India is striving to hit $100 billion in textile exports within the next five years, with success relying heavily on the ability to support and scale its micro, small, and medium enterprises (MSMEs), according to a new report by Primus Partners. The report emphasizes that textile MSMEs, the backbone of the industry, are currently hampered by fragmented value chains, high production costs, skill shortages, and limited global market access.
Although India accounts for just 4.6 per cent of global textile exports, compared to China’s 48 per cent share, there is immense potential to close this gap. The ‘Roadmap for $100 Billion Exports in 5 Years’ report stresses that unlocking MSME potential is crucial to driving India textile export growth and positioning the country as a global leader in textile manufacturing.
Leveraging Opportunities Amid Geopolitical Shifts
The report highlights the opportunities presented by geopolitical changes, offering Indian firms a chance to expand their share of the global market. However, textile MSMEs need to adapt and modernize to capitalize on this shift. Readymade garments and home textiles, which account for 75 per cent of India’s textile exports, stand to gain most from the ‘China Plus One’ sourcing strategy adopted by global brands. However, MSMEs must enhance their capabilities to align with this growing demand.
Recommendations to Strengthen MSMEs
- Aggregated Clusters for MSMEs
The report suggests creating formal clusters for MSMEs, similar to farmer producer organizations, to help them negotiate better pricing, adopt standardized practices, and gain direct access to global buyers. These clusters would also facilitate improved credit access and streamline supply chain operations, further supporting India textile export growth. - Addressing the Skills Gap
A shortage of formal training in the sector significantly limits productivity, with only 15 per cent of textile workers formally trained. This skills gap results in 20-30 per cent productivity losses, according to the National Skill Development Corporation. To bridge this gap, the report proposes establishing training centres in tier-II and tier-III cities, especially in regions where PM MITRA Parks are being developed, to provide industry-specific training. - Improving Financial Access
MSMEs often face challenges in obtaining affordable credit for modernizing equipment and expanding operations. The report recommends expanding operational subsidies and introducing employment-linked incentives to reduce input costs and boost competitiveness. - Upgrading Infrastructure and Logistics
Infrastructure inefficiencies, especially in logistics, inflate production costs. India’s logistics costs, at 14 per cent of GDP, are significantly higher than the global benchmark of 8-10 per cent. The report recommends accelerating the development of integrated supply chain parks and enhancing port connectivity to equip MSMEs for export readiness. - Negotiating Better Trade Access
Indian exporters face tariff disadvantages compared to competitors like Sri Lanka, which benefits from duty-free access to Europe under the Generalised Scheme of Preferences (GSP). The report urges the government to expedite negotiations for free trade agreements with key markets such as the European Union, United Kingdom, and United States, to improve the price competitiveness of Indian goods.
Expanding into Technical Textiles
The report highlights the growing technical textile market, which is projected to reach $274 billion globally by 2027. Integrating MSMEs into this emerging segment offers a significant opportunity for diversification and enhanced contributions to India’s textile exports.
Conclusion
India’s goal of achieving $100 billion in textile exports relies on its ability to address the challenges faced by MSMEs, such as skill shortages, financing constraints, infrastructure inefficiencies, and trade barriers. By implementing the strategies outlined in the Primus Partners report, the country can support MSMEs in overcoming these obstacles, thereby driving India textile export growth and establishing itself as a global hub for textile manufacturing.
