Synthetic Fabric Shortfall Hinders Indian Apparel Exports: GTRI Study

"The results are low exports, low wages, and low investments in the sector," states the report

The report highlighted India's focus on informal cotton-wear exports has kept wages low. However, transitioning to synthetics could lead to year-round factory operations, significantly boosting wages

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The Indian apparel industry is facing challenges in meeting the demand for clothing made from mixed synthetics, which has led to a decline in its share of global exports, according to a report by the Global Trade Research Initiative (GTRI) released on Tuesday. The GTRI report highlighted that this weakness in synthetic fabrics has hindered the industry's competitiveness on the global stage, likening it to a horse running with one leg tied.

"The results are low exports, low wages, and low investments in the sector," it said. In addition, it stated that synthetics have surpassed cotton and become the favoured choice of the fashion industry.

"70 per cent of clothing bought by developed countries is made of mixed synthetics. Their share in Indian exports is less than 40 per cent, and this is the key reason for India's weak garment exports,” the report said.

The report noted that synthetic fabrics are now prevalent in formal, sports, and fashion wear due to their durability, colour retention, and versatility in blending with other materials like wool, cotton, or rubber for innovative designs. Globally, cotton dominates spring and summer sales, while synthetics and blends are favoured in autumn and winter. In India, textile units operate for six months to produce cotton apparel, while the remaining months see many units shut or operating at reduced capacity due to limited orders for synthetics or winter wear, leading to worker layoffs.

"Also, a factory that runs only six months a year still has to pay the full year's fixed costs' rent, salary for minimal staff, interest on loans, etc. This makes anything made in the factory expensive. Absence from synthetics also affects workers' wages," the report said.

The report highlighted India's focus on informal cotton-wear exports has kept wages low. However, transitioning to synthetics could lead to year-round factory operations, significantly boosting wages.

"With less than 40 per cent 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," it said.

Moreover, the report highlighted weaknesses in India's textile value chain, encompassing yarn making, weaving, fabric processing, and apparel manufacturing. It noted that the weaving and processing sectors in India are underdeveloped, characterised by small, informal units lacking expertise, scale, and technology. Challenges such as power outages and underutilisation contribute to weaving costs in India reaching levels comparable to those in the EU or US. 

Similarly, fabric processing in India faces hurdles, with smaller units processing significantly less cloth daily compared to their Chinese counterparts. While Chinese units process 10 lakh meters of cloth daily, Indian units handle less than 20,000 meters. This capacity gap, combined with batch processing methods leading to inconsistent quality and difficulties in meeting environmental standards like zero-liquid discharge (ZLD), further undermines the strength of the chain.

"This disparity results in India exporting yarn but importing fabric," the report highlighted, pointing out that while the yarn sector comprises large units, weaving and processing are predominantly carried out in small, informal units.

As expected, while India leads as the top yarn exporter with a 23 per cent share (compared to China's 13 per cent), its performance declines significantly in fabric exports, where it holds a mere 6 per cent share, while China dominates with 52 per cent.

"Setting up ten big-scale weaving and processing units could be an annual goal. In 2023, India's garment exports were a mere $ 14.5 billion, significantly trailing behind China ( $ 114 billion), the EU ($ 94.4 billion), Vietnam ($ 81.6 billion), and even Bangladesh ($ 43.8 billion),” the report said.

The report recommended that domestic firms prioritise compliance with fast fashion industry standards, noting that only 1,200 Indian factories currently meet these requirements. Additionally, it called for improvements in contract enforcement and the relaxation of rigid labour laws to facilitate industry growth.

"To regain its textile glory, India must focus on enhancing synthetic apparel production, strengthening weaving and processing capabilities, becoming fast fashion compliant, negotiating non-tariff barriers, liberalising labour laws, and improving contract enforcement," it added.