The textile industry is among the large industrial sectors in India and is estimated to be the second-biggest employer after agriculture. From cotton to silk, jute and human-made fibres, the textile sector encompasses the business in totality, from crop cultivation to manufacturing fabric and garments.
India, like most countries globally, has a particular focus on exports. The textile industry accounts for12 % of total exports from India. The Indian textile sector has an approximate share of 5% of the total global textile and apparel trade; the estimated export value was over US$37 billion in 2018-19. The textile segment offers excellent potential and can offer several import-export business ideas to an entrepreneur.
Which textile product is more profitable for export?
Within the category of textiles, which product is more profitable - To find the answer, let us understand the different classifications of the textile export business:
1. Readymade garments
2. Cotton textiles
3. Man-Made textiles
4. Woollen textiles
5. Silk products
6. Jute products
7. Handloom items
8. Other items (industrial fabric and more)
In textiles, if you want to find out how to start an import-export business and identify profitable products, you need to focus on the top three categories (of products exported) and then explore the best markets for these products.
Besides, a fair price realisation coupled with a reasonable sourcing price can boost export profitability. It is imperative, however, to avail all the applicable export incentives available to your product category.
You will start generating the best export business ideas when you study and analyse past data. We take a look at the category-wise export details and the best international markets for Indian textiles:
Category–wise export data from India in 2018-19:
Top ten countries of export (2019-20)
Total Textile and apparel exports 2019-20: 37498 US$
(Data source: Textile ministry-GOI statistics)
From the above tables, we learn, 1) the segments to focus on are readymade garments and cotton textiles, which together account for 78% of textile exports from India 2) the USA and UAE are the best markets for Indian textiles.
But, it would help if you considered several other factors to work out an effective import-export business plan and identify profitable items.
1. Within the category, say, readymade garments (rmg), what are sub-categories? Like, cotton rmg, silk rmg, manmade fibre rmg.
2. Matching items with markets (countries of export)-
3. Check for the best source of these items in India-
4. Working out the total logistics costs and the probable export incentives applicable -
A quick look at the available export incentives that can improve profitability:
- Import replenishment license (REP): Exporters can import raw materials and components under this scheme for manufacturing the items for export.
- Impex (Import-export) passbook: The passbook scheme allows recognised export houses and manufacturers can import duty-free raw materials.
- Export-oriented units: Units located in the specific trade zones in the country (FTZ) and exporting their entire production enjoy a complete income tax holiday for five years.
- Tax exemption on export earnings: For income tax calculation on export earnings, a 50% deduction is allowed from the profits of export earnings.
- Duty drawbacks: This scheme allows exporters a refund on customs duty paid on imported items when used/processed for exports.
- Cash assistance: This scheme offers a price reimbursement guarantee in specific cases and specified products to match international market prices.
The textile promotion councils play a significant role in improving the textile export business from India.
1. The activities of the councils include-
1. They provide guidance and consultancy to Indian exporters on trade policies of various countries, market intelligence, technical and quality requirements, social and environmental guidelines.
2. Members of the councils (exporters) can access various market-related statistics for their planning.
3. The councils provide periodic updates on international product trends, specific trade-related issues, emerging markets, changes in textile manufacturing technology for countries with export potential.
4. Besides Indian exporters, international buyers also source information from the council on various market inputs on the Indian textile sector.
5. Organising buyer-seller meets.
6. The council also keeps track of international trade fairs and assists participating exporters.
2. There are eleven councils to take care of specific product categories:
1. Apparel Export Promotion Council
2. The cotton textiles export promotion council
3. The synthetic and rayon textiles export promotion council
4. Wool and woollens export promotion council
5. Wool industry export promotion council
6. Indian silk export promotion council
7. Carpet export promotion council
8. Export promotion council for handicrafts
9. Handloom export promotion council
10. Power loom development and export promotion council
11. Jute products development and export promotion council
Future export scenario
If you are still looking for import and export business ideas, consider India’s future export prospects:
1. Growth in international apparel markets- Garments and apparel constitute the most prominent export segment; internationally, markets show high growth in this segment.
2. Large manufacturing bases of textile fabrics in India provide an easy and cheap raw material source for garments.
3. Particular policy focus(of the government) on the textile sector – export incentives, export parks, export promotion councils, up-skilling of labour, technology up-gradation, permitting direct foreign investments and more are among the several measures for increasing textile imports.
4. India enjoys a natural advantage of comparatively low labour wages (compared to other international countries).
Tips on improving profitability - Textile export business
We have learnt that various factors influence export profitability, but ultimately, it is the period-specific demand-supply situation that acts as the decider.
Now for some quick tips on how to start a garment export business and improve its profitability:
1. Select the products
2. Choose your markets
3. Study the demand pattern
4. Find your buyer
5. Get the right channel partner
6. Take the assistance of export promotion councils
7. Study export policies in depth
8. Identify reliable product source (manufacturer/supplier)
9. Focus on the quality of your products
10. Locate efficient logistics partners and clearing agents
Identifying a profitable product is an essential element in your plan of how to start an import and export business. In textiles, various factors affect profitability, but the best way to begin is to adopt a logical approach of following the trends. You can always fine-tune your textile export business ideas after sufficient on-the-job experience.
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Q. I am in the garment wholesale business; how can I enter the export business?
Ans. You start with the advantage of product knowledge. To be a successful garment exporter, you need to understand various procedures, identify markets and understand buyer sentiments.
Take help from the export promotion councils; and maybe from a consultant if you cannot afford time for a detailed understanding of the export requirements.
Q. Is jute fabric a good textile product to export?
Ans. Jute is an eco-friendly packaging material. Of late, jute garments have also made an appearance. But generally, commodity exports offer low profitability.
There are international markets where jute packaging is encouraged, and if you can establish links with those markets, you will get a better price realisation. Working on jute garments can lead you to a niche segment where profitability may be high.
Q. What are technical textiles, and how is the export prospect?
Ans. Technical textiles are products manufactured for functional purposes and used in different construction, transport, medical, and sports sectors. It can be woven or non-woven or a combination of both and can be of several layers. It can be produced from natural or artificial fibres.
You can find technical textiles in filters, conveyor belts, machine clothing, abrasive substances, and many other applications.
The international demand for technical textiles is increasing following several restrictions in many countries on using plastic products. A careful study of various markets will open up the export prospect of the emerging sector of technical textiles.