“Fashion is not just about what we wear, it’s also a business, and art and a career involving science and accounting.”
- Michelle Obama
In the financial year 2023-24, the Indian textiles and apparel industry contributed more than 12% to export earnings and constituted roughly 2% of India’s GDP. It’s an industry that involves employment of almost 40 lac people. In this post, we analyze the laws applicable, compliances, budget announcements and government initiatives that favorably impact the garments and textiles industries in India.
From the time India was an ancient culture, raw materials such as cotton and silk were the primary items of textile exports to other countries. India has a rich flourishing market with good quality hand-spun and handwoven textiles.
India is currently the largest producer of cotton accounting for almost 25% of the world’s output.
India is the second largest producer of man-made fibres, mainly polyester and viscose.
In the modern world, this industry is extremely varied. We not just have hand spun, labour intensive textiles but also large looms with heavy machinery churning out good quality textiles.
In the last 10 years, the industry of dyed and printed textiles has attracted huge foreign direct investment worth more than 3.46 billion US Dollars.
India has also allowed 100 percent FDI in the Indian textile sector under the automatic route.
India’s free trade agreements with several countries would also boost exports in the textile industry.
Announced in Budget 2021-22, the Production linked incentive is an outcome or output oriented scheme. Here, the incentive by the government is paid proportionate to the goods manufactured. It is also linked to incremental sales from such products made in India.
The scheme incentivises both foreign players as well as local industries to apply for benefits worth 10,000 crores in the next five years under the scheme.
The production linked incentives for textiles would cover man made fibers and technical textiles.
The scheme is aimed at making the textile industry globally competitive, attract large investments, boost employment generation and add to exports from India. Under this, large industrial parks for textiles are being set up in Telangana, Gujarat, Madhya Pradesh, Tamil Nadu, Karnataka and Uttar Pradesh, with an outlay of 4500 crores. The scheme aims at creating parks to double the industry size to 3 billion dollars by the year 2026.
Plug and play facilities - A plug-in play facility refers to an easy arrangement where a business can access facilities available as per their convenience. Private businesses with limited resources do not have to lock their capital in such heavy investment. The government facility would be available to all players in the textile space.
Textile parks – These parks would be set up covering over 1000 acres of land with the best capital infrastructure. This will give domestic manufacturers a level playing field by improving the quality of the Indian textiles export.
This is a flagship skill development programme approved for creating jobs in the organized textile sector. This would cover the entire value chain of textiles, handlooms, handicrafts, silk making and jute and create a large pool of skilled workers and professionals, for employment in textile industries.
This comprehensive scheme aims to improve the storage conditions, infrastructure in pre-loom and post-loom operations and provides assistance for development of basic and technical common infrastructure. Industries can apply for need based assistance for setting up integrated and holistic development facilities of handloom. The handloom clusters have facilities like dye houses, value addition centers, marketing complex etc.
Deduction of basic custom duty on nylon – The Ministry of Textiles has announced a uniform deduction of basic custom duty rates on caprolactam, nylon chips and nylon fibre and yarn to 5%. Nylon, a synthetic fibre with multiple applications in textiles, fabrics and industrial use has been a contentious issue. Importers of the same had long argued for elimination or a reduction in this basic raw material. Now, with a uniform customs duty on nylon at a minimal rate, importers using it in making finished products would be favorably impacted.
National Technical Textiles Mission, 2020 - Technical Textiles refer to the non-clothing textiles such as use of fabrics in applications in industrial use, agriculture, firefighting and other sectors.
For this sector, The National Technical Textiles Mission was launched in 2020 to promote development and research in technical textiles. Until the year 2024, this scheme involves an approved outlay of 1480 crores for developing usage of technical textiles.
Amended Technology Up-gradation Fund Scheme (ATUFS) - In 2015, the government approved the amended technology upgradation fund scheme for providing access to technological upgradation in the textile industry. Funds can be utilized by textile entrepreneurs for upgrading industrial technology for textiles.
Domain Name - In today’s digitized world, securing a domain name for your textile company is of foremost importance. Courts when deciding cases of trademark infringement often look at who began to use a disputed domain name first. Hence, first usage of a name can go a long way in determining ownership rights over it.
Illustrations, fashion designs etc are eligible to receive a Graphic Design Copyright in India. In addition, the Designs Act, 2000 and corresponding Design Rules, 2002 extend the registration and protection of industrial designs in India. Securing a trademark can lead to better brand recognition, visibility and also serve as a differentiator for customers.
Patents are the key point of negotiation with investors when it comes to innovative fabrics, technical textiles and novel materials in the textile businesses. A business with a registered patent is viewed more favorably by investors. For inventions of a scientific nature, it is advisable to seek a patent registration at the earliest as the average time taken from filing to the actual grant is about five years in India.
Under this scheme, designs and technology, tools, equipment, market intelligence and assistance to exporters and entrepreneurs can be provided for prototype designing. A 100 per cent grant-in-aid can be received by applying to state and central handicrafts corporations.
A textile business can be set up through registering your business either as a company or a limited liability partnership. The proposed name of the company along with its registered trademark can be applied to, using the SPICe+ form.
A duly filled Form INC 32 is to be submitted to the RoC for the incorporation of the company. The mandatory requirements of DIN, and automatic generation of TAN, PAN along with filing of electronic Memorandum of Association and Articles of Association, should be met. Once the Central Registration Centre verifies all documents, a certificate of incorporation is alloted.