Introduction 

The textile and apparel industries are among the oldest and most important sectors of the Indian economy. They contribute to the country’s GDP, exports, employment, and social development. The textile and apparel industries are also highly diversified, covering a wide range of products, processes, and markets. The industries have shown resilience and adaptability in the face of changing consumer preferences, global competition, and environmental challenges. 

The purpose of this report is to provide a comprehensive overview of the textile and apparel manufacturing industry in India, with a focus on the states of Andhra Pradesh and Telangana. The report will cover the following aspects: 

• The market potential of the textile and apparel products at the global, national, and state levels, including the current and future demand, market size, and growth projections. 
• The subsidies and incentives offered by the Government of India and the state governments of Andhra Pradesh and Telangana to the textile and apparel units, including the schemes, policies, and programs for technology upgradation, infrastructure development, export promotion, skill development, and social welfare. 
• The marketing and sales strategies for the textile and apparel products, including the target market, product category, customer segment, distribution channel, and competitive landscape. 
• The investment requirements for different production scales of the textile and apparel units, including the capital cost, operating cost, and return on investment. 

Market Potential 

Global Market 

The global textile and apparel market is expected to grow at a compound annual growth rate (CAGR) of 4.3% from 2020 to 2027, reaching a value of USD 1,182.9 billion by 2027, according to a report by Grand View Research. The growth is driven by the increasing demand for clothing and accessories, especially from emerging economies, the rising disposable income of consumers, the rapid urbanization and industrialization, and the technological advancements in the textile and apparel manufacturing processes. The major segments of the global textile and apparel market are cotton, wool, silk, synthetic fibers, woven fabrics, knitted fabrics, clothing, and accessories. The major regions of the global textile and apparel market are Asia-Pacific, North America, Europe, Latin America, and Middle East and Africa. 

Asia-Pacific is the largest and fastest-growing region in the global textile and apparel market, accounting for more than 50% of the market share in 2019, and is expected to maintain its dominance during the forecast period. The region is driven by the large population, the rising income levels, the changing lifestyles, the growing fashion consciousness, and the increasing penetration of e-commerce and organized retail. China and India are the key countries in the region, contributing to more than 70% of the region’s market share. China is the world’s largest producer and exporter of textile and apparel products, while India is the second-largest producer and the fifth-largest exporter of textile and apparel products. 

Indian Market 

The Indian textile and apparel market is one of the largest and most dynamic in the world. It is estimated to be worth USD 150 billion in 2020, accounting for 5% of the global market, and is projected to reach USD 250 billion by 2025, growing at a CAGR of 10.6%, according to a report by India Brand Equity Foundation. The growth is fueled by the increasing domestic consumption, the expanding e-commerce and organized retail sectors, the favorable government policies, and the competitive advantage of low-cost and skilled labor, abundant raw material availability, and large domestic market. The major segments of the Indian textile and apparel market are natural fibers, man-made fibers, fabrics, yarns, home textiles, technical textiles, clothing, and accessories. The major regions of the Indian textile and apparel market are North, South, East, West, and Central. 

The domestic consumption is the major driver of the Indian textile and apparel market, accounting for more than 70% of the market share in 2019, and is expected to grow at a CAGR of 12% to reach USD 180 billion by 2025. The domestic consumption is driven by the large and young population, the rising income levels, the changing lifestyles, the growing fashion awareness, and the increasing demand for quality and branded products. The e-commerce and organized retail sectors are also boosting the domestic consumption, by offering a wide range of products, competitive prices, convenience, and customer service. The online sales of textile and apparel products are expected to grow at a CAGR of 30% to reach USD 25 billion by 2025. 

The exports are the other driver of the Indian textile and apparel market, accounting for more than 20% of the market share in 2019, and are expected to grow at a CAGR of 8% to reach USD 70 billion by 2025. The exports are driven by the increasing demand from the developed and emerging markets, the preferential trade agreements, the government incentives, and the product diversification and innovation. The major export destinations of the Indian textile and apparel products are the USA, the UAE, the UK, Germany, France, China, Bangladesh, and Vietnam. The major export products are cotton, man-made fibers, fabrics, yarns, clothing, and accessories. 

Andhra Pradesh & Telangana Market 

The states of Andhra Pradesh and Telangana are among the leading producers and exporters of textile and apparel products in India. They have a strong base of raw material production, processing, spinning, weaving, knitting, dyeing, printing, finishing, and garmenting. They also have a large pool of skilled and semi-skilled workers, a well-developed infrastructure, and a conducive business environment. The combined market size of Andhra Pradesh and Telangana is estimated to be USD 12 billion in 2020, accounting for 8% of the Indian market, and is expected to grow at a CAGR of 12% to reach USD 21 billion by 2025, according to a report by Wazir Advisors. The major segments of Andhra Pradesh and Telangana market are cotton, silk, synthetic fibers, fabrics, yarns, clothing, and accessories. The major regions of Andhra Pradesh and Telangana market are Hyderabad, Visakhapatnam, Vijayawada, Guntur, Tirupati, Warangal, and Nizamabad. 

The domestic consumption is the main driver of the Andhra Pradesh and Telangana market, accounting for more than 60% of the market share in 2019, and is expected to grow at a CAGR of 13% to reach USD 14 billion by 2025. The domestic consumption is driven by the large and growing population, the increasing urbanization, the rising income levels, the changing lifestyles, the growing fashion consciousness, and the increasing demand for quality and branded products. The e-commerce and organized retail sectors are also enhancing the domestic consumption, by providing a wide range of products, competitive prices, convenience, and customer service. The online sales of textile and apparel products are expected to grow at a CAGR of 35% to reach USD 3 billion by 2025. 

The exports are the other driver of the Andhra Pradesh and Telangana market, accounting for more than 30% of the market share in 2019, and are expected to grow at a CAGR of 10% to reach USD 7 billion by 2025. The exports are driven by the increasing demand from the developed and emerging markets, the preferential trade agreements, the government incentives, and the product diversification and innovation. The major export destinations of the Andhra Pradesh and Telangana textile and apparel products are the USA, the UAE, the UK, Germany, France, China, Bangladesh, and Vietnam. The major export products are cotton, silk, synthetic fibers, fabrics, yarns, clothing, and accessories. 

Government Subsidies and Incentives 

Government of India 

The Government of India has launched various schemes and initiatives to support the textile and apparel industries in the country. Some of the major ones are: 

• The Amended Technology Upgradation Fund Scheme (ATUFS), which provides capital subsidy for technology upgradation, modernization, and expansion of textile and apparel units. The scheme covers segments such as spinning, weaving, knitting, processing, garmenting, technical textiles, and jute. The subsidy ranges from 10% to 15% of the project cost, subject to a ceiling of INR 20 crore to INR 30 crore per unit. 
• The Scheme for Integrated Textile Parks (SITP), which provides financial assistance for the creation of world-class infrastructure facilities for textile and apparel clusters. The scheme covers segments such as spinning, weaving, knitting, processing, garmenting, technical textiles, and handlooms. The financial assistance is up to 40% of the project cost, subject to a ceiling of INR 40 crore per park. 
• The Production Linked Incentive (PLI) Scheme, which provides incentives for the manufacture and export of man-made fiber and technical textiles. The scheme covers segments such as polyester, nylon, acrylic, viscose, spandex, aramid, carbon, glass, and ceramic. The incentives range from 3% to 12% of the incremental sales value, subject to a ceiling of INR 10,683 crore for the entire scheme. 
• The Rebate of State and Central Taxes and Levies (RoSCTL), which provides reimbursement of taxes and duties paid on the export of textile and apparel products. The scheme covers segments such as cotton, wool, silk, man-made fibers, fabrics, yarns, clothing, and accessories. The reimbursement ranges from 0.5% to 6.05% of the free on board (FOB) value of the export products. 
• The Merchandise Exports from India Scheme (MEIS), which provides duty credit scrips for the export of textile and apparel products. The scheme covers segments such as cotton, wool, silk, man-made fibers, fabrics, yarns, clothing, and accessories. The duty credit scrips range from 2% to 4% of the FOB value of the export products, and can be used for the payment of customs duties on the import of inputs and capital goods. 
• The Remission of Duties and Taxes on Exported Products (RoDTEP), which replaces the MEIS and provides refund of duties and taxes paid on the export of textile and apparel products. The scheme covers segments such as cotton, wool, silk, man-made fibers, fabrics, yarns, clothing, and accessories. The refund rates are yet to be notified by the government. 
• The Samarth Scheme, which provides skill development and training for the textile and apparel workers. The scheme covers segments such as spinning, weaving, knitting, processing, garmenting, technical textiles, and handlooms. The scheme aims to train 10 lakh workers over a period of three years, with a budget of INR 1,300 crore. 

Government of Andhra Pradesh 

The Government of Andhra Pradesh has announced various incentives and concessions for the textile and apparel industries in the state. Some of the major ones are: 

• The Textile and Apparel Policy 2015-20, which provides capital subsidy, interest subsidy, power cost reimbursement, VAT/CST/GST reimbursement, stamp duty and registration fee reimbursement, and land conversion fee reimbursement for the textile and apparel units. The policy covers segments such as spinning, weaving, knitting, processing, garmenting, technical textiles, and handlooms. The incentives vary depending on the location, investment, and employment of the units. 
• The Mega Textile Park Policy 2018-23, which provides additional incentives for the development of mega textile parks with an investment of more than INR 1,000 crore. The policy covers segments such as spinning, weaving, knitting, processing, garmenting, technical textiles, and handlooms. The incentives include capital subsidy, interest subsidy, power cost reimbursement, VAT/CST/GST reimbursement, stamp duty and registration fee reimbursement, and land conversion fee reimbursement. 
• The YSR Nethanna Nestham Scheme, which provides financial assistance of INR 24,000 per annum to each handloom weaver family. The scheme covers segments such as cotton, silk, wool, and khadi. The scheme aims to benefit 85,000 handloom weaver families in the state. 
• The YSR Cheyutha Scheme, which provides financial assistance of INR 75,000 to each woman belonging to the SC, ST, BC, and minority communities, who are in the age group of 45-60 years, for engaging in textile and apparel activities. The scheme covers segments such as spinning, weaving, knitting, processing, garmenting, technical textiles, and handlooms. The scheme aims to benefit 25 lakh women in the state. 

Government of Telangana 

The Government of Telangana has introduced various schemes and programs to promote the textile and apparel industries in the state. Some of the major ones are: 

• The Telangana State Textile and Apparel Incentive Scheme 2017, which provides capital subsidy, interest subsidy, power cost reimbursement, VAT/CST/GST reimbursement, stamp duty and registration fee reimbursement, and land conversion fee reimbursement for the textile and apparel units. The scheme covers segments such as spinning, weaving, knitting, processing, garmenting, technical textiles, and handlooms. The incentives vary depending on the location, investment, and employment of the units. 
• The Kakatiya Mega Textile Park, which is a flagship project of the state government to establish a world-class textile park in Warangal district, with an investment of INR 3,900 crore. The park covers segments such as spinning, weaving, knitting, processing, garmenting, technical textiles, and handlooms. The park provides state-of-the-art infrastructure, common facilities, plug and play sheds, and other amenities for the textile and apparel units. 
• The Chenetha Mitra Scheme, which provides financial assistance of INR 2,000 per month to each handloom weaver. The scheme covers segments such as cotton, silk, wool, and khadi. The scheme aims to benefit 17,000 handloom weavers in the state. 
• The Chenetha Bima Scheme, which provides insurance coverage of INR 5 lakh to each handloom weaver in case of accidental death or disability. The scheme covers segments such as cotton, silk, wool, and khadi. The scheme aims to benefit 17,000 handloom weavers in the state. 

Marketing and Sales 

The marketing and sales strategies for the textile and apparel products depend on the target market, the product category, the customer segment, the distribution channel, and the competitive landscape. Some of the general marketing and sales strategies are: 

• Identifying the niche market and customer segment, such as domestic or international, mass or premium, casual or formal, etc. For example, a textile and apparel unit can target the domestic mass market by offering affordable and durable products, or the international premium market by offering high-quality and fashionable products. 
• Creating a unique value proposition and brand identity, such as quality, design, innovation, sustainability, etc. For example, a textile and apparel unit can create a value proposition of offering eco-friendly and organic products, or a brand identity of being a traditional and authentic producer. 
• Developing a product portfolio and pricing strategy, such as product differentiation, product mix, product positioning, product pricing, etc. For example, a textile and apparel unit can differentiate its products by using different materials, colors, patterns, styles, etc., or offer a product mix of clothing and accessories, or position its products as premium or value-for-money, or price its products based on the cost, demand, and competition. 
• Choosing the appropriate distribution channel and mode, such as online or offline, direct or indirect, wholesale or retail, etc. For example, a textile and apparel unit can sell its products online through its own website or a third-party platform, or offline through its own outlets or a franchise network, or directly to the end-customers or through intermediaries such as distributors, agents, or retailers. 
• Implementing effective promotion and communication strategies, such as advertising, social media, public relations, events, etc. For example, a textile and apparel unit can advertise its products through print, electronic, or digital media, or use social media platforms such as Facebook, Instagram, or Twitter to engage with the customers, or conduct public relations activities such as press releases, interviews, or testimonials, or organize events such as fashion shows, exhibitions, or trade fairs. 
• Establishing strong customer relationships and loyalty, such as customer service, feedback, referrals, rewards, etc. For example, a textile and apparel unit can provide customer service through phone, email, or chat, or collect feedback from the customers through surveys, reviews, or ratings, or encourage referrals from the existing customers to the potential customers, or offer rewards such as discounts, coupons, or loyalty points. 
• Monitoring and evaluating the market performance and customer satisfaction, such as market research, sales analysis, customer feedback, etc. For example, a textile and apparel unit can conduct market research to understand the customer needs, preferences, and trends, or analyze the sales data to measure the sales volume, value, and growth, or gather customer feedback to assess the customer satisfaction, loyalty, and retention. 

Investment Requirements 

The investment requirements for the textile and apparel units vary depending on the product category, the production scale, the technology level, the location, and the market demand. The following table provides an indicative estimate of the investment required for different production scales of clothing units, based on the data from the Ministry of Micro, Small and Medium Enterprises (MSME). 

The investment includes the capital cost and the operating cost. The capital cost consists of the land, building, plant and machinery, furniture and fixtures, and pre-operative expenses. The operating cost consists of the raw material, labor, power, water, fuel, maintenance, packaging, transportation, and marketing expenses. The investment also depends on the availability of subsidies and incentives from the government and the financial institutions. 

The return on investment (ROI) is the ratio of the net profit to the total investment. The ROI depends on the sales revenue, the production cost, the profit margin, and the break-even point. The sales revenue is the product of the sales volume, the sales price, and the capacity utilization. The production cost is the sum of the raw material cost, the labor cost, the power cost, the water cost, the fuel cost, the maintenance cost, the packaging cost, the transportation cost, and the marketing cost. The profit margin is the difference between the sales price and the production cost per unit. The break-even point is the level of sales at which the total revenue equals the total cost. The ROI can be increased by increasing the sales revenue, reducing the production cost, increasing the profit margin, and reducing the break-even point.