India- An attractive investment & sourcing destination
India : An Attractive Investment
& Sourcing Destination
Texc n 13
Friday, 19 July 2013 | Hotel Lalit : New Delhi
Confederation of Indian Industry Management Consultants
Conference Knowledge Partner
Texc n 13
India: An Attractive Investment &
Sourcing Destination for
Textile and Apparel
Conference Knowledge Partner
1. Indian Economy:An Overview 2
a. Size and Growth of the Economy 2
b. Demography 3
c. Investments 3
d. Export Scenario 4
e. Infrastructure 5
2. Overview of Indian Textile &Apparel Sector 6
a. Installed Capacities 6
b. Structure of the industry 6
c. Market Size 7
d. Manufacturing Cost in India 10
e. Foreign Direct Investment (FDI) 10
3. Strengths of Indian Textile &Apparel Sector 12
a. Raw MaterialAvailability 12
b. InexpensiveTrained Manpower 13
c. Government Support forTextile Sector 14
d. Presence of CompleteTextile Value Chain 15
e. Strong IPLaws 16
4. Key Drivers of Future Growth 17
a. Exponential Growth of Domestic Demand 17
b. Opportunities in Exports 18
i) China’s increased focus on domestic demand expected to 18
create a global trade gap
ii) Growth in IntraAsia trade 20
iii) Trade agreements 20
5. Investment Opportunities 22
a. Synthetic Value Chain 22
b. TechnicalTextiles 22
c. Textile Machinery 23
d. Specialty Fabric 23
About WazirAdvisors 25
About CII 26
Figure 1: Indian GDPand GDPper Capita 2
Figure 2: GDPGrowth Projections for BRIC Nations 2
Figure 3: India’s Population Segmentation & MedianAge 3
Figure 4: India's Domestic Capital Formation 3
Figure 5: FDI Inflows in India 4
Figure 6: India’s Global Export 4
Figure 7: MajorTextile andApparel Manufacturing Clusters 7
Figure 8: IndianTextile &Apparel Sector Market Size 7
Figure 9: Growth of IndianApparel Market (In US$ bn.) 8
Figure 10: IndianApparel Market Segmentation 8
Figure 11: Growth of Indian Export Market (In US$ bn.) 9
Figure 12: Category wise breakup of exports (In US$ bn.) 9
Figure 13: Manufacturing Cost Comparison 10
Figure 14: FDI Inflow inTextile Industry 10
Figure 15: Strengths of IndianApparel &Textile Sector 12
Figure 16: Textile Value Chain 15
Figure 17: India’s GDPand GDPper capita projections 17
Figure 18: Projected Growth of IndianApparel Market 18
Figure 19: China's Projected Share in GlobalTextileTrade 19
Figure 20: IntraAsiaTrade Value 20
Figure 21: TechnicalTextiles Market in India 22
Table 1: Installed Capacities inTextile Sector 6
Table 2: Fibre Production in India & India’s Global Standing 13
Table 3: Apparel Factory Workers Monthly Wage (In US$) 13
Table 4: Key Features of Central Government Schemes 14
Table 5: Key Features of State GovernmentTextile Policies 15
Textile and Apparel industry around the globe has witnessed sweeping changes since the turn
of this century. One of the key changes is Asia’s emergence as a major manufacturer and
supplier to the rest of the world. Two most important factors which caused this shift were the
availability of low cost manpower and abundant availability of raw material in Asian countries.
India, among other Asian countries, is one of the most competitive textile and apparel
When CII started having discussions about holding this year’s Texcon; the core program
committee consisting of CII, industry representatives and Wazir Advisors (Knowledge Partner)
decided to highlight how India is not only a preferred destination for sourcing, but also because
of changing demographics and consumer trends, the domestic market is gaining importance.
Hence, the theme “India:AnAttractive Investment & Sourcing Destination” was selected.
The subtopics of this conference will shed light on the strengths of Indian textile and apparel
sector making it a global sourcing hub as well as opportunities present in the sector. These
opportunities can boost the textile and apparel sector growth provided investments happen.
The idea for this conference is not only to discuss and debate on the topics which are most
relevant in today’s context but also to identify what needs to be done, whose action is required
and who will be the catalyst for boosting investment in the textile sector.
Finally, as an industry representative CII will start taking suitable steps along with industry,
towards achievement of the long term goals.
We look forward to have your active participation and welcome your invaluable inputs.
D. L. Sharma Gautam Nair PrashantAgarwal
Director Managing Director Joint Managing Director
VardhmanTextiles Matrix Clothing WazirAdvisors
(Conference Chairman) (Conference Co-Chairman) (Knowledge Partner)
a. Size and Growth of the Economy
Indian economy is one of the fastest growing, large economies in the world. Various
macroeconomic factors have supplemented to this growth and have created an
environment for a sustainable high growth. The resilience that Indian economy has shown
in last 5 years by being far less impacted by the global financial meltdown indicates the
structural strengths of the growth model.
Indian GDP has grown at an average growth rate of ~7% in the last decade to reach at
US$ 1.8 trillion in 2012-13 making it world’s 10th largest economy.Also, it is expected to
grow despite having tough situation in the global markets. GDP per capita has also
increased multifold during the same time period.
Figure 1: Indian GDP and GDP per Capita
Source: Economic Survey 2012-13
Going forward the Indian economy is expected to maintain its growth momentum by
growing in the range of 6 to 7%, making it one of the best performing large economy.
Figure 2: GDP Growth Projections for BRIC Nations
Source: World Economic Outlook Database, IMF,April 2013
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
GDP at MP (US$ bn) GDP per capita (US$)
2013 2014 2015 2016 2017 2018
Brazil Russia India China
India has a huge population base of over 1.2 billion which is the second largest in the world.
Its median age is lower than that of world’s average and median age of other major
countries. In 2010, working age group in India constituted more than 60% of the total
population and it is projected to remain at the same levels in 2020 according to United
Nation estimates. These demographic factors ensure proper availability of workforce to
support industry growth in India.
Figure 3: India’s Population Segmentation & Median Age
Source: CIAWorld Fact book, UN Database
Note: Data of MedianAge is for 2013
India has witnessed continuously increasing trend of capital formation during past decade.
It has exhibited a robust CAGR of 19% in the same period. Due to high domestic capital
formation, capacity of Indian entrepreneurs has also increased to further invest in building
Figure 4: India's Domestic Capital Formation
Source: Economic Survey 2012-13
343 350 363
694 740 855
2005 2010 2020 (P)
0-14 15-59 60+In mn.
120 130 166
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
In US$ bn.
Foreign Direct Investment has also played a key role in putting India on fast growth track. It
has been on a constant rise since 2002-03 and has registered a strong CAGR of 16% in the
last decade to reach at more than US$ 22 bn. in 2012-13 from US$ 5 bn. in 2002-03. Peak
investment of US$ 38 bn. was achieved during 2008-09 & 2009-10 but due to global
meltdown & Eurozone crisis, decline in the investment is experienced in last few years.
Figure 5: FDI Inflows in India
Source: Department of Industrial Policy & Promotion Statistics
Over last ten years, India has registered a tremendous growth in its global exports.
According to World Bank data, India’s global export has increased six fold in value terms as
compared to three times increase in global trade since 2002-03. It has registered a strong
CAGR of 19% during last decade to reach at US$ 300 bn. in 2012-13. During this period,
peak export value of US$ 305 bn. was also achieved.
Figure 6: India’s Global Export
Source: Economic Survey 2012-13
Major exporting partners of India are UAE, USA and China with respective share of 12%,
11% and 8% in India’s total export. Categories of the products which are primarily exported
from Indian shores are: engineering goods, gems & jewelry, petroleum, agricultural
products and textiles & apparel.
d. Export Scenario
5 4 6
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
In US$ bn
53 64 84 103 126
163 185 179
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
In US$ bn.
Roads, Railways, Ports and Power are the four pillars of infrastructure required for the
growth of any economy. Over the last decade, India has significantly build world class
infrastructure to support its industry requirements. A snapshot of each of this infrastructure
is provided below:
Roads are a major mode of transportation in India today, as they carry almost 90% of the
country's passenger traffic and about 65% of its freight. Indian Government has played a vital
role in developing the road network in the country. It provides various incentives for private and
foreign sector investment in the roads sector apart from allowing 100% FDI under automatic
route for support services to land transport such as operation of highway bridges, toll roads, and
vehicular tunnels. All these initiatives has made India’s road network 3rd largest in the world
with a total length of ~4 mn. km.
Indian Railways has a total route network of ~65,000 km. spread across more than 8,000
stations and operates more than 19,000 trains every day. India has the world's fourth largest rail
network, which is the largest under single management. Over 30 million passengers travel and
~2.8 MMTof freight is transported by trains on a daily basis in India.
Government of India has also increased the scope of public-private partnership (PPP), to
provide maintenance and other such supporting roles to railways. It has plans to invest US$ 153
billion in 12th Five Year Plan against US$ 40 billion in 11th Five Year Plan for building new lines
and increasing the rolling stock.
There are 13 major and ~200 non-major ports in the country. The total cargo traffic in India stood
at more than 900 MMT during 2011-12 and is expected to touch ~1,200 MMT in current fiscal.
Strong growth potential, favorable investment climate and sops provided by central & state
governments have encouraged domestic and foreign private players to enter the Indian ports
sector. These all factors will help to further open this market and improve facilities. Apart from
ports, India is home to ~350 airports some of which are world’s busiest and ranked among best
in terms of infrastructure facilities.
Electricity production in India (excluding captive generation) stood at ~900 terawatt-hour (TWh)
in 2011-12 registering a y-o-y growth of 8%. Over last five years, the production has expanded
at a CAGR of 6%. Indian government has targeted capacity addition of 100,000 MW each under
the 12th and 13th FiveYear Plans in order to meet increasing power demand.
The factors discussed above show that Indian economy is set to write another chapter of its
growth story. Conducive environment along with presence of necessary supporting
infrastructure makes India one of the preferred destinations to do business. This will ensure the
sustainability and growth of industry in India in the years to come.
a. Installed Capacities
b. Structure of the industry
The textile & apparel industry in India has an important presence in the country’s economy
through its contribution to industrial output, employment generation, and the export
earnings. It contributes almost 5% to the US$ 1.8 trillion Indian economy whereas its share
in Indian exports stands at a significant 11%.
India has the second largest textile infrastructure after China. India is one of the few
countries in the world which has production at each level of textile manufacturing viz.
fibre manufacturing, spinning, weaving, knitting, processing and garmenting. The
snapshot of installed capacities of textile infrastructure in India is provided below:
Table 1: Installed Capacities in Textile Sector
Source: Ministry of Textiles, Government of India
Indian textile & apparel manufacturing industry includes both the formats of organized
as well as decentralized sectors. As on one hand, the mill sector is largely integrated
across the value chain, while on the other hand, the MSME manufacturers are highly
fragmented comprising of small scale spinning, weaving, knitting, finishing and apparel
making enterprises. The decentralized sector forms the bulk of the industry, comprising
handlooms, powerlooms, hosiery and knitting, readymade garments, khadi and carpet
manufacturing units. The manufacturing is largely done in various clusters which are
spread across India. Some of the prominent textile and apparel manufacturing clusters
are depicted on the map below.
Description Unit 2008-09 2009-10 2010-11 2011-12
Spindles Lac 410 420 480 490 490
Rotor Lac 7 7 8 8 8
Lac 1 1 1 1 1
Powerloom Lac 22 22 23 23 23
Man Made Fibre ‘000 MT 1800 1800 1800 1800 1800
Man Made Filament ‘000 MT 2200 2200 2200 2300 2300
Figure 7: Major Textile and Apparel Manufacturing Clusters
The market size of Indian textile and apparel industry is estimated at US$ 96 bn. which
includes domestic consumption of US$ 63 bn. and an export value of ~ US$ 33 bn in 2013.
Within domestic consumption; apparel retail contributes ~ US$ 45 bn., technical textiles
contributes ~ US$ 14 bn. and home textiles contributes ~ US$ 4 bn. The domestic market
has grown at a yearly growth rate of 12% over last 5 years. In exports, the markets growth
has been 8% in last 5 years and presently the share of textile and apparel in total export
value stands at 60% and 40% respectively.
Figure 8: Indian Textile & Apparel Sector Market Size
Source: Wazir Advisors
c. Market Size
The present apparel market size of India is estimated to be US$ 45 billion and it has registered a
robust growth of 12% from 2007 to 2012 despite global uncertainties and slack demand.
Figure 9: Growth of Indian Apparel Market (In US$ bn.)
The market segmentation of IndianApparel market shows a different trend with the fact that it is
the only major apparel market where women’s wear is not the largest category in value terms.
The reason behind this anomaly is the fact that womenswear in India is largely dominated by
traditional, unbranded dresses which in value terms are lower than menswear market despite
having larger volumes overall.
Figure 10: Indian Apparel Market Segmentation
2007 2008 2009 2010 2011 2012
India is the 5th largest exporter of textile & apparel in the world with a share of ~5% of the global
trade. It exported textile and apparel goods worth US$ 33 bn. in 2012. The exports have grown
at a CAGR of more than 8% in last five years.
Figure 11: Growth of Indian Export Market (In US$ bn.)
Category wise, apparel exports contribute the most to the overall exports in terms of value,
followed by contributions from fibre, yarn and fabrics as depicted in the figure below
Figure 12: Category wise breakup of exports (In US$ bn.)
Source: Ministry of Textiles, Government of India
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Fabric, 4.1RMG, 12.2
Made ups, 3.5
Other Textiles, 1.5
d. Manufacturing Cost in India
e. Foreign Direct Investment (FDI)
India provides a diversified production base for the manufacturing of textile and apparel
products in the world. It is also one of the most cost efficient textile manufacturing countries
in the world. A manufacturing cost analysis done by ITMF covering Raw material, Waste,
Labor, Power, Auxiliary material, Depreciation and Interest costs highlighted India’s cost
competitiveness for textile sector manufacturing.
Figure 13: Manufacturing Cost Comparison
Source: ITMFInternational Production Cost Comparison 2012
In India, 100% FDI under automated route is permitted in textile and apparel manufacturing
sector. Cumulative FDI inflows in the sector during April 2000 to March 2013 stood at US$
1.23 bn. Looking at the opportunities in the Indian textile and apparel sector several
international companies like Ahlstorm, Rieter, E-Land, Bilsar, Monti, Soktas, Fiberweb,
MAS holdings, Brandix, etc. have started their operations.
Figure 14: FDI Inflow in Textile Industry
Source: Ministry of Textiles
0.25 0.23 0.24
0.043 0.026 0.036 0.026 0.022 0.036 0.028
Brazil China Egypt India Indonesia Korea Turkey
Ring Yarn (US$/ Kg) Rotor Yarn (US$/ Kg) Weaving (US$/ Mt) Knitting (US$/ Mt)
In last few years, Private Equity firms have also started showing interest to tap the Indian
consumption story. There have been several investments by PE players in manufacturing as
well as apparel retail sector. Some of these include Blackstone’s investment in Gokaldas, CX
Partners investment in Sutures India, Peterson Partners investment in KPR mills, W. L. Ross’
investment in OCM, etc.
a. Raw MaterialAvailability
Indian textile and apparel sector offers various competitive advantages as compared to
other countries. For any manufacturing industry, raw material and manpower are the
prerequisites. India possesses both these inherent advantages when it comes to textile and
apparel industry. These along with other strengths of Indian textile and apparel industry
serves as a strong base for growth and development.
Following are the key strengths of Indian textile and apparel sector:
Figure 15: Strengths of Indian Apparel & Textile Sector
The fundamental strength of the Indian textile industry is its strong production base of wide
range of fibre/ yarns from natural fibres like cotton, jute, silk and wool to synthetic/
manmade fibres like polyester, viscose, nylon and acrylic. The textile and apparel industry
in India includes almost all types of fibres – natural fibres, synthetic fibres, multiple blends of
these fibres and filament yarns such as partially oriented yarn, fully drawn yarn.
Following table provides the production statistics of various textile fibres produced in India
and India’s global standing in terms of their production:
Table 2: Fibre Production in India & India’s Global Standing
Source: Office of Jute Commissioner, Ministry of Textiles, Cotton Corporation of India
The textile and apparel industry in India benefits from a large pool of skilled workers at
comparative less wage rates. Though the wages across the globe are consistently
increasing, wage rate growth in India is still lower than several other textile and apparel
Table 3: Apparel Factory Workers Monthly Wage (In US$)
Source: ILO Wage Report
In today's dynamic business environment, the demand for trained manpower with requisite
competencies for manufacturing quality products efficiently with sophisticated machines is
a recognized need across textile and apparel sector. Realizing this, Government of India
has implemented several initiatives to address the rising demand for skilled manpower in
textile and apparel sector. It has launched Scheme for Growth and Development of
Technical Textiles (SGDTT) and Integrated Skill Development Scheme (ISDS) for the
textiles and apparel sectors with the objective of building capacities of institutions providing
skill development and training in the textile and apparel sector. India’s large population base
with government initiatives ensures the proper and economical availability of trained
manpower to textile and apparel sector.
b. Inexpensive Trained Manpower
S. No. Fibre (Year) Production (In Mn Kg) Global Position
1. Jute (2012-13) 1,700 1st
2. Silk (2011-12) 23 2nd
3. Cotton (2012-13) 5,700 2nd
4. Synthetics (2012-13) 2,650 5th
5. Wool (2011-12) 45 7th
Country 2009 2010 2011
China 173 184 193
India 121 129 135
Thailand 295 314 329
Philippines 379 403 423
Indonesia 148 157 165
c. Government Support for Textile Sector
Indian Government has initiated various schemes to support textile sector. These schemes
provide numerous ben0efits to Indian textile manufacturers. Highlights of these schemes
with their key features are provided below:
Table 4: Key Features of Central Government Schemes
Scheme / Policy Key Features
Scheme for Integrated
Textile Parks (SITP)
• Grant/ Equity up to 40% of textile park development project
cost to a ceiling of Rs 40 crore.
• Further 9% grant by State Govt . to strengthen
infrastructure to a ceiling of Rs 9 crore.
• Reimbursement of 5% on the interest charged on
technology upgradation project except spinning where it is
• Additional 10% capital subsi dy for specified processing,
garmenting, technical textile machinery and shuttleless
• Cover for foreign exchange rate fluctuation up to 5%
• Option for powerloom and independent preparatory units to
avail 20% Margin Money in lieu of 5% interest
• Option for SSI textile and jute sector to avail of 15% Margin
Money subsidy in lieu of 5% interest reimbursement.
• Aims to support skill development by training ~3 million
people in textile sector.
• Provides fund support up to 75% of training cost per
• Provide assistance to people by providing them income
generating skills through a mix of bank credit and
• Subsidy at a uniform rate of 30% of the project cost,
subject up to Rs. 7500 per individual.
• Financial support to textile manufacturer for conducting
export promotion activities abroad.
Technology Mission on
Technical Textiles (TMTT)
• Upgrade exist ing Centre of Excellences and set
up of four new COEs
• Support for business start-up
• Creating awareness through organizing workshops/
• Support for standardization
• Support for Market development targeted at bulk and
• Market development support for export sales
• Grant for conducting contract research in identified
Market Access Initiative
• Financial support for conducting market studies/survey.
• 50% reimbursement of expenses incurred during trade
Apart from the central government, many State Governments are also making efforts to attract
investments in their states. States like Maharashtra, Gujarat, Tamil Nadu, Karnataka, Andhra
Pradesh, Rajasthan, Madhya Pradesh and Punjab have come out with a host of investment
related incentives in the sector. The states policies provide support in addition to central
Government schemes like RTUFS, thus making investments more attractive. The same are
concisely presented in the table below.
Table 5: Key Features of State Government Textile Policies
India is one of the few textile manufacturing countries in the world where all levels of textile
value chain i.e. from fibre/ filament to garment manufacturing are present.
Figure 16: Textile Value Chain
d. Presence of Complete Textile Value Chain
IncentivesStates Guj TN Maha. Karnataka AP Raj Punjab MP
Land a a a a a a a
Electricity/Power a a a a a a a
Stamp duty exemptions a a a a a
Interest subsidy a a a a
Entry tax exemptions a a a
Venture capital funding a a
VAT/CST/SGST exemptions a a a a a
Capital investment subsidies a a a a a a
Research and Development
Patent and quality certification a a a a a a
Technology development and
a a a a a a a
Human Resource Development
Skill development a a a a a
Employment a a a a
Export subsidies a a
Import subsidies a
Sick unit rehabilitation a a
Energy and water conservation a a a a a
Level 1 Level 2 Level 3 Level 4
Indian textile and apparel sector is fragmented into organized and unorganized sector.
Unorganized sector primarily consists of handloom, small scale mills and medium scale
mills while organized sector has large scale units with high production capacity. This
structure gives textile and apparel sector a great flexibility to cater small & customized
orders on one hand and on the other hand it possesses capability to execute large quantity
orders as well.
Government has been proactive in creating conducive business environment by making
sweeping changes in IP culture and administration in India. As compared to other Asian
countries, India has robust IP laws in place to protect the interest of manufacturers. Many
international companies have already established their research and development centers
in India due to strong IP base in India. The international companies investing in India have
the full flexibility to venture into their own or join with any Indian partner of their choice. The
law of the land allows companies to maintain their propriety product/services and any
infringement can be challenged in the Court of Law.
e. Strong IPLaws
a. Exponential Growth of Domestic Demand
India has already emerged as a major exporter of textile and apparel in the world. With
changes in its economy, the domestic consumption is also on rise and it is fast becoming
one of the major consumer nation as well. These factors will create several investment
opportunities both for Indian companies as well as international ones, and also result in
reinforcing India’s image as a sourcing hub for textile and apparel exports. Some of the
future drivers of market growth are explained in the subsequent section.
Indian economy has been one of the best performing economies in the last decade and
expected to maintain high growth rate over the next 10-15 years. Indian economy is
expected to grow at a CAGR of 8% to reach a level of US$ 4.8 trillion in 2025 from a current
level of US$ 1.8 trillion. Such a high economic growth will be the major driver of an increase
in demand and spending of consumer in India.
Figure 17: India’s GDP and GDP per capita projections
Source: CEPII- Baseline database 2050
In addition, Indian consumers are inclining towards brands and organized retailing.
Organized retailing in India currently stands at only 6% of the overall retail market of US$
500 billion. Within this, apparel is the single largest category with a share of ~ 35%. The
vast population base and growing economy has caused global retailers and brands to
actively seek Indian market participation, either on their own, or in partnership with a local
player. The recent Government decision of allowing up to 51% FDI in multi-brand retail is
expected to provide a boost to organized retail in India over the next few years. With growth
of disposable incomes, favorable demographics, changing lifestyles, and a high potential
for penetration into urban and rural markets; the share of organized retail in India is
expected to reach 31% by 2025, within which ~ 42% will be apparel.
1,557 1,672 1,797 1,922 2,045 2,175
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
GDP (US$ Bn) GDP per capita (US$)
On account of this, it is projected that the India’s domestic apparel market will grow at a
CAGR of 12% to touch US$ 200 bn. by 2025, adding an additional US$ 150 bn in the market
size in a span of 13 years.
Figure 18: Projected Growth of Indian Apparel Market
There are three factors which will support the growth of exports of textile and apparel from
China is the single largest exporter of textiles and apparel in the world with a mammoth
40% of the global trade of US $700 bn. (2011). However, in near future the domestic
demand of apparel in China is slated for a high growth. The per capita spend on apparel
in China is expected to grow from US$ 109 in 2012 to US$ 377 by 2025; resulting in
growth of total market size to US$ 540 billion from a present value of US$ 150 billion
registering a CAGR of 10%. Such a demand will put pressure on exports and increase
imports as well.
In addition, there are other reasons as will which will cause a shift in China’s supply side
of textile and apparel industry.They include:
a. Shift of focus to innovation driven industry and service sectors
Chinese Government is taking initiatives to reinforce higher productivity and greater
income. The main steps taken include increasing minimum wages, further opening
financial markets and increase competition in the economy to help expand private-
sector activity for boosting employment and accelerate household-income. These
initiatives are targeted towards shifting to advanced industries and service sector.
From a GDP split of Industry: Service:Agriculture which stands at 47:44:9 today, it is
projected that by 2025 the split will be 46:46:8. By 2030, the service sector will
overtake the industry sector.
b. Opportunities in Exports
i) China’s increased focus on domestic demand expected to create a global trade
2012 2025 (P)
In US$ Bn.
The rise of manufacturing cost and a natural transition towards becoming a developed
economy, China will concentrate on innovation driven industries like Aerospace,
Artificial Intelligence, Biotechnology, Information systems, Photonics, Nanotechnology,
Nuclear Physics, Robotics, etc. Basic textiles and apparel industry will no longer be the
prime focus of Government has been since the 1990’s for enhancing exports and
generating employment. This will eventually result in a slower growth of textile and
apparel output, to a level of 5-6% from 7% currently.
b. Rise in Manufacturing Cost
China is no longer a low cost destination as it used to be at the turn of century.
China’s labor pool is shrinking due to demographics and reduced flow of migrant labor
from rural areas, exerting upward pressure on wages. The wages across sectors and
regions in China have grown in double digits over the last couple of years. For a labour
intensive sector like textile and clothing, this can put a brake on the fast growth in
manufacturing output recorded historically.
c. TradeAgreement with Region
China has also entered into several trade agreements with South-east and East Asian
countries where manpower cost are lower than that in China. Going forward, China is
expected to support investment in overall infrastructure and specifically manufacturing
capacities which will ultimately cater to China’s own domestic demand for apparel.
Despite the growth slowdown; China with its vast land-base, plentiful resources, manpower
strength and large existing manufacturing set up will continue to be the single largest textile and
apparel global manufacturer in the foreseeable future. Exports will only slowdown to the extent
that China’s domestic market will become increasingly attractive for its local firms as well as
increasingly becoming a significant importer of value added textiles and apparel.
The share of Chinese exports in global trade is expected to reduce from 40% currently to
around 35% by 2025. The global trade in textiles and clothing during this period is expected to
grow from around $700 bn at a CAGR of 6.5% whereas Chinese exports will lag behind
registering growth of ~ 6%.
Figure 19: China's Projected Share in Global Textile Trade
Source: Wazir Analysis
2011 2025 (P)
Other exporters 700
This lower-than-market performance will create a vacuum of ~100 bn. by 2025. China’s loss
of share in global trade will throw up opportunities for India to take up the market share.
Asia has emerged as the major manufacturer-supplier of textile and apparel products to the
developed and developing world. But now, the region is on the verge of entering into a new
phase wherein its own consumption of textile and apparel products is going to become very
The last decade has seen a significant rise in the intra-Asia trade of textile and apparel
products. In 2000, it accounted for ~20% of the global textile and apparel exports which
grew to 27% by 2011. In 2011, the intra-Asia trade stood at US$ 180 bn. registering a
steadily growth of 8% over the past decade. It is expected to grow at a CAGR of 5% to US$
350 bn. by 2025.
The intra-Asia trade is skewed towards a handful of countries in East and SouthAsia. China
dominates trade with a majority share of ~65%. It is also importing significant quantum of
commodities from the rest of Asia. Other major suppliers include India, South Korea and
Figure 20: Intra Asia Trade Value
Source: UN Comtrade database, Wazir Analysis
Four of the largest trade partners inAsia will determine the shape of intra-Asia trade by 2025
viz. China, India, South Korea and Japan. These countries have cumulative exports of US$
335 bn. and cumulative domestic markets of US$ 335 bn. as well.
Another important influencer for Indian exports will be the trade agreements with various
markets. India has already singed CEPAwith Japan. It has also trade agreements with other
Asian countries like Bangladesh, Sri Lanka, etc. One of the major event which will prove to
be a game changer is signing of FTA with EU. This will provide a major thrust to Indian
exports to EU which currently suffers duty disadvantage in comparison to countries like
ii) Growth in IntraAsia trade
iii) Trade agreements
2000 2005 2010 2011 2025 (P)
In US$ Bn.
Government policy will also play a fundamental role in shaping the growth, structure and
technological evolution of the textile sector in India. With a large and growing domestic demand,
significant opportunities for exports and strong policy support, India has everything in its basket
to be an attractive investment and sourcing destination.
a. Synthetic Value Chain
b. Technical Textiles
Several segments in the Indian textile and apparel industry provide growth potential the
global as well as Indian manufacturers for investment. Some of such key opportunities are
Synthetic fabric manufacturing and processing is a weak-link in textile value chain of
India. At present, the segment is majorly unorganized and cotton focused. Most of the
MMF based fabrics manufactured are basic commodity types, lacking value addition.
Production of value added 100% MMF based fabric qualities (e.g. performance fabrics,
sportswear fabric etc.) is very low in India. Due to this, lot of demand of MMF based
fabrics is being met through imports.
Technical textile is one of the untapped markets in Indian textile industry. It is still at a
nascent stage in India but growing at a significant pace. India imports about US$ 1.5 bn.
value of technical textile products from global markets whereas the overall technical
textile market is estimated at US$ 14 bn. It is projected to reach US$ 43 bn. by 2020-21
at a CAGR of ~15%. Factors responsible for this growth are increased consumer
awareness level about hygiene & safety, high spending in infrastructure and high per
capita consumption. Categories which would be mainly benefitted from the changing
trends are; Meditech (covering products like baby diapers, medical bandages, sanitary
napkins etc.), Mobiltech (covering products like airbag, helmets, seat belts etc.),
Geotech (reinforcing products like geo grids, river embankment etc.) & Protech
(covering products like industrial gloves, high visibility clothing, fire retardant apparel
etc.). Looking at these trends, growth of technical textile segment seems to be
promising in future.
Figure 21: Technical Textiles Market in India
Source: Wazir Analysis
2001-02 2003-04 2007-08 2012-13 2020-21 (P)
In US$ Bn.
c. Textile Machinery
d. Specialty Fabric
Indian textile machinery market is also a key area which has potential of high growth in
future years. Currently, only 50% of the industry demand is met through India based
manufacturers. In the coming years, the exponential growth of end-product demand will
create a demand for machinery as well. It is estimated that there would be requirement of
~US$ 80 to 90 bn. investment in textile machinery to meet this demand. Imports alone will
not suffice the requirement not only because of lead time issue but also due to the fact that
projects which will target domestic market will not be able to take duty waive off benefits as
available to exporters.
Usage of Specialty fabrics including coated, warp knitted and nonwoven fabrics is not only
confined to industrial applications like roads and construction activities, but also find a place
in lifestyle products like kitchen wipes, lingerie, bed sheets and clothes. These fabrics can
be used to make sportwear that absorbs and dries sweat and curtains with anti-microbial
qualities. The popularity of these products is increasing because of growing consumer
awareness and changing lifestyles. In India, market of these products is not fully developed
and still at nascent phase. Market of specialty fabric is expected to grow tremendously in
near future providing opportunity to the global and Indian investors.
WazirAdvisors is a management consulting firm based out of India that advises clients globally
on business strategies, mergers and acquisitions, joint ventures, funding and investments.
Wazir is focused on the Indian consumer segments like Textiles, Apparel, Technical Textiles,
Retail, Education, Media & Entertainment, Consumer Durables, etc.
Wazir offers strategic direction and momentum to Indian and multi-national firms that are
looking to address the growing needs of one of the world’s largest and fastest growing market.
Wazir assists its clients in developing winning business strategies and implementing them
successfully from end to end.
With a team of experienced professionals, Wazir offers a comprehensive range of services to its
clients to create, compete and develop their consumer-centric businesses in the exciting and
challenging Indian market. Wazir’s team comprises of engineers, MBA’s, financial experts and
economists from reputed institutes.
Wazir’s Service Offerings:
a. StrategicAdvisory Services
• Assess market opportunity
• Develop business & sales strategy
• Conduct business & financial
• Support action planning & assist
c. Services for International Companies
• Develop market entry strategy
• Pursue M&Aopportunities
• Identifying local partners: JV,
franchisee or licensee
• Facilitate setting up business in India
b. BusinessAdvisory Services
• Facilitate M&A
• Promote JV & alliances
• Provide funding & investment support
d. Services for PE Funds
• Develop sector investment strategy
• Identify targets & facilitate
• Due diligence of target companies
The Confederation of Indian Industry (CII) works to create and sustain an environment conducive
to the development of India, partnering industry, Government, and civil society, through advisory
and consultative processes.
CII is a non-government, not-for-profit, industry led and industry managed organization, playing a
proactive role in India's development process. Founded over 118 years ago, India's premier
business association has over 7100 member organizations, from the private as well as public
sectors, including SMEs and MNCs, and an indirect membership of over 90,000 companies from
around 257 national and regional sectoral associations.
CII charts change by working closely with Government on policy issues, interfacing with thought
leaders, and enhancing efficiency, competitiveness and business opportunities for industry
through a range of specialised services and global linkages. It also provides a platform for
consensus-building and networking on diverse issues.
Extending its agenda beyond business, CII assists industry to identify and execute corporate
citizenship programmes. Partnerships with over 120 NGOs across the country carry forward our
initiatives for integrated and inclusive development, in affirmative action, healthcare, education,
livelihood, diversity management, skill development, empowerment of women, and water, to
name a few.
The CII Theme for 2013-14 is Accelerating Economic Growth through Innovation,
Transformation, Inclusion and Governance. Towards this, CII advocacy will accord top priority
to stepping up the growth trajectory of the nation, while retaining a strong focus on accountability,
transparency and measurement in both the corporate and social eco-system, building a
knowledge economy, and broad-basing development to help deliver the fruits of progress to
With 63 offices including 10 Centres of Excellence in India, and 7 overseas offices in Australia,
China, France, Singapore, South Africa, UK, and USA, as well as institutional partnerships with
224 counterpart organizations in 90 countries, CII serves as a reference point for Indian industry
and the international business community..
Confederation of Indian Industry
The Mantosh Sondhi Centre
23, Institutional Area, Lodi Road, New Delhi – 110 003 (India)
T: 91 11 45771000 / 24629994-7 • F: 91 11 24626149
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CII Helpline Toll free No: 1800-103-1244