Indian Textile and ApparelOverviewIndia is today recognized as one of the best sourcing destinations for garments, textiles,accessories and finish: It provides a perfect blend of fashion, design, quality, patterns, textures,colors and finish. Manufacturers here are ready to innovate, be flexible on quantities, havehands- on approach to quality control and keep the integrity on deadlines.As the world’s second largest producer of textile and garments, India’s garments exportstotaled US$ 10.70 billion during FY 2009-10, giving an inevitable market share of 3.2%. TheAmericas EU, much of Asia and Middle East are India’s clients.The Industry proudly supports 7 million people as a part of its workforce, and aims to doublethis figure by 2011-12; even today it is the second largest provider of employment in thecountry. For every INR 100000 Invested in the industry, an average of 7 additional jobs created.The Apparel sector also contributes to 7% of India’s total exports recording decline of 0.35% in2009-10 against 2008-09 due to global downturn.Textile and Apparel’s contribution to India’s GDP
Indian Textile and Apparel Industry’s SizeIndias textile and apparel (TandA) industry (domestic and exports) is expected to grow fromRs.3.27 lakh crore ($70 billion) to Rs.10.32 lakh crore ($220 billion) by 2020, according to aresearch report by Technopak Advisors, a leading management consultancy.The report says that the domestic TandA market size in 2009 was Rs.2.18 lakh crore ($4 billion)and is expected to grow at a compounded annual growth rate (CAGR) of 11 per cent to Rs.6.56lakh crore ($140 billion) by 2020. The domestic apparel retail market was worth Rs.1.54 lakhcrore ($33 billion) in 2009 and will touch Rs.4.70 lakh crore by 2020.Segment wise Market size and ProjectionsEven though, at present, the menswear has a majority share in the apparel market (43 per cent)and is growing at 9 per cent, womens wear is growing at a higher rate of 12 per cent and isexpected to reach 43 per cent share in 2020 from the current 37 per cent of the market. Apartfrom this, kids wear is growing rapidly with higher growth in girls wear (11 per cent) than boyswear (10 per cent). The report said that the home textile market is expected to grow 9 per centCAGR from Rs.15,570 crore in 2009 to Rs.40,000 crore by 2020.
The report said that India has the potential to increase its export share in world trade from thecurrent 4.5 per cent to 8 per cent to reach $80 billion by 2020. The high growth of Indianexports is possible due to increased sourcing shift from developed countries to Asia and Indiasstrengths as a suitable alternative to China for global buyers. Investments to the tune of Rs.3.20lakh crore ($68 billion) across the textile supply chain will be required by 2020 to tap thepotential market created due to the growth of the industry and the investment required in thegarment sector by 2020 is $14 billion and for processing $19 billion.ConclusionThe growth drivers of the industry, as predicted, shall be innovation across product, design, andbrand, channel and also business processes. Further, it is important for the industry to identifyand create new mega clusters — Madurai, Mundra, Ambala and Mangalore — havingtremendous potential for manufacturing. There is need for collaborative and aggressiveentrepreneurship, increasing scale through mergers and acquisitions, divestments and bringingforth positive outlook for the industry to attract the best managerial and operational talent toprovide further impetus for growth within the industry.Government’s InitiativesThe government has provided a new lease of hope with the introduction of enhanced subsidyallocation for modernization of the textiles industry to ` 15,404 crores from earlier sanction of `8,000 crores for the current Plan ending 2012.The decision to increase the outlay and re-structure the Technology Upgradation Fund (TUF)was taken by the cabinet committee on Economic Affairs recently.Under the restructured scheme, 5 per cent interest subsidy and 10 per cent capital sops wouldbe provided on brand new looms.The Indian Textile Industry contributes 14 per cent of the total manufacturing to global brandslike Nike, Reebok, Pepe Jeans, Armani and Versace for sourcing their merchandise from thecountry.Growth OpportunitiesYarn producers should forward integrate into garments to improve their profitability. Thisstrategy carries the costs and risks of moving commodity products to differentiated products.Large garmenting companies should integrate backwards till the weaving stage. This will enablethem to emerge as bulk suppliers to global companies.Companies manufacturing high-fashion short-run products may however choose to operate asindividually run units. They should focus on strengthening their design and fashion capabilities.Depending on the risk appetite, some companies may focus on building and distributing theirown brands globally. It is a high margin, high risk business.