The just published report ‘The US $100 bn Investment Opportunity’ by Wazir Advisors highlights that for India’s textile and apparel sector to realize its potential of $350 billion by 2030, investments worth $100 billion would be required. This growth will see increased demand across the value chain of textiles in India – fiber, spinning, weaving and knitting, dyeing, washing, printing, finishing, made ups and retail. The potential target of $350 billion by 2030 should result in ad additional $197 billion in market value – the domestic market value will contribute $140 billion whereas exports will add a further $ 57 billion.
Investing to increase production capacity
The Report points out the numbers. It says, investments will be required to increase spindle capacity of 23 million spindles by 2030, which is an increase of nearly 40 per cent of the current number of spindles available. In weaving process, around 63,000 extra shuttle-less looms have to be introduced while in knitting process, 45,000 machines are required. 4.2 million sewing-machines will have to support garmenting and made ups segment to reach its target and older machines would need replacement annually.
The $100 billion worth of investments will ensure the increasing market demand can be catered to and replacement of old machinery. This investment includes the entire project cost including land, building, machinery, miscellaneous fixed assets, pre-operatives, etc.
From a socio-economic prospect, by 2030, with this kind of investment, the Indian textile and apparel manufacturing sector will employ an additional 15 million people. The readymade garment sector will attract the lion’s share of this investment as India is tapping the huge global opportunity it represents as well as the prolific rise in domestic demand that has kept it buoyant so far. Technical textile is another niche that India is paying attention to as demand in the domestic market as well as on the international ones surge. Further corresponding investments in the value chain in spinning, knitting, weaving, and processing will be required to balance the supply chain.
Machinery investment worth $50 billion
Out of the projected $100 billion investment by 2030, half will be on machinery – new and replacements. Whilst investment in adding new machinery would be around $40 billion; $10 billion would be used to replace old ones. Here technical textile machinery would be around $11 billion, spinning $10 billion, processing $9 billion, garmenting around $7 billion, man-made fibers $6 billion, weaving $3 billion, knitting at $2.6 billion and made-ups at $1.3 billion. The highest investments in machinery are expected in the technical textiles, spinning, and processing segments as they are more capital-intensive than garmenting where the higher investments will be in buildings and miscellaneous assets.
The projection has a lot of significance. For domestic and international investors, the buoyancy of the textile and apparel sector is an opportunity for higher returns on investments made. For textile and apparel machinery manufacturers, it represents an increase in production and whilst domestic manufacturers can increase their plant capacity, international ones can open operations in India. Furthermore, they can take advantage of the Indian government’s PLI schemes that is being supported through tax holidays and easy processing of starting manufacturing processes.
