On November 3, 2023, the Marketing Department of China National Textile and Apparel Council (CNTAC), and the Sub-Council of Textile Industry, China Council for the Promotion of International Trade (CCPIT TEX) jointly released the Outbound Investment and Cooperation Guide by Country for the Textile Industry (2023) at the 6th Belt and Road Textile Conference. This report introduces and analyzes the investment environment of 20 countries around the world. It provides information and guidance for textile enterprises to engage in “Belt and Road” cooperation.

South Asia - India

Geography: India is the largest country in South Asia. It borders China, Nepal, and Bhutan to the northeast, Myanmar to the east, Sri Lanka across the sea in the southeast, and Pakistan to the northwest. The south has a tropical monsoon climate, while the north has a temperate climate. The year is divided into three seasons: the cool season (October to March), the summer season (April to June), and the rainy season (July to September).

Natural Resources: India has abundant mineral resources, producing the largest amount of mica globally and the third largest amount of coal and barite. The recoverable reserves are 253.3 billion tons of coal, 760 million tons of oil, and 1.07 trillion cubic meters of natural gas.

Macroeconomy: India is one of the fastest-growing countries in the world, with a well-developed industrial system that includes textiles, food processing, and the chemical industry. The added value of the secondary industry accounts for about 26% of the gross domestic product (GDP). The service sector has experienced significant growth, with software and financial services exports playing a crucial role on a global scale, and the value added of the tertiary sector representing approximately 50% of the GDP. In 2022, India’s GDP reached US$ 3.4 trillion, with a per capita GDP of US$ 2,380. The World Bank’s Doing Business 2020 Report ranked India 63rd out of 190 participating countries and territories. World Investment Report 2023 released by the United Nations shows that India attracted US$ 49.36 billion in foreign direct investment in 2022, with a foreign investment stock of US$ 510.72 billion.

Status of Textile Industry

The textile industry is a conventional sector of India’s national economy with a long history. The industrial system is well-developed, providing direct employment to over 45 million people through more than 3,400 textile factories. India has the largest cotton planting area in the world, with about 13 million hectares, accounting for 40% of the global cotton planting area. The planting is mainly concentrated in the nine central and western provinces of India. The output is about 5.66 million tons, making it the second largest globally and contributing to 22% of the world’s cotton production. Relying on the advantages of cotton resources, India’s cotton textile industry is large and mature, with a capacity of about 50 million spindles; yarn production reaches about 4.3 million tons, ranking second in the world. India is also the world’s second-largest producer of chemical fibers, with an annual output of more than 6 million tons. The main products include polyester fiber, polyamide fiber, viscose, and others. The majority of production capacity is concentrated in a few companies, with the Birla Group and Reliance Group being typical examples. Birla Group is one of the largest producers of viscose staple fibers worldwide and among the top three producers of high-quality acrylic fibers. Reliance Group is well-known globally for producing polyester and operating in fiber, yarn, weaving, and garments. In recent years, India's industrial textile industry has also developed. The country has about 2,200 enterprises engaged in technical textiles-related business. Relevant products mainly include sacks, cord fabric (in tyres), sports shoe materials, elastic belts, fishing nets, and the other twelve categories.

India is the second-largest silk producer in the world, with an annual output of about 34,000 tons. 97% of the silk is produced in Karnataka, Andhra Pradesh, Tamil Nadu, West Bengal, and other regions. India is the world's largest producer of jute, and the world's second-largest exporter of jute after Bangladesh. Jute production accounted for about 60% of the total, primarily from the eastern Ganges River delta region. Indian government regulations require food bags to be made from jute products, which promotes jute planting and industrial development. In addition, India's handloom weaving is a unique cultural heritage, with 35.22 million weavers and related workers. Some of the weaving methods are challenging to replace with modern machines.

International Trade

Currently, India is the world’s second-largest textiles exporter and seventh-largest apparel exporter after China. According to data from India’s Ministry of Industry and Trade, India’s textile and garment exports reached a total of US$ 38.44 billion in 2022. The export market is relatively decentralized, mainly to the United States (28%), Bangladesh (9%), the United Arab Emirates (6%), and the United Kingdom, Germany, and other European countries. From the perspective of export categories, apparel stands out as the primary export category, representing 43.5% of the total. Within this category, the exports of knitted garments and woven garments share a similar proportion. Following closely are cotton, cotton yarn, and cotton woven fabrics, accounting for 18.3%. In 2022, the import of textiles and apparel totaled US$ 10.61 billion. China is India’s top source of imports, accounting for 38% of total imports, followed by Bangladesh (11%), and the United States (7%). The main imported products are cotton, cotton yarn and cotton woven fabrics (16.3%), chemical filaments and fabrics (15.8%), chemical staples and fabrics (11.7%), and woven garments (8.5%).

Summary and Suggestion for Investment

(1) The Indian government has implemented protection policies for its national industry, imposing more restrictions on foreign direct investment in the field. Indian residents commonly boycott foreign investment and participate in protest marches from time to time. The general investment environment is becoming less favorable.

(2) Foreign workers struggle to apply for work visas, as land privatization has resulted in limitations on industrial land and complicated land acquisition for engineering projects. The power supply gap is significant, and the transportation infrastructure is relatively underdeveloped.

(3) India’s cotton is only allowed for use by local textile enterprises, as the government has imposed a ban on its exports. Even foreign companies that build new cotton textile production capacity find it difficult to utilize their raw material resources.

(4) India withdrew from the Regional Comprehensive Economic Partnership Agreement (RCEP) negotiations at the end of 2019. It has also faced repeated cancellations by the European Union and the United States of America's Generalized System of Preferences (GSP) treatment. This has created greater uncertainty regarding whether foreign-funded enterprises can take advantage of its import market tariffs.

Source: CHINA TEXTILE LEADER Express