Growth Prospects Of Indian Textile IndustryPresentation Transcript
Growth Prospects of Indian Textile Industry – Home Textile focus J. N. Singh Textile Commissioner
Indian Textile Sector - Overview
Key contributor to GDP
4 percent of GDP
14 percent of National Industrial production
Significant forex earner
15 percent of exports
Provides direct employment to 35 million people
Spinning Mills Nos. 2,012
Composite Mills Nos. 1,566
Exclusive weaving mills Nos. 202
Spindles Million Nos. 37.47
Looms Lakh Nos. 1.03
Powerloom Lakh Nos. 19.03
Handloom Lakh Nos. 38.91
Textile exports $ billion 17.8
Textile imports $ billion 2.2
What is the Indian Market Size (Bn US $) 2005-06 100 47 29.12 17.88 Total 40.72 19.14 9.99 9.24 Textile 59.28 27.86 19.22 8.64 Apparel % to Total Total Domestic Export
Home Textile Market Globally
Global Home Textile Market is estimated at US $12b in 2005, and is expected to grow at 16% CAGR and reach US $22-25b By 2010.
India ranks 2 nd in the global market with a share of approx. 9-10% of market share.
India's home textile exports expected to grow from $1.2 billion now to $5 billion by 2010 Great opportunity to be the market leader.
Our Vision 2010
Market size of US$95 Bn
Export Target- US $ 50 Billion
(National Textile Policy, 2000 )
Domestic market - US$ 45 Billion
(CRISIL Study, 2004)
India’s market share in World textiles trade to grow from 3% to 6%.
Growth Projections of 20% in exports, 16% domestic
Reasons for Optimism: Growth in fabric production
Reasons for Optimism: Raw Materials
India is now the 2 nd largest producer of cotton
2 nd largest producer of Silk
Very well placed in Man-made Fibres too.
Reasons for Optimism: Growth in Investments in Textile sector
Investments under TUFS have grown significantly recently.
Reasons for Optimism :Growth in exports
Winners and Losers in EU Market 2005 over 2004
Gainers: China, India, Turkey
Losers: Thailand, Pakistan, Indonesia
EU MARKET VARIATION JAN – JUN 2006/05
US IMPORTS OF TEXTILE AND APPAREL PERCENT VARIATION 2005/04
US IMPORTS OF TEXTILE AND APPAREL PERCENTAGE VARIATION JAN – SEPT. 2006/05
DRIVERS OF DOMESTIC GROWTH : Demand Side Factors: Increasing Income Levels * - Projections Note : Income is in Rs.’000 per annum at 2001-02 prices and the households are in ‘000s Source : NCAER 2.1 221,945 204,283 188,193 Total 27.7 141 53 20 >10000 Super rich 25.4 255 103 40 5000-10000 Sheer rich 22.9 1,037 454 201 2000-5000 Clear rich 20.6 2,373 1,122 546 1000-2000 Near rich 17.7 6,173 3,212 1,712 500-1000 Strivers 12.7 22,268 13,813 9,034 200-500 Seekers 9.0 75,304 53,276 41,262 90-200 Aspirers -3.6 114,394 132,250 135,378 <90 Deprived CAGR 2009-10* 2005-06* 2001-02 Income class Classification Distribution of households by income category
Favorable Demographics for Home Tex
The population of India is expected to increase from 1029 million to 1400 million during the period 2001-2026.
The population profile of India is shifting towards a larger composition of people in the age group 15-59 .India most favourably placed globally. Out of the total population increase of 371 million between 2001 and 2026, the share of the age-group 15-59 years in this total increase is 83 percent.
The low median age of population means a higher current consumption spending vs savings
The growth in population is taking place in the urban area. Out of the total population increase of 371 million during 2001-2026 in the country, the share of increase in urban population is expected to be 249 million.
Favourable Demographics- increasing young population and that too in the urban area- coupled with rising income levels will act as a key growth factor for the Indian textile and Fashion Industry
Increasing Working Female Population Source : CENSUS
Increased usage of credit cards and availability of cheap finance
The use of credit cards (plastic money) has increased significantly in the last 3-4 years. The number of credit cards issued has grown at 26 per cent per annum in the past 5 years while debit cards have grown by a whopping 113 per cent. Increase in the number of installations of electronic data converter machines will provide fillip to impulse apparel purchases.
Demand Driver- Domestic Housing Boom
Asian Development Bank expects that by 2008, the housing deficit will be 22 mn units and by 2030 India will be requiring upto 10 mn housing units every year. A very huge requirement for home tex.
The Real estate sector has given phenomenal returns in the last 2-3 years as per the global trend. A property owner is now more inclined to buy/renovate his home furnishings etc.
The domestic housing boom is further enhanced by the reducing age of Indian borrower- from 43 years in 1995-99 to 33 years in 2005-9.
Drivers of Domestic Growth:Supply side factor : Retailing Revolution - Growth so far
Five year outlook
Growth of Mall Space
From 2 mn sq ft in 2001 , we had 28 mn sq ft of mall space in 2005 – and by end 2008, the eight Indian large cities will have a supply of 66 mn sq ft and the next seven large cities about 13 mn sq. ft.
The entry of Reliance , Aditya Birla group , expansion of Futures and now of Bharati-Walmart is expected to further sizzle Indian market.
Drivers of Export Growth
Dismantling of the MFA regime and the full play to the Indian entrepreneurship.
Progressive dismantling of the textile and mass apparel industry from the Western world. India is a major player to fill this gap. The current quantitative restriction on China is helping India.
Buying of several Western brands by Indian industry, thus facilitating entry in EU and US.
Increasing modernization of Indian textile and apparel manufacturing sector in response to the increased global demand and facilitated by the TUFS scheme.
Global Housing Boom
According to estimates by The Economist , the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs .
The global boom in house prices has been driven by two common factors: historically low interest rates have encouraged home buyers to borrow more money; and households have lost faith in equities after stockmarkets plunged, making property look attractive .
Naturally as people buy more property or as their property becomes costlier , the propensity to spend on home-textile increases significantly .
Other Export Drivers
The IMF forecasted a 4 th continuous year of income increase globally at 4.7%- naturally leading to a more than higher purchase of textiles including home-tex.
Also a phenomenon of decline in textile prices over a continuous period esp in developed economies- driving higher the worldwide demand of textiles and clothing.
Real Clothing Prices Index, 1994=100 United States South Korea Germany Thailand Japan China
Strategy of various
Strategy for the GOVERNMENT
1.Further investments must continue to be encouraged- TUFS should be continued (may be with some modification)
TUFS help to processing sector – Vital for home tex
13.42 986 7349 2004-5 7.91 260 3289 2003-4 14.63 210 1438 2002-3 P.c % Processing (in crores) TUFS all segments (in crores) Year 22.30 2081 9335 2006-7 (april-sept) 7.7 1157 15032 2005-6
2. Continuance of textile infrastructure schemes
SITP ( Scheme for Integrated Textile Parks) has had a huge success : 26 parks approved. GOI contribution to be 866 crores with another 1250 crores to come from private sector. Estimated investment of Rs.13445Cr.
Need to continue such schemes on the PPP model.
Governments in PPP mode with the industries must invest heavily in training in the textile sector because a huge shortfall of over 40 lakh workers is expected in the next 5 years.
4.High Transaction Costs
According to EXIM Bank Study (2002), transaction cost is very high in Textile & Garments Sector ranging from 3-10%
Ownership of exports – less support from State Governments
Non-refundable incidence of State Taxes – VAT, Entry Tax, Luxury Tax, Mandi Tax, Electricity Duty, Octroi, etc.
To consider refund of State / Local levies through appropriate refund mechanism
5.High Power Cost
High power cost:
Frequent power interruption
3.49 Bangladesh 6.04 China 3.65 Indonesia 8.87 India Cost (Cent / KWH) Country Cost (Cent / KWH) Country
High Power Cost
Export oriented textile units be exempted from cross subsidy
Duty free import of furnace oil to units for captive power generation
Uninterrupted power supply for export oriented textile clusters
Integration - Moving up/down the full value chain. Leading Home-tex players like Welspun, Alok are now fully integrated, with strong competencies in spinning, weaving,and finishing.
Scale - Massive expansion plans of existing as also new players to take advantage of this unprecedented opportunity. Smaller companies, some of whom are in unrelated businesses, are also foraying into home textiles - Gangotri Textiles, KG Denim, S Kumars Nationwide, Bannari Amman Spinning, to name a few.
Brand presence - there has to be greater shift towards branded products.Realization that real value addition comes only after branded sale.
Domestic- Spaces brand of Welspun
Carmichael House of S.Kumars
International- Purchase of Christy by acquiring CHT Holding by Welspun.
Dan Rivers and Roseby’s by GHCL.
Designer labels will also have to be brought in to counter the pull of top international labels like Tommy Hilfiger, Zegna, Mark and Spencer and likely presence of Italian Pozzi Industria Tessile and Ralph Lauren. Alliance with Indian designers important over here.
The home-textile sector in India is in for BOOMING TIMES.
Save for major implementation problems, India poised to become a leader in this sector.