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Cover Story | October 2019

The growth engine of Indian textiles sector

With transformation of the Indian economy post liberalisation in the early 1990s, the demand and consumption of technical textiles products in India has been consistently increasing, says a report from KPMG.

Technical textiles are functional products with end-use applications across multiple non-conventional textile industries such as healthcare, construction, and automobile, among others. Technical textile products exhibit enhanced performance over traditional textiles. Technical textile products are manufactured using natural as well as man-made fibres such as Nomex, Kevlar, Spandex, Twaron, etc. These fibres exhibit enhanced functional properties like higher tenacity, excellent insulation, improved thermal resistance, etc. Hence, these fibres find application in varied industries and applications.

Technical textile market segmentation is done on the basis of material, technology and application:

  • Segmentation as per material is done into composites and uniform materials.
  • Segmentation as per technology is done into nonwoven, woven and others including braiding, knitting, etc.
  • Segmentation as per application is done into 12 sub segments as mentioned in the infographic.

Technical textile global market is anticipated to grow from $176.83 billion in 2018 to reach $220.37 billion by 2022 with a CAGR of 5.89 per cent. Some of the factors influencing the growth of the market are:

  • Rising demand from new application areas
  • Varying consumer preferences
  • Useful physical properties of technical textiles
  • Innovation and R&D
  • Government regulations
  • Climate change and global warming

In 2017, Asia-Pacific region was estimated to have the largest share of technical textiles market. The region is further expected to grow at CAGR of 5.6 per cent to 5.8 per cent from 2017 to 2022. Asia Pacific has dominated the technical textiles market owing to new technological advancements, increasing awareness among user population and rise in disposable income.

In 2017, composites was among the highest growing product category and demand for composites is expected to grow further due to higher usage of reinforced composites in construction and industrial sectors, glass fibre composites in marine industry and increasing usage of composites in aircraft manufacturing sector.

The Asia-Pacific region is poised to grow highest and is expected to account for over 30 per cent of the global market share. Industrialisation and economic growth of India and China is fuelling growth of technical textiles in this region. Mobiltech, indutech, buildtech, meditech, sportech and protech are expected to grow higher than other sub-segments of technical textiles.

In Europe, the technical textile market is estimated to grow at impressive CAGR of 4.8 per cent to 5.2 per cent during 2018 to 2022, with indutech, mobiltech, buildtech, sportech and oekotech driving growth of technical textiles sector. In terms of markets, Germany, France and the UK are expected to fuel growth of technical textiles in the region.

Technical textile market in North America is estimated to grow at CAGR of 3.1 per cent to 3.3 per cent with indutech, mobiltech, protech and geotech driving growth of technical textiles sector.

Domestic market scenario

Technical textiles as a segment are directly proportional to the stage of industrialisation and economic growth of any country. Developing countries undergoing large scale industrialisation fuel the demand for technical textile products. The usage may range from infrastructure, agriculture, health, defence, automobiles, aerospace, sports, protective clothing, packaging, etc.

With transformation of the Indian economy post liberalisation in the early 1990s, the demand and consumption of technical textiles products in India has been consistently increasing. The growth of technical textiles has also helped growth and innovation of conventional textile products, owing to significant value addition across the textile value chain. All major players in India have started developing technical textiles products as they provide better margins in comparison to conventional textiles.

Despite showing impressive growth over the years, the per capita consumption of technical textiles in India is very less (1.7 kg) in comparison to other developing countries (10-12 kg). This lower consumption in the Indian market is due to the fact that 41.6 per cent of the technical textiles in India focus on packtech, which is primarily low-value low-technology product. High-value product segments such as indutech, mobiltech, sportech, meditech, buildtech, etc. have low market penetration.

Packtech segment is followed by other key high value segments such as indutech (11.3 per cent), hometech (10.4 per cent) and mobiltech (9.8 per cent). The growth of these segments indicates the growth of the Indian economy and changing socio-economic needs of the population.

High indutech share indicates high usage of such products in the burgeoning Indian industrial sector. Whereas, high shares for hometech and mobiltech sectors indicate higher consumption of such materials by Indian population for their homes and ever growing automotive sector. Whereas, all the other segments such as clothtech, sportech, meditech etc., have significant growth potential with changing demographics and consumption patterns of Indian consumers and propensity of Indian buyers to adopt technologically advanced products for their inherent advantages.

Currently, share of technical textiles in Indian textile value chain is around 13 per cent. With the growth potential of various related sectors, technical textiles are poised to grow at 18 per cent CAGR during the period 2018-25.

Technical textile industry in India is import dependent. Many products like speciality fibres/yarns, medical implants, sanitary products, protective textiles, webbings for seat belts, etc. are mostly imported. However, technical textiles sector has registered impressive growth in the recent years. As per the Baseline Survey of technical textile industry by Ministry of Textiles, Indian technical textile industry is estimated to grow at a CAGR of 20 per cent to $ 28.7 billion by 2020-21 from $16.6 billion in 2017-18.

In order to capitalise on the growth potential, technical textiles ecosystem in India needs to grow significantly with focus on research and innovation in high growth sectors such as mobiltech, buildtech, indutech, meditech, etc., to ensure sustainable growth, the sector needs to adopt global best practices and attract FDIs (100 per cent FDI is allowed under automatic route) and JVs with global technical textiles companies.

Indian technical textile trade analysis

The Government of India has recently notified 207 HSN Codes from Technical Textiles Exports. The brief analysis of India’s technical textiles imports and exports are given in the pie chart. During 2014-19, India’s exports have grown at a 6.5 per cent CAGR, whereas India’s imports have grown at a CAGR of 8.5 per cent during the same period. India is depending on imports for high-value technical textiles products.

Also listed is the top 10 technical textiles imported products account for approximately 50 per cent of India’s technical textiles imports for the last six years. Among these 10 product categories, India has shown negative growth in only two product categories and increasingly depends on imports for the remaining eight product categories.

It is worth noting that, India is also indigenously manufacturing and exporting certain products such as airbags for automobiles (HS Code 87089500), PVC coated fabrics (HS Code 59031090, 59039090), etc.

This indicates presence of existing capacities in the country. Concrete steps need to be taken to understand the issues faced by the manufacturers of above product categories and support manufacturers in promoting import substitution, thus resulting in higher value retention within the economy.

Detailed analysis of the Indian technical textiles export for the period of 2013-14 to 2018-19 indicate that packtech sector contributes 39 per cent (FIBC primarily), followed by indutech at 19 per cent, hometech (carpets) at 11.63 per cent, 9 per cent contribution from mobiltech (seat belts, air-bags, tyre cords, etc.). In the same period, import data indicates that indutech (coated fabrics) has accounted for 30 per cent of total imports, followed by mobiltech (airbags and tyre cords primarily) at 24 per cent, hometech (carpets, etc.) at 16 per cent and clothtech at 12 per cent.

In addition, the following trend has been observed based on FICCI’s analysis of 207 technical textile HSN codes trade data:

  • Exports from India increased by 17 per cent in January -June 2019 from January -June 2018 to $1.02 billion.
  • Imports to India increased by 6 per cent from Jan-June 2018 to $1.09 billion in January -June 2019.
  • The overall trade deficit has decreased from $157 million in January-June 2018 to $75 million in Jan-June 2019, a decrease of about 52 per cent.
  • Out of the 207 commodities, 88 have observed a positive trade balance.

Potential growth areas in technical textiles

Analysis of the Indian technical textile market indicates that packtech segment has the highest market share with primarily low-technology, low-value products such as FIBCs, woven sacks, etc. Packtech segment is followed by other high growth potential segments such as indutech, hometech and mobiltech. High indutech share indicates high usage of such products in burgeoning Indian industrial sector. Meanwhile, high growth potential of hometech and mobiltech indicate higher consumption of such materials by Indian population for their homes and ever increasing automotive demand.

In addition, based on analysis of import data, mobiltech, indutech and specialty fibres are some of the products, which are currently being extensively imported into India. Import substitution through favourable policies would help in growth of these high-growth segments and ensure value retention within the economy and new employment opportunities for Indian youth. All the other segments such as meditech, geotech, sportech and clothtech are in nascent stage and are expected to grow at higher rate in the near future.

Joint ventures in technical textiles in India

Technical textiles are high-tech industry with functional products requiring technologically advanced machinery for manufacturing. Technical textile manufacturing in India is still growing and is in nascent stages. Further, low budgetary allocation for research and development and innovation in India has resulted in low-value low technology production by most of key players. The ideal approach to build high-tech industry infrastructure is to forge joint ventures with existing foreign companies with high-tech capabilities required for advanced high-value products. Joint ventures would help in technology transfer and minimising development cost of high quality products. This arrangement can be a win-win for Indian and foreign players as it provide access to new markets and opportunities.

Way forward

Indian technical textile sector is expected to grow significantly in the coming years. However, below concrete steps need to be taken to ensure conducive industry ecosystem to transform India into global technical textiles hub.

Raising awareness of end-use applications: Technical textile products are highly functional in comparison to their traditional alternatives. These functional elements enhance various beneficial values for end products such as safety, hygiene and better product life cycle. In order to ensure affordability, higher adoption of these products across the population, increasing awareness is of utmost importance. Increasing awareness about the products will lead to higher adaptation of these products.

Development and implementation of standards for technical textile products: Standardisation of a product being sold in a market is one of the key parameters to ensure the quality of the product. This helps in ensuring the intended functionalities expected from technical textile products are retained and provided to the end user every time the product is used. Further, to ensure the Standardised products are rolled out in the markets, appropriate implementation of these standards is also required at the government level.

Regulatory reforms supporting the usage of standardised technical textile products: Regulatory reforms are essential for technical textile products deemed necessary for the usage in specific conditions such as car seat belts, air bags for cars, flame resistant/retardant fabrics for public places, etc., Such regulations shall ensure better quality of life of the citizens and shall also expand the technical textiles market.

Incentivising R&D in the field of technical textiles: India pales in comparison to other countries in terms of R&D expenditure on technical textiles. With high capital requirement, setting up large capacities for technical textiles remains a challenge. Incentivising research and development in the field of technical textiles shall help in fostering the culture of indigenous research, instead of depending only on JVs and technology transfer for manufacturing high end technical textiles products.

Dedicated courses on technical textiles for entrepreneurship training: India is currently witnessing a boom in entrepreneurial spirit with fresh graduates from IITs and IIMs opting for entrepreneurship. The government needs to work with various entrepreneurship development institutes for initiating courses on entrepreneurship in technical textiles. This would help develop a robust base for technical textiles sector in India, and help in creating a pool of energetic youth transforming the sector.

Improving availability of skilled manpower: Availability of skilled manpower with specialized skill set is a key requirement for technical textiles industry. Introduction of technical textiles specific courses in various educational institutions is the key to ensure that we have abundant workforce with specialised skills required for technical textiles courses in various educational institutions is the key to ensure that we have abundance workforce with specialized skills required for technical textiles.

Promoting indigenous manufacturing of high performance specialty fibres: Currently, most specialty fibres are imported in India, owing to little or no domestic manufacturing of products such as Kevlar, high tenacity PFY, Nylon 11, Nylon 66, Aramid for manufacturing high value products. The Government needs to incentivise manufacturing of these fibres for reducing import dependence and help in reducing the manufacturing costs of high value technical textile products.

Resolving the inverted duty structure: Currently, lower duties are levied on the finished products while duties on raw materials are higher. This duty structure has had a detrimental effect on the capabilities of indigenous technical textiles industry. Government should revisit the duty structure to ensure growth of indigenous.

Promoting institutional buying: Government needs to actively promote and ensure institutional buyers such as Air Force, Army, Navy, Railways and other to increase procurement from domestic manufacturers. Institutional buying would help in imports substitution and ensure requisite infrastructure in the country and value retention in Indian economy. The Government may enable mechanisms where local manufacturers may directly connect with institutional buyers that procure bulk quantities of technical textiles products.

Incentivising production of technical textiles machinery: Currently, majority of machinery used to manufacture technical textile products are imported into India from Europe, China, Taiwan and South Korea. In order to reduce this dependence on imports, the government could promote manufacturing of such machinery in India – either through facilitating technology transfer or providing incentives for foreign companies to collaborate with domestic firms in India or setting up manufacturing units in the country.

Promotion of exports of technology intensive technical textiles: Packtech products contributed 39 per cent of technical textile exports from India. These products are less technology intensive and low-value products with minimal research and development. In order to transform India into global hub for technical textiles, it is essential that India develop the required infrastructure, expertise and skill sets for high-value technical textiles products. India should focus on the exports of technology intensive products such as protech, geotech, meditech and mobiltech segments. The government should increase export incentives for these categories of technical textile products. The proposed Technical Textiles Export Promotion Council can sensitise the government of the various opportunities and challenges that India’s technical textiles face in the international arena. Opportunities to collaborate with foreign players could also be sought by the local industries to facilitate technology know-how and technology transfer.

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