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Indian State of Andhra Pradesh to See Investment Benefiting the Textile and Apparel Sector
Mayu Saini
6 min read
The newly re-elected Indian government announced its first union budget on Tuesday. The textile and apparel industry has been watching keenly in the lead-up to the reveal.
Now, it’s parsing the budget to see how it stacks up to pre-election promises. After the huge machinery of the Indian general election, which took place from April to June this year, the sector has been eager to see whether conversations held at Bharat Tex in New Delhi this past February would translate into more financial support.
The apparel and textile industry in India has been on the back burner in recent years. While India is the sixth largest exporter of textiles and apparel globally, textile and apparel exports declined by a combined 3.24 percent between April 2023 and March 2024. While textile exports increased by 2.62 percent during that time, apparel exports took a significant hit, falling 10.25 percent.
The union budget announcement increased the allocation for the textiles sector of 44.17 billion rupees ($527.73 million), up from last year’s 34.43 billion rupees ($411.35 million), an increase of 9.74 billion rupees ($116.36 million). Post-budget analysis has revealed a series of disappointments and gains, including greater raw material availability, with both cotton and man-made fibers accessible at internationally competitive prices.
Announcements in the budget for states like Andhra Pradesh, which have stepped in to play a big role in the newly formed coalition government by Prime Minister Narendra Modi in June, were also expected. Manufacturers and mill owners in the state have been abuzz due to the fact that commitments to Andhra Pradesh were made on Tuesday.
Chief Minister Chandrababu Naidu’s return to power in the state this June was saluted by spinning mills as well as the cotton and textile sector. He has often been referred to as a “CEO Chief Minister,” having completed four previous terms in the same role.
There are big implications for the state’s infrastructure, which was divided 10 years ago into Telengana and Andhra Pradesh, sharing a common capital of the progressive city of Hyderabad. This time of division came to an end in June, and Hyderabad has become the capital of Telengana. Chief Minister Naidu has proposed a new capital city of Amravati.
Among other commitments to the state, Finance Minister Nirmala Sitharaman noted, “Our government has made concerted efforts to fulfill the commitments in Andhra Pradesh Reorganization Act.”
“We are recognizing the state’s need for a capital. We will facilitate special financial support through multilateral development agencies. In the current financial year, 150 billion rupees ($1.7 billion) will be arranged with additional amounts in future years,” she said on Tuesday.
“The local industry is expecting that Andhra Pradesh will bounce back,” T. Rajkumar, former chairman of Confederation of Indian Textile Industry (CITI), told Sourcing Journal as Chief Minister Naidu took office.
He said spinning mills have endured tough times. “There are 3.3 million spindles in Andhra, yet approximately 20 percent of the mills have closed, and 30-40 percent have been facing acute financial stress.”
According to Rajkumar, a 25-billion-rupee ($299.6 million) allocation of incentives spending was agreed upon but is yet to be given to the mills. “They are expecting that Chandrababu Naidu will clear these and that he will get special financial packages for Andhra Pradesh from the central government.”
Several of the mill owners told Sourcing Journal that they are “waiting for times to change.”
So too are many small- and medium-sized businesses, as well as top companies from the state like Gokuldas Garments, NRKR Textiles, Trading Yarns Exports, Mohan Spintex Home Textiles, Fabrics & Yarns, NSL Textiles, Fabrics & Yarns, Ravali Spinners, NRKR Textiles and Trading Yarns Exports.
Sri Lanka based Brandix Apparel Limited is one of the leading companies in the state as well, with Brandix India Apparel City (BIAC) located in the Andhra Pradesh Special Economic Zone at Achyutapuram, near Visakhapatnam.
“The 1,000-acre, infrastructure-rich, fully serviced and environmentally compliant manufacturing park was inaugurated in May 2010, and has been one of the foremost investors in the state,” the Minister of State for Textiles, Panabaaka Lakshmi, noted at the inauguration of the unit.
She said at the time that the ministry had been making serious efforts to attract Foreign Direct Investment (FDI) into the Indian textile industry and that BIAC was “a shining example” which could motivate large-scale FDI players.
It has clearly worked well for the state. “Over the past decade, we have grown into a comprehensive textile ecosystem, employing over 20,000 people, generating over $350 million in annual exports, and producing more than 150 million garments each year,” Suchira Surendranath, director of strategy and investment at BIAC told Sourcing Journal.
“The city offered excellent infrastructure and a large pool of workers. The absence of major apparel companies presented both advantages and challenges. On the positive side, it allowed us to train the workforce with the right culture from the ground up,” he said.
“However, it also meant we had to attract companies to supply essential materials such as packaging and trim,” he added, noting that the company was now entering “a new phase” of its journey.
“We are aiming to double that output and further enhance the infrastructure and capabilities at BIAC over the next five years,” he said. “We feel buoyant about the new investments coming to the park, both from India and abroad.”
Naidu announced after his election that that business would grow “significantly” with both infrastructure and development speeding up.
How his agenda can help the industry has been a subject of growing speculation, as he has been looking at including industrial parks, a mega textile park, a green energy corridor and the Ramayapatnam port, all of which needs funding. While some spinners and manufacturers were concerned that they may not get the kind of focused help they need, many analysts believe that it’s only a matter of time.
“Naidu has always been a man for the industry,” Rajkumar pointed out. “He drove the IT sector in Hyderabad. The industry in Andhra Pradesh is buoyant that he will do something. He will make sure there is value added for the textiles sector.”
As India itself shows sign of some recovery. In June, textile and apparel exports saw an increase of 1.63 percent over June 2023, and apparel was up by 3.68 percent from the same period a year prior. The states are expected to be big contributing factors in the growth, according to figures from the Ministry of Commerce.
Meanwhile, India has a new Textile Minister, Giriraj Singh, who noted last month that the ministry is framing a roadmap to move ahead of China in the sector.
“The market for Indian textiles and apparel is projected to grow at a 10-percent CAGR to reach $350 billion by 2030, with apparel exports expected to reach $100 billion,” he said.
