Preprint / Version 1

Reigniting the Manmade Clothing Sector in India


  • Abhishek Anand PWC, Dubai
  • Naveen Joseph Thomas O P Jindal Global University



Manmade Fibres, Polyester Value Chain, Market Concentration, Textile and Apparel Sector


The clothing sector have traditionally been the most employment-intensive sectors in India. Despite the promise that the sector holds, the performance has stagnated in recent years. Since 2011, the real output of the textile sector has barely grown whereas that of the apparel sector has witnessed a significant slowdown. On external front too, the global market share has declined sharply post-2014 and have now been overtaken by Bangladesh and Vietnam. Our paper attempts to explain this recent decline and finds that the decline in India’s clothing sector stems largely from its polyester-based clothing segment. More importantly, this decline does not emanate from any exogenous shock but has been a result of domestic policy choices made by India.  At a time when domestic PTA production, a key polyester input, was declining, the government responded by imposing stiff anti-dumping duties on India’s PTA imports. This was later followed by hike in import tariff on PTA. Both these measures led to an increase in market concentration in the production of PTAs that are essential for the sector to grow. Consequently, the manufacturing cost of polyester increased substantially which made our exports uncompetitive in the global market. As polyester is a key input for the man-made apparel segment, our productivity in the man-made apparel sector declined as well. More importantly, we find that this fall in productivity is largely accounted by top 10 per cent of the most productive man-made apparel plants.


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