Foreign Direct Investment Policy in Textiles

Indian textile and apparel industry is one of the largest in the world with US$ 19 billion of export and US$ 30 billion of domestic textile and apparel during 2006-07 (P). The industry has, over the years, contributed significantly to national output, employment and exports. At present, industry accounts for about 14% of our total industrial production and contributes to nearly 15% of total exports. It provides direct employment to about 35 million people and another 56 million are engaged in allied activities. The textile export has registered a growth of 10 percent to 19.24 billion during 2006-07 (P) from US$ 17.85 billion during 2005-06. The Industry has a potential to reach a size of US$ 85 billion by 2010. With its consistent growth performance and abundant cheap skilled manpower, there are enormous opportunities both for domestic and foreign investors to make investments in textile sector in India.

India has most liberal and transparent policies in Foreign Direct Investment (FDI) amongst emerging countries. India is a promising destination for FDI in the textile sector. 100% FDI is allowed in the textile sector under the automatic route. FDI in sectors to the extent permitted under automatic route does not require any prior approval either by the Government of India or Reserve Bank of India (RBI). The investors are only required to notify the Regional Office concerned of RBI within 30 days of receipt of inword remittance.

Ministry of Textiles has set up FDI Cell to attract FDI in the textile sector in the country.

The FDI cell will operate with the following objectives:

To provide assistance and advisory support (including liaison with other organizations and State Governments);
To sort out operational problems;
Maintenance and monitoring of data pertaining to domestic textile production and foreign investment.