India plans subsidies, tax sops to boost synthetic yarn manufacturing

A global leader in the 1990s, India's textile sector, which employs nearly 50 million, has been struggling for a while now. It grapples with limited capabilities for synthetic yarns, a market currently dominated by China, and for which global demand has been steadily rising.

India's share in the global synthetic textile market is a modest 5-6%. This has led to increased dependence on Chinese imports, a decline in Indian textile exports, and a loss of market share for the domestic industry.

To address these issues, the government is considering measures to boost domestic production capabilities of synthetic yarns by offering subsidies and tax incentives to set up advanced manufacturing units, and strengthen the sector's overall competitiveness, according to two people aware of the matter.

“The government is working on a plan to revamp small, informal weaving and processing units by upgrading their technology,” one of the persons cited above said.

This aims to enable these units to manufacture products of global standards and compete with Chinese products, the person added.

Read More: India issues quality orders on textiles to take on China

Currently, the proposal is in the discussion stage, and its contours will be finalized soon.

These proposed incentives are over and above the production-linked incentive (PLI) scheme for the textile industry.

Schemes and aims 

The government aims to attract ₹95,000 crore in investments over the next four to six years under the textile PLI scheme and the PM Mega Integrated Textile Regions and Apparel (PM-MITRA) park scheme. This initiative seeks to rejuvenate the sector and position India as a global textiles sourcing destination.

Announced in 2021 with an outlay of ₹10,683 crore, the scheme is to be implemented till 2029-30.

The government has also set a textiles production target of $250 billion by 2030, aiming to increase the sector's contribution to the economy.

India's textile exports fell to $34.40 billion in fiscal year 2024 (FY24) from $37.16 billion in 2018.

“With less than 40% of Indian textile exports being synthetic, despite developed countries' preference for such materials, India misses out on a substantial market segment. This also means failure of most Indian firms to connect to fast moving textiles global value chains," said Ajay Srivastava, founder, Global Trade Research Initiative (GTRI).

Imports, on the other hand, have risen. From 2018 to 2023, India saw a 25.46% increase in textile and garment imports, indicating unmet domestic demand.

Synthetic yarn and fibre imports, in particular, have shown rapid growth. For instance, the import of high tenacity nylon yarn surged from $467 million in 2018 to $1.031 billion in 2023.

Also Read | The new Indian textile boom: 3 stocks for your watchlist

“India must focus on enhancing synthetic apparel production, strengthening weaving and processing capabilities, becoming fast fashion compliant, negotiating non-tariff barriers, liberalizing labour laws, and improving contract enforcement,” Srivastava added.

Queries emailed to the textiles ministry spokesperson remained unanswered until press time.

“Given the demand for essential products, the government is focusing on promoting synthetic yarns. This will be done in coordination with export promotion councils and other key stakeholders," the other person said.

Synthetic yarns are widely used in textiles and apparel, as well as home furnishings like curtains, upholstery, carpets, and rugs due to their durability and ease of maintenance. Key states involved in synthetic yarn manufacturing include Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh, Punjab, and Haryana.

Also Read: Your next dental implant could be made of fabric