A bird's-eye view
Targeting $65 billion in exports by 2026: Aspirational
India now aims to grow its textile exports by 9 percent CAGR till 2026. It aims to generate textile exports worth $65 billion by the period.
The Ministry of Textiles (MoT) has also set an ambitious target of $100 billion exports over the next five years. Export growth will also create 7.5 million to 10 million direct new jobs in the industry.
To achieve these targets, India needs to first target a $16 million rise in exports by exploiting the China-Plus One sentiment in Europe. Make no mistake, the Indian textile industry has been missing the boat earlier.
Again, it has to be compliant with ESG parameters to be considered a sustainable & reliable supplier hub, considering the prevailing regulatory overhang in some of the export destination countries.
The opportunities and roadblocks surrounding Environmental, Social, and Governance (ESG) regulations in India's textile industry.
Opportunities:
- The sustainability piece is the front & center of any industry today: The textile industry is actively embracing sustainable practices, driven by the Ministry of Textiles and state-level initiatives like Tamil Nadu's approach.
- Pull and Push: The EU's Green Deal and CBAM push for sustainable production, opening doors for Indian companies that comply. EU regulations have been viewed as a driver for change, escalating the industry sustainability landscape. Hopefully, the textile industry in India will not be found wanting in coping with the regulations of the day
- India's textiles are staying on course: Given that sustainability is inherent to our textile heritage and vast resources, we position it well to become leaders in sustainable practices. And this time around, the situation is different as Indian textile industry is seized of the opportunity, and the possibility of grabbing it with both hands is real.
Road bumps:
- Walk A Tightrope: Micro, Small, and Medium Enterprises (MSMEs) face difficulty balancing sustainability efforts with maintaining affordability and staying relevant & competitive.
- Aligning to the reality of the day: Aligning with regulations like CBAM requires adjustments in sourcing, production, and supply chain management, posing a challenge for some businesses.
Future guidance: Overall, this piece of information emphasizes the transition India's textile industry is undergoing towards sustainable practices.
The Impact of ESG Management on Investment Decisions:
The industry is on its way to being ESG compliant; While challenges exist, the proactive support from the government, combined with the potential for growth in the international market, paints a positive outlook for the future of the sector.
Again, incremental investments in ESG pieces of business in the frontrunners in the Indian textile sector is only a testament to how seriously businesses are taking it today, where less attention/less seriousness has been paid hitherto.
Action point; In the near to midterm, the project funding is going to be right around ticking the box on 'Getting ESG right for the textile industry'.
