As per the Ministry of Textiles, the Indian textile

industry contributed about 14% to industrial

production, 4% to the country's GDP and 1%
to the country's export earnin!s in "1#$ It
pro%ides direct e&ploy&ent to o%er #' &
people and is the second lar!est pro%ider of
e&ploy&ent after a!riculture$

Accordin! to the Ministry of Textiles, the do&estic textile
and apparel industry in India is esti&ated to reach ()*
141 bn by "1 fro& ()* '+ bn in "11$ Apparel
exports fro& India is expected to increase to ()* + bn
by "1 fro& ()* #1 bn in "11$ Total cloth production
in India is expected to !ro, to 11 bn s-uare &etres by
./10 fro& 1 bn s-uare &etres in ./11$

India en2oys a si!nificant lead in ter&s of labour cost per
hour o%er de%eloped countries li3e () and ne,ly
industrialised econo&ies li3e 4on! 5on!, Tai,an, )outh
5orea and 6hina$ As per data fro& 7ational 8ureau of
)tatistics, due to steep ,a!e inflation, the a%era!e ,a!e
cost in 6hina stood at ()* 4'" per &onth in "1 as
a!ainst ()* "" per &onth in India$ Also, India is rich in
traditional ,or3ers adept at %alue9addin! tas3s, ,hich
could !i%e Indian co&panies si!nificant &ar!in
ad%anta!e$ 4o,e%er, India's inflexible labor la,s ha%e
been a hindrance to in%est&ents in this se!&ent$ (nli3e
in ho&e textiles, !ar&ent capacities are hi!hly
fra!&ented and leadin! Indian textile co&panies ha%e
been slo, to ra&p up their apparel capacities, despite
stron! order flo,s fro& o%erseas buyers ,ho are tryin!
to di%ersify out of 6hina$

The textile industry ai&s to double its ,or3force o%er the
next # years$ As a thu&b rule, for e%ery :s1 lac
in%ested in the industry, an a%era!e of 0 additional 2obs
is created$
Key Points
Supply Due to slu!!ish de&and fro& both !lobal and do&estic &ar3ets, &ost ne,
capacities in the apparel and ho&e textile se!&ents are not operatin! at full
capacities$
Demand 4i!h for pre&iu& and branded products due to increasin! per capita disposable
inco&e$
Barriers to entry )uperior technolo!y, s3illed and uns3illed labour, distribution net,or3, access to
!lobal custo&ers
Bargaining power
of suppliers
8ecause of o%er supply in the unor!anised &ar3et li3e that of deni&, suppliers
ha%e little bar!ainin! po,er$ 4o,e%er, pre&iu& products and branded players
continue to !arner hi!her &ar!ins$
Bargaining power
of customers
Do&estic custo&ers 9 ;o, for pre&iu& and branded product se!&ents$ Global
custo&ers9 4i!h due to presence of alternate lo, cost sourcin! destinations
Competition 4i!h$ <ery fra!&ented industry$ 6o&petition fro& other lo, cost producin! nations
is li3ely to intensify$
TOP
Financial Year '1

4elped by the depreciation of rupee %ersus () dollar and hi!her de&and fro& the (), India's textile
export !re, by 1"% in ./1#$ The sa&e has !ro,n at an a%era!e annual rate of +$+% in the last '
years$

Most co&panies in the sector ti&ed their expansion plans ./"4 on,ards, so as to a%ail the&sel%es of
the fundin! under T(. =Technolo!y (p!radation .und, offerin! loans at 1% subsidy>$ This led to the
capex9spendin! phase in the textile sector pea3in! in the last three fiscals$ 4o,e%er, ,ith the slu&p in
de&and for textile products fro& the o%erseas &ar3ets, a nu&ber of co&panies had to defer their
expansion plans due to lar!e under9utilised capacities$

:elati%ely lo,er cost of cotton and depreciation of the rupee a!ainst () dollar helped the &ar!ins of
export dependant textile industry in the second half of ./1#$ 4o,e%er, since these trends are
te&porary in nature, pressure on &ar!ins could increase the debt le%els for players in the sector$

Troubled by the rupee's appreciation a!ainst the () dollar, thereby erodin! their co&petiti%eness in the
!lobal &ar3et, textile exporters ha%e de&anded duty benefits and credit at lo,er interest rates$

In "1 the !o%ern&ent had i&posed a ban on export of cotton ,hich ,as later lifted$ Accordin! to the
data fro& the &inistry of textiles, cotton prices are currently tradin! around 10% lo,er on /o/ basis$
TOP
Prospects

After !oin! throu!h a tou!h period of rise in input costs as ,ell as interest cost, it is unli3ely that the
sector's outloo3 ,ill turn positi%e until funda&ental issues such as po,er shorta!e, lac3 of technolo!y
and capital in%est&ents are resol%ed$ It earlier appeared that forei!n direct in%est&ent =.DI> in retail is
an opportunity that ,ould unleash de&and in the lon! run and offset any slo,do,n in exports$
4o,e%er, the sa&e no, see&s on the bac3burner$

Incre&ental capital in%est&ents in debt reliant textile industry is expected to re&ain subdued !i%en
ban3s' un,illin!ness to lend to the sector and hi!her cost of funds$

Althou!h ho&e textile co&panies ha%e been a!!ressi%e on the capacity expansion front, realisations
ha%e re&ained stable$ 8ut as ne, capacities co&e on9strea& and utilisation le%els pic3 up, this is
unli3ely to continue$ This is because althou!h India continues to feature a&on!st the lo,est cost
producers for the () and ?( &ar3ets, co&petitors li3e Pa3istan and Tur3ey are cannibalisin! its
&ar3et share$ Moreo%er, ,ith the possibility of slo,do,n in the ,estern econo&ies loo&in! lar!e, a
slo,do,n in de&and cannot be ruled out$

The ,ithdra,al of !lobal retailers li3e @al&art fro& their 2oint %enture ,ith Indian partners for .DI in
retail is a hu!e step bac3 for the textile sector, in need for both technolo!y and capital$

India and 6hina are currently co&petin! in the sa&e cate!ories =pre&iu& se!&ent> of apparels and
ho&e textiles and !i%en India's established presence in the hi!h end se!&ent, India could !ain
si!nificant &ar3et share in () apparel i&ports$ 4o,e%er, the on!oin! econo&ic slo,do,n in the ()
could result in lo,er orders fro& () retailers that, in turn, &ay result in lo,er capacity utilisation and
i&pact profitability of textile co&panies in India$

The !o%ern&ent allocated :s 111 bn for the T(.) sche&e in the T,elfth .i%e /ear Plan period ="19
"10>$ This is li3ely to encoura!e in%est&ents in the sector, especially in the areas of &odernisation,
spinnin! and processin! capabilities as ,ell as for enterin! ne, &ar3ets and products$
India is the worlds second largest producer of textiles and garments after China. It is the worlds third largest
producer of cotton-after China and the USA - and the second largest cotton consumer after China. The textile and
garment industry in India is one of the oldest manufacturing sectors in the country and is currently the largest . The
textile and garment industry fulfils a pivotal role in the Indian economy. It is a maor foreign exchange earner and!
after agriculture! it is the largest employer with a total wor"force of #$ mn. In %&&$ textiles and garments accounted
for a'out () per cent of industrial production and (* per cent of export earnings. In cotton yarn production India has
made a mar" in the world textile scenario. It is the largest exporter of the cotton yarns in the world. +esides yarn
exports! Indias growing garment industry is wor"ing as a driving force to improve the yarn ,uality and to increase the
production of cotton yarn.
India has the second-largest yarn-spinning capacity in the world -after China.! accounting for roughly %& percent of
the worlds spindle capacity. Indias spinning segment is fairly moderni/ed0 approximately #$ to )& percent of Indias
spindles are less than (& years old. 1uring (232-23! India was the leading 'uyer of spinning machinery! accounting
for %3 per cent of world shipments. Indias production of spun yarn is accounted for almost entirely 'y the 4organi/ed
mill sector!5 which includes %3$ large. 6an-made fi'ers! wool and sil" segment grew 'y modest ).$ per cent per
annum during the $-year period %&&&-&( to %&&$-&*.1uring the first year of ,uota-free glo'al trade! production
increased leaps and 'ounds. Textiles production increased (& per cent over %&&). The growth was fuelled 'y a %% per
cent rise in production of other textiles -including apparels.. Cotton textile also posted an increase of nine per cent.
http://www.scribd.com/doc/27916651/textile-industry-analysis
http://www.scribd.com/doc/5368669/!wot-"nalysis-o#-the-$ndian-%extile-$ndustry
http://www.textileworld.com/$ssues/28/&uly-
"u'ust/(usiness)and)*inancial/+urrent)%rends