Structure of the Indian Textile Industry: A Case Study

Last Updated on 16/12/2020

Structure of the Indian Textile Industry: An Overview

Neetu Jha,
Research Scholar,
Punjabi University, Patiala, India



Indian textile industry is known globally for its products and it is the second largest producer and exporter of textiles and garments China being the first in the world market. Indian market accounts for about 14 percent of the world’s production of textile fibers and yarns. It has a vast variety of textile production which includes cotton, jute, handicraft, silk, hosiery and wool. India is first in jute production, second largest producer of silk, cotton, manmade fiber and filament and third in cellulosic fiber in the world. The textile industry occupies an important place in Indian economy too. It has a wide spectrum of industries extending from the organized large and medium scale units to small scale units which constitute an important segment of the economy. It has a unique position as a self reliant industry, from the production of raw materials to the delivery of finished products with substantial value-addition at each stage of processing. The textile and clothing industry is a major contributor in the gross domestic product, employment and exports of the economy. This sector contributes 4 percent to the GDP of India. It is one of the major contributors to the total output of the fast growing Indian industrial sector with 14 percent share of the total industrial production. This sector plays an important role in terms of employment generation (after agriculture). Since the production process including marketisation of textile industry require huge services therefore it provides employment to 45 million people directly and 60 million people indirectly. It is also one of the major sources of export earnings for the country and its contribution is about 15 percent of total export earnings. Thus, the textile and garment industry plays an important role in the Indian economy in terms of its share in GDP, employment, exports and industrial production.

Structure of The Indian Textile Industry

The production of textiles is structured across the organised sector and unorganised decentralized sector. The organized sector consists of spinning mills and composite mills. Composite mills are those where all the activities, i.e., spinning, weaving and processing are performed in the same building. Weaving is done in unorganised decentralized sector and consists of powerloom, handloom and hosiery units which mainly perform weaving. Apart from this, knitting, yarn and fabric processing units are also included in the decentralized sector.

Structure of Indian Textile Indstry
Fig: Structure of the Indian Textile Indstry

There exists a strong complementary relationship between the organized and unorganized sectors of textile industry. The organized sector is the sole producer of yarn which is used by both organized as well as unorganized sector. Organized sector is also named as the modern sector because it is the hub of technology for textile industry as the technological practices employed in this sector enable the spinning mills to produce the yarn cost effectively and helps the unorganized sector by making yarn available to them at competitive prices. Unorganized sector is also termed as the traditional sector because of use of age-old traditional production practices which are now considered obsolete. At the same time, the unorganized sector employs the largest chunk of labour force and has been an important absorber of the surplus labour force from the labour market. In fact, the unorganized textile sector is the second largest employer after agriculture in Indian economy. Unorganized textile sector has also become a dominant contributor to the total textile output. As per the structure of Indian textile industry concern, it ranges from hand spinning and hand weaving to most sophisticated automatic spindles and looms.

Textile value chain:

The textile value chain extends from raw material (fibres) to finished products (clothing and made-ups) with spinning, weaving, knitting and processing or fabric finishing coming in between as intermediate processes.

1. Spinning is the process of converting cotton or manmade fibre into yarn then to fabrics, bleaching is done on fabrics to produce textiles and finally clothes are manufactured. Most of the spinning mills are primarily located in North India. This sector is technology intensive and productivity is affected by the quality of cotton and the cleaning process used during ginning.

2. Weaving and knitting converts cotton, manmade, or blended yarns into woven or knitted fabrics. The weaving and knits sector lies at the heart of the industry. India has one of the highest weaving capacities in the world (61.6% of global weaving capacity), with a presence of 2.2 million powerlooms and 3.5 million handlooms.

3. Fabric finishing includes dyeing, printing, and other cloth preparation prior to the manufacture of clothing, and is dominated by a large number of independent, small-scale enterprises. Overall, about 4300 processors are operating in India, including about 4000 independent units and 300 units that are integrated with spinning, weaving, or knitting units.


  1. Annual Report of Ministry of Textile. Government of India, 2018-19.
  2. Chaudhri K.N. (1974). The Structure of Indian Textile Industry in the Seventeenth and Eighteenth Centuries.The Indian Economic and Social History Review, 11(3), 127-182.
  3. Seshaiah S.V, Sharma I. and Naidu M.B. (2006). Production Structure of the Indian Textile Industry. Journal of Industrial Economics, 3(3), 77-82.
  4. Sen S. and Majumdar S. (2015). Relative Efficiency of Organized and Unorganized Segments of Indian Textile and Garments Industry: A Preliminary Exploration. The Journal of Industrial Statistics, 4, 37-57.

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