India an emerging sourcing hub

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The presentation shed light on the global trade in Textile & Apparel sector, major exporters, importers, comparative mapping of top exporters, their USP, India's potential to be a sourcing hub and the areas it needs to focus on

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India an emerging sourcing hub

  1. 1. India: An Emerging Sourcing Hub Arindam Saha 3rd April 2013
  2. 2. Nearly US$ 700 bn. worth of textile and apparel goods crossinternational borders today…  The global trade in textiles and apparel Global trade in textile and apparel was ~US$ 680 bn. in 2012 In US$ Billion  This is approximately 4.5% of the +5% -3% trade of all commodities which is +5% +11% estimated at ~ US$ 15 trillion +7% 700 680 +3% 616 628 630  In last 17 years (1995 to 2012) the 556 542 504 trade has grown at a CAGR of 5% per annum. 360 304 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 Data Source: UN Comtrade2
  3. 3. Asian countries are the prominent exporters while developedcountries are the major importers Values in US$ Bn. Largest exporters Largest importers Country 2011 Exports Country 2011 Imports China 259 USA 118 Italy 38 Germany 56 Hong Kong 37 Japan 46 Germany 36 China 36 India 34 UK 35 USA 29 France 34 Turkey 22 Italy 30 France 22 Hong Kong 30 Bangladesh 20 Spain 21 Belgium 18 Netherlands 16 Netherlands 14 Canada 15 Spain 14 Belgium 15 Pakistan 13 S.Korea 14 Indonesia 13 Turkey 13 UK 11 Russia 11 Data Source: UN Comtrade3
  4. 4. Progressively, fewer countries are having share of somesignificance in total exports Countries having more than 3% share in global exports China & HK 23% China & HK 24% China & HK 29% China & HK 38% Italy 9% Italy 7% Italy 7% Germany Italy 5% USA 8% USA 6% Germany 5% Korea Germany Germany 5% 6% 5% France Korea USA 4% Belgium 6% France 5% Turkey 4% India 4% UK 4% Mexico 3% India 4% 3% Japan India 3% France USA 4% 3% 3% 3% Turkey 3% Belgium Belgium 3% 3% 3% 3% 3% Turkey 4% India 3% Turkey Korea Others 29% Others 38% Others 39% Others 39% 1995 2000 2005 2010No. of Countries 11 10 9 6 There is a clear trend of consolidation in global T&A trade, where fewer and fewer countries are having share of some significance in total trade Data Source: UN Comtrade4
  5. 5. Comparative Mapping of Top ExportersTrade growth rate(2007 – 2011) Bangladesh Viet Nam India China & Hong Kong Indonesia Netherlands USA Pakistan Spain Overall trade growth Turkey Germany ~ 4% CAGR Korea France Italy UK Belgium US$ 10 Bn US$ 20 Bn US$ 100 Bn Trade Value5 * Exports value > US$10 bn
  6. 6. USP of some successful textile & apparel exporting countries Germany Technology & Innovation, China Proximity Scale & ProductivityItalyHigh skill, design &Proximity Bangladesh Low cost Turkey Product development Sri Lanka & Proximity Compliances & Skill India Raw Material6
  7. 7. India has the potential Raw Material Richness Presence of Government complete supply Support chain Domestic FTA with Market EU (?) Cost Availability of Competitiveness labour But we need improvements…7
  8. 8. India needs to focus on… • Mega investments • Productivity • Product & design development • Service Orientation8
  9. 9. a. Deficiency of Mega Investments  Investment needed to create capacities  Growth rate of India’s T&A exports is high but base is small  Even though the wages have gone up in China, with large capacities only present in China, buyers have no option Historical performance T&A exports from India and China Values in US$ Bn 275 18% 234 9% 149 11% 4% 88 72 11% 25% 9% 27 34 8 7% 11 17 1995 2000 2005 2010 2011 China India9 Source: UN Comtrade database CAGR
  10. 10. b. Lack of Focus on Productivities  Big unorganized sector with old technology  Productivity levels in fabric and garments section is low  Lack of training and skill development program is the main reason for this issue.  IT focus is missing Efficiency levels (Apparel Industry) India 40% Bangladesh 45% Sri Lanka 50% Turkey 55% China 65% Source: Wazir Advisors10
  11. 11. c. Lack of Design & Product Development  Operate on a cut-make-trim model.  Limited companies have their own design team and design center, which is focus of organization  Though the labour cost in Turkey is high, the supply is huge to EU as it supplies premium products with good service • Out of Turkeys total T&A exports, ~60% is to the highly demanding EU market. The trade has grown at a CAGR of 10% over last 3 years. Exports of T&A from Turkey to EU Break up of Turkey’s T&A Exports to EU (2011) +10% Other Textiles Woven Garment 12 23% Exports (In Bn Euro) 11 26% 10 Home Textiles 9% 42% 2009 2010 2011 Knitted Garments11 Source: Eurostat
  12. 12. d. Approach towards Service Orientation is missing  One of the biggest consideration for customer satisfaction is: • Correct in first time • Supply what is committed • Supply on time12
  13. 13. Arindam Saha Associate Director arindam.saha@wazir.in +91 9810677443 Wazir Advisors Pvt. Ltd 3rd Floor , Building #115, Sector 44 Gurgaon - 122 002 Haryana Tel : +91 124 4590 30013

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