindle capacity in the world with more than 50 million spindles in 2014-15
  • Second largest installed rotor capacity in the world with more than 8 million rotors in 2014- 15
  • World’s highest installed weaving capacity with more than 4.9 million looms (including 2.4 million handlooms) in 2014-15
  • Apparel has contributed the most, i.e., 42% to the textile and apparel export basket of India during 2015-16. Also, it is one of the focus areas of the Government of lndia as the sector has huge potential for employment generation


  • 100% FDI is allowed  under the automatic route in the textile sector; investment is subject to all applicable regulations and laws.


The Government of India has launched the following initiatives to strengthen textile production and encourage this industry to cater to the domestic and international market efficiently:

  1. Technology Upgradation Fund Scheme (TUFS)
    • TUFS has infused investment of more than USD 41.33 billion in the industry. Support has been provided by way of credit at reduced rates and capital subsidies for modernisation and upgradation
  2. Scheme for Integrated Textile Parks (SITP)
    • Scheme will provide funding for infrastructure, buildings for common facilities like design and training centers, warehouses, factories and, plant and machinery. 74 textiles parks have been approved and are at various stages of implementation till date, with 18 parks operational, 32 under implementation. The investment of USD 692 million is sanctioned by the government to create 66,000 jobs
  3. Integrated Processing Development Scheme (IPDS)
    • IPDS is being implemented to make Indian textiles more competitive and environment-friendly
  4. Integrated Skill Development Scheme (ISDS)
    • ISDS plans to bridge that skill gap by training 1.5 million people for which USD 300 million has been allocated by the government
  5. Amended Technology Upgradation Fund Scheme for textiles industry (ATUFS)
    • ATUFS is designed to provide incentives to entrepreneurs and business owners for upgrading technologies. ATUFS facilities are expected to receive an investment of USD 15 billion and create 3 million jobs in the country
  6. Market Access Initiatives (MAI)
    • MAI was launched to promote the Indian exports in a sustained manner. The scheme funds various market studies and surveys to assist exporters
  7. Market Development Assistance (MDA)
    • To encourage exporters to conduct promotional activities for their products
  8. Technology Mission for Technical Textiles (TMTT)
    • TMTT has two mini missions to create a healthy ecosystem for the production of technical textiles in India. The Mini Mission I of the plan aims at standardization, creating common testing facilities and several resource centers with IT infrastructure. Under Mini Mission II, support will be provided to create domestic and export markets for the technical textiles
  9. Special package for Textile and Apparel Sector
    • To boost exports, labour-friendly policies, scaling up the production and to generate over 10 million jobs in the textile industry over the period of next three years
  10. Implications of Goods and Services Tax (GST) for Indian Textiles Sector
    • GST will result in ‘Fibre-neutrality effect’ on the Indian textiles sector, according to the Ministry of Textiles, that means all man-made and natural fibres will be treated equally from the tax point of view


Key Provisions of Budget 2016-17:

  • Basic Custom Duty on certain speciality fibres and yarns has been reduced from 5% to 2.5%. Basic Custom Duty has been exempted on import of certain fabrics of value equivalent to 1% of Free on Board (FOB) value of exports in the preceding year for the manufacturing of textile for exports
  • The Excise Duty of 2% without CENVAT credit and 12.5% with Central Value Added Tax (CENVAT) credit has been imposed on branded readymade garments and made up of price USD 15.38 or more
  • The tariff value of readymade garments and made up articles of textiles has been changed from 30% of retail sale price to 60% of retail sale price
  • The Excise Duty has been increased from 6% to 12.5% with CENVAT credit on re-cycled Polyester Staple Fibre and Polyester Filament Yarn

Recent Packages provided to the sector:

The Outlay for Ministry of Textile is of USD 515.39 million (including USD 51.5 million for North Eastern Region, USD 25.77 million for Scheduled Caste Sub-Plan and USD 6.18 million for Tribal Sub-Plan) which is mainly for:

  • Amended Technology Upgradation Fund Scheme (USD 227.7 million)
  • National Handloom Development Programme (USD 84.15 million)
  • National Handicraft Development Programme (USD 33.69 million)
  • Development of Woollen Textiles (USD 4.46 million)
  • Development of Silk Industry (USD 26.54 million)
  • Power Loom Promotion Scheme (USD 17.7 million)
  • Textile Infrastructure (USD 24.25 million)
  • Research & Capacity Building including National Institute of Fashion Technology (USD 47.51 million)
  • NER Textiles Promotion Scheme including Scheme for usage of Geo Textile in North Eastern Region & Scheme for Promoting Agro Textiles in North East (USD 39.88 million), etc.

Tax Incentives:

  • Presumptive taxation scheme under section 44AD of the Income Tax Act available for small and medium enterprises with turnover or gross receipts not exceeding USD 0.15 million has been enhanced to USD 0.30 million
  • The corporate income tax rate for the next financial year of the companies with turnover not exceeding USD 0.76 million (in the financial year ending March 2015) has been lowered from present rate of 30% to 29%, plus surcharge and cess
  • Service tax is exempted on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana (DDU GKY) and services provided by Assessing Bodies empaneled by Ministry of Skill Development & Entrepreneurship
  • Higher drawback rate has been provisioned from 1.7.2012 onwards under notification No. 41/2012

State Incentives:

  • Apart from the above, each state in India offers additional incentives for industrial projects. Some of the states also have separate policies for the textiles sector
  • Incentives are in areas like subsidized land cost, relaxation in stamp duty exemption on sale/lease of land, power tariff incentives, concessional rates of interest on loans, investment subsidies/tax incentives, backward areas subsidies and special incentive packages for mega projects

Export Incentives:

  • Export Promotion Capital Goods Scheme (EPCG)
  • Duty Exemption & Remission Scheme
  • Merchandise Exports from India Scheme (MEIS)

Area based Incentives:

  • Incentives for units in Special Economic Zones (SEZs)/National Investment & Manufacturing Zones (NIMZs) as specified in respective acts or the setting up of projects in special areas such as the North-East, Jammu & Kashmir, Himanchal Pradesh & Uttarakhand.