During an investment seminar in Frankfurt, held under the title "Collaborative Business Opportunities in Textile and Apparel Sector - Manufacturing and Retail", and involving the participation by representatives of German companies engaged in the various aspects of the textile industry - from processing of yarn and fiber through finished goods manufacture to textile machinery - Maran said that foreign companies operating in India had made good profits.

"I have come here to showcase India as an investment destination for textiles," Maran told this correspondent. Accompanied by a large delegation of senior officials of India's textile ministry, representatives of textile industry and trade and industry groups, Maran said that the Indian Government was looking "very favorably" at foreign investments to prop up textile manufacturing in India. 

Juggling with figures, the minister pointed out that even in 2009, a crisis year, India had posted about 8% growth, fuelled by rising domestic demand.  "The textile industry benefited from this economic growth," he maintained.

With more than half of India's population under 25 years, there will be a growing demand for textiles and apparel as this generation acquired greater earning capacity and a taste for upper-end textiles.

India's textile and apparel exports were hit by the recession in major markets such as the USA and Europe. The Indian Government is, consequently, keen to improve the international competitiveness of India's textile industry by attracting investments and high technology.

According to the Indian Textile Ministry, there will be need to carry out a major overhaul of the industry, entailing extensive investments for modernization and increased productivity. Indeed, by 2015, the ministry estimates that an investment volume of US$24 billion would be needed. To attract greater investments in the textile sector, India is further liberalizing its economy. India hopes to get a quarter of such investments through foreign direct investment (FDI).

Maran drew attention to the setting up of a simplified one-stop investment window - the so-called "automatic route" - to facilitate the entry of foreign investors in India whose textile and apparel market was worth some US$40 billion in 2008/09 fiscal, a 14% growth over the previous year.

Picking up the German grouse against the blatant violations of intellectual property rights (IPR) in China, Maran said that, unlike in China, India had a firm IPR regime in place. "Foreign investors have adequate protection against piracy in India and can resort to our local judiciary for redressing any complaints," he said.

Another irritant which the German textile industry has faced in China is the so-called "unfair price advantage" China has because of its currency manipulation, coupled with its low production and labor costs which pose a threat to Germany's domestic textile production.

"You can use India, with its much lower production and labor costs, to compete against China. You can also produce and sell in the Indian market where demand is rising with the addition of some 20 million Indians each year to the overall population," Maran said.

Nevertheless, some German textile companies are worried by India's infrastructure which, unlike China's, was considered inadequate for distribution of textile products, along with the slow and often obstructive bureaucracy. "The Indian bureaucracy has changed and is now a facilitator. Our infrastructure may have been inadequate in the past but it is progressing rapidly," Maran assured them.

Realizing that technical textiles are a domain of German textile manufactures, Maran also spoke of the "huge business potential" inherent in India's technical textiles which had, so far, experienced only a 4% utilization. "The market for technical textiles is presently worth US$7.5 billion and is expected to grow annually by 11% in the next five years, rising to US$14.3 billion by 2012/13," he added. Demand for packaging materials had posted strong growth, generating demand for technical textiles. Another growth engine is India's automobile industry which is showing an insatiable appetite for technical textiles.

Maran pointed out that the Indian Government had launched a number of programs to promote the textile and clothing sector. A Technology Upgradation Funds Scheme (TUFS) promotes investments in the modernization of production capacities. The Indian Government, according to the minister, gives financial assistance by taking over 5% of the interest for banking credits used for modernization of textile factories and installation of new machines. Indeed, the government is willing to provide greater assistance if investments are designated for innovative segments, for example, in technical textiles.

The government has also created a Scheme for Integrated Textile Parks (SITP) which include infrastructure especially suited for the textile industry. Under the SITP, the government can get involved in so-called public-partnership-models with a 40% participation in the infrastructure costs if several textile manufacturing companies or units establish subsidiary. The SITP can also be set up in Special Economic Zones (SEZs) and new companies can enjoy 10 year tax holiday, duty-free import of textile machinery, etc.

Arvind Singhal, chairman of Technopak Advisors Private Limited, a management consultancy firm specializing, among other things, in India's textile sector, said that, unlike China, India's growth is supported mainly by the domestic market. "Indeed, two-third of India's GDP is accounted by domestic consumption," Singhal, a member of Maran's delegation, said in an interview.

Singhal, an expert on Indian consumer behavior, said that women's clothing segment in India was "largely untapped". "The wardrobes of young Indian women are rapidly changing. Manufacturers of women's wear should find good opportunities in India. Indian women still wear the traditional Indian clothes, but they are increasingly adding denim jeans and other western clothes to their wardrobes.  Women's wear - both outer and innerwear - will provide maximum growth," Singhal predicted.

According to Singhal, China itself will become a net importer of low-end textile products over the years as its level of development rises and it graduates to a producer of upper-end products. "If India had better infrastructure, it would have been where China is today in terms of textile manufacturing," he said.

India's Requirements of Technical Textiles (Individual segments in million US$)

Segment                             2007/08                 2012/13              Average Growth(%)

Packaging                              3126                             5758                         13
Clothing                                 1460                             2148                          8
Sports equipment                     624                             1254                        15
Home textiles                           717                             1191                         11
Vehicles                                  703                             1143                        10
Industrial applications               485                               846                        12
Construction industry                380                               581                        9
Work protection/safety              308                              530                         11
Medical materials                     333                              500                          8
Agricultural applications            113                              165                          8
Geo textiles                               80                              107                          6
Environmental 
  technologies                           18                               36                          14

Total:                                    8348                    14268                         11

Source:  Government of India, Textile Ministry 

Apparel Consumption in India
India's apparel market has been growing by 19% annually since 2005 and is among the fastest growing markets of the world.  In 2008, it was worth some US$ 30 billion, and made up of the following segments (value in US$):

Men's wear            10.3 bn.
Women's wear        9.5  bn.
Unisex                    2.7  bn.
Kid's wear              7.5  bn.

Source: Government of India, Textile Ministry

India's Upgrading of Textile Technology
India's textile and clothing industry will need to invest about US$43 billion in following machinery/plants (Source: Government of India, Textile Ministry):
- 20 million new spindles and the modernization of 29 million old spindles;
- 280,000 weaving machines;
- 36,000 embroidery machines;
- 3 million sewing machines;
- plants to produce additional 17 billion sq. meters;
- plants to produce additional 1.7 billion tons of synthetic filament yarn