42896677 textile-industry


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42896677 textile-industry

  1. 1. Textile Industry OverviewTextile Industry is one of the largest and oldest industries in India. It has a significant role inIndia as it fulfils the essential and basic need of people. Textile Industry in India stands atunique place and has maintained a sustainable growth over the years. This is a self-reliant andindependent industry and has great diversification and versatility. Textile Industry in Indiaprovides great contribution for the development of economy. It is the second largest textileindustry in the world after China. It provides ample employment opportunities to peoplebelonging to all classes. After agriculture this industry provides employment to maximumnumber of people in India employing 35 million people.Textile Industry represents the rich culture, tradition, heritage & economic well-being ofcountry with diversified range and versatility. At the same time industry is competitiveenough to fulfill different demand patterns of domestic and global markets. Indian TextileIndustry plays vital role in countrys economic development and contributes 14% to industrialproduction in the country. Textile Industry contributes around 4% of GDP, 9% of excisecollections, 18% of employment in industrial sector, and 16% share in country‘s export.Indian Textile Industry is valued at US $36 bn. The development of Indian Textile Industrystarted in 1985. This was the year, for the first time Textile sector was considered as animportant industry and a separate policy was formulated for sector‘s development. In the year2000, National Textile Policy was announced.With further development Textile Industry came out of Quota Regime of Import Restrictionsunder the Multi Fiber Arrangement (MFA). This development came on 1st January 2005under the World Trade Organization (WTO) Agreement on Textiles and Clothing. Because ofthe elimination of quota restrictions, most of the developing countries now can develop thepotential market at both domestic and international level. These countries can develop theindustry expertise and can have competitive advantage through implementing newtechnology, more skilled labor will improved distribution channel, cost effective operationand production with greater value addition in each step of value chain. Moreover it will helpfor Foreign Direct Investment in industry that will create great opportunity to strengthen thesector. Some of the strengths of Indian Textile Industry are large and potential domestic andinternational market, large pool of skilled and cheap labor, well-established industry,promising export potential etc.
  2. 2. HISTORY OF TEXTILENo one knows when exactly the spinning and weaving of textile began. It has been said thatpeople knew how to weave even 27000 years ago. This was even before humans were able todomesticate animals. The oldest actual fragment of cloth found was in southern Turkey.People used fibers found in nature and hand processes to make fibers into cloth. Even thoughhigh technology was not available, skilled weavers created a wide variety of fabrics. Dyeingof fabrics was done to satisfy the universal human need for beauty.Within time, more complex social and political organization of people evolved. With thegrowth of cities and nations, improvements in technology came into place and there was asubstantial development in the international trade, both of which involved textiles.Chinese textile was considered to be the most significant in international trade. Historianshave claimed that silk from China has reached ancient Greece and Rome along a trade routecalled the Silk Road in the latter part of the second century B.C. and Egypt in 1000 B.C. TheRomans also imported cotton from nearby Egypt and from India. Archeologists have foundfacilities for dyeing and finishing cotton fabrics in settlements throughout the Roman world.During the middle ages, the production and trading of the plant called ‗woad‘, an importantsource of dye, was a highly developed industry. During the fifteenth century, Trade Fairs insouthern France provided a place for the active exchange of wools from England and silksfrom the Middle East. The economic activities surrounding these events gave rise to the firstinternational banking arrangements. Even the discovery of America was a result of the desireof Europeans to find a faster route not only to the spices but also to the textiles of the Orient.Textile trade quickly took root in America, as colonists sold native dyes such as indigo andcochineal to Europe and bought cottons from India. Although advances were being made inthe technology of textile production, the manufacture of cloth in Western Europe in 1700 wasstill essentially a hand process. Yarns were spun on a spinning wheel and fabrics were wovenby hand-operated looms.A major reorganization of manufacturing of a variety of goods occurred during the latter halfof the 1700s in Western Europe. These changes, known as the Industrial ‗Revolution‘, alterednot only technology, but also social, economic, and cultural life. The production of textileswas the first area to undergo industrialization during the seventeenth and eighteenth centuriesas the result of an economic crisis. Good quality textile products, produced inexpensively inIndia and the Far East, were gradually replacing European goods in the international market.
  3. 3. In Britain, it became imperative that some means be found to increase domestic production,to lower costs, and to improve the quality of textiles. The solution was found in thesubstitution of machine or nonhuman power for hand processes and human power.Many important inventions, most importantly spinning machines, automatic looms, and thecotton gin, improved the output and quality of fabrics. These inventions provided thetechnological base for the industrialization of the textile industry. Each invention improvedone step of the process. For example, an improvement that increased the speed of spinningmeant that looms were needed that consumed yarn more rapidly. More rapid yarn productionrequired greater quantities of fiber. The growth of the textile industry was further hastened bythe use of machines that were driven first by waterpower, then by steam, and finally byelectricity. The textile industry was fully mechanized by the early part of the nineteenthcentury. The next major developments in the field were to take place in the chemist‗slaboratory. Experimentation with the synthesis of dyestuffs in the laboratory rather than fromnatural plant materials led to the development and use of synthetic dyes in the latter half ofthe nineteenth century. Other experiments proved that certain natural materials could bedissolved in chemical solvents and re-formed into fibrous form. By 1910, the first plant formanufacturing rayon had been established in the United States.The manufacture of rayon marked the beginning of the manufactured textile fibers industry.Since that time, enormous advances have been made in the technology for every field in thetextile industry. Today, the textile industry utilizes a complex technology based on scientificprocesses and vast economic organizations.With the application of advanced technology to the textile field, textile use has expandedfrom the traditional areas of clothing and home furnishings into the fields of construction,medicine, aerospace, sporting goods, and industry. These applications have been madepossible by the ability of textile scientists to utilize textile fibers, yarns, and fabrics forspecific uses. At the same time that textile technology is making strides in new directions, thefabrics that consumers buy for clothing and household use also benefit from the developmentof new fibers, new methods of yarn and fabric construction, and new finishes for existingfibers and fabrics.Today, a huge international industrial complex encompasses the production of fiber,spinning of yarns, fabrication of cloth, dyeing, finishing, printing, and manufacture of goodsfor purchase. Consumers purchase many different products made of textiles. The story of the
  4. 4. journey that these products make as they progress from fiber to yarn to fabric to finishedproduct is not just the story of spinning yarns, weaving or knitting fabric, or constructing theend product. It is also the story of a complex network of interrelated industries.HISTORY OF INDIAN TEXTILE INDUSTRYThe history of textiles in India dates back to nearly five thousand years to the days of theHarappan civilization. Evidences that India has been trading silk in return for spices from the2nd century have been found. This shows that textiles are an industry which has existed forcenturies in our country. Recently there has been a sizeable increase in the demand for Indiantextiles in the market. India is fast emerging as a competitor to China in textile exports. TheGovernment of India has also realized this fact and lowered the customs duty and reduced therestrictions on the imported textile machinery. The intention of the government‗s move is toenable the Indian producers to compete in the world market with high quality products. Theresults of the government‗s move can be visible as Indian companies like Arvind Mills,Mafatlal, Grasim; Reliance Industries have become prominent players in the world. TheIndian textile industry is the second largest in the world-second only to China. The othercompeting countries are Korea and Taiwan. Indian Textile constitutes 35% of the totalexports of our country.The history of apparel and textiles in India dates back to the use of mordant dyes and printingblocks around 3000 BC. The foundations of the Indias textile trade with other countriesstarted as early as the second century BC. A hoard of block printed and resist-dyed fabrics,primarily of Gujarati origin, discovered in the tombs of Fostat, Egypt, are the proof of largescale Indian export of cotton textiles to the Egypt in medieval periods.During the 13th century, Indian silk was used as barter for spices from the western countries.Towards the end of the 17th century, the British East India Company had begun exports ofIndian silks and several other cotton fabrics to other economies. These included the famousfine Muslin cloth of Bengal, Orissa and Bihar. Painted and printed cottons or chintz waswidely practiced between India, Java, China and the Philippines, long before the arrival of theEuropeans.India Textile Industry is one of the largest textile industries in the world. Today, Indianeconomy is largely dependent on textile manufacturing and exports. India earns around 27%of the foreign exchange from exports of textiles. Further, India Textile Industry contributes
  5. 5. about 14% of the total industrial production of India. Furthermore, its contribution to thegross domestic product of India is around 3% and the numbers are steadily increasing. IndiaTextile Industry involves around 35 million workers directly and it accounts for 21% of thetotal employment generated in the economy.Indian Textile Industry MarketIndia Textile Industry is one of the leading textile industries in the world. Though waspredominantly unorganized industry even a few years back, but the scenario started changingafter the economic liberalization of Indian economy in 1991. The opening up of economygave the much-needed thrust to the Indian textile industry, which has now successfullybecome one of the largest in the world. India textile industry largely depends upon the textile manufacturing and export. It alsoplays a major role in the economy of the country. India earns about 27% of its total foreignexchange through textile exports. Further, the textile industry of India also contributes nearly14% of the total industrial production of the country. It also contributes around 3% to theGDP of the country. India textile industry is also the largest in the country in terms ofemployment generation. It not only generates jobs in its own industry, but also opens upscopes for the other ancillary sectors. India textile industry currently generates employmentto more than 35 million people. It is also estimated that, the industry will generate 15 millionnew jobs by the year 2015India is a traditional textile -producing country with textiles in general, and cotton inparticular, being major industries for the country. India is among the world‘s top producers ofyarns and fabrics, and the export quality of its products is ever increasing. Textile Industry isone of the largest and oldest industries in India. Textile Industry in India is a self-reliant andindependent industry and has great diversification and versatility. The textile industry can bebroadly classified into two categories, the organized mill sector and the unorganizeddecentralized sector.The organized sector of the textile industry represents the mills. It could be a spinning mill ora composite mill. Composite mill is one where the spinning, weaving and processingfacilities are carried out under one roof. The decentralized sector is engaged mainly in theweaving activity, which makes it heavily dependent on the organized sector for their yarnrequirements. This decentralized sector is comprised of the three major segments viz., power
  6. 6. loom, handloom and hosiery. In addition to the above, there are readymade garments, khadias well as carpet manufacturing units in the decentralized sector.The Indian Textile Industry has an overwhelming presence in the economic life of thecountry. It is the second largest textile industry in the world after China. Apart fromproviding one of the basic necessities of life i.e. cloth, the textile industry contributes about14% to the countrys industrial output and about 17% to export earnings. After agriculturethis industry provides employment to maximum number of people in India employing 35million people. Besides, another 50 million people are engaged in allied activities. India is thelargest producer of Jute, the 2nd largest producer of Silk, the 3rd largest producer of Cottonand Cellulosic Fibers/Yarn and 5th largest producer of Synthetic Fibers/Yarn.The main objective of the textile policy 2011 is to provide cloth of acceptable quality atreasonable prices for the vast majority of the population of the country, to increasinglycontribute to the provision of sustainable employment and the economic growth of the nation;and to compete with confidence for an increasing share of the global market. Indias textileindustry is considered a pioneer in the industry, as the industrialization of India in other areasis managed by funds generated by the textile machinery industry. However, since thebeginning of liberalization in 1992 to 1970, the industry tends to protect domestic producersof cotton with a clear objective continuous erosion of its prosperity.ProspectConsidering the continual capital investments in the textile industry, the Govt. of India mayextend the Technology Upgradation Fund Scheme (TUFS) by the end of the 11th Five YearPlan (till 2011-2012), in order to support the industry. Indian textile industry is massivelyinvesting to meet the targeted output of $85bn by the end of 2010, aiming exports of $50bn.There is huge development foreseen in Indian textile exports from the $17bn attained in2005-06 to $50bn by 2009-10. The estimation for the exports in the current financial year isabout $19bn. There is substantial potential in Indian exports of technical textiles and hometextiles, as most European companies want to set up facilities near-by the emerging markets,such as China and India.The global demand for apparel and woven textiles is likely to grow by 25 percent by year2010 to over 35mn tons, and Asia will be responsible for 85 percent output of this growth.The woven products output will also rise in Central and Southern American countries,
  7. 7. however, at a reasonable speed. On the other hand, in major developed countries, the outputof woven products will remain stable. Weaving process is conducted to make fabrics for abroad range of clothing assortment, including shirts, jeans, sportswear, skirts, dresses,protective clothing etc., and also used in non-apparel uses like technical, automotive, medicaletc.It is been forecasted that the woven textile and apparel markets will sustain their growth fromcurrent till 2010. The imports of apparel and textiles will rise from developed economies likethe USA and the western countries of Europe and Japan, along with some newly emergedeconomies, such as South Korea and Taiwan. Certainly, import growth has been witnessedvertical rise in the previous year.Apparel is the most preferred and important of all the other applications. Woven fabrics arewidely used in apparel assortments, including innerwear, outerwear, nightwear andunderwear, as well as in specialized apparels like protective clothing and sportswear. Hometextile also contributes considerably in woven fabric in products assortments like curtains,furnishing fabrics, carpets, table cloths etc.Special kind of woven fabrics are utilized in medical as well as industrial applications. Themedical applications include adhesives, dressing bandages, plasters etc.The Indian Industry foresees huge demand for industrial woven products for medical andautomotive applications. Demand for woven fabrics is anticipated to be rise vertically in thesector of home textiles.Non woven sector has great future in terms of global demand, thus major facilities of cottonyarn are currently concentrating just on home textiles. It is mandatory, that the peakmanagement of the cotton yarn manufacturers analyze the future prospect and growing graphof demand for non woven products.Anticipating massive growth in medical and automobile sectors, these sectors assuressubstantial demand for non woven facilities in India. Albeit, home textiles also will lurehigher demand, there are specific demands for home textile facilities also.The 7th Five Year Plan has huge consideration on agricultural growth that also includescotton textile industry, resulting a prosperous future forecast for the textile industry in India.Indian cotton yarn manufacturers should rush forward for joint ventures and integrated plans
  8. 8. for establishing processing and weaving facilities in home textiles and technical textiles inorder to meet export target of $50bn, and a total textile production of $85bn by 2009-2010. Expectations are high, prospects are bright, but capitalising on the new emergingopportunities will be a challenge for textile companies. Some prerequisites to be included inthe globally competing textile industry are: Imbibing global best practices Adopting rapidly changing technologies and efficient processes Innovation Networking and better supply chain management Ability to link up to global value chains.The Indian textiles industry has established its supremacy in cotton based products, especiallyin the readymade garments and home furnishings segment. These two segments will be thekey drivers of growth for Indian textiles. Readymade garment exports were worth US$ 8 bnin FY06 and will cross US$ 16 bn by the end of 2010, assuming a conservative growth of15% per annum. According to estimates, investments in textiles are expected to touch US$ 31bn by 2010.The readymade garment segment will be the principal driver of growth even in the domesticindustry. The changing preferences of Indian consumers -- from buying cloth to readymadegarments -- have prompted several companies to move up the value chain into the finishedproducts segment.Strategic InitiativesBusiness integration -- especially forward integration -- by the larger textile companies hasbeen prominent among Indian companies. Several companies that are engaged in fabricmanufacturing are now keen to enter the readymade garments space. A recent entrant isSiyaram, which launched its readymade garments range in Nov 06, following suit with othermajors like Century Textiles and Raymond.Most of the large textile companies have opted for an inorganic growth strategy to scale upoperations. Acquisition is the most logical step towards integrating operations and buildingthe value chain. Domestic acquisitions are on the rise, while acquiring foreign assets is yet togain traction. Some recent domestic acquisitions that have been executed in 2006 include
  9. 9. KSL & Industries‘ acquisition of Deccan Cooperative, and Ambattur Clothing taking overCelebrity Fashions. Another growing phenomenon observed among Indian textile companiesis the setting up of manufacturing facilities in strategic regions outside India, where they canavail of duty concessions and reduce export lead-time. Zodiac and Ambattur Clothing haveset up facilities in the Gulf region to cut down on export delivery schedules to the Europeanand US markets. Raymond has set up a unit in Bangladesh to avail of the zero duty access tothe EU.This trend is seen primarily among the large domestic players, who are trying to achievesizable scales in order to win orders from the large retailers in the US and EU. Globalretailers prefer large-sized companies that can scale up capacities consistently, keep up withdelivery schedules and meet their growing demand. They have clear preferences forcompanies with integrated design, process and manufacturing facilities.An interesting commonality in countries with successful garment exports is that they have amuch lower level of sub-contracting than India. A study during the 1990s found that apparelfirms Future Outlook XXXIII in India subcontracted 74% of their output, as compared toonly 11% in Hong Kong, 18% in China, 20% in Thailand, 28% in South Korea and 36% inTaiwan. Consequently, these countries have a wider base of exports and have done very wellin the market for large volumes of uniform products.Foreign Acquisitions by Indian Textile Companies Period Acquirer Acquired Company License Of ‗Healthtex‘ Kidswear May 01 Arvind Mills Brand Of Vf Corpn (USA) Jun 01 Ambattur Clothing Colour Plus (UK) Regency Texteis Portuguesa Sep 01 Raymond‘s Limitada (Portugal) Sep 03 Jindal Polyester Rexor Group (France) Dec 04 JCT Ltd CNLT Malaysia (Synegal)
  10. 10. May 05 Reliance Group ICI Pakistan Ltd (Pakistan) Shirting Company Located In Jun 05 Zodiac Clothing Alqoze Industrial Area (Dubai) Dec 05 GHCL Dan River (USA) Emmetre Tintolavanderie May 06 Malwa Industries Industrial (Italy) May 06 Malwa Industries Third Dimension Apparels (Italy) Jul 06 Welspun India CHT Holding (UK) Tashkent-To‘yetpa Tekstil Ltd Jul 06 Spentex Industries (Uzbek) Jul 06 GHCL Rosebys (UK)The exports market will remain favourable for India till 2008, when quota restrictions onChina end. Post 2008, competition will become tougher. This will be the phase in whichIndian textile companies will come under tremendous pricing pressures and tighter productdelivery schedules. Nevertheless, the value-added segments of readymade garments, homefurnishings and made-ups will continue to grow.Implications for SMEsThe new business dynamics have varying undertones across the value chain. The segmentthat is likely to be hit is weaving. The SMEs in the Powerloom and handloom sector will facesignificant churn in the future. Spinning mills that account for 95% of the yarn and fibreproduction, will move up the value chain into weaving. This will erode the viability of thehitherto protected Powerloom and handloom operators numbering over 400,000, who haveremained insulated from competitive forces so far. A possible remedy could be for theseweavers to align with bigger players or integrate operations that would ensure off-take oftheir products.
  11. 11. The fragmented industry structure has in the past been beneficial in generating employment,but will be difficult to sustain in a globally competitive environment. For fabricmanufacturers in the unorganised segment, this will mean inefficient units losing outeventually, while the more efficient and dynamic ones aligning with manufacturers or buyers.For readymade garment SMEs, rising demand and preference for ready-to-wear outfits in thedomestic market will sustain a large number of units in this sector. This will be the mostthriving segment in the industry and SMEs will play a key role.India‘s key assets include a large and low-cost labour force, sizable supply of fabric,sufficiency in raw material and spinning capacities. On the basis of these strengths, India willbecome a major outsourcing hub for foreign manufacturers and retailers, with compositemills and large integrated firms being their preferred partners. It will thus be essential forSMEs to align with these firms, which can ensure a market for their products and new orders.Weaknesses of the Indian textile industry include fragmentation of the industry, lengthydelivery times, delays in customs clearance and high transportation and input costs. To tacklethese factors, the Government will have to play a key role. Infrastructure development,reforms in labour laws and significant policy support will be essential.Textile Sectors in India:The Man-Made Fiber / Yarn and Powerloom Sector: This part of industry includes fiberand filament yarn manufacturing units. The Power looms sector is decentralized and plays avital role in Indian Textiles Industry. It produces large variety of cloths to fulfill differentneeds of the market. It is the largest manufacturer of fabric and produces a wide variety ofcloth. The sector contributes around 62% of the total cloth production in the country andprovides ample employment opportunities to 4.86 million people.The Cotton Sector: Cotton is one of the major sources of employment and contributes inexport in promising manner. This sector provides huge employment opportunities to around50 million people related activities like Cultivation, Trade, and Processing. India‘s Cottonsector is second largest producer of cotton products in the world.The Handloom Sector: The handloom sector plays a very important role in the country‘seconomy. It is the second largest sector in terms of employment, next only to agriculture.This sector accounts for about 13% of the total cloth produced in the country (excludingwool, silk and Khadi).
  12. 12. The Woolen Sector: The Woolen Textile sector is an Organized and Decentralized Sector.The major part of the industry is rural based. India is the 7th largest producer of wool, andhas 1.8% share in total world production. The share of apparel grade is 5%, carpet grade is85%, and coarse grade is 10% of the total production of raw wool. The Industry is highlydependent on import of raw wool material, due to inadequate production.The Jute Sector: Jute Sector plays very important role in Indian Textile Industry. Jute iscalled Golden fiber and after cotton it is the cheapest fiber available. Indian Jute Industry isthe largest producer of raw jute and jute products in the world. India is the second largestexporter of jute goods in world.The Sericulture and Silk Sector: The Silk industry has a unique position in India, and playsimportant role in Textile Industry and Export. India is the 2nd largest producer of silk inworld and contributes 18% of the total world raw silk production. In India Silk is availablewith varieties such as, Mulberry, Eri, Tasar, and Muga. Sericulture plays vital role in cottageindustry in the country. It is the most labor-intensive sector that combines both Agricultureand Industry.The Handicraft Sector: The Indian handicrafts industry is highly labor intensive, cottagebased and decentralized industry. It plays a significant & important role in the country‘seconomy. It provides employment to a vast segment of craft persons in rural & semi urbanareas and generates substantial foreign exchange for the country, while preserving its culturalheritage.Structure of India’s Cotton Textile IndustryUnlike other major textile-producing countries, India‘s textile industry is comprised mostly ofsmall-scale, non-integrated spinning, weaving, finishing, and apparel-making enterprises.This unique industry structure is primarily a legacy of government policies that havepromoted labor intensive, small-scale operations and discriminated against larger scale firms: Cotton farming and harvesting: Cotton is grown in tropical as well as sub tropical area in India. Mostly the cotton grown in India is from dry lands and crops mostly depend on the irrigation systems available and not only on the rain water. Ginning: Ginning is the process where cotton fiber is separated from the cotton seed. The first step in the ginning process is when the cotton is vacuumed into tubes that carry it to a dryer to reduce moisture and improve the fiber quality. Then it runs
  13. 13. through cleaning equipment to remove leaf trash, sticks and other foreign matter.Ginning is accomplished by one of two methods. Cotton varieties with shorter stapleor fiber length are ginned with saw gins. This process involves the use of circularsaws that grip the fibers and pull them through narrow slots. The seeds are too large topass through these openings, resulting in the fibers being pulled away from the seed.Long fiber cottons must be ginned in a roller gin because saw gins can damage theirdelicate fibers.Oil mill: in the operation the oil is extracted from the cotton seeds that are comingfrom the ginning process. The cotton seeds coming from the ginning unit are thenpassed through the pressing unit and crude cotton oil is produced. The pressed cottonseed oil cake is supplied as the cattle feed. The crude is further modified as the bio-diesel which could be used as the one of the energy source. The refined cotton oil isalso used as the edible oil but it is proved to be unfit for the human health.Spinning: Spinning is the process of converting cotton or manmade fiber into yarn tobe used for weaving and knitting. Largely due to deregulation beginning in the mid-1980s, spinning is the most consolidated and technically efficient sector in India‘stextile industry. Average plant size remains small, however, and technology outdated,relative to other major producers. In 2002/03, India‘s spinning sector consisted ofabout 1,146 small-scale independent firms and 1,599 larger scale independent units.Weaving and Knitting: Weaving and knitting converts cotton, manmade, or blendedyarn into woven or knitted fabrics. India‘s weaving and knitting sector remains highlyfragmented, small scale, and labor-intensive. This sector consists of about 3.9 millionhandlooms, 380,000 ―Powerloom‖ enterprises that operate about 1.7 million looms,and just 137,000 looms in the various composite mills. ―Power looms‖ are smallfirms, with an average loom capacity of four to five owned by independententrepreneurs or weavers. Modern shuttle less looms account for less than 1 percent ofloom capacity.Fabric Finishing: Fabric finishing (also referred to as processing), which includesdyeing, printing, and other cloth preparation prior to the manufacture of clothing, isalso dominated by a large number of independent, small scale enterprises. Overall,about 2,300 processors are operating in India, including about 2,100 independent unitsand 200 units that are integrated with spinning, weaving, or knitting units.
  14. 14. Clothing: Apparel is produced by about 77,000 small-scale units classified as domestic manufacturers, manufacturer exporters, and fabricators (subcontractors). Composite Mills: Relatively large-scale mills that integrate spinning, weaving and, sometimes, fabric finishing are common in other major textile-producing countries. In India, however, these types of mills now account for about only 3 percent of output in the textile sector. About 276 composite mills are now operating in India, most owned by the public sector and many deemed financially ―sick.‖India textile industry is one of the leading in the world. Currently it is estimated to be aroundUS$ 52 billion and is also projected to be around US$ 115 billion by the year 2012. Thecurrent domestic market of textile in India is expected to be increased to US$ 60 billion by2012 from the current US$ 34.6 billion. The textile export of the country was around US$19.14 billion in 2006-07, which saw a stiff rise to reach US$ 22.13 in 2007-08. The share ofexports is also expected to increase from 4% to 7% within 2012. Following are area,production and productivity of cotton in India during the last six decades: Area in lakh Production in lakh bales of 170 Yield kgs perYear hectares kgs hectare1950-51 56.48 30.62 921960-61 76.78 56.41 1241970-71 76.05 47.63 1061980-81 78.24 78.60 1701990-91 74.39 117.00 2672000-01 85.76 140.00 2782001-02 87.30 158.00 308
  15. 15. 2002-03 76.67 136.00 3022003-04 76.30 179.00 3992004-05 87.86 243.00 4702005-06 86.77 244.00 4782006-07 91.44 280.00 5212007-08 94.39 315.00 5672008-09 93.73 290.00 526Though during the year 2008-09, the industry had to face adverse agro-climatic conditions, itsucceeded in producing 290 lakhs bales of cotton comparing to 315 lakhs bales last year, yetmanaged to retain its position as worlds second highest cotton producer.Economic issuesPrices of CottonThe Minimum Support Prices of Kapas (Seed cotton) for fair average quality announced forthe cotton season 2005- 2006 (Oct – Sept), was fixed at last year‘s level (2004-05) i.e.Rs.1760/- per quintal for medium staple variety (F-414/J-34/H- 777). The support price forH-4 (Long staple variety) has been fixed at Rs.1980/ - per quintal, an increase of Rs.20/- perquintal over support price of 2004-05. The MSP fixed for F-414/H-777/J-34 variety of kapaswill be applicable only to Rajasthan. The price of this variety, grown in Haryana and Punjabhas been fixed keeping in view the respective quality differential, vis-à-vis Rajasthan,obtaining in these States. The Cotton Corporation of India Ltd. (CCI) undertook massiveMSP operations throughout 2004-05 in all the cotton growing states, and procured kapasequivalent to lint cotton of 27.52 lakhs bales. In 2004-05, due to favourable seasonalconditions, there was a sharp rise in productivity, which peaked to a record 463 Kg.Lint/hectare, as compared to 399 kg. / lint per hectare during 2003-04, the cultivated areaincreased to 89.20 lakhs hectares in 2004-05, as compared to 76.30 lakhs hectares in 2003-04,
  16. 16. and the production touched 243 lakh bales in 2004-05, as compared to 179.00 lakh bales in2003-04.Present ScenarioTextile Industry is offering one of the most basic requirements of community and it possessimportance; preserve continued growth for developing quality of life. From themanufacturing of raw materials to the delivery of end products, it has gain it‘s kind ofposition, as a self-dependent sector and with considerable value-addition at every stage ofdealing; it is a key input to the country‘s economy.Today the textiles and clothing industry engages an important position in India‘s economy.Being the major foreign exchange earner having about 35% in its torso, contributing to about30 % of India‘s exports and 14% of industrial productions, expecting above 6% GDP in2005, and it considered as the second largest vital sector of employment initiator afteragriculture sector.Under the World Trade Organization (WTO) Agreement on Textiles and Clothing, the textilequota scheme of quantitative import limitations under the multi-fiber arrangement (MFA)came to an end on 1st January, 2005, hence developing countries like India will flourish inthe new competitive atmosphere and as a result, the Indian textile industry will have astronger place in both their export and domestic markets.All along with its usual yarn and fabrics, at present India is exporting more than 100 garmentproduct range. Many worlds‘ leading brands like Tommy Hilfiger, Gap, Liz Claibome, Poloetc are sourcing products from India.With huge investments, persistence innovations, latest product mix and planned marketing,today, India has come out as a flourishing outsourcing centre for textiles and apparel industryto meet the global requirement of the manufacturing fibers and yarns products. In a view ofthe rising rapport with major global brands, dismantling of quota system from 2005 erawould hit upon India as a main global outsourcing hub.Competitive advantage & possible growth in Synthetic Textiles Sector India‘s synthetictextile sector is relatively modern and has a high growth potential which will help India tocoming out as a major outsourcing hub. With a compounded annual growth rate of more than22% the exports of MMF textiles have stretched out to a level of US $1.62 billion in 2002-03starting from small exports in 1954. The export growth in 2002-03 matches up to the
  17. 17. preceding year was in the harmony of 30 percent, and the MMF textile sector is the onlysector where the performance has exceeds by the target fixed for this year by US $ 115million.Indian synthetic textiles are more and more accomplishing new markets along with keepingthe market share in the existing markets. At present Indian synthetic textile exports aretargeting more than 175 countries worldwide, where Middle East accounted for over 32percent of our exports and the share of the extremely quality conscious in European Union,approximately 23 percent.Over the years, the Indian MMF textile sector has built-up an export base; and the share ofMMF textile exports in the total Indian textile export has also been raised, the share movedup from 10.38% in 2000-01 to 11.46% in 2001-02 and more to about 14% in 2002-03.At present Indian exports of synthetic textiles to USA are rising at more than 90% yearly. Ithas also been observed that export growth will be striking for major MMF textile items afterdismantling of quota system from 2005.Furthermore, Indonesia, Korea‘s export of synthetic textiles are turning down compared toprevious year. Manufacturing capacity of Korea has declined by more than 30% in thepolyester filament sector in 2002 and in 2003 and it is expected to turn down further more,which will end with a turn down in their exports of polyester filament fabrics. Due to anti-dumping duty on the polyester filament fabrics obtained from Taiwan and Korea, countrieslike Brazil, gaining of more opportunity for India will exists as a larger synthetic fabricsexporter.In the world, synthetic textile trade‘s share of India is also seeing increasing. The exportshare of Indian synthetic textiles in worldwide increased from 0.11% in 1971 to 1.12% in1991 and more to about 3% in 2002. This suggests the rising performance of Indian synthetictextile items in the worldwide market.Still there is an opportunity to explore new market segments like Latin America and Africaall along with maintaining the share in the established markets like European Union andUSA. At this stage an annual growth expected to 15% for synthetic textiles and exports areexpected to touch US$ 2.5 billion in 2005-05 and US$ 4.3 billion in 2009-10.SWOT analysis of the textile industry
  18. 18. Strengths Weaknesses Strong and diverse raw material base Structural weaknesses in weaving and  Third largest producer of cotton processing  2 percent of shuttleless looms as  Fifth largest producer of man-made percentage of total looms as against fibre and yarn world average of 16 percent and China, Vertical and horizontal integrated textile Pakistan and Indonesia 15 percent, 9 value chain percent and 10 percent respectively. Strong presence in entire textile value Highly fragmented and technology chain from raw material to finished goods backward textile processing sector Globally competitive spinning industry Highly fragmented garment industry  Average cotton yarn spinning cost at Except spinning, all other segments are US$ 2.5 per kg. Which is lower than all predominantly in decentralized sector. the countries including China The rigid labour laws: proving a bottleneck Low wages: rate at 0.75 US$ per operator particularly to the garment sector. Large hour as compared to US$ 1 of China and seasonal orders cannot be taken because the US$ 3 of Turkey labour strength cannot be reduced during the Unique strength in traditional handlooms slack season. and handicrafts Inadequate capacity of the domestic textile Flexible production system machinery manufacturing sector. Diverse design base Big demand and supply gap in the training facilities in textile sector. Infrastructural bottlenecks in terms of power, utility, road transport etc.Employment GenerationThe textile sector itself has the potential to create 1.2 crore employment opportunity over thenext five years. The government would continue to encourage growth within the textilesindustry as it holds huge potential for employment and exports.Textile Sector Contribution:According to the Annual Report 2009-10 of the Ministry of Textiles, the Indian textileindustry contributes about 14 per cent to industrial production, 4 per cent to the countrysgross domestic product (GDP) and 17 per cent to the country‘s export earnings. It providesdirect employment to over 35 million people and is the second largest provider ofemployment after agriculture. According to the Ministry of Textiles, the cumulative
  19. 19. production of cloth during April‘09-March‘10 increased by 8.3 per cent as compared to thecorresponding period of the previous year. Total textile exports increased to US$ 18.6 billionduring April‘09- January‘10, from US$ 17.7 billion during the corresponding period of theprevious year, registering an increase of 4.95 per cent in rupee terms. Further, the share oftextile exports in total exports has increased to 12.36 per cent during April‘09-January‘10,according to the Ministry of Textiles. As per the Index of Industrial Production (IIP) datareleased by the Central Statistical Organization (CSO), cotton textiles have registered agrowth of 5.5 per cent during April-March 2009-10, wool, silk and man-made fibre textileshave registered a growth of 8.2 per cent and textile products including wearing apparel haveregistered a growth of 8.5 per cent.Technical Textile Segment:According to the Ministry of Textiles, technical textiles are an important part of the textileindustry. The Working Group for the Eleventh Five Year Plan has estimated the market sizeof technical textiles to increase from US$ 5.29 billion in 2006-07 to US$10.6 billion in 2011-12, without any regulatory framework and to US$ 15.16 billion with regulatory framework.The Scheme for Growth and Development of Technical Textiles aims to promote indigenousmanufacture of technical textile to leverage global opportunities and cater to the domesticdemand.Current StatusThe textile industry holds significant status in the India. Textile industry provides one of themost fundamental necessities of the people. It is an independent industry, from the basicrequirement of raw materials to the final products, with huge value-addition at every stage ofprocessing.Today textile sector accounts for nearly 14% of the total industrial output. Indian fabric is indemand with its ethnic, earthly colored and many textures. The textile sector accounts about30% in the total export. This conveys that it holds potential if one is ready to innovate.The textile industry is the largest industry in terms of employment economy, expected togenerate 12 million new jobs by 2010. It generates massive potential for employment in thesectors from agricultural to industrial. Employment opportunities are created when cotton iscultivated. It does not need any exclusive Government support even at present to go further.
  20. 20. Only thing needed is to give some directions to organize people to get enough share of theprofit to spearhead development.SegmentsTextile industry is constituted of the following segments Readymade Garments Cotton Textiles including Handlooms (Millmade / Powerloom/ Handloom) Man-made Textiles Silk Textiles Woollen Textiles Handicrafts including Carpets Coir JuteThe cottage industry with handlooms, with the cheapest of threads, produces average dressmaterial, which costs only about 200 INR featuring fine floral and other patterns. It is notnecessary to add any design to it. The women of the house spin the thread, and weave a piecein about a week.It is an established fact that small and irregular apparel production can be profitable byproviding affordable casual wear and leisure garments varieties.Now, one may ask, where from the economy and the large profit comes in if the lowest endof the chain does not get paid with minimum per day labour charge. It is an irony of course.What people at the upper stratum of the chain do is, to apply this fabric into a design withsome imagination and earn in millions. The straight 6 yards simple saree, drape in with ablouse with embroideries and bead work, then it becomes a designer¡¦s ensemble. For anaverage person, it can be a slant cut while giving it a shape, which can double the profit.Maybe, the 30 % credit that the industry is taking for its contribution to Indian economy asgood as 60 % this way. Though it is an industry, it has to innovate to prosper. It has all theingredients to go ahead.Textile exports are targeted to reach $50 billion by 2010, $25 billion of which will go to theUS. Other markets include UAE, UK, Germany, France, Italy, Russia, Canada, Bangladeshand Japan. The name of these countries with their background can give thousands of insights
  21. 21. to a thinking mind. The slant cut that will be producing a readymade garment will sell at aprice of 600 Indian rupees, making the value addition to be profitable by 300 %.Currently, because of the lifting up of the import restrictions of the multi-fibre arrangement(MFA) since 1st January, 2005 under the World Trade Organization (WTO) Agreement onTextiles and Clothing, the market has become competitive; on closer look however, it soundsan opportunity because better material will be possible with the traditional inputs so faravailable with the Indian market.At present, the textile industry is undergoing a substantial re-orientation towards other thenclothing segments of textile sector, which is commonly called as technical textiles. It ismoving vertically with an average growing rate of nearly two times of textiles for clothingapplications and now account for more than half of the total textile output. The processes inmaking technical textiles require costly machinery and skilled workers.The application that comes under technical textiles are filtration, bed sheets and abrasivematerials, healthcare upholstery and furniture, blood-absorbing materials and thermalprotection, adhesive tape, seatbelts, and other specialized application and products.Strengths India enjoys benefit of having plentiful resources of raw materials. It is one of the largest producers of cotton yarn around the globe, and also there are good resources of fibres like polyester, silk, viscose etc. There is wide range of cotton fibre available, and has a rapidly developing synthetic fibre industry. India has great competitiveness in spinning sector and has presence in almost all processes of the value chain. Availability of highly trained manpower in both, management and technical. The country has a huge advantage due to lower wage rates. Because of low labor rates the manufacturing cost in textile automatically comes down to very reasonable rates. The installed capacity of spindles in India contributes for 24% share of the world, and it is one of the biggest exporters of yarns in the global market. Having modern functions and favourable fiscal policies, it accounts about 25% of the world trade in cotton yarn.
  22. 22. The apparel industry is largest foreign exchange earning sector, contributing 12% of the countrys total exports. The garment industry is very diverse in size, manufacturing facility, type of apparel produced, quantity and quality of output, cost, requirement for fabric etc. It comprises suppliers of ready-made garments for both, domestic or export markets.WeaknessMassive Fragmentation:A major loop-hole in Indian textile industry is its huge fragmentation in industry structure,which is led by small scale companies. Despite the government policies, which made thisdeformation, have been gradually removed now, but their impact will be seen for some timemore. Since most of the companies are small in size, the examples of industry leadership arevery few, which can be inspirational model for the rest of the industry.The industry veterans portrays the present productivity of factories at half to as low as one-third of levels, which might be attained. In many cases, smaller companies do not have thefiscal resources to enhance technology or invest in the high-end engineering of processes.The skilled labor is cheap in absolute terms; however, most of this benefit is lost by smallcompanies.The uneven supply base also leads barriers in attaining integration between the links insupply chain. This issue creates uncontrollable, unreliable and inconsistent performance.Political and Government Diversity:The reservation of production for very small companies that was imposed with an intention tohelp out small scale companies across the country, led substantial fragmentation that distortedthe competitiveness of industry. However, most of the sectors now have been de-reserved,and major entrepreneurs and corporate are putting-in huge amount of money in establishingbig facilities or in expansion of their existing plants.Secondly, the foreign investment was kept out of textile and apparel production. Now, theGovernment has gradually eliminated these restrictions, by bringing down import duties oncapital equipment, offering foreign investors to set up manufacturing facilities in India. Inrecent years, India has provided a global manufacturing platform to other multi-national
  23. 23. companies that manufactures other than textile products; it can certainly provide a base fortextiles and apparel companies.Despite some motivating step taken by the government, other problems still sustains likevarious taxes and excise imbalances due to diversification into 35 states and UnionTerritories. However, an outline of VAT is being implemented in place of all other taxdiversifications, which will clear these imbalances once it is imposed fully.Labour Laws:In India, labour laws are still found to be relatively unfavorable to the trades, with companieshaving not more than ideal model to follow a hire and fire policy. Even the companies haveoften broken their business down into small units to avoid any trouble created by labourunionization.In past few years, there has been movement gradually towards reforming labour laws, and itis anticipated that this movement will uphold the environment more favourable.Distant Geographic Location:There are some high-level disadvantages for India due to its geographic location. For theforeign companies, it has a global logistics disadvantage due the shipping cost is higher andalso takes much more time comparing to some other manufacturing countries like Mexico,Turkey, China etc. The inbound freight traffic has been also low, which affects cost ofshipping - though, movement of containers are not at reasonable costs.Lack of trade memberships:India is serious lacking in trade pact memberships, which leads to restricted access to theother major markets. This issue made others to impose quota and duty, which put scissors onthe sourcing quantities from India.OpportunitiesIt is anticipated that Indias textile industry is likely to do much better. Since the consumptionof domestic fibre is low, the growth in domestic consumption in tandem is anticipated withGDP of 6 to 8 % and this would support the growth of the local textile market at about 6 to 7% a year.
  24. 24. India can also grab opportunities in the export market. The industry has the potential ofattaining $34bn export earnings by the year 2010. The regulatory polices is helping out toenhance infrastructures of apparel parks, Specialized textile parks, EPZs and EOUs.The Government support has ensured fast consumption of clothing as well as of fibre. Asingle rate will now be prevalent throughout the country.The Indian manufacturers and suppliers are improving design skills, which include differentfabrics according to different markets. Indian fashion industry and fashion designers aremarking their name at international platform. Indian silk industry that is known for its fineand exclusive brocades, is also adding massive strength to the textile industry.The industry is being modernized via an exclusive scheme, which has set aside $5bn forinvestment in improvisation of machinery. International brands, such as Levis, Wal-Mart, JCPenny, Gap, Marks & Spencer and other industry giants are sourcing more and more fabricsand garments from India. Alone Wal-Mart had purchased products worth $200mn last yearand plans to increase buying up to $3bn in the coming year. The clothing giant from Europe,GAP is also sourcing from India.AnticipationAs a result of various initiatives taken by the government, there has been new investment ofRs.50,000 crore in the textile industry in the last five years. Nine textile majors investedRs.2,600 crore and plan to invest another Rs.6,400 crore. Further, Indias cotton productionincreased by 57% over the last five years; and 3 million additional spindles and 30,000shuttle-less looms were installed.Forecast till 2010 for textiles by the government along with the industry and ExportPromotion Councils is to attain double the GDP, and the export is likely attain $85bn. Theindustry is anticipated to generate 12mn new jobs in various sectors.Recent TrendsThe mood in the Indian textile industry given the phase-out of the quota regime of the Multi-Fibre Arrangement (MFA) is upbeat with new investment flowing in and increased orders forthe industry as a result of which capacities are fully booked up to April 2005. As a result ofvarious initiatives taken by the government, there has been new investment of Rs.500 billionin the textile industry in the last five years. Nine textile majors invested Rs.26 billion and
  25. 25. plan to invest another Rs.64 billion. Further, Indias cotton production increased by 57% overthe last five years; and 3 million additional spindles and 30,000 shuttles-less looms wereinstalled.The industry expects investment of Rs.1,400 billion in this sector in the post-MFA phase. AVision 2012 for textiles formulated by the government after intensive interaction with theindustry and Export Promotion Councils to capitalise on the upbeat mood aims to increaseIndias share in worlds textile trade from the current 4% to 8% by 2012 and to achieve exportvalue of US $ 50 billion by 2012 Vision 2012 for textiles envisages growth in Indian textileeconomy from the current US $ 37 billion to $ 85 billion by 2012; creation of 12 million newjobs in the textile sector; and modernisation and consolidation for creating a globallycompetitive textile industry. The textile industry is undergoing a major reorientation towardsnon-clothing applications of textiles, known as technical textiles, which are growing roughlyat twice rate of textiles for clothing applications and now account for more than half of totaltextile production. The processes involved in producing technical textiles require expensiveequipments and skilled workers and are, for the moment, concentrated in developedcountries. Technical textiles have many applications including bed sheets; filtration andabrasive materials; furniture and healthcare upholstery; thermal protection and blood-absorbing materials; seatbelts; adhesive tape, and multiple other specialized products andapplications.
  26. 26. Vision Statement for textile industry(2007-2012)  To build world class, state-of-the-art, manufacturing capacities and achieve a predominant global standing in manufacture and export of textiles and clothing.  To ensure the growth of the Indian textile industry at 16 percent per annum in value terms, to US$ 115 billion, by the end of the Eleventh Five Year Plan.  To secure a 7 percent share in global textile trade by the end of the Eleventh Five Year Plan.  To equip the textile industry to withstand the pressures of import penetration, and maintain dominance of the growing domestic market.  To enable Small & Medium Enterprises (SMEs) to achieve competitiveness to face the global scenario with confidence.
  27. 27.  To provide a conducive policy environment which will encourage innovation, augment R&D efforts, and enhance productivity through the upgradation of technology, manufacturing processes and the development of human resources. To establish the Indian textiles industry as a producer of internationally competitive value added products.
  28. 28. Future of Textile Industry in IndiaThe textile industry in India is one of the flourishing sectors of Indian economy. It contributesmore than 13% to industrial output, 16.63% to export revenues and 4% to the nation‘s GDP.In the year 2010, the industry is estimated to produce 12 million jobs with an investment ofUS$ 6 billion in the fields of textiles equipments and structure, and garment manufacturingby the end of 2015.Union Ministry of Textiles certified Apparel Export Promotion Council (AEPC) has taken theresponsibility to motivate the foreign investors to invest in Indian Textile industry byexhibiting it massive unexplored domestic market. It has also formulated and endorsed themotto of ―come, invest, produce and sell in India‖. Under this the ministry has decided tosend it representatives to Germany, Switzerland, France, Italy and US. The objective is totrigger the foreign investment towards instituting textile units in India by offering numerousallowances to global investor like low-priced workforce and intellectual right fortification.The government of India has also taken few initiatives to promote the textile industry bypermitting 100% Foreign Direct Investment in the market. Owing to the upright and straightincorporated textiles price chain, the Indian textile industry symbolizes a strong existence inthe complete value chain from raw commodities to finished products. The Synthetic andRayon Textile Export Promotion Council (SRTEPC) has taken all the required steps to meetthe target of doubling the synthetic textile exports in India to US$ 6.2 billion by seizing 4%of market share by FY 2011-12.Global Textile Market OverviewThe global textile market value is estimated to be US$ 4.50 trillion during the year 2008. It isobserved that clothing accounted for about 60% of the market, while textile accounted for thebalance 40%. The global textile industry grew at an estimated average annual rate of about2.5% during 2000-2008. The global slowdown has also affected Textile industry adversely.The global fibre demand has decreased by one percent in 2008. It is also observed that theglobal textile and clothing industry can be broadly divided into Natural Fibre and ManmadeFibre industry. The Natural Fibre industry includes Cotton, Wool, Silk and Jute; while themanmade Fibre Industry includes Polyamides, Polyester, Polyethylene, Viscose and Acrylic.Global Fibre Scenario
  29. 29. The global fibre demand in 2003 was 641 Lacs MT. The demand for fibre grew at a CAGRof 5.05% to reach an estimated 807.50 Lacs MT during 2008. It is noted that during the sameperiod, demand for natural fibre grew at a CAGR of 4.65%, while the demand for manmadefibre grew at CAGR of 5.38%.PFY Demand in IndiaThe domestic demand for PFY stood at 1014755 Tons during the year 2003. The demand forPFY grew at CAGR of 4.21% to reach an estimated 1288523 Tons by the years 2008.PFY industry, as we know, had faced difficult market conditions during the years 1999-2002due to excess capacity over demand which lead to cut throat unhealthy competition causingsubstantial erosion in profitability of these companies. However, as now new capacities cameup during this period, the gap between supply and demand got gradually bridged up and POYmanufacturing units/companies are doing reasonably well since beginning of 2002 and areexpected to do much better during the next few years in view of the sustained demandgrowth.As per detailed survey conducted by CRISINFAC the domestic Polyester industry is likelyto witness robust demand growth and higher profit margins in the next five years due to thefollowing positive factors favouring Polyester Industry. Price Competitiveness of Polyester: viz-a-viz other substitutes like cotton, silk and woollen yarns. Excise duty reduction to encourage demand: Excise duty on POY has been progressively reduced over the previous few years to 16% and is expected to be reduced further which will further increase the price competitiveness of POY. Increase of PFY in non-appeal segments: In India, fibre is mostly used for textile applications i.e. 93% and only 7% for non-apparel applications like home textiles, automotive an industrial segments as against 59% worldwide. The demand of non- apparel segment is expected to grow @ 20% p.a. as Polyester offers high tenacity an strength which is most suitable for such applications. Lower per capita consumption: The average per capita consumption (PCC) of fabric in India is much lower than in its neighbouring countries. India has a huge potential market, given that its PCC is as low as 1.4 kg as compared China (5 kgs), Pakistan (3
  30. 30. kgs) and Indonesia (5 kgs). India has the advantage of a large an growing domestic market, and a good GDP growth. Rapid urbanization: higher spend on clothing: In India, out of the total population, about 70% is rural. Behaviour patterns suggest that most of the fabric demand in this segment is need-based. The urban demand, on the other hand, is also driven by fashion trends and favours more sophisticated textiles, and variety in designs and colours. The average urban spend on apparel is higher than rural spend. However, over the years, the clothing pattern in India has shifted. Mens clothing consumption has moved from the traditional cotton based wear to synthetic fabrics. Cotton dhotis are giving way to trousers (mostly made of polyester or polyester blends). Likewise, women are moving from cotton saris to synthetic saris/dresses. Levy of Anti-dumping duty on import of POY to lower threats of import leading to availability of better contribution to domestic manufacturers. Rapid additions in downstream processing facilities leading to incremental demand. Manufacturing of manmade fibres globally is getting shifted mainly to China and India. As Chinas domestic consumption almost matches its production, India will be able to increase its presence in the International market.Keeping in view the strong fundamentals mentioned above, CRISINFAC has projected thePOY industry grew at a healthy 7.8% Compounded Annual Growth Rate (CAGR).Raising concern over Indias share in the US imports of technical textiles and non-wovenfabric which is way behind China, industry body Ficci today said domestic industry needsresearch and development (R&D) support."Indias share in the US imports of special purpose fabric (technical textiles) and non-wovenfabrics was merely 2.6 per cent and 1.2 per cent, respectively in 2009 compared to Chinasshare of 15 per cent and 12 per cent," a Ficci study said.India needs to strengthen its capabilities to tap this growing market as technology-intensiveproducts are the future, it said.The study said there is a need to formulate a comprehensive research and development(R&D) policy for the Indian textile industry. The chamber has submitted itsrecommendations to the Ministry of Textiles in this regard. The study pointed out that only a
  31. 31. small portion of revenue of the Indian textile industry is derived by innovative or technologyintensive products. "The policy should aim at increasing the countrys share of advancetechnology-based products and high value-added items in global market to seven per cent innext five years from less than two percent currently.The chamber has also recommended setting-up of a National Textiles Research Council withseed money of Rs 30 crore and an annual grant of Rs 10 crore. The council could be the apexbody for undertaking and providing direction to research in textiles in the country, the studysaid.Ficci said that the policy should provide a special focus on eco-friendly textiles that wouldhelp in reducing carbon footprint. "Development of eco-friendly and sustainable linkages iskey to competitiveness. Also, the competitive edge for Indian textile industry will come fromadoption of new and advance materials with functional properties (like anti-microbial fabricsfor patients dress) in the textiles sector," it said.Government Initiative for Textile Industry:According to the Ministry of Textiles, investment under the Technology Upgradation FundSchemes (TUFS) has been increasing steadily. During the year 2009-10, 1896 applicationshave been sanctioned at a project cost of US$ 5.23 billion. The cumulative progress as onDecember 31, 2009, includes 27,477 applications sanctioned, which has triggered investmentof US$ 45.5 billion and amount sanctioned under TUFS is US$ 18.9 billion of which US$16.4 billion has been disbursed so far till the end of April, 2010.Moreover, in May 2010, the Ministry of Textiles informed a parliamentary panel that itproposes to allocate US$ 785.2 million for the modernization of the textile industry.The Scheme for Integrated Textile Park (SITP) was approved in July 2005 to facilitate settingup of textiles parks with world class infrastructure facilities. 40 textiles park projects havebeen sanctioned under the SITP. According to the Minister of State for Textiles, PanabaakaLakshmi, under the SITP, a cumulative expenditure of US$ 204.3 million has been incurredagainst allocation of US$ 220.7 million in the last three years.In the Union Budget 2010-11 presented in February 2010, the Finance Minister made thefollowing announcements to benefit the textile industry:
  32. 32. The central plan outlay for the industry has been enhanced to US$ 1.03 billion. Of this US$ 521.4 million is for TUFS, US$ 76 million for SITP, US$ 80.2 million for handlooms, US $ 69.3 million for handicrafts and US$ 98.4 million for sericulture. Allocation for textiles and jute industry is US$ 713.4 million. The total allocation for village and small enterprises sector which include handicrafts and handlooms is US$ 210.3 million. US$ 31.5 million has been provided for development of mega clusters in handlooms, handicrafts and powerloom sectors. Customs duty at 4 per cent for import of readymade garments for retail sales has been withdrawn. The micro small medium enterprises in textiles sector have been given full CENVAT credit on capital goods in one installment in the year of receipt of such goods and the facility of payment of excise duty in quarterly basis.InvestmentsAccording to the Minister for Textiles, Mr Dayanidhi Maran, around US$ 5.35 billion offoreign investment is expected to be made in India in the textile sector over the next fiveyears.The textiles industry has attracted foreign direct investment (FDI) worth US$ 817.26 millionbetween April 2000 and March 2010, according to data released by the Department ofIndustrial Policy and Promotion. S Kumars Nationwide has formed a joint venture (JV) with Donna Karan International to design, produce and distribute the entire range of DKNY menswear apparel across the world except Japan for 10 years. The new venture will invest US$ 25 million for expansion of Donna Karan‘s menswear brand and expects to record sales of about US$ 140 million in the next three years. The Andhra Pradesh government has allocated over 1000 acres of land for the Brandix India Apparel City (BIAC) in the state‘s special economic zone (SEZ), which was inaugurated in May 2010. The apparel city is expected to attract an investment of US$ 1.2 billion (around Rs 5,400 crore). Private equity firms TPG and Bain Capital have picked up stakes in children apparel retailer Lilliput Kidswear for US$ 27 million and US$ 60.7 million respectively.
  33. 33. Italian sportswear maker Lotto is planning to invest US$ 10 million over the next five years to capture 7 per cent of India‘s branded sports apparel and equipment market. The brand, which started its stand-alone retail chain in India in 2008, has 31 stand- alone stores across the country and plans to open 200 more such stores by 2015.Worlds leading lingerie brand, Germany-based, Triumph International, plans to invest overUS$ 217 million in India to open 12 more flagship outlets and 30 additional EPS (ExclusivePartner Stores) during 2010.Government policies relating to textile industries in IndiaThe Indian textile industry is one of the largest industries in the world. The Ministry ofTextiles in India has formulated numerous policies and schemes for the development of thetextile industry in India. Some of them are detailed in the following sections.National Textile PolicyThe National Textile Policy was formulated keeping in mind the following objectives: Development of the textile sector in India in order to nurture and maintain its position in the global arena as the leading manufacturer and exporter of clothing. Maintenance of a leading position in the domestic market by doing away with import penetration. Injecting competitive spirit by the liberalisation of stringent controls. Encouraging Foreign Direct Investment as well as research and development in this sector. Stressing on the diversification of production and its Upgradation taking into consideration the environmental concerns. Development of a firm multi-fibre base along with the skill of the weavers and the craftsmen.Such goals are set to meet the following targets: The size of textile and apparel exports must reach a level of US $50 billion by the year 2010. The Technology Upgradation Fund Scheme should be implemented in a strict manner.
  34. 34. The garments industry should be removed from the list of the small scale industry sector. The handloom industry should be boosted and encouraged to enter into foreign ventures so as to compete globally. The National Textile Policy has also formulated rules pertaining to certain specific sectors. Some of the most important items in the agenda happen to be the availability and productivity along with the quality of the raw materials. Special care is also taken to curb the fluctuating price of raw materials. Steps have also been taken to raise silk to the international standard.Preamble To comprehend the purpose of textile industry that is to provide one the most basic needs of the people and promote its sustained growth to improve the quality of life. To acknowledge textile industry as a self-reliant industry, from producing raw materials to delivery of finished products; and its major contribution to the economy of the country. To understand its immense potentiality for creating employment opportunities in significant sectors like agriculture, industry, organized sector, decentralized sector, urban areas and rural areas, specifically for women and deprived. To recognize the Textile Policy of 1985, this boosted the annual growth rate of cloth production by 7.13%, export of textile by 13.32% and per capita availability of fabrics by 3.6%. To analyze the issues and problems of textile industry and the guidelines provided by the expert committee set up for this specific purpose. To give a different specification to the objectives and thrust areas of textile industry. To produce good quality cloth for fulfilling the demands of the people with reasonable prices. To maintain a competitive global marketThrust areasGovernment of India is trying to promote textile industry by giving emphasis on several areasof textile, which are as below: Innovative marketing strategies
  35. 35. Diversification of product Enhancement of textile oriented technology Quality awareness Intensifying raw materials Growth of productivity Increase in exports Financing arrangements Creating employment opportunities Human Resource DevelopmentEffortsGovernment of India has set some targets to intensify and promote textile industry. Tomaterialize these targets, efforts are being made, which are as follows: Textile and apparel exports will reach the US $ 70 billion mark by 2015 All manufacturing segments of textile industry will come under TUFS ( Technology Upgradation Fund Scheme) Increase the quality and productivity of cotton. The target is to increase 50% productivity and maintain the quality to international standards Establish the Technology Mission on jute with an objective to increase cotton productivity of the country Encourage private organization to provide financial support for the textile industry Promote private sectors for establishing a world class textile industry Encourage handloom industry for producing value added items Encourage private sectors to set up a world class textile industry comprising various textile processing units in different parts of India Regenerate functions of the TRA (Textile Research Associations) to stress on research works.Government policy on cotton and man-made fiber
  36. 36. One of the principal targets of the government policy is to enhance the quality and productionof cotton and man-made fiber. Ministry of Agriculture, Ministry of Textiles, cotton growingstates are primarily responsible for implementing this target.Other thrust areas 1. Information Technology: Information technology plays a significant role behind the development of textile industry in India. IT (Information Technology) can promote to establish a sound commercial network for the textile industry to prosper. 2. Human Resource Development: Effective utilization of human resource can strengthen this textile industry to a large extent. Government of India has adopted some effective policies to properly utilize the manpower of the country in favour of the textile industry. 3. Financing arrangement: Government of India is also trying to encourage talented Indian designers and technologists to work for Indian textile industry and accordingly government is setting up venture capital fund in collaboration with financial establishments.ActsSome of the major acts relating to textile industry include Central Silk Board Act, 1948 The Textiles Committee Act, 1963 The Handlooms Act, 1985 Cotton Control Order, 1986 The Textile Undertakings Act, 1995Government of India is earnestly trying to provide all the relevant facilities for the textileindustry to utilize its full potential and achieve the target. The textile industry is presentlyexperiencing an average annual growth rate of 9-10% and is expected to grow at a rate of16% in value, which will eventually reach the target of US $ 115 billion by 2012. Theclothing and apparel sector are expected to grow at a rate of 21 %t in value terms.
  37. 37. Tariff policyIndia & US have reached on an Agreement for reciprocal market access commitments forTextiles and Apparel with the negotiation of the WTO Agreement on Textile & Clothing. Itprovides elimination of Quota system of Textiles & Apparel from 1st January 2005.Under Indo-US Agreement of 1st January 1995, India agreed to reduce tariffs on Textile &apparel and remove all the restrictions on these products.From 1st April 2000, Government of India reduced tariffs on Manmade Fibers & Filament Yarns from 35% to 20% Cotton Yarn from 25% to 20% Spun, Blended, and Woolen Yarn from 40% to 20 %India agreed to bind its tariffs on 265 textile & apparel products (Textured Yarns of Nylon &Polyester, Filament Fabrics, Sportswear, and Home Textiles.)Apparel products are free from Excise Duties & various Taxes.Grey Fabrics and certain Cotton Yarns are exempt from basic Excise Duty.Customs duty on Polyester Filament Yarns is reduced from 10% to 7.5%. Duty on otherFilament yarns will be remain at 10%.Customs duty on Polyester Staple fibers is reduced from 10% to 7.5%. Duty on other ManMade Staple fibers will be remain at 10%.Customs duty on Raw Materials such as DMT, PTA and MEG reduced from 10% to 7.5%.For Small Scale Industries there is Full Exemption Limit being increased from Rs.1 crore toRs.1.50 crores.Most of the products fall under HS code 61 and 62 carry an import duty of 56.83% whichincludes 30% basic duty, 16% additional duty and 4 per cent special additional duty.Excise duty on Nylon Chips has been reduced from 16% to 12%.Optional excise duty on Nylon Fish Net Fabrics is increased from 8% to 12%.
  38. 38. Excise Duty Exemption on specified Textile Machinery Items is withdrawn and 8% ExciseDuty is imposed.CST rate reduced from 4% to 3% with effect from April 1, 2007.Removal of surcharge on income tax on all firms and companies with a taxable income ofRs.1 crore or less.Import Licensing:India has liberalized its Import regime for Textiles and apparel, but some of the part is stilllimited for market access. Currently, there is no import restriction for yarns & fabrics items.Apparel & Made-up textiles goods require a Special Import License (SIL). Govt. revisedExim Policy on 31st March 1999 by eliminating Import Licensing Requirements for 894consumer goods, agriculture products and textiles. On 28th December 1999 India and Ussigned an Agreement for the elimination of import restrictions of 1,429 agriculture, textiles,consumer goods and apparel. India removed restrictions on 715 tariff items as of 1st April2000.Custom Procedures:Marking, Labelling, and Packaging Requirements: Marking, Labelling, and PackagingRequirements for Textile products are technically complex and difficult to implement.According to textile regulation passed on 22nd July 1998 by GOI, Yarns, and Fabrics to havethe statutory markings and these markings should not mislead the consumers. For instance,Cloths must be remarked with the name & address of manufacturer, a description of cloth,sort number, length in meters and width in centimetres, and washing instructions. The Manmade fiber cloth must indicate whether it is made by spun or filament yarn. The month &year of packaging, the exact composition of cloth. The Marking must appear on the face plateof each piece of cloth. The language for marking must be in Hindi and English withinternational numerals.EXIM Policies:Duty Entitlement Passbook Scheme: DEPS is available for Indian Export Companies andTraders on a Pre-Export and Post-Export basis. Pre-Export credit requires the beneficiaryfirm has exported during the preceding 3-year period. The Post-Export credit is a transferable
  39. 39. credit that exporters of finished goods can use to pay or offset custom duties on imports ofany unrestricted goods.Export Promotion Capital Goods Scheme: This scheme is available to export companies andtraders who provide the GOI with information about which type of goods and what value ofCapital Goods they will import. And they also inform what will be the outcome of exportthey expect to produce from those imports. Depending upon the export commitment GOIprovides them a license to import capital goods duty-free or preferential rates of duty.Pre and Post Shipment Financing: The Reserve Bank of India provides Indian Exporters Pre-Shipment Financing through commercial banks for purchasing raw materials and packagingmaterials by presenting Letter of Credit. RBI also provides Post-Shipment Financing throughcommercial banks at preferential rates by presenting export documents.Export and Special Economic Zones: Govt. of India has established Export Processing Zones(EPZs) and Special Economic Zones (SEZs). In EPZs units can import goods free of customduty. There is 5-year tax holiday to any industrial unit in EPZs. Govt. has allowed 100%Foreign ownership of units under EPZs and SEZs. The Govt. considers SEZs as foreignterritory for trade and tariff purpose. Units under SEZs may engage in Manufacturing,Trading and Services. Units are exempt from routine checking of exports by customs, andthey can sell in the domestic market on payment of duty as applicable to imported goods.Duty Drawback Scheme: The basic objective of this scheme is to reduce the indirect taxes onexports. Exporters can get refund of the excise and import duty. Through this scheme theycan be more competitive and have more potential market.Reform measures and Policy initiatives:The Textile Industry came out of Quota Regime of Import Restrictions under the Multi FibreArrangement (MFA). This development came on 1st January 2005 under the World TradeOrganization (WTO) Agreement on Textiles & Clothing. In an effort to increase Indias sharein the world textile market, the Government has introduced a number of progressive steps. 100 per cent FDI allowed through the automatic route. De-reservation of readymade garments, hosiery and knitwear from the SSI sector. Technology Mission on Cotton has been launched to make available quality raw material at competitive prices.
  40. 40. Technology Up gradation Fund Scheme (TUFS) has been launched to facilitate the modernization and up gradation of the textiles industry. Scheme for Integrated Textile Park (SITP) has been started to provide world-class infrastructure facilities for setting up their textile units through the Public Private Partnership model. The Indian Textile Plaza is being built, in the city of Ahmedabad to encourage exports to overseas markets. 50 textile parks are being established to enhance manufacturing capacity and increase the industrys cost competitiveness. A cluster approach for the development of the handloom sector has been adopted from the year 2005-06 onwards. Measures have been initiated for protection of handloom items like Banarasi brocades, Jamdani of Bengal etc., under the Geographical Indications of Goods (Registration and Protection) Act, 1999. So far sanctions to register 20 items have been issued under the Act. For the handicraft sector, some of the new initiatives include the facility center for exporters and entrepreneurs in the Public Private Partnership (PPP) mode on build, own and operate model with the government meeting 40% of the total cost of setting up the centre with maximum investment of Rs. 24 lakhs. In the Wool Sector, a project in public private partnership mode was approved for setting up processing and finishing facilities for shawl manufacturers at Ludhiana in Punjab. In the Jute Sector, the Jute Technology Mission was started during the year 2006-07 with Mini Missions being implemented by the Ministry. The focus of the mission is on improvement of the yield and quality of Jute Fibre, establishing market infrastructure, storage godowns, developing prototypes of machinery with private sector involvement, development of human resources for the jute industry etc.GOVERNMENT POLICIES, SCHEMES AND CORPORATIONS FORPROMOTING TEXTILE INDUSTRY IN INDIA:The Multi-Fibre Agreement (MFA)
  41. 41. The Multi-Fibre Agreement (MFA), that had governed the extent of textile trade betweennations since 1962, expired on 1 January 2005. It is expected that, post-MFA, most tariffdistortions would gradually disappear and firms with robust capabilities will gain in theglobal trade of textile and apparel. The prize is the $360 bn market which is expected to growto about $600 bn by the year 2010 – barely five years after the expiry of MFA.National Textile Policy 2000Faced with new challenges and opportunities in a changing global trade environment, theGOI unveiled its National Textile Policy 2000 (NTP 2000) on November 2, 2000. The NTP2000 aims to improve the competitiveness of the Indian textile industry in order to attain $50billion per year in textile and apparel exports by 2010.86 The NTP 2000 opens the country‘sapparel sector to large firms and allows up to 100 percent FDI in the sector without anyexport obligation.National Jute Policy-2005:The objectives of the policy are to: Enable millions of jute farmers to produce better quality jute fibre for value added diversified jute products and enable them to enhance per hectare yield of raw jute substantially; Facilitate the Jute Sector to attain and sustain a pre-eminent global standing in the manufacture and export of jute products; Enable the jute industry to build world class state-of-the-art manufacturing capabilities in conformity with environmental standards, and, for this purpose, to encourage Foreign Direct Investment, as well as research and development in the sector; Sustain and strengthen the traditional knowledge, skills, and capabilities of our weavers and craftspeople engaged in the manufacture of traditional as well as innovative jute products; Expand productive employment by enabling the growth of the industry; Make Information Technology (IT), an integral part of the entire value chain of jute and the production of jute goods, and thereby facilitate the industry to achieve international standards in terms of quality, design, and marketing;
  42. 42. Increase the quantity of exports of jute and jute products by achieving a CAGR of 15% per annum; Involve and ensure the active co-operation and partnership of State Governments, Financial Institutions, Entrepreneurs, and Farmers‘ Organizations in the fulfilment of these objectives.Export Promotion Capital Goods (EPCG) schemeTo promote modernization of Indian industry, the GOI set up the Export Promotion CapitalGoods (EPCG) scheme, which permits a firm importing new or Second-hand capital goodsfor production of articles for export to enter the capital goods at preferential tariffs, providedthat the firm exports at least six times the c.i.f. value of the imported capital goods within 6years. Any textile firm planning to modernize its operations had to import at least $4.6million worth of equipment to qualify for duty-free treatment under the EPCG scheme.Export-Import PolicyThe GOI‘s EXIM policy provides for a variety of largely export-related assistance to firmsengaged in the manufacture and trade of textile products. This policy includes fiscal and othertrade and investment incentives contained in various programsDuty Entitlement Passbook Scheme (DEPS)DEPS is available to Indian export companies and traders on a pre- and post-export basis.The pre-export credit requires that the beneficiary firm has exported during the preceding 3year period. The post-export credit is a transferable credit that exporters of finished goods canuse to pay or offset customs duties on subsequent imports of any unrestricted products.The Agreement on Textiles and Clothing (ATC)The Agreement on Textiles and Clothing (ATC) promises abolition of all quota restrictions ininternational trade in textiles and clothing by the year 2005. This provides tremendous scopefor export expansion from developing countries.Guidelines of the revised Textile Centres Infrastructure Development Scheme (TCUDS)TCIDS Scheme is a part of the drive to improve infrastructure facilities at potential Textilegrowth centres and therefore, aims at removing bottlenecks in exports so as to achieve thetarget of US$ 50 billion by 2010 as envisaged in the National Textile Policy, 2000. Under the
  43. 43. Scheme funds can be given to Central/ State Government Departments/ Public SectorUndertakings/ Other Central /State Government‘s agencies/recognized industrial associationor entrepreneur bodies for development of infrastructure directly benefiting the textile units.The fund would not be available for individual production units.Technology Upgradation Fund Scheme (TUFS)At present, the only scheme through which Government can assist the industry is theTechnology Upgradation Fund Scheme (TUFS) which provides for reimbursing 5% intereston the loans/finance raised from designated financial institutions for bench marked projectsof modernisation. IDBI, SIDBI, IFCI have been designed as nodal agencies for large andmedium small scale industry and jute industry respectively. They have co-opted 148 leadingcommercial banks/cooperative banks and financial institutions like State FinanceCorporations and State Industrial Development Corporation etc.Scheme for Integrated Textile Parks (SITP)To provide the industry with world-class infrastructure facilities for setting up their textileunits, Government has launched the ―Scheme for Integrated Textile Parks (SITP)‖ bymerging the ‗Scheme for Apparel Parks for Exports (APE)‘ and ‗Textile Centre InfrastructureDevelopment Scheme (TCIDS)‘. This scheme is based on Public-Private Partnership (PPP)and envisages engaging of a professional agency for project execution. The Ministry ofTextiles (MOT) would implement the Scheme through Special Purpose Vehicles (SPVs).National Textile Corporation Ltd. (NTC)National Textile Corporation Ltd. (NTC) is the single largest Textile Central Public SectorEnterprise under Ministry of Textiles managing 52 Textile Mills through its 9 SubsidiaryCompanies spread all over India. The headquarters of the Holding Company is at New Delhi.The strength of the group is around 22000 employees. The annual turnover of the Companyin the year 2004-05 was approximately Rs.638 crores having capacity of 11 lakhs Spindles,1500 Looms producing 450 lakh Kgs of Yarn and 185 lakh Mtrs of cloth annually.Cotton Corporation of India Ltd. (CCI)The Cotton Corporation of India Ltd (CCI), Mumbai, is a profit-making Public SectorUndertaking under the Ministry of Textiles engaged in commercial trading of cotton. The
  44. 44. CCI also undertakes Minimum Support Price Operation (MSP) on behalf of the Governmentof India.GOVERNMENT REGULATIONS AND SUPPORTGovernment InitiativesThe textile industry, being one of the most significant sectors in the Indian economy, hasbeen a key focus area for the Government of India. A number of policies have been put inplace to make the industry more competitive. The Technology Upgradation Fund Scheme (TUFS): Recognising that technology is the key to being competitive in the global market, the Government of India established the Technology Upgradation Fund Scheme (TUFS) to enable firms to access low-interest loans for technology upgradation. Under this scheme, the Government reimburses 5 per cent of the interest rates charged by the banks and financial institutions, thereby ensuring credit availability for upgradation of the technology at global rates. Under the TUF Scheme, launched on April 1, 1999, loans amounting to Rs. 149 billion have been disbursed to 6,739 applicants. In consonance with the industry, the TUF Scheme has been continued during the Eleventh Plan (2007-2012). Allocation for TUF has been raised from Rs.5.35 billion in 2006-07, to Rs.9.11 billion in 2007-08. Handlooms will now be covered under the TUF scheme. Integrated Textile Parks Scheme: Manufacturing is a thrust area for the government, as Indian industry and the government see foreign companies more as partners in building domestic manufacturing capabilities rather than a threat to Indian businesses. Following this through, the Central Government as well as various States has executed Schemes such as, Schemes for Integrated Textile and Apparel Parks. Under the Scheme for Integrated Textiles Parks (SITP), 26 parks have been approved so far out of 30 sanctioned. The Budget provision for these parks has been increased from Rs.1.89 billion in 2006-07 to Rs.4.25 billion in 2007-08. Scheme for Handlooms: For Handlooms a cluster approach for the development of the handloom sector was introduced in 2005-06 and 120 clusters were selected. 273 new yarn depots are opened up till now and the Handloom Mark was launched. The Government proposes to take up additional 100-150 clusters in 2007-08.