The textile industry in India is at the forefront worldwide. The industry is largely dependent on exports. About 27% of the foreign exchange in India is through textiles. It is thought to be around a US$ 52 billion industry and is estimated to reach US$ 115 billion by 2012. The domestic and international markets are on their way upward. In fact, India's exports worldwide are projected to rise to 7% from the existing 4% during this time period. At present they are showing a growth rate of 15%.

There are various kinds of fabrics available in the Indian market, namely cotton, silk, woolen, jute, and others that are popular overseas. These fabrics are in huge demand and heavily exported.

Potential Areas of Investment:

• Indian Retail Industry:

A major area that is propelling the textile industry is the Indian retail market. The Indian retail industry is going through a golden phase. Apparels and textiles are the second-highest grosser for the retail industry. With organized retail growing in India and an increase in the purchasing power of Indians, the textile industry is set to expand. This bodes well for the Indian textile Industry. The industry grew at 13% domestically and is stated to grow 5–7% further.

• Exports:

Indian-made textiles and handicrafts are exported to many countries. The US is the primary market for exports, but the overall count of countries totals 100. Readymade garments form the largest segment in exports with a 41% share. As per the records of the Textiles Ministry, India sent textiles amounting US$ 17 billion, an increase of 7% over last year.

India is being considered as a textiles hub because of the easy availability of raw materials, skilled labor, and good designing capabilities. World-famous labels, such as Hugo Boss and Diesel, are also importing fabrics from India. Thus, exports benefits of this industry are enormous.

• Textile Machinery:

This is yet another area that offers investment potential. The government has reduced customs duties on textile machinery imported from overseas. The government has also lowered restrictions on the capital goods import prompting more imports from overseas in this field. Equipment for cotton spinning, finishing, carding, and weaving is being imported from abroad.

By providing technological input along with machinery, training, and buy-back possibilities, investment in this field can be further encouraged and sales boosted.

Incentives provided by the government:

To further propel the textile industry, the government of India has brought into force a number of steps:

1. It has allowed a 100% FDI via the automatic path.
2. It has de-reserved knitwear and readymade garments from the banner of small-scale industries.
3. It has initiated TUFS (Technology Upgradation Fund Scheme) to upgrade and modernize the existing textile industry, which offers investment potential.
4. Textile parks are being set up under SITP (Scheme for Integrated Textile Parks), which is stated to attract foreign investment to the extent of US$ 4.3 billion.
5. It has also announced financial waivers to hand loom industries and is providing concessional loans for this industry.

Thus, the Indian textile industry is on a forward path and offers many incentives for growth.