APEX CLUSTER DEVELOPMENT SERVICES

LUDHIANA KNITWEAR AND APPAREL CLUSTER

2009
Prepared for

Small Industries Development Bank of India
UNDER SMEFDP

A-246,

OKHLA, PHASE-I, NEW DELHI-110020

Contents
Executive Summary......................................................................................................... 4 CHAPTER I - BACKGROUND AND CLUSTER PROFILE........................................... 8 1.1 Methodology and Objectives.................................................................................... 8 1.2 Sector Analysis ......................................................................................................... 8 1.3 Global Environment.................................................................................................. 9 1.4 Ludhiana Knitwear Cluster - cluster Profile ......................................................... 11 1.5 Geographical Spread of the Cluster ....................................................................... 12 1.7 Turning Point.......................................................................................................... 14 1.8. Institutional Set Up in Ludhiana............................................................................ 19 1.9 Industry Associations............................................................................................. 23 1.10 Financial Institutions............................................................................................ 24 1.11. Production Process.............................................................................................. 25 Value Chain Process - Woollen ................................................................................ 25 Value Chain process - Hosiery ................................................................................. 26 1.12. Value Chain T- shirt ....................................................................................... 27 1.13 Cluster Map .......................................................................................................... 29 1.14 Determinants of Ludhiana Cluster Dynamism ..................................................... 30 15.4.5 The Diamond Model-Ludhiana .......................................................................... 35 1.16 SWOT Analysis ..................................................................................................... 35 1.17 Need for Business Development Service Providers (BDS)................................... 38 CHAPTER – II STATUS AND DEMAND FOR BDS SERVICES................................ 39 2.1 Core Cluster Actors ................................................................................................ 39 2.2 Demand for BDS Services....................................................................................... 51 CHAPTER III - STATUS AND SUPPLY OF BDS ........................................................ 61 3.1 Status of Business Development Service Providers in the Cluster........................ 61 3.1.7 E- Readiness Centre/ ICT adoption .................................................................. 64 3.1.12 . Financial Services ......................................................................................... 66 3.2 Who Does Who Pays Matrix: Ludhiana Knitwear Cluster (Annexure - II)............ 67 3.3 Supply of Business Development Services in the Cluster ....................................... 67 CHAPTER - IV CONCLUSIONS AND RECOMMENDATIONS ................................ 74 4.1 Challenges before the Industry .............................................................................. 74 4.2 Areas of Intervention ............................................................................................. 75 4.3 Major Pressure Points ............................................................................................ 80

4.4 Cluster Vision ....................................................................................................... 81 4.5 Strategy ................................................................................................................... 81 Annexure II BDS Analysis – Who does, who pays? ................................................... 83 Annexure-III Knitwear and Apparel Manufacturers Association of Ludhiana (KAMAL) ........................................................................................................................ 87 Annexure IV Estimated BDS Usage and size................................................................ 88

Executive Summary
Located in the Northern state of Punjab and known as “Manchester of India” Ludhiana Knitwear cluster manufactures the entire range of winter and summer wear for people of all age groups. Further, it contributes to almost 80% of the total woollen/acrylic output of the economy. The product range includes gents, ladies and children garments including T-shirts, sweat shirts, pullovers, jackets and grey fabric clothes of hi-fashion quotient. The cluster The Ludhiana is highly labour-intensive and the labour is mostly migratory, unskilled labour though there is skilled and semiskilled labour workforce also. Indirect labour activities include tailoring, embroidery, packing, retailing and marketing etc. and some of these are BDS (Business Development Service) activities. The cluster value chain is rather long but Knitwear manufacturers are at the core of the value addition cycle. Activities post knitting of the yarn, and upto the garment manufacturing stage constitute about 62% of the total value addition in the exfactory price. While spinners, dyers and sub contracting knitting units provide backward process support, Dye manufacturers, machinery manufacturers and accessory suppliers extend the raw material feed to various processes. In domestic markets the sales and marketing process is facilitated by BDS Providers like intermediate agents, wholesalers and retailers. Similarly, in the export markets, merchant exporters, buying agents and buying houses assist the firms. Subcontracting is a major critical attribute of Ludhiana cluster with a large number of small and micro knitting and knitwear firms extending production and manufacturing support to the bigger firms and direct exporters. Though the cluster started off as a woollen knitwear cluster, it is gradually getting transformed into a highly diversified knitwear cluster on account of market dynamics extending better margins and market reach. To stand up to the expectation level in the face of global competition, production systems need to be improved, skill of the workforce needs to be upgraded, quality

Besides. The survey revealed that the cluster has number of service providers in functional areas to address routine business needs like accounting. value chain should be strong in terms of technical capability. National Small Industries Corporation. National Small Industries Corporation. efficient working capital management for stocking requirements is a major critical success factor for these units as efficient delivery schedules need to be matched with . Textile Committee. system should be in place to get right information at appropriate time. This requires lot of support from the service providers who can advise and establish the system to achieve the goal. system implementation. Northern India Textile Research Association and Sportking Institute of fashion Technology. auditing. Small Industries Development Bank of India. These institutions are mainly the nationalised and private banks operating through their branches in Ludhiana. Government Training Institute for Women. Prominent institutions in the cluster are Industrial Training Institute. taxation ESI & PF accounting. quality improvement. design development. Punjab National Bank and many more. waste minimization. while inter firm co operation should be good.control system should be strong. and energy conservation. as regards both availability and competence of service providers in strategic areas like productivity improvement. logistics. To name a few. & delivery time. project support will have to butt in as an incentive factor to kick start the activities which alone can demonstrate the gainful benefits to the firms. A primary survey was conducted with the value chain firms to assess the BDS demand side. However. an interventionist approach in the cluster market is required. there are a host of financial institutions that provide various kinds of financing facilities including foreign exchange transactions. Thus to simulate BDS activity in strategic areas. However. The survey also revealed that though there is a large network of institutions in Ludhiana most of these are riddled with government control and bureaucratic interference becoming a big obstacle in skill development in the cluster and which needs to be mapped to the industry’s requirements. documentation etc.

market order books to cut the market reach time. The machinery manufacturers provide important information dissemination on technology and operational issues. It revealed that the private sector BDS providers have a very significant role to play in the export markets. It provides guidance on best manufacturing practices and supports industry by providing them with information on latest trends at international level with regard to fashion. Consultancy. There is also visibly very little participation in domestic & international trade fairs so the cluster remains bereft of the current and future market trends. and also suggest the required working capital (finance) withdrawals/limits based on such a real time flow scenario. not many units are avail testing services due to less emphasis on quality control which done mainly on buyers’ demand rather than being mandatory. . So there is an urgent need in the cluster of BDS services to plan the supplies at the backend and match them with the delivery schedules required by the market. legal and procedure related services. IWS needs to be involved in the licensing of the “woolmark” in the cluster. Considering the high degree of controls & bureaucratic procedures in international trading arena. Similarly. They can act as middlemen between the buyer and exporter by procuring order from the buyer and by identifying the right supplier for the order and by coordinating. However. Brand value and its utility as a marketing tool needs to be percolated to the cluster stakeholders effectively through this BDS project. these BDS providers would have a critical role to play and need to be induced to diversify themselves to areas like pricing strategy from their current specialisation in documentation. they themselves suffer from technological obsolescence and require capacity Building through training. there is little emphasis on branding in the cluster largely reducing the margins for the MSMEs. Small and micro firms need to interact more with the marketing agents to expand their markets. The supply side assessment was done through another primary survey with the leading BDS providers. and bridging information gaps The demand side survey also revealed that currently. marketing strategy and new technologies.

thus diminishing brand loyalty. and is an area where earlier projects have failed. Conversely. In all probability. raw material manufacturers may fail to timely supply at the last moment. Inefficiency in this area also negatively impacts retailer and distributor relationships. So most of the issues addressed earlier continue to hover around the cluster stakeholders in the absence of a local body taking over charge. The interventions in the BDS project need to propel the private BDS providers to fill in the gap left by the govt. due to an underestimated consumer demand. the cluster stakeholders require good interface with the environment and energy efficiency BDS. the umbrella Association FEKTAA will need to be enthused with some new strategies to take on this challenge. Rather. An inventory levels in excess of customer demand result in inventory write-downs.There is a dearth of Professionally qualified designers in the cluster. like those concerned with forecasts and international trends. agencies. These two initiatives will leave a positive mark on the export markets in view of WTO norms. This is not only important to cut private costs but also avoid social costs which emanate from such negligence. Efficient Inventory Management is an important function in order to avoid delays in the delivery schedules to customers. entrepreneurs or knitting masters assume this Role. Sustainability is another issue that will have to be addressed. The professional designing institutes can be collaborated in various other issues also apart from these mentioned here. Use of such inventory planning and management BDS needs to be inculcated in the cluster. And last but not the least. .

which implies closely working with all firms. horizontal or institutional. there are limitations to leverage all the available support instruments for them. It is.township of Ludhiana in the month of May 2009. during the last quarter of a century.. therefore. impacts. national and global levels has received substantial recognition the world over. The present diagnostic study on the textile sector at Ludhiana in Punjab (India) is aimed mainly at understanding the existing level of BDS usage in the cluster and to evolve an action plan to improve the MSME productivity with better use of BDS. As a part of the study. small being small as they may be in size.BACKGROUND AND CLUSTER PROFILE 1. In the textile industry. higher efficiency of working and innovations (CEI) in business processes. However. technical institutions. Knitted garments are preferred over woven . The competitive advantage for MSMEs is becoming increasingly dependent on three critical. necessary to understand the value of networking towards accrual of greater benefits to SMEs through collective action. Therefore these can definitely play an important role in improving competitiveness of the firms.1 Methodology and Objectives The potential of Micro Small and Medium Enterprises (MSMEs) in contributing to the development process at the local. a questionnaire was administered to MSMEs. 1. Knitwear is emerging as the fastestgrowing segment of Indian garment exports as compared to all other segments.CHAPTER I . The basic purpose was to assess the demand and supply of Business Development Services in the cluster. including woven garments and the mill-made garments. whether vertical.2 Sector Analysis Though textile and apparel form nearly 15 per cent of the Indian exports and 45 per cent of this is knitwear though the share of knitted garments in terms of value is much less compared to the volume of total garment exports. viz. cost reduction. support organizations and local associations. industries and institutions with strong linkages. Business development Services (BDS) significantly impact on CEI. the role of hosiery or knitwear sector is increasing day by day. A Primary Survey was conducted in the cluster .

Tirupur in Tamil Nadu for cotton knitwear 3. which is selling to the endconsumer.garments the world over due to comfort. Delhi (Gurgaon & Noida included) for synthetic knitwear 4. especially . It has thrown open both opportunities and threat. With lean retailing and the evolution of electronic solutions.3 Global Environment The garment industry all over the world is at the threshold for far . . Reducing stocks requires fast and on-time delivery from the manufacturer. More and more clothing manufacturers are becoming service providers to retailers. The removal of quantitative restrictions has brought about important implications. retailers are Refer Figure 1 giving up more responsibilities. Internationally retailers are concentrating on their core business. which manufacturers who want to remain competitive have to take up. who gets alerted when to produce and ship garments. stretchability and easy breath ability built within the knitted fabric structure. Shipments become smaller but more frequent. especially for the lowincome economies seeking to industrialize through promotion of the garment sector. Many are turning to “lean retailing”.reaching institutional changes. with point-of-sale data transmitted directly to the manufacturer. Mumbai for cotton and synthetic knitwear 1. Ludhiana in Punjab for woollen and synthetic knitwear 2. or cutting down inventory to the minimum. as a means to achieve this. Bangalore for cotton and synthetic knitwear 5. trade dynamics. Over the past three to four decades. The important centres of knitwear industry in India are listed below: 1.price and quantitative restrictions have come to play a major role in the patterns of the sector’s development.

these developments create new challenges for garment manufacturers in the cluster. To stay competitive. In view of the last years’ exports Bangladesh exports increased by 11% while India exports was down as Compared to 2007. Retail Business in US . Those who had set big Manufacturing facilities for these specific clients don’t have any other option other then accepting it. UK and other countries of Europe is down by 25% (2008). Even on tax front Duty Draw Back Structure on Cotton Garments INDIA: 8%. over and above those they faced earlier. The problem is more chronic for large manufacturers as they have very limited choice. China 17%. Wal -Mart has asked its suppliers to give 5% discount on last one year supplies. Productivity in Indian Companies’ is at about 50% of global Standards where as in Bangladesh its 70-80%. .Supplyand Supply and Design development Development Production & Supply Management Production 1970 2005 Time FIGURE 1 From product development to fabric and trim sourcing. Higher value items slowing down globally. manufacturers need to find innovative solutions that go beyond just manufacturing good-quality products.Buyers’Increasing Expectations To take care of complete Value Chain Complete Solution Production . Most of the sourcing companies are pushing manufacturers for more discounts. Bangladesh & Vietnam are posing sever competition to Indian apparel export business by supplying at low prices. there is general trend among on price sensitivity .

A number of technical support institutions are also present in the cluster. For a common user. With a daily factory employment of 55 workers per 1000 population. Some big exporters from India are even contemplating to set up factories in Bangladesh. machinery manufacturers and accessory suppliers provide requisite raw material backup to various processes. This is primarily because wool as a raw material is produced mainly in Australia. yarn stage or old woollen rags. jackets and grey fabric. Knitwear manufacturers (including manufacturers-cum-traders/exporters) are at the core of the cluster. So in order to cater to the market requirements. ladies and children. compared to 11 for India as a whole. which is famous for woollen knitwear. Ludhiana is way ahead of any other cluster. the cluster has now a diversified range of cotton. T-shirts. pullovers. 1. uses acrylic fibre substantially while pure wool is used in lesser quantities. Knitwear industry uses various types of yarns. Ludhiana district is clearly Punjab's knitwear hub and is also known as Manchester of India. in the case of acrylic/wool knitwear.cluster Profile Knitwear is a diversified industry in India. sweat shirts.4 Ludhiana Knitwear Cluster . Dye manufacturers. dyers and subcontracting knitting units provide backward process support.the Ludhiana knitwear industry manufactures the entire range of winter and summer wear for gents. The industry in India mainly imports wool either in its fibre stage. which is then recycled. buying agents and buying houses. Exports are being affected either directly or through merchant exporters. South Africa and New Zealand. Spinners. acrylic and woollen seem to be similar and therefore Ludhiana is most commonly known as the Woollen Knitwear cluster. Over four-fifths of the nation's output of woollen/acrylic hosiery comes from this region. wholesalers and retailers. On the domestic front forward linkage is provided by intermediate agents. and 19 for Punjab. Tirupur is the most famous cluster in India. These days . However Ludhiana. synthetic and wool -based yarns.Vietnam 15% Bangladesh 14% which is also an advantage on there part. The product range includes hi fashion garments. While in cotton knitwear. .

The remaining 10% of the firms are scaterred across the cluster. LudhianaJalandhar and Ludhiana-Amritsar. The main hosiery knitting centres in Ludhiana are geographically centred within the city only. around 300 kms from Delhi. viz. Ludhiana. Purana bazar. Along with Jalandhar. Sundernagar and Shivpuri 2.. and Civil Lines another 40% of the firms are located. the places within Ludhiana can be divided into the following four blocks: 1. Major products emanating from Ludhiana are bicycles. 32 percent of its total industrial output. and another 10% in the Bahadur Ke Road area. sewing machines and sweaters (pullovers). respectively. Ludhiana has a population of about 40 lakh and accounts for 21 percent of Punjab’s small firms. The Ludhiana knitwear industry is highly labour-intensive. The cluster units mostly use manually. Purana Bazar/ Madhopuri. and in 2007 accounted for 70 percent of Punjab’s industrial exports. 28 percent of its medium and large firms.. it forms two of Punjab’s principal industrial hubs. Dal bazar ).5 Geographical Spread of the Cluster Ludhiana is an important knitwear centre located in the Northern state of Punjab. the 40% concentration in the undesignated area (s) as mentioned above is more of Micro level industry which has evolved due to clusterisation of the traditional setup for associated industries in the said location (s). as part of two major industrial belts of Punjab.1. has a budding industrial support system/infrastructure. which are in excess of 50. viz. Bahadur Ke Road 4. Focal Point (Dhandari Kalan) About 20% of the firms each are concentrated in the designated Industrial Area(s) like the Industrial area and Focal Point (Dhandari Kalan). dominated by textiles and light engineering goods industries. According to industry concentration.driven flat knitting machines. Old city Area (Sunder Ngr. In the undesignated area (s). Industrial area 3.000 and the industry employs about 4 lakh people . While the concentration of the firms in the designated Industrial Area (s) is due to Infrastructure facilities provided by govt for industrial setup. The labour available is migratory labour and is mostly unskilled.

No. retailing marketing. Turnover of the Cluster is approx Rs. this cluster forms the backbone for the local economy of Ludhiana and its surrounding areas. Small. Turnover (in Rs. crore) 800 3200 1000 4500 Approx.5000 crore pertain to Micro. They started manufacturing sweaters on these machines with cotton as raw material. These migrants brought with them the skills of weaving fine woollen fabrics and embroidery. SMALL & MEDIUM Small 2800(20%). Having such strong employment strength through generation of direct and indirect activities and its ability to foster so many backward linking sub-activities. Micro 9800. The direct employment generated includes skilled. direct & indirect Employment 215000 90000 55000 40000 Note : The estimates of turnover quoted in the diagnostic study of Rs. Their skills were commercialized by the local traders who sought markets within Punjab and beyond.directly and indirectly including large industries. semi-skilled and unskilled workers as well as those earning their livelihood indirectly through this industry. The second turning point in the history of this cluster was the . & Un Regd ) which cam be divided into MICRO. embroidery. the industry saw its first change with the introduction of circular knitting machines. These indirect activities relate to the forward and backward linkages within the industry such as tailoring.5000 Crores (2007-2008) Including exports of 1000 crores. The turnover and employment statistics of the cluster can be summarised as per table below based on sizewise firm classification : S. 1 2 3 4 Size of the firm Micro Small Medium Large Approx. packing.6 History and Evolution Knitwear’s origin in Ludhiana can be traced to many decades back when migrants from Kashmir settled in Ludhiana after a famine in Kashmir in 1933.(70%) Total No of MSME 14000 (Regd. etc. as follows. Medium 1400 (10%) . In 1935. & Medium industries 1.

g. Most importantly.. the Muslim population. operating in two very different markets helped local enterprises to nurture varied skills. In the same year the Government of India also imposed restrictions on import. 1. Most local large enterprises in the 1970s and 1980s. Local and immigrant population from Pakistan post -1947 sustained this trade and the industry grew smoothly for the next four decades. e.oriented and low cost manufacturing and could earn profits through cost-cutting skills. During the same period the industry started importing wool for manufacturing woollen products. it was the largest export market for the woollens from Ludhiana.up of Russia into CIS. Burma ( Myanmar) was a very important market for Ludhiana knitwear till 1950. the industry saw another change with the introduction of automatic and computerized knitting machines supported by the State Government which set up a modern knitwear centre with technical and financial assistance from UNDP and UNIDO. The latter took a cue from Tirupur. also maintained a strong presence in the middle-end domestic market. shifts in demand. to mitigate the market risk from Russian markets. Delhi and Bombay industries and diversified their product . Development of this flexibility in operations proved to be rewarding in the 1990s when most . Most of the inputs (machinery. and gradually a new generation of manufacturers cropped up. etc ) at that time were being imported and the import restrictions induced local manufacturers to manufacturer local machines locally. new trends in design.7 Turning Point Before the break. needles. apart from serving the Soviet market. While catering to the Soviet market depended on scale.mix from wool based garments to that of summer wears. while retaining its dominance in the woollens’ manufacturing. quality-related issues. before the Burmese Government imposed import restrictions.mix shifted to a predominant bias for cotton and summer wears.1980s. Till 1947. as the cluster was looking for newer markets for woollens for sustainability. Post . As a result. Russia’s disintegration forced the cluster units to search for alternative markets. many old stalwarts could not sustain in the changing business environment. During the period of 1980s. who subsequently migrated to Pakistan during the partition of India. the domestic market induced cluster firms to address other qualitative concerns. owned most of the machines. Ludhiana’s product .introduction of flat knitting machines during the 1940s. The cluster formation around Ludhiana knitwear industry became evident during the Second World War when the woollen jerseys were in great demand. etc.

New market ventures the national and international levels led to an increased sale of US$ 34 million by around 25 firms.toback feedbacks leading to improvisations in quality and processes. the project aimed at enhancing the capability of the cluster to rapidly respond to the changing demand pattern of consumers. Through these efforts. 300 were women of which 70 per cent gained employment post training.local enterprises had to shift their exports towards the western markets. etc. 45 new yarns were also introduced in the cluster. training around 400 people and benefiting around 75 firms.25 million in new equipment. The small time orders from the Western markets fed the cluster through back. Deeply entrenched socio-economic issues related to poverty and women empowerment were thereby addressed by employing women workers in the formal knitwear units. low level of competitiveness and weak institutional framework.7. Of these. The strategy of the intervention was to convince the units about the scope for stronger cooperation in business enhancing capacity. These embedded services imbibed into the cluster an important learning function from seemingly petty orders. and to respond to a stagnating domestic market. the latter being quality and design sensitive. nonetheless very valuable for the cluster as a whole. The various cost -cutting and productivity improvement measures introduced in the cluster led to an estimated savings of US$ 1. It also enabled the cluster to de-risk the market uncertainties for achieving sustainability. firms started to explore Western European markets and succeeded in getting short-term and small-scale orders. The pressure towards experimentation was created through benchmarking of the cluster. During the UNIDO programme. Meanwhile. store management. This made local producers skilled at multi-task management.1. were introduced in the cluster as . better washing. 1. UNIDO’s Cluster Development Programme The objective of UNIDO intervention in Ludhiana cluster was to address poor endowment of human resources. Five new training programmes were introduced. new techniques to raise competitiveness like energy saving. weak international market linkages.3 million in nearly 100 units. Around 50 units made additional investment to the tune of US$ 6.

also new marketing tools like BSM were made a part of the curriculum. sharing of best practices and enabling linkages within the SME cluster ecosystem.2 Project Vikas Microsoft. along with the NMCC and other stakeholders. Further. inadequate order planning and tracking and procurement but at a affordable price for the SME's.7. Such interventions can be taken up under the BDS implementation Project by offering to provide customised solutions through local software vendors (BDS) which can be then found affordable on a SaaS (Software as a service) platform. Most of the firms are keen on investing in systems for tackling their problems of excess inventory. capacity building with regional training institutes. The other . A cluster resource centre was too initiated during UNIDO’s CDP.a five.7. This dedicated and scalable multi-divisional programme was projected to harness skills and build capacity cover knowledge creation and dissemination.year project strived to make SMEs more competitive. Project Vikas was successful enough in achiveing the above mentioned objectives but due to less penetration of IT from the beginning in the cluster the price at which the solutions offered were not affordable to the firms in Ludhiana.3 SBI Uptech Project Uptech was a intiative taken by the SBI (The State Bank of India) for Ludhiana cluster development. Joint participation in trade fairs was encouraged and an export consortium was created. 1. The objective of Project Vikas was development of soft skills including cluster level networking & common challenges using ICT thru creation of R&D linkages. 1. It was focused on facilitating techno-managerial consultancy services to the individual units to upgrade the technology. A self-sustainable exporters’ association – Apparel Exporters’ Association of Ludhiana (APPEAL) was launched during the same project. through “Project Vikas”. and enable linkages in the cluster ecosystem. a local association of knitwear manufacturers – Knitwear Club was guided towards developmental activities and an umbrella organization – FEKTAA was constituted in the cluster.

Ludhiana under the Apparel Park Scheme of Ministry of Textile. and energy conservation have been touched earlier but sustainability lacks. Energy audits of firms with PCRA 4. and enhancing global competitiveness & exports. find way into the BDS Implementation Project’s agenda and will have to be addressed in a phased manner. is a special Purpose Vehicle (SPV) being set up to develop a 100 acre Aparel Park with a total investment of Rs 355 crores at Doraha Distt. Such . The salient initiatives under the project have been : 1. Training Seminar(s) on quality improvement through motivation and Inspection 1. Sales tax . Most of these issues like skill development. Facilitation of consortia of 6 local manufacturers – Launched brand ‘wee’ 2. Training Seminar(s) on Defects causes and remedies for fabrics 6. Awareness Session(s) on overview of Indian Apparel Industry and Quality Testing 5.7. 1. the problems still find equal relevance in the current context. and APPEAL (Apparel Promoters and exporters Associaton of Ludhiana. thus. all these problems. financial support to the SMEs. Exposure visit to other cluster to study best cluster practices 3.continuous power supply. a joint venture of PSIEC (Punjab Small Industries and Export Corporation Ltd) .5 Major On-Going Programmes & Scope for complementarity a) PUNJAB APPAREL PARK Punjab Apparel Park. Govt. on the exit of the earlier projects. Besides the BDS requirements of the member units of the park. As such. As such. a host of BDS services will be required in-house within the park as a clustered set up. of India. preventing obsolescence. To Facilitate the industry the proposal includes facilities like exemption from stamp duty & registration fee. single window clearance etc for the units set up at Park.4 Textile Committee The objective of this program was capacity building of SMEs. energy conservation. by improving the existing support system and by enhancing the collective efficiency of SMEs so that the opportunities coming up as a result of globalization can be fully utilized. through a cluster based approach.issues tackled in the project were skill development of workers. technological obsolescence.7.

Sewerage. 2) A cluster of about 80 units of Knitwear/Textile industry envisaged under the park 3) A Total investment in the cluster to the tune of Rs. Government of India was engaged. 2011. land measuring 57. The knitwear club formed a special purpose vehicle (SPV) namely Ludhiana Integrated Textile Park Ltd. The park now stands approved and grant sanctioned by Ministry of Textiles. namely “scheme for Integrated Textile Park’s” (SITP).requirements can be mapped for propogation of BDS services within the park. Storm Water. Punjab Government’s empowerment committee for mega projects granted its approval in 2006 for setting up of Textile Park and allowed certain concessions such as waiver of stamp duty etc. For the purpose.25. FEKTAA will also function as a MESO organisation in the cluster for the furtherance of the BDS implementation objectives once the project exits in Oct. 5) The project to have the provision for excellent Roads. Necessary state of the art conference infrastructure will be an important component of the with the top class facilities available. in order to achieve the economic scale of activities within the proposed park. 1) The park to be developed on around 60 acres of land with the provision of further extension if possible. Lights. 6) The compact functioning of the park envisaged to change the unorganised functioning in the cluster. and the project has an MOU with FEKTAA for various initiatives. Being a lead project partner. This will brace up the cluster for national and global competitiveness. Captive Power Plant.18 Acres was registered in the name of the company for development of the Textile Park.a consultant agency for preparing and submission of detailed project report (DPR) to Ministry of Textiles. Trade Centre and Sophisticated Research & Development Centre. 4) The cluster to provide direct and indirect employment to about 1. Knitwear Club is a part of FEKTAA. b) LUDHIANA INTEGRATED TEXTILE PARK The endeavour is a brainchild of of Knitwear Club has always been to ensure betterment of Knitwear/Textile and Allied industry. 1500 Crores. Simultaneously Infrastructure Leasing and Financial Services (IL&FS) . a lot of BDS initiatives in various areas can be dovetailed into the Knitwear Club plan for Ludhiana Integrated Textile ParK.000 persons. CETP (COMMON EFFLUENT TREATMENT PLANT) . as it was a pre-requisite for developing a Textile park under the Government of India Ministry of Textiles scheme. The main features of the project are as under. Effluent Treatment Plant.

computer science etc. The ITI has both elementary and advanced level courses in garment related trades.2 Industrial Training institute There are two ITI’s In Ludhiana.8. 1. The polytechnic has . The ITI for Men has training programs majorly related to the bicycle and engineering industry. 1. So a proposal of Joint ETP is proposed to the govt. embroidery and garmenting that are all related to the knitwear and apparel industry of Ludhiana.3 Govt. Small dyeing units don’t have space and funds to set up their own ETP.A proposal for Common effluent treatment plant for Dyeing units is under consideration with the state government. The institute also has a small test house and a large auditorium that is made available to the industry associations for conducting workshops for the industry benefit at a very nominal fee. The institute also hosts a modern machining centre that houses expensive machines and where the industry is unable to invest large amounts . The polytechnic was rated to be the best in northern India in 2000 and has also won several accolades in the field of sports. The total project cost is about 15 crores.8. polytechnic for women (GPW) It was established in 1995 under a World Bank aided program focused on creating employment opportunities for women in Punjab. All the courses are of three year duration. The institute also provides training support to the industry in addition to conducting entrepreneurship development programs. of India centre dedicated to provide technical support to the small sector companies that cannot afford to have in-house R&D. diploma in engineering. Institutional Set Up in Ludhiana. The institute is running courses on garment manufacturing technology. 1. The cluster Dyeing units have pooled about Rs 3. The maximum duration of the course is three years (it is an advanced version of the two year course). while the ITI for women mostly has training programs on knitting. CETP facility can be utilised for linking Environmental and Pollution related BDS to a large chunk of firms.1 MSME Institute It is a govt. the services of these machines is offered on a no profit basis.15 crores for the project till now.8. The proposal is based on public-private partnership. for the project. one for Women and the other for Men. 1.8.

8.8 ATDC .Sc. It allows the flexibility of a degree from a recognized University along with a full -time diploma to the students.4 Govt.8.8. Institute of Textile Chemistry and Knitting Technology (GITC&KT) This is one of the oldest institutes in Asia on knitting technology and wet processing. 1. Sportking Institute of Fashion Technology industry and the Institute with the Sportking Group of Industries as the mentor.8. It has three-year diploma courses in both the fields and additionally runs a six-month course for workers.6 AEPC Incorporated in 1978. The Institute is offers seven courses at present.7 Sportking Institute of Fashion Technology With the objective of assisting apparel/textile industry to meet facilitates collaboration the industrial between the competitiveness at the global plane and to focus on fashion as a professional career. certification and assistance to exporters. ISO consultancy. market research studies etc. This has now taken the shape of programme at unit level. The institute is supporting the industry sponsored training program on skill up gradation of supervisors employed in the knitwear industry. KD and APM) and one undergraduate part -time degree course (B.5 Textiles Committee It is a statutory body of the Ministry of the Government of India for rendering services such as testing.8. FT) which can be pursued along with a regular full time course at a nominal University fee.entered into a MOU with the industry (APPEAL) and is conducting the Industry –sponsored course on stitching and linking in their premises 1. 1. 1. 1. GSP issue. They are also running short. The Institute is running three undergraduate full -time diploma courses (FD.term courses for training and development of Lab technicians. AEPC is the official body of apparel exporters in India that provides invaluable assistance to Indian exporters as well as importers/international buyers who choose India as their preferred sourcing destination for garments.

1. Since its inception. ATDC is a society under the Societies Registration Act sponsored by AEPC and supported by Government of India. pattern making. ii) to upgrade the technical skills of the human resource employed in the industry . JD Institute of Fashion Technology. 11 INIFD Ludhiana was launched in 1997 by a team of first.8. Interior Design. a strong network of more than 20 centres in India and abroad. IT. Garment Manufacturing Technology. INIFD. etc. consisting of academicians with rich experience in diverse fields at the national and international levels. . garment manufacturing.oriented courses in the Fashion Designing .10 Pinnacle Institute of Fashion Technology The institute s offers various courses in Fashion Designing/ Merchandising / Quality / Production related to knitwear industry. knitwear manufacturing. was established in 1988 to anticipate and fulfil the ever-changing requirements of the fashion world. 1. 1.8. Visual Merchandising and Export Management. The key objective of ATDC is i) to provide skilled manpower to the industry in order to improve the technical edge in manufacturing as per international parameters. Ludhiana has come a long way and is the most sought-after institute in the region offering career.8.generation entrepreneurs. Founded in 1991.9 JD Institute of Fashion Technology.The mission of ATDC is to create skilled human resources for rapidly growing exports and domestic market. ATDC is running various certificate and diploma courses on quality. The institute is running various one or two year diploma courses in Fashion Designing. Textile Designing and Interior Designing fields on the one hand and MBA course in Design Management on the other. thereby bridging the gap between designers and business managers.

8.1. ISO certifications. NIIFT.13 Central Tool Room Set up as another common facilities centre for the burgeoning metal -based industry . however. 1. knitting and dyeing problems. technical issues. To move into the global main -stream of intense economic competition and reckoning with requirements of India's fashion industry in totality and Ludhiana industry particularly. 1. knitwear and readymade garments.8. It also provides training support to the cluster. Since then. NIIFT. NITRA was established in the year 1975 with the objective to carry out scientific research in the field of textiles as well as to promote and foster scientific research studies for the extension of knowledge related to or connected with the textile industry. in August 2008. This centre developed high -speed stitching machines among other knitwear related machines. There have not been many takers for technologies developed by MERADO since then.based inputs to the metalbased industries in Ludhiana. it supports the knitwear and other industries as well. but the local manufacturers were.8. 1. It is equipped with a modern tool room and latest facilities on CAD CAM. forced out by cheaper imports from Taiwan and Japan.15 Northern India Textile Research Association (NITRA) One of the four textile research associations located in different parts of the country.14 Mechanical Engineering Research & Development Organization (MERADO) MERADO was set up with the objective of providing rich R&D. NIIFT Centre Ludhiana apart from being a significant textile cluster. NITRA is providing consultancy on power. but the organization is competent to develop newer machines if placed with a specific requirement. flat .12. Ludhiana has emerged as a premier institute and strives to impart knowledge comparable with international standards. NIIFT Centre is engaged in the production of hosiery. achieved another milestone by opening a new centre at Ludhiana.8. It also provides Diploma courses for operators of circular knitting. All the technologies developed by MERADO were commercialized.

spinners.16 Punjab Agriculture University ( PAU) Home Science Department has started a fashion designing course for two years to cater to the industry needs.knitting & embroidery machines. of BDS capacity projected the institution after 2 yrs of our development programme 1 2 3 ATDC NIFD Pinnacle Inst of 6 8 7 7 9 8 Fashion Designing 4 JD institute of 6 7 Fashion Technology 5 Sportking Institute of Fashion Technology 6 Govt Polytechnic for Women 18 20 20 23 1. But due to lack of infrastructure and ICT -related issues. PAU is actively involved in research and other field related studies. No. readymade hosiery manufacturers. dyers. The expected growth rate of the BDS providing capacity is estimated at 5-10% during the next two years. 13 of these active associations have joined hands to form an umbrella association called FEKTAA. 1. A mapping exercise was done with some leading institutions. the status of which is projected as under : S. of instructors with No. There are very few associations which are active in the cluster and take initiatives. knitters etc.9 Industry Associations There are around 70 associations in Ludhiana representing various interest groups such as exporters. NITRA is not very much popular in Ludhiana. . Name Institution of the No.8.

which have been shifted to this platform such as Apparel Park.Bhadur Ke Textile and Knitwear Association 7. Many banks have International banking divisions to promote exports from the cluster.1 FEKTAA Federation of Knitwear. It has represented Ludhiana at various forums and efforts are on to increase its member looks after the areas as its members are from all the 1. etc. and to achieve collectively what is not possible alone. It has been the endeavour of all the associations to strengthen FEKTAA and some of the ongoing projects with various member.1 Small Industries Development Bank of India (SIDBI) .i. 1. synergy in effort. APPEAL and KNIDGRO were formed as a part of UNIDO’s cluster development programme and have been quite active. knitting.Garment Machinery Manufacturers and Suppliers Association 10.associations. garmenting.10 Financial Institutions All the major nationalized banks have branches in Ludhiana providing credit and other banking facilities to the cluster. dyeing. 1.Apparel Exporters Association of Ludhiana (APPEAL) 4. active participation of the complete value chain . Knitwear Club 2.e.1.Dyeing Factories Association (Regd.Shawl Club 8.) 9. FEKTAA ‘s main objective is to work towards the needs of shared vision. The Knitwear Club which broader segments. Cluster Development Programme.Knitters Association 6.9. The main associations who are members of FEKTAA are given in the box. spinning.Ludhiana Dyeing Associations (Cotton Division) 11 KNIDGRO All associations that look after and the interests of work for their their respective segments betterment.Readymade Hosiery Manufacturers Association (REHMA) 3. exports.10.Knitwear Development Group 5. exhibition centre and resource centre. Textile and Allied Industries Association has been conceptualized with the support of UNIDO.

The Small Industries Development Bank of India Act 1989 is envisaged to be the principal financial institution for promotion. Scouring. a cleaning operation is carried out locally for wool by medium or upper end of small scale spinning units before spinning the yarn. 1. Production Process Value Chain Process . · This yarn is then supplied to the industry for further operations. . · Yarn is wound over cardboard cones. The larger hosiery units buy the yarn from spinning units directly or through traders and then send it to dyeing units for dyeing in different shades. Small units buy different shades from traders who stock these for retail.Woollen · It starts with spinning of raw wool. Generally a master craftsman is employed for making designs for flat machines (hand driven and Raw Fibre Cleaning Fibre Dyeing Spinning Winding Yarn Dyeing Winding Knitting Fabric Dyeing Finishing Garmenting Packaging . semiautomatic or fully computerized knitting machines.11. Knitting the yarn into fabric is done through hand operated flat knitting machines. Different designs are made on the fabric through these knitting machines manually or mechanically depending upon the machine used. acrylic or other fibers that are sourced from outside Ludhiana. financing of developing industries in the small -scale sector.SIDBI was established on 2nd April 1990.

: · · · Spinning units (provides yarns as raw material) Dyeing units (yarn dyeing for knitwear manufacturers and spinners) Knitwear garment manufacturing (fabrication.mechanical both). manufactured garments undergo washing or drycleaning. Value Chain process . After cutting and tailoring. This process softens the fabric. finishing and marketing) as the industry at the core . cutting and tailoring. · The fabric then undergoes milling process in which fabric is dipped in chemicals and soap. It then gets ready for cutting and tailoring which is generally done in-house by most of the hosiery units on piece rate basis. In computerized machines. Visual checking is done before packing them into boxes. design inputs are fed through available software programs.Hosiery Hosiery production process is segmented into three broad categories viz.

shirt RAW MATERIAL 15 % OF A SPINNING 16-17 % OF A KNITTING 6 . Value Chain T.8 % OF A Brand percentage value addition in business processes for Tshirts A=Ex-factory cost of garments B= Price at another country C = Price at domestic outlet DYEING 10 % OF A GARMENTING 35 %OF A FINISHED GARMENTS (A ) 17-18% OF A DOMESTIC AGENTS 2-3% OF C WHOLESALERS 7-8 % OF C EXPORT AGENTS 3% OF B IMPORTERS 60-65%OF B RETAILERS 35-40% Sweater OF C Brand %ageValue Chain of a sweater value addition in Y business processes (Sweaters) B= price at another country C = price at domestic outlet RAW MATERIAL 12-15 % OF A .12.1.

SPINNING 12.15 % OF A DYEING 16.17 % OF A KNITTING 20 % OF A DOMESTIC AGENTS 2-3% OF C EXPORT AGENT 3% OF B .

Manf. Suppliers (300) Yarn Dealer (200) Wool Importers (50) .13 Cluster Map Cluster Map Association of Buying Houses GPW GITC&KT SISI SBI SGS Thermax TC SIDBI Overseas Buyers Buying Houses FEKTAA Knitwear Club Export Agents APPEAL Manf. Domestic (500) LDA Dyers LSA Spinners Domestic Market Retail Chain Agent KNIDGO GMMSA Mach.1. Exporters (70) Manf. Traders (140) Acc.

The assessment is highly subjective. companies have displayed wanted labour boards outside their factories. especially erratic electric power supply and the increasing pressure on the roads has put considerable strain on the growth of this cluster. This has impacted on the supply of workforce in industrial clusters such as Ludhiana.1 Factor Conditions · Effective entrepreneurial skills of Ludhiana industry stakeholders result in better management of orders and their negotiations and also help in direct control of operations resulting in cost. Lack of required infrastructure renders the city unsuitable for visits by foreign buyers or as a venue for any high-level conference. · · Workplace environment and quality of living conditions do need upgradation. · · · Telecommunication facilities are very good in the cluster. The recent government scheme ( employment guarantee) in some of less developed states of India like Bihar. · The cluster is so big that there are no proper ways of information exchange. retailing and marketing etc. · Support services are fairly affordable. The cluster is actively supported by an array of supportive activities in the value chain. Even during the recession period.effective competitiveness of the industry. Infrastructure in the cluster is very poor. is very effective in terms migration from these states.1. located within the cluster. the competitiveness indices of the cluster under different conditions are prepared with the support of opinion. Michael Porter’s Competitiveness of Nations model (1990) methodology is used for assessing competitiveness of Ludhiana cluster on the scale of 5.makers and leaders of the cluster to make it as realistic as possible.14 Determinants of Ludhiana Cluster Dynamism In this section . These activities relate to the forward and backward linkages within the industry such as tailoring. The use of ICT including the Internet is very limited. Packing. The methodology has been used widely to measure the competitiveness of clusters. embroidery. Getting skilled workers is a major challenge but getting unskilled labour is also becoming difficult day by day. Even the website of some of the proactive .14. However. Connectivity is a major problem as there is no airport in the city and hence the overseas buyers are usually unwilling to travel to Ludhiana. 1.

This also shows that lack of an exhaustive website/information portal for locating a vendor. 1.r. so are the organizations. stock details of various accessories are not kept and there is low. Consultants in this domain would need to be utlised more intensively and extensively so that the cluster achieves cost efficiency parameters on a global scale. The so called semi skilled labour switches jobs rapidly in pursuit of higher remuneration for new skilled acquired. There is very little inventory management. market demand based mapping with sourcing of various resources for production is required.association like FEKKTA has not been updated for the last one year. and the stay period on the average does not last more than 3-4 months (one season). professional organisation of distribution orders and supply chain linkages w. A high rate of skilling of local labour all round by the cluster based institutions would tend to stem this instability in labour retention and needs to be attended. BDS or a buyer or any new technology is not available.t. · · Awareness about various government and institutions aided schemes for the benefit of the industry in terms of optimum utilization of each and every resource is missing.capacity utilization. Generally the labour hired is mostly unskilled and the skilling exercise is done through on the job training. The winter production is seasonal in nature and also the way it is sold to distributor/ suppliers and the industry is largely unorganized. The cluster requires effective linkages among firms and the institutions for skilling of the unskilled labour on an on-going basis. But such an exercise goes waste as the churn out rate of such in-house trained labour is very high.14.2 Demand Conditions . BDS intervention in such issues will go a long way addressing mismatch situations in the supply chain flows. Similarly. Last but not the least. Inventory management is an integral component of cost effective supply chain charting of various activities. integration and compacting of the supply chain is required in this subcontracting driven cluster using ICT tools like internet which paves way for faster information exchange.

European Union and the CIS (erstwhile USSR). and more frequent participation in trade fairs are required for better market related sensitivity of the firms. · There is very less participation in domestic trade fairs while the international ones are seldom visited to get a feel of the market trends. and Kanpur) and low-end middle-income mass markets (comprising of Tibetans/Nepalis). Mumbai. The domestic segment consists of both high-end (such as Delhi. · There is no emphasis on branding and this largely reduces the margin because maximum value addition in the value chain at this stage. The export markets include USA.· · The change in weather conditions has put a strain on the demand of flat knit sweaters . · 95% of the domestic demand for woollen knitwear is fulfilled by Ludhiana industry alone. there is no distinction between a manufacturer and a marketer. In Ludhiana cluster. There are very few firms who are selling directly through their own retail outlets. · Another major market for the industry is Government purchases (primarily for Armed Forces and other departments) which is done through tendering by the respective government departments. Ahmedabad. There are very few units which are directly marketing in the international market. Lucknow. For sustainability in terms of BDS intervention. Many units are doing job work for big brands. two core issues of more intensive branding strategy. The marketing in the export sector is targeted mainly at the buying houses. Initiatives that lead to addressing these core bottlenecks in improvisation the demand conditions stand out in terms of immediate implementation. .

This allows multi -skill use of labour. and provides for scale/cost advantages. But dyeing. with complementary The development strategy needs to capitalise on the low capital structure of the firms. · Increased pressure of quality demand. · Exporting firms largely do certain basic processes in-house. This clubbed with product diversification flexibility enabled by the technical competence of the . of routine as well as highly sophisticated tasks for the MSMEs. thus increasing intra cluster rivalry. permitted by a high ratio of outsourced work of firms directly connected to the market. This permits the firms to operate with a low fixed capital. · A bunch of skill-development centres in the cluster along with multiple state and Central Government programmes have increased the potential for considerable information spillovers between firms. along with firm deadlines for delivery dates for export markets have induced some firms to set up composite units. and allows quick entry and exit of new firms in the cluster leading to razor -thin competition.1. Sharing of complementary knowledge has resulted in enhancement of cluster productivity. · Low capital base requirements also allow easy shifting of the production lines and faster product diversification to curtail market risk whenever necessary.14.3 Strategy. Structure and Rivalry · Widely present specialized job shops and firms perform a large number. cutting and stitching are generally subcontracted leading to collaborative production synergies.

Professional management is not perceptible in the cluster.4 Related Supporting Industries · Large outsourcing results in low initial capital costs. · Work in the field of R&D is very low. cutting the time to the market with better information experts & systems. · Since there are a large number of activities being outsourced in the cluster. Second. The cost of installing completely computerized machines is too high and as the demand keeps changing after every few years. 1. · A large number of machines are outdated. . practically every process can be outsourced to specialized firms in the cluster market. an area where ICT can play a major role. two things stand out.14. So low capacity utilisation appears more of an illness emanating from poor information on fast changing market patterns. resulting in revenue sustainability/ increase. The presence of specialized job shops and firms that perform a wide range of routine as well as highly sophisticated tasks for the firms have permitted the firms to start production from rented sheds with the bare minimum in-house machinery. As regards BDS intervention for related supporting Industries. coordination of the various supply chain activities becomes time consuming and tends to prolong the cycle or turnover time. One. it seems risky to the exporters.firms to quickly switch product lines makes things simpler for catering to the markets. There is not much design development and especially export houses rely on the overseas buyers to give them the prototype sheets to develop. So infusion of market research consultants on a continual basis with the cluster firms is an imminent requirement in the cluster for long term sustainability. This flexible specialization has further helped in fast entry and exit of new firms in the cluster and also helps in shifting of the production line whenever a shift in demand warrants such a strategy.. Even where new machines are added. there is huge dearth of trained operators for the same. is the increase in BDS usage intensity for the technological upgradation and maintenance/operations of the machinery.

structure more favourable for the development of cluster.4.15. Most of the cluster based programmes/ schemes are still not been utilised by the cluster especially in the areas of infrastructure.5 The Diamond Model-Ludhiana The overall picture of Ludhiana in terms of competitiveness suggest that the cluster has very strong factor conditions . FEKTA’ s efforts for setting up of a Textiles Park may take some time.1 Strengths . 1. The dyeing units are still in struggle phase and are far from any sustainable solution. which will make firm strategy . The current situation covered recessionary especially by in export market is partly strong domestic demand. however related support services including Business Development Services in the cluster are very weak. On the whole the cluster is likely to attract more investment and better technology with strong joint actions.16.16 SWOT Analysis 1. With the formation of cluster based marketing networks like KAMAL the overall demand likely to conditions are remain strong. There is likely increase in the cost of processing with adoption of cleaning technologies by dyeing units. The current suitable factor conditions are likely to become less supportive due to decline in the migrant workers in the cluster.

research and development is not practised within the industry. There are good banking facilities available in the cluster. 7. The entrepreneurs are innovative. The retailing methods used in the industry are terribly unorganized and not linked to market patterns. Substantial production capacity of the industry units work to its advantage.scale units to close operations. . Unhealthy market competition prevails in the industry due to low collaborative marketing initiatives.1. The industry enjoys a well. As a result.2 Weaknesses 1. 3. 1. The industry has been facing serious dearth of skilled and unskilled labour. 2. Manufacturing in small lots and catering to niche markets as per customers specifications is a huge advantage of the Ludhiana industry. There are improper linkages between SMEs and institutions and most of the firms have a myopic view of the returns to training by institutions.established financial base. They replicate and customize the product and machinery very easily. the products also benefit from the international demand as well. Majority of the industrial units still operate on the old technology which do not befit the global requirements in a scenario where WTO standards have made both quality and cost based competition very stringent.16. 3. The production process is strengthened by closely connected value chain existing in the cluster. 2. The products have a good image in the minds of the customers. There is a fast migration pattern of the in-house trained labour. 4. High electricity tariffs and erratic power supply has been major hurdles as it forces many small. 5. 5. 6. 4. Also branding is not paid much attention in the cluster killing the value addition for the manufacturer. Though the industry artisans are able to easily adjust to the new patterns and techniques developed in other clusters. new innovations and technological developments are rare in the industry. In addition to the domestic popularity. 6.

8. The unorganized nature of the industrial units makes things more difficult which makes collaborative approach quite improbable as there are returns to be had in an unorganised set up by way of cutting short the official loop and tax avoidance. 9. Foreign buyers are apprehensive about their visit to Ludhiana as there is no air linkage available here. 10. Lack of adequate infrastructure is hampering the growth and performance of the industry. 1.16.3 Opportunities 1. Tapping the new and unexplored foreign markets could help the industry to bring in huge foreign exchange earnings , especially in view of the unstable political situation prevailing in the neighbouring countries like Pakistan and Sri lanka . 2. Opening of large retail stores has created an opportunity for the industry . 3. There is a huge scope for product diversification in the knitting industry of Ludhiana, especially with respect to Technical textiles. Also, research and development activities could be undertaken to create new designs, thus adding value to the industry products. 4. Subcontracting opportunities are also extensive in the cluster and as such the cluster has an inherent potential for supply chain linkages through ICT - based software for time and cost efficiencies. 5. Availability of government and institutional support can help the industry to a great extent.

1.16.4 Threats 1. The industry has been facing constant threats from the cheap Chinese goods that have been entering the markets in large volumes. 2. Countries like Bangladesh and Sri Lanka have emerged as new supply bases with fastpaced techniques of knitwear manufactures. 3. Ludhiana importers have to bear a heavy import duty on inputs such as wool, machinery and spare parts. This increases the market price of the products. 4. Absence of public –private partnership to promote R&D for value- added production and new markets is a big threat to the industry.

5. Due to increasing competition, cluster entrepreneurs have been witnessing declining profit margins. 6. It is difficult to adopt latest technology without upgrading the skill base of the workers. 7. The present technological level is short of effectively meet the international competition.

1.17 Need for Business Development Service Providers (BDS)
The cluster is actively supported by an array of supportive activities in the value chain, located within the cluster. These activities relate to the forward and backward linkages within the industry such as tailoring, embroidery, Packing, retailing and marketing etc. There are about 50 spinning units producing yarn for this industry in and around Ludhiana district most of which are modern in terms of technology configuration. As such, good quality knitting yarns are available, though these require colouring, dyeing, washing & blending for industry use. As the industry is growing and becoming globalized and competitive , the demand and need for BDS providers is increasing. So far, the industry was relying on traditional and conventional practices of management and production. With globalisation, now buyers are demanding various certifications and professional environment to do business with them, which in turn is an opportunity for various BDS providers to act in this market.

CHAPTER – II STATUS AND DEMAND FOR BDS SERVICES 2.1 Core Cluster Actors
2.1.1 Spinning Units In Ludhiana there are about 55-60 spinning units varying from 1500 to 3,50,000 spindles. Out of these 50 are modern units in terms of technology configuration. These units are producing 100% cotton and polyester- cotton blended yarns for exports as well as for local markets. Some units are also producing fancy yarns with different blends. The commonly used BDS by spinning units are yarn agents, transporters and testing labs. Agents get new business for the units on commission basis and help in resolving any disputes related to quality and payments. They also help spinners in procuring raw material like cotton. Agents are easily available and their working style is very traditional. Majority of the business is done through verbal commitments. Another critical service for spinning units is provided by testing labs which are required to test and certify their products. The spinning units need more business from International markets. So international marketing consultants or buying agents, who can help them in getting export orders and elevate their products to export quality, are required in this area. They also require guidance regarding new blends and innovations in yarns to cater to the growing demand of the industry.

2.1.2 Knitting Units There are about 8000 knitting units in the cluster. Most of the knitting units are small with the number of machines varying from two to sixty machines. Machines includes high- speed circular knitting machines, (for knitted fabrics ) and hand flat & power flat knitting machines (for sweaters). Major brands of circular knitting machines are MAYER and FAKUHARA. The knitting units mostly undertake job orders for exporters as well as domestic manufacturers. Some exporters and domestic manufacturers have in-house set -up of knitting . The price of

knitting varies from Rs. 15 to Rs 35./kg depending upon the availability of machines and quantity of fabrics. Knitting units need yarn agents, testing labs, certifications, transporters and software vendors as support services. Certification providers are not very much in demand by knitting units. Only very few units who are interested in standardising their products are interested in certifications like ISO and Oeko-tex. Transporters and agents are easily available in cluster. Testing labs like SGS, Textile Committee and others are able to serve testing requirements of the cluster. A sensitisation and awareness in knitting units to get certification and standardization of there products is required. Moreover their data base to get more designs and new developments is very limited. Thus, services of research textile engineers are required which can help them in developing new products as per international standards to tap new markets.

2.1.3 Dyeing and Processing Units There are nearly 200-250 dyeing and processing units in the cluster. Most of the units are on Bahadur Ke Road , Industrial Area and Focal Point Area. They are under pressure from Pollution Board for installation of ETPs. Dyeing units have conventional set- ups and don’t have space to install ETP in their premises. The proposal of the Common ETP (CETP) for dyeing units is under consideration with the Government. 15 industries have sent a proposal to government for helping them in establishing a common dyeing plant for exporters . The proposal is lying with the government for approval. Testing labs, Pollution control advisors and technical experts are the prime BDS required by the dyeing units. The major problem is to dispose water after dyeing. For this the requirement of consultants for effluent treatment, consultants for new technology and machinery and plant layout are required within the cluster. Technical experts are required for minimizing waste and to improve dyeing quality. Testing labs purpose can be served either from Ludhiana or from Delhi.

Most of the units have . They mostly get their business by reference. depending upon the orders running in the unit. Normally printing units work as subcontractors or job workers. Working hours are 10 – 12 hours per day.4 Printing Number of printing units in the cluster is estimated at 100-125. The working conditions in these units are generally poor and unhygienic.1. There are nearly 125 fabric printing units in operation. Most of them are listed in the yellow pages but do not feel that it significantly contributes to their business generation. These types of BDS are not available in Ludhiana and to get such services printers generally depend on chemical suppliers only.5 Embroidery Units There are around 1250 embriodery units in the cluster. Exporters prefer to outsource the printing services since the investments on such high -end technologies are high and they may not have continuous orders to fully utilize their installed capacity. However.1. Printing is used both by exporters and domestic garment manufacturers. They have an association of their own for the promotion of the business of their members. The BDS whish can help them in getting more business are technical and chemical experts who can guide them about optimum usage of chemicals. Exporters demand a good quality of printing with chemicals used. 2. these are not enough for the dyers as they require more in-depth consultancy on up gradation of their units. Although this service is extended to the cluster by the chemical suppliers through regular seminars and workshops on usage of dyestuffs and international acceptance levels. as per international norms. new printing techniques and the compliance issues related to use of banned chemicals. Embroidery is mainly used in women and kids wear . 2.The dyeing units also require consultants who can guide them in standardization of the processes as dye lot variation is a major problem in the dyeing industry. It can be done manually as well as with machines.

They generally work without proper invoicing and without TIN or VAT registrations.1. payment terms in exports are L/. They get orders directly from buyers and through buying houses or agents. They normally Exporters use their services whenever there is shortage of time to fulfil the orders. Sub-contracting Units (for Garment making): Approximately 3000 sub contacting units do stitching and tailoring operations for have 20-40 machines. exporters and domestic manufacturers .C at sight. accessories are provided by the contractor to these units to do the job work.1. All the fabric. software vendors etc.6 . branding consultants. Nowadays buyers are also showing interest in the Chinese and Taiwanese machines. After getting firm orders and all specifications from buyers. Embroidery units use the services of software vendors to feed the designs in machines. Normally these units are not compliance approved.7 Direct Exporters There are approximately 400 direct exporters of sweaters as well as circular knitted garments in Ludhiana. technical assistance. Mostly these sub-contracting units are of micro or small level and affording external BDS at their level is a challenge. operated mainly at home or in small rented premises.Barudan and Tajima embroidery machines. Normally. These services are easily available in Ludhiana at very nominal prices. financial advisers. certifications. They require BDS like marketing. HR consultants . transporters. Hence sensitization for quality standards and work efficiency improvement is required with these units. they have to take approval from buyers at every stage . freight forwarders. Marketing BDS which can advise them about new markets and new products are required by . testing labs. They do not adhere to the quality standards required either due to lack of knowledge or as cost cutting tactics. Most of them work for more than one exporter. R&D. So a complete control on quality is maintained at their end. trims and 2. buying agencies. Maximum BDS are used by the direct exporters. 2.

Jogging suits. He also advised about the improvement in total system from the stage of sampling till the delivery of goods with the help of Time and Motion study and Cad Cam Systems. Singlet. The company was initially dealing only with men’s garments in flat knits but later diversified into circular knits also and started another firm with the name of York Exports . Later the company imported a lot of advanced computerized knitting machines for the production of fabrics and manufacture of knit wears / sweaters / garments according to international standards . The company was very willing to accept their offer but faced a lot of problems in the initial orders in terms of Quality.Use of International BDS York Exports Ltd was established in 1983 and is engaged in manufacture of woollen and cotton knitwear’s for sale in domestic and export markets. The challenge is to get good marketing. Their range of products in various blends and washes include T-shirts. delivery. The orders were good and there was no dearth of money but the smooth functioning was missing. The company approached a person who was working as Director. A few years back. Sensitization & awareness regarding SAP & ERP is required in the industry. Pullovers and Cardigans.Today this company enjoys a very strong presence in the cluster and is running on full capacity software packages because of the cost factor involved in it. Sherpur Bypass respectively. Financial services and freight forwarders are easily available . However.T road. transporters. reducing their expenses and increasing their profits. Srilanka to provide technical guidelines on the total machinery setup as well as the guidelines to recruit and boost the morale of persons who matters in production to produce only the quality goods for timely delivery of the same. opposite old session courts and G. Most of the Inventory Management branded developed by local software vendors. As a result the company’s turnover more than doubled in just 2-3 years Many new buyers placed their orders with the group and the previous ones increased their quantities after seeing the wonderful performance the company was enjoying. Technical Apparel Industry consulting Services. Shorts. Sweat shirts. Kids wear and girls wear. . consistency and production planning. The Company was approached by a famous brand who wanted to use the premises for their exclusive production. HR consultants. The units are located at Civil Lines. Track suits. testing labs. Chillan and help them in getting new business.all export houses and more so currently in the time of recession. Technical BDS are required to reduce their operation costs and to minimize their expenses. HR consultants are required to hire the best men for best job. From the above mentioned BDS. Track pants. there is a reluctance in accepting YORK EXPORTS LTD. branding & technical experts who can assure them the secrecy of their business and exporters have customised software for Invoicing.

financial consultants and marketing consultants to run their operations. polyester .9 . etc.8 . They often employ services of recruitment consultants for their staffing needs. Malwa. They are highly dependant on sub contractors or manufacturers giving packed shipments. They collect it from the exporters for procurement of the orders and all this is done through coordination between the buyer and exporters. nylon. . Some fancy yarns are also in trend which are made up of Acrylic. Lycra.10 Yarn Suppliers Most of the commonly used yarns are 100% cotton and cotton blends. Triburg. They usually have very good relationship with the buyers .2. They need software vendors. linen etc. and Winsome are some of major players in this field. Vardhman . RSM. 2. There are about 6 Buying agents in Ludhiana.1. 2. Some big brands /buyers like GAP. designers and HR consultants to improve their business operations. Merchant Exporters Exporters who do not have their own production facilities but they procure orders from overseas buyers and get the production executed by outsourcing the work are usually known as merchant exporters.1. Arti. Most of the yarn buying is done through agents to safeguard the payments and other disputes. whose offices are working as sourcing arms do not charge any commission from the vendors. All these services are amply available in Ludhiana.1. They use the services of freight forwarders. Buying Houses and Buying Agents: Buying houses are agents of buyers abroad and work generally on a 3-5 percent commission basis on the invoice value. testing labs. There are about six buying houses in Ludhiana. Merchant exporters are not available in Ludhiana cluster and operate from outside Ludhiana. The payment usually comes in their own name . Diesel. Nahar. Reliance.

Being the raw material for the knitting and garmenting units. No. Their availability and price do not encourage innovative development especially for small and medium enterprises. blends and yarns with enhanced qualities.Yarns are also available thru dealer network of various suppliers. marketing consultants. any flaw at this level affects the final output. testing and certification will be helpful towards business efficiency and growth. of yarn suppliers in Ludhiana cluster are about 150-180. At present such services are at a rudimentary stage. They require support from textile designers and researchers to develop new look. Other BDS that are often required by yarn suppliers are testing labs. Another area that requires assistance is quality standardization. In the process need for technical advisors and marketing consultants would also evolve. transporters. Yarn suppliers work through a network of yarn agents who work on a commission basis. Innovative products would help them increase their market share. . They liaise with knitting units to agglomerate orders for the yarn suppliers. Training on quality standards. textile designers and research consultants.

and have offices and dealers all over India. they were facing problems in getting orders. Manufacturer was not ready to give orders to Madura because of the price issues. So he switched the orders to Coats. Coats had provided an extra helping hand in calculating thread consumption to the factory . man power. After two days Madura thread got an edge over repairs & Split Seams. which results in more production. he found that Coats thread is cheaper than the other supplier. when the manufacturer checked the cost of repairs. Keeping all other factors same they will note the breakage. .MADURA COATS –Embedded BDS story MADURA COATS is an international manufacturer of stitching threads of all types like Poly Poly. Poly Cotton. So. They have six manufacturing units in India at different locations. At one of the factories of Oswal Group. threads consumption involved. Although there were some quality issues with local suppliers the manufacturer was unable to count its direct loss or it’s impact on production. 100% Cotton etc. So that there should not be any over or under inventory . Madura proposed one plan to one of the factories of the group that in two stitching lines you use Coats threads for stitching and in the rest of the lines you can use your local manufacturers thread. Madura coats prices are approx 15% higher because of transportation & other costs involved in its deliveries. plit seams. It helped the manufacturer a lot and coats get a better business share. The reason was low prices offered by local the manufacturers. repairs & final production for two days.

harmful or banned chemicals and are safe for environment and human beings. certificate like 2.1. Kailash Ribbion. There are about 225-250 accessory suppliers in Ludhiana. Most of the major suppliers like PAXAR. These chemical players also contribute knowledge to the cluster regarding usage of chemicals through workshops and seminars. China and Europe. An area of expansion for them could be the designers and exporters who develop new collections for the buyers and can provide helpful inputs on the new trends. don’t have any Certification agencies are required to get certification that their products REACH.1.etc who can be contacted as per requirements. clearing and forwarding agents. Chemical Suppliers All major chemical suppliers have their base in Ludhiana. the total no.13 Packing Material Suppliers . Accessories are imported mainly from Hong Kong.11 . testing labs are primarily required BDS by chemical suppliers. The accessory suppliers are into absolute trading activity and make minimal use of BDS. and testing labs are also commonly utilized by them.2. Bangalore. Most of the national and international dye stuff are available through dealers or companies’ own representatives. Opti.12 Accessory Suppliers Most of the accessories required by the cluster are locally available. of chemical suppliers in Ludhiana being around 200. Oeko tex . Some large exporters import chemicals directly from the manufacturers abroad to save on cost Certification Agencies. Services of transporters. YKK. IDEAL have agents or representatives in Ludhiana or in metros like Delhi . Mumbai .1. Fair trade are few examples. Foreign buyers generally nominate suppliers for accessories to maintain quality and consistency in supplies. However advertising is an important activity for them having direct bearing on their business. 2.

showcase efficient methods of utilization of their machines and carry out promotional activities. capacities and overall reliability factor it would help them secure more business.1. Many of the buyers have nominated suppliers of Tag. They require consultancy which is practical and reasonably priced. Brother. Local offices are required to provide after . And if such a listing could also get a rating based on their capabilities.sales services to the cluster. Mayor. Other areas where they would benefit from BDS are consultancy on innovative packing materials and methods but these BDS are not available in Ludhiana.14 Machinery Suppliers All the machinery manufacturers and suppliers have offices.etc. All the major brands like JUKI. there is little problem in securing the packing materials required for the cluster. HCA etc. are available through various dealers like IIGM. Most of the suppliers have small units and are very cost conscious. The packing material manufacturers also face from problems from the pollution control authorities as their units are generally not compliant. Pegasus.15 Machine Manufacturers . and numbers of suppliers vary between 150200. etc. These numbers stand around 60-70. Currently they secure business by word of mouth and informal references. Siruba. 2. The other pain point for them is marketing. They would greatly benefit from listings in the industry directory. agents or dealers in Ludhiana. ALT. wash -care label . They could benefit from a regular platform where they can display their new products.1. Machinery Suppliers commonly use the services of transporters. Thus. Cartons and polybags of every type and size are easily available and can be manufactured in Ludhiana. Fakuhara.Packing material is easily available in Ludhiana. 2. The reason for non compliance is usually lack of knowledge of the actual rules or of ways to implement them at reasonable costs. freight forwarders and financial institutions which are suitably available in Ludhiana.

Chain Lock Stitching Machines. Jalandhar. . Overlocking Machines. The domestic sewing machines are manufactured in ‘‘ Singer Type’’ and ‘’‘Usha Type’’ models. • Latest painting technologies are not in use. • Quality control methods are not strictly adhered to. • Inter-changeability of components and sub-assemblies is very limited. Zig-Zag Embroidery Machines. Cuff-Seamer Machines. Umbrella Sewing Machines. Malerkotla. Ludhiana. Rib Cutting and Stitching Machines. fixtures andtooling are not used in production. Major technological gaps of this industry are observed as under : • Lack of new Models. • Latest technology environment friendly heat treatment plant is not used. Nabha. Samrala and Rurka Kalan in the different districts of Punjab. Village: Bowani. Flat Lock Stitching Machines. • Hi-tech environment. Leather Stitching Machines. Distt. • R& D support to the required level is not available. Various models are being manufactured in different sizes. Kurali. • Precision jigs. Blind Stitch Machines etc.000) are engaged in the production of complete sewing machines as well as its parts & components..Purpose Production Machines are not used.friendly electroplating plants are not used. Patiala. • Production technology like aluminium pressure die cast components and cast steel components are not in practice. • Precision Special. Though mainly situated at Ludhiana. the industry is also engaged in the manufacturing of different parts and components and such units are located at Bassi Pathana. Designs & Light-weight High Speed Sewing Machines. are also being manufactured. Pathankot. Khanna.Ludhiana is also famous for the manufacturing of Domestic Sewing Machines as well as Industrial Sewing Machines which cater to the apparel sector. Some other issues noted for these machinery suppliers are • Common Effluent Treatment Plants (CETP) are not available. The Industrial Sewing Machines viz. • Hi-Tech/High Production plants are not installed. Bag Closing Machines. A large number of SMEs (about 1. • Hi-tech foundries having controlled metal temperature are not used. • Lightweight materials for parts and components are not used . Morinda.

throat competition amongst the unit. This machinery is much ahead of what is called advanced in the Indian context. Direct machinery import is almost negligible. increases the quality of the produce. Of late. and. • Bill discounting facility provided by financial institutions is on the higher side.hand reconditioned machinery under the TUFS Scheme and many units are availing this facility. This gives a technological upliftment to the industry.• Skill development training facilities are not available for the work force. There is a big demand for the Chinese & Taiwanese spare parts. • Raw material prices are unstable. The machinery being imported is through indenters which are around 25 in number. • HRD training for the supervisor to the required level is not available. • Entrepreneurs are not receptive to new market avenues and technologies due to limited resources and other constraints.sales services also like repairs and supply of spare parts. • DEPB incentive is on the lower side. in turn.15 . 2. Machinery Spare Part Suppliers. • Dumps for disposal of intoxicated/hazardous waste are not available. Capacity building through training.16 Second hand and Rejected Goods . Spare parts are easily available from Ludhiana and Delhi. 2. there has been a provision of importing second. consultancy and information dissemination is urgently required for these suppliers/manufacturers.1.1. • Individual approach and cut. Most of the machinery dealers and suppliers provide after. as original parts are very expensive. • BIS licence fee system is irrational. • Lack of exposure to the international market and manufacturing technologies. The machinery used in dyeing is mostly indigenous while a lot of imported machinery is being used in finishing despite the fact that there is 25% import duty on machines.

sportswear and sweaters.2.Exports surplus and rejected shipments are taken by agents who sell them in cheaper markets in India and abroad. 27.third of the units are able to cater to the high-end and middle segments through the sub-contracting mode. embroidery. They generally work on cash payment terms. inner wear and many more daily wear garments. One. These firms pertain to garment manufacturing.3 Demand Pattern for Cluster Products Among the sample firms · Most of the business in the cluster is generated by wholesalers and retailers . printing. trousers. 2. lycra. Both of these are easily available in Ludhiana. tools and equipments from other businesses.2 Quality of machines and new technology has remained a challenge.customer like pullovers & cardigans. 2. The financial capacities of the smaller firms are quite low to sustain high-end designers and other experts for technically advanced processes in manufacturing and finishing.1 Outsourcing and Sub-contracting It is observed that these firms receive bulk orders in the form of final products ready to sell to the end. T-shirts/pyjamas.2. freight forwarders are generally used by these cluster actors as BDS. printing. fabrics and blended fabrics to make T.5 % of the sample firms rent / hire machines. The survey highlights in the area of subcontracting are · · · 31% of the firms make use of sub-contracting for order execution for processes such as fabrication.2 Demand for BDS Services A sample survey of 29 firms manufacturing various kinds of knitwear products in the Ludhiana cluster was undertaken to map the demand side issues of firms. track suits. garments washing and dyeing. These firms have been covered in the sample survey to make them representative for Business Development Services (BDS) in the cluster. Transporters. The raw materials used by them are cotton. 2. yarn.2. 2. knitting and embroidery.shirts. polyester.

58% firms believe that there has been no change in the number of clients during the last two years. . associations still comes from trade Gradually and the media have started playing the role of business information providers.· About one fifth of surveyed firms are exporters. other Business People (31%) Business associations / support organizations (23%) Media . An analysis of the shifts in the demand pattern shows that: · Clearly .2.25% growth of this knitwear & apparel cluster. The general reaction of the BDS /firms is positive and feel that if the market conditions remain good over the next two years there is a possibility of 20. Customers (buyers) are still very important for product markets. though · · 13.majority of the firms (58.8% of the firms believe that the clients have decreased over the period of two years. 2. Even for new Family & friends . Most of the business information relations.Radio.4 Sources of Business Information The Ludhiana cluster is very closely networked by family and friends. TV and Newspapers (17%) business ideas and other support information for business growth family relatives and industry associations are very important. · Use of E-commerce for business generation is very limited.62%) believe that their clients have increased for their products. 27.

on the other hand are more suited to standardized products. ERP applications.5 Information and Communication Technology The cluster in the use of ICT is still very conventional and is mainly used in the areas such as Accounts/ Inventory Control / Designing /Office Communication / Reports. A very few firms were inclined to make use of ERP or any of its variant for supply chain management. The firms apprehended that these products are not reliable and priced very highly for SME consumption. The products manufactured by the firms were not standardized and design variations were quite rampant.2. etc.2. . particularly in value -added products for export markets.

The PunjabGovernment has also set up a network of Quality Marking Centres (common service centres for testing and certification). 2. No firm / firms have ever tried partner company or other business . However.based trainings.However.job training (93% of the sample firms have used such method of training). Other preferred modes of trainings are through private training company (67%). Currently the cost of setting up this facility in-house is high and apart from the investment cost. District Industries Centre (DIC) located in and nearby Ludhiana. Government Training Institute (40%) and Association -based training programmes (7%) . availability of skilled / trained operators is also an issue. 24% surveyed firms feel that the existing government skill development infrastructure may be .6 Quality Testing and Training Quality plays a significant role in branding and competitiveness of the products from the cluster. It was also indicated by the respondents that the need for ICT skilled and trained staff is of great urgency to improve productivity levels and further operational efficiency. on –the. This shows that the trend to train the staff/workers with professional channels is still not very popular .2.house.7 Human Resources and Skill Development The most common training methodology used by the firms is in .respectively.more than 55% of the firms have indicated in negative on the quality testing facility in the cluster. the firms were quite emphatic that better availability of CAD / CAM facilities in the Apparel and Knitwear Cluster Ludhiana is important. The quality services are generally used on the recommendation of the buyers. Even private BDS providers are also playing a major role in trainings.2. During the survey . 2. in-house testing facilities for colour matching and colour fastness are available in most units.

useful to upgrade the skills. The best perceived source of design is traditional and own design . Currently the firms tend to resort to free service channels. However local products and other sources such as product development and design experts are not given much importance by any of the firms. this being in an embryonic market mode currently. Such a BDS market needs to be developed in the cluster. 2. Such an initiative will impart professionalism in the product design and development for these units and will meet the dynamic changes in the export market demand. However 48 % feels that multi -skilling of the workforce may help in protecting the business against risks.8 Product Design and Development Designing inputs are critically important in Ludhiana.followed by other sources such as media and catalogue books and bulk buyers. .2.

unnecessary procedures etc. The surveyed firms of Ludhiana prefer term loans from Public Sector banks /financial institutions as they generally carry a lower rate of interest. The inferences are mapped below : .10 Factors for Business Growth – Last Two Years In the sample survey. Working capital limits and Cash credit limits were the other forms of credit being availed. They rely on Public Sector banks to avail such a facility.2. various factors were assessed for their impact on the business of the firms over the last two years (to see whether the factors resulted in business to increase.82% of the sample firms have responded that diverse product.About 86 % of the sample export firms indicated that there is no requirement of designing capabilities as all export buyers and major domestic buyers provide their own designs for development.mix helps protect sales from dipping in recessionary time.2. Higher rate of loan interest was an obstacle for not banking / doing transactions with the private banks. Some of the problems faced by the firms related to delays in loan sanction. 2.9 Linkages with Financial Institutions More than 50% of the companies surveyed had agreements / arrangements with financial Institutions / banks to access loans. 2. Mostly. decrease or remain constant). Further probing revealed that insufficient capacities for designing according to specific buyers’ target market hinder the business due to unmet buyers’ expectations. Further 78. Similarly 44. the product is designed based on the specification given by buyers.5% of the firms were satisfied with their relations with financial institutions.

So. However. better communication and easy process of their overall business. b) Change in prices – Most SME responses indicated that increase in raw material prices has impacted the profit margins over the last two years.About 66% of the sample indicated that business opportunities were abundant in the last two years and their market linkages have increased. Important BDS services The priority in the usage of various BDS and service . This has implications for introducing new marketing consultants in exports who can guide the firms in tapping new orders/markets e) Marketing Strategies – 59% of the sample firms were convinced that their markets have grown in the last two years due to better marketing strategies over the last two years. some 17% firms experienced recessionary pressures and their business prospects dipped. This points to an optimistic scenario in the cluster as firms are amenable to new marketing ideas.a) Market Opportunities – Majority (> than 50%) of sample SMEs indicated that their business increased due to the increase in market opportunities but this has resulted in high competition also. This indicates towards a competitive business environment in the global markets. d) Market linkages . So a large proportion of the firms were applying themselves to new marketing strategies to develop their sales. c) New / Latest technology – 90% of the Ludhiana firms were confident that the latest technologies like Internet have helped in increased efficiency. this was indicative of the recession setting in with fewer new orders for the cluster exports as the old order book got gradually vacated. though the volumes of sales has increased. one perceives the Ludhiana cluster market as a growing one for the marketing BDS. The remaining 17% said that their market linkages and in turn business have remained constant over the last two years. Overall.

d) None accorded any importance to the packaging BDS. tailoring and technology consultants were among the least preferred services as most were mostly used in-house. b) Machinery/ accessory suppliers/importers and training institutes/skill development are placed at the second spot and need attention. . c) Software vendors and marketing and branding consultants fared at the third spot.providers. However there was no dearth of financial BDS firms in the cluster. e) Product designs & development expert. the following picture emerged : a) The SMEs considered financial services as the most critical BDS service for a firm’s market competitiveness and revenue growth.

Other areas of concern mentioned by the sample firms are: · Process planning and plant layout: Currently there is an expected 10 – 15% productivity loss due to inefficient processes. But the costs for such systems are high due to which many small units are reluctant to invest. unavailability of desired services and locating issues Pricing problems (some BDS providers are reluctant to any change in prices) So . delayed payment act etc. A lot of variations were observed in the percentage share of money invested on the procurement of BDS services (including raw materials) out of the gross revenues of the firms.in general. the industry was willing to pay a little higher price for the dyed fabric/yarn if RO system is installed as this would help them with buyer’s compliances.11 Other Issues The sample firm pointed out various other problems faced in the procurement of BDS .such as· · · · · Lack of awareness Lack of proper services (competent people) Late deliveries (leading to usual problems of delay and harassment) Non -fulfillment of commitments.2. The firms were also keen to deploy agencies (BDS providers) who could take up various matters with the Government on policies in the interest of the industry (Advocacy) and also advise the firms on the changes in government policies and regulations that affect their industry directly like registration under MSME Act. work methodologies and even plant layout. Consultants doing workflow studies and system optimization activities would be helpful in this regard. This ranged from 15% to 70%. However. · Dyeing: This is a critical area where improvement is required. the main concern for using BDS is awareness about the services offered by the BDS provider as well as proper management and quality of services provided by BDS provider. The dyeing units need to have zero discharge and convert to RO systems as per the pollution norms. A common effluent treatment plant is not possible as the units are not clustered in one area and .

· Energy: Another major area of expense for the factories is energy. According to industry sources this leads to nearly 20% productivity loss. Clearance of their stocks. which are created due to over-booking for export orders. . HR issues related to worker motivation and work culture also need to be addressed. If a viable platform / channel can be created for them to sell this fabric and garment stocks. Seasonal diseases and malnutrition are rampant leading to increased absenteeism. E-commerce could be an interesting possibility for which they would require services of consultants and ICT vendors. is a major area where they loose money. At present very few facilities for energy audit are available and the services are expensive as well. supervisor training and other operational areas.even if a few units are together then lack of space is an issue. They belong to the economically weakest section and live in unhygienic conditions. · Health care services: Most of the labour is either migrant labour or from nearby villages. management. The main areas for training are ICT. · Manpower training: There is a huge demand for training of workforce. However. it would increase their turnover by minimum 5%. Information on international and national fairs and exhibitions could help them with their marketing efforts. Thus most small and even middle size units shy away from such audits. machine operations. Consultants for RO system installations and for government grants / soft loans would be helpful for all dyeing units. one factory reported 6-10% energy saving due to changed lighting after an energy audit by TERI. · Sales and Marketing: The industry felt a need for marketing services to increase their spread in the domestic market by linking up with retailers.

STATUS AND SUPPLY OF BDS 3.added garments to exports. embroidery. Some of the services are at a mature level of acceptance and usage whereas with changing business environment a whole new lot of BDS like energy audits. finishing.CHAPTER III . They are one of the most utilized service providers in the cluster. Post 1991 during the liberalization phase. a number of foreign buying houses began to develop sourcing networks in Ludhiana and became catalytic feedback-giving intermediaries for market access. Most of the first generation entrepreneurs were depending on the services for accounting. taxation. finance. a number of BDS providers emerged to maintain the records and to liaise with those enforcement authorities. . marketing etc.1 Status of Business Development Service Providers in the Cluster As the cluster graduated from the mere sweater manufacturing centre for domestic market to manufacturing of value. Knowledge spill over from other firms complemented the absorbing firm’s own efforts and carried it to new efficiency levels. and documentation of import and export. IPR have emerged which still need to be established in the cluster to stay globally competitive. located within the cluster. a number of functional BDS providers emerged along the line of business operations. These activities relate to the forward and backward linkages within the industry such as tailoring. When the authorities of Employees’ State Insurance (ESI) and Provident Fund organizations were enforcing the Act during the year 1999. transfer of knowledge and monitoring for local producers. The cluster is actively supported by an array of supportive activities in the value chain. The State and Central Government programmes under which the European and American designers were brought in to help local firms became the channels of such information flow.

2 Testing and Inspection Services Textiles Committee and SGS are two premier institutes providing testing facilitates and certifications in Ludhiana. Thus.1. They depend on references from friends and old suppliers. They act as middlemen between the buyer and exporter by procuring order from the buyer and by identifying the right supplier for the order and by coordinating with them till they execute the order.1. . Ludhiana did not have a BDS provider for implementing ISO 9000 certification. Although these are critical services but they are availed only on buyer’s behest.3. So there is actually no pull factor for utilizing them unless there is a requirement mandated by the buyer. The private sector BDS providers particularly for export promotion have a very significant role to play. The auditors had to be called from Delhi or Mumbai. The buying agents look for new suppliers as per the need of the buyers. Thus.1 Buying Agents Foreign buying houses happen to be an important set of embedded BDS in the cluster on export marketing information. Such buying agents represent more than one buyer and charge fees either from the supplier or the buyer or both for the service provided by them. and insist on the adoption. it is mostly the exporters who use these services. However some companies have started feeling that such adoptions will actually bring benefit to the firm if implemented properly and with good intentions.1. need is slowly emerging in the cluster for better utilization of these BDS awareness programmes on what certifications entail and the benefits that can be drawn from then will also create more demand. Now there are about five companies giving this certification in the cluster but the firms still feel that such certifications are mere formality and they undertake these certifications only when buyers ask for them.3 Lead Auditors and Certifying Agencies for Compliances Nearly two decades back . 3. Also there was not much awareness about the international quality certification. 3.

6 Skill Up gradation Infrastructure/Training institutes.4 Spinning Units There are more than 50-60 spinning units producing yarn for this industry. the available number of intake in various public institutions (Polytechnics. With twp lakh of workers. South Africa and New Zealand to promote sales of wool by helping woollen industry to grow. a few thousand supervisors and an equal number of entrepreneurs.1. The present level of skill developing institutions in the cluster is not up to the desired level as they are not only ill -equipped but also severely inadequate to meet the requirements. The Secretariat has its own brand name '’Woolmark’' that it licenses for usage by firms after assessing their methods of production and usage of high quality wool. marketing strategy and new technologies. These are open to region’s workforce in general. . This is done by holding an annual national -level wool meet that provides a show window to local firms. At present. when the licence was issued free of cost.000 per annum on the firms. 3.3. Good quality knitting yarns are available though. Some of these are supported by the industry itself.5 Woolmark Company It is an international body of wool growers from Australia. IWS provides guidance on best manufacturing practices and supports industry by providing them with information on the latest trends at the international level with regard to fashion. This initiative has contributed greatly to skill development and enhanced productivity in the cluster. 3. based on their marks and/or entrance examinations. still there may be shortage of '’ready to use'’ yarns in various colours and blends.1. Initially. but after imposition of a fee of US $ 2. The modern worsted spinning mills have been installed in and around Ludhiana district. ITIs. the number of licensees has reduced to about 60 in Ludhiana. as foreign firms are also invited.1. primarily for school pass outs. there are 9n training institutes in Ludhiana for the textile industry. Engineering Colleges) in Ludhiana for example is estimated to be less than 200 seats per annum. there were some 200 firms licensed.

Readiness Centre has been opened at the Local institute named SIFT in Ludhiana to promote ICT in the cluster. capital investment was supported by the industry. it was decided that women would be trained on industrial stitching and tailoring.a joint initiative of National Manufacturing Competitiveness Council (NMCC) and Microsoft . Witnessing such success. revamp available courses and cut them into acceptable short-term modular courses that the industry can sponsor their candidates on a part time basis. was later enhanced to three months. Department of Science & Technology (DST) provided financial support. sponsor candidates for training in order to utilize the upgraded skills effectively on a sustainable basis. In the absence of standard funding (these being new programmes).Readiness Centre/ ICT adoption E. This can only be meaningfully undertaken after a clear mapping of skill requirements as per their competencies needed at every segment of the productive value chain of the cluster. The programmes were constantly monitored and changes were made in the course content and duration. including the types of modules and sustainability of initiative. The newlycreated association of exporters – Apparel Exporters’ Association of Ludhiana (APPEAL) took all the initiatives in ensuring that industry demands were met. 3.Moreover. Besides formal institutional based training. the industry also provided 20 local machines. Two local NGOs (Nishkam Sewa and Ram Saranam) took up the task of mobilizing women trainees. The training programme for women initially lasting one month. Because of the natural aptitude of women in stitching. A Japanese machinery manufacturer (Juki) provided 13 machines valued at US$ 22. the Bhadur ke Road Textile and Knitwear Association has also launched a training programme on garmenting. innovative means to train supervisors. Institutionalization of the programme was ensured from the very beginning. the local women polytechnic college – Government Polytechnic for Women (GPW) got linked up with various support organizations to introduce a training programme for women. most such institutions are under the control of the national and state ministries and conduct only long duration (12 months to 3 years) courses targeted mainly at fresh students At the Knitwear cluster of Ludhiana. Discussion held with the Department of Technical Education. CDP with little linkages with the industry. Similarly. Government of Punjab led to the provision of space for the programme at no cost.Source: UNIDP.. E. The space for the training centre has been provided by a local charitable trust. By the same token.000 on machinery.Readiness Centre is an organization promoted under “Project Vikas” . private BDS providers. It is of utmost importance to involve private sector in designing the new requirement of training modules. There is an urgent need to upgrade the available facilities.7 E. machinery operators and creation of the cadre of trainers in the clusters is called for.1. resources were raised from innovative sources. The industry invested more than US$ 22. upgrade available facilities.000.

There have been a couple of programmes arranged with these institutes such as those on product diversification with NIFT and on retailing with Pearl Academy. they source orders to manufacturers from distant buyers and secondly they serve as a guarantor of the buyer.1. They provide two kinds of important services to the entrepreneurs. These are a great resource to the industry. Most of the designers are used as merchandisers in the industry with the assumption that they would be better able to interpret buyer’s designs. All these institutes are running courses in designing as well as knitting.9 Designers Although designers are an integral part of any textile value chain but in Ludhiana their role is minimized as most of the manufacturers depend on designs given by the buyers which slowly percolate down to domestic market as well. Ltd. besides NIIFT at Mohali and NIFT and Pearl Academy of Fashion at Delhi.11 Marketing Agents Marketing agents basically cater to requirements of the domestic markets. 3. In case of dispute they reimburse 50 per cent of entrepreneur's dead payment. both high-end and low-end /middle. The market is not yet mature enough for this BDS.10 Fashion Designing Institutes There are seven fashion institutes being run at Ludhiana. but there are very few takers for the pass outs due to one.1.Corporation (India) Pvt. They are responsible for collection of money from buyers after expiry of credit limit.income segments. Firstly.The centre can provide basic training for utilizing available software to the companies’ best advantage. 3.man show and entrepreneur giving his own design inputs. . This aspect requires a push from BDS providers to make themselves better embedded in the value chain. It can also design simple solutions for common work flow procedures and reports. They can be collaborated in various other issues also like those concerned with forecasts and international trends 3. .1.

3. paving the way for increased margins. Financial Services Finance is not a big problem for the enterprises in Ludhiana. The units also have to maintain an inventory of certain products that they anticipate will be in greater demand. efficient working capital management for stocking requirements is a major critical success factor for the units in the garment sector which requires efficient delivery schedules to be complied with market order books. and also negatively impact retailer and distributor relationships. The surpluses they generate find their way back in the industry. thus diminishing brand loyalty.time flow scenario. Better management techniques and adoption of ICT can help in minimising stocks. So there is a good need for consultants of BDS services which can plan the supplies at the backend to match with the delivery schedules required by the market. Yarn Agents . This is done with a view to minimize purchasing costs.1. 3. the time required to fulfil customers’ orders and the risk of non-delivery. rest are their agents who provide these services on a commission basis. There are a number of banking agents who provide door –to. and suggest working capital (finance) withdrawals/limits based on such a real.13 Inventory Management Most successful garment units have to place orders for raw materials in the case of wool or for other garments prior to receiving the customers’ orders.1.12 . Even in the local market there are a number of private financiers who provide financial resources to the industry. Most of them are themselves in the banks.14 . Such inventory levels in excess of customers’ demand result in inventory write-downs and the sale of excess inventory at discounted prices.3. Good management on this front can facilitate cut into the interest costs.1.door banking service to the entrepreneurs. Smaller importers have the impact of delaying the delivery schedules to customers. Finance is easily available from banks and other financial service institutions. However.

3 Supply of Business Development Services in the Cluster BDS Provider Firms A sample of 18 BDS firms from Apparel and Knitwear Cluster of Ludhiana were studied. Organisational Structure . The BDS survey is intended to look into the supply side issues of BDS market for the cluster firms.The yarn agents are mainly agents of traders who collect requirements of knitters for different shades on a daily basis by going door to door. ICT.Testing. A wide range of service providers were contacted for the sample survey . All except one firm. Consultancy.the sole other one being a Public – Private Partnership. Fashion Designing.2 Who Does Who Pays Matrix: Ludhiana Knitwear Cluster (Annexure . They then purchase these shades from traders at night and deliver the required amount of different shades to knitters by early next morning before the unit commences its daily operations.II) 3. Quality. are private entities . 3. Education and Training etc.

more credibility is assigned to the personal contacts due to cost factor. Other most prevalent modes are Internet. meetings and personal contacts (36% in all).3. Few of them make use of their own software and training materials and make use of e-learning devices such as projectors and slides.1 Business Coverage Majority of the clients of the BDS surveyed are exporters. workshops .The size of surveyed firms varied from single person to 50 persons. While Internet as a major mode is fast catching up in Ludhiana. 3. These firms had different information and communications skills nil computer to 15 computers. personal contacts preferences from the existing clients account for 39% of total source (s) in terms of clients tapped. Most of the clients come from seminars . Lack of use of market tools like Advertisements and media reflects weak marketing strategies in a competitive scenario and requires an intensive interface of marketing strategists/consultants with these firms. . Seminars/ Workshops and awareness programmes account for only 19 % whereas advertisement is the least used by Ludhiana firms (accounting only 6%).

3.3. university/ professional bodies and international organization has been observed.3.3 Demand for BDS in the last Two Years . Their relationship with national level or international BDS was not reported during the survey except in few case of certifying agencies for the exports.2 Backward / Forward Linkages The sample studied indicated little backward linkages with national institutions. Only three BDS providers in the sample informed having International certifying organisations and External Consultants as a source of their backward linkages. 3. Most of the BDS in the cluster are of local knowledge base.

the following are worth mentioning: · · Competition from other countries Lagging in quality. Business Growth of Firms perceived by BDS the Among the major factors pointed out by the BDS catering to the Ludhiana firms.With the increase in competition and growing demand (domestic and international) it seems obvious that the demand for BDS has increased. price & delivery schedules . Clearly out of the 18 responses 16 have informed that their clients have increased over the period of two years despite recessionary conditions in the world during the preceding year.

the sample has revealed that a personal meeting with the clients accounts for 63% of the various sources available. Name of the BDS Type ISO Certifications Average pricing of each type of BDS ISO Consultant charges Rs 35000 (For trg. 150175 Man power) Certification charges Rs 35000-40000 Consultant charges Rs 50000 Certification Charges Rs. The pricing levels of some major BDS types in the cluster have been plotted in the table below for an understabding of the BDS pricing scenario : S. Due to cost and time factors. No one seems to use either prevailing charges for similar activities or clients’ ability to pay as a measure of judging fee requirements. 1. This would encourage cross learning of adopted best practices internationally to make effective dents into the global markets. 50000 Social Compliance - .3. No. The Internet and cellular services together account for 25% (18+7) and are gradually increasing as these modes save time. nobody seems to use market/customer surveys as a source of information for assessing clients’ needs.5 Fee Criteria The main criteria for charging fees by the BDS in the cluster is the organizational standard service charges.· · · Inadequate technological advancement Lack of skilled workforce Lack of diversification leading to concentration of market risks It was also highlighted that there was a need to coordinate the functions of other institutions and firms engaged in similar activities. 3. cost and increase efficacy. 3. Cost and profit basis mark-ups are also resorted to in quoting the fees to the SMEs.3.4 Understanding Client Needs While certainly every BDS provider is making an endeavour to understand client needs.

3.3.5/Kg ( Depending upon weight & distance) By Air : Rs 95-Rs 135/Kg (Depending upon Weight & Distance ) Courier Services - International Courier : Rs 550/kg-1500/kg( Depending upon country & weight ) Domestic Courier Rs 25/ kg -35 Kg (Depending upon Courier to courier) Advertising Services Printing ( Fabric & Garment ) Embriodery Knitting TV Advt : Rs 400/ 10Sec & Rs 5000/3 Minutes /3 times a Day Graphic Add Making Rs.) if any of the item is certified cost will be less) HR Consultancy Transporters . 3. Testing and Consultancy Services.Oeko Tex Certification - Rs 260000. of colors / types / Area of printing ) Rs 0.7 Customer Satisfaction and Business Problems .Rs 12000/requirement onwards Depending upon the 3.50 /1000 Stitches ( Depending upon Knit . Most of the BDS income comes through consultancy services.50 To Rs 50 ( Depending upon no.6 Income Source. 275000 ( considering none of the item in value chain is not certified. .60000 onwards Rs 0.Rs. and as such there appears little initiative on diversifying their activities.in the last two years Out of the 18 members only few are believed to have sources of funds from Education and Training.15 days or One month’s salary By Road Approx Rs1/Kg to 2. 4000-5000 Advt with Models Rs.Rs15/ kg-Rs 35/ kg Quantity & Machine availability ) ICT Services .

less priority by the management are the problems faced by very few BDS providers.3. Too much bargaining is ranked second in terms of problem faced. problems such as lack of awareness.8 Linkages with Financial Institutions None of the sample surveyed appears to have any significant relation with the financial institutions nor have they apparently facilitated clients in accessing the banks or financial institutions. However. .None of the BDS provider seems to use feedback on a regular basis or just after receiving services as a source to evaluate satisfaction of their customers. The major problem while implementing services was found to be the delay in fees payment among sample BDS. lack of commitment towards procedures. However there were eight BDS providers who believe in assessing the impact of the services provided through other modes including oral feedback. 3.

and the delivery span has reduced considerably.IV CONCLUSIONS AND RECOMMENDATIONS 4. A major factor of the competitiveness of the Ludhiana knitwear industry was its cheap and skilled labor availability though most of it was migrant population. The buyer today.CHAPTER . Hence the industry is loosing that advantage. Buyers today are looking for small lead times and more value addition in the products. has more choices for sourcing his product and has made considerable changes in his pattern of sourcing. Fast changing demand pattern also puts a strain on the designing capabilities of the manufacturing firms. It is felt that there is dearth of trained professionals in the cluster to improve the competitiveness of the cluster and to prepare the cluster stakeholders for the changing business requirements. There is much competition from the neighboring countries as well as from some new production centers. variety and source of the product.1 Challenges before the Industry After the diagnostic study and a detailed analysis of the same. the buyers are looking for new and faster ways to connect the value chain so that the preproduction costs can be reduced. Since last two years. whether international or domestic. The buyers have become more quality conscious and would like to work with exporters who have independent quality control and quality assurance system . The buyer today has many more options available in terms of quality. Also. Countries like Austria etc are also developing and growing in Europe with latest production facilities which gives an advantage to the buyer in terms of proximity and quicker delivery time Hence the buyer today has become more quality conscious. we can see that the market today is not the same as it used to be a few years back and the business environment has also changed. The markets are not the same as they used to be especially after the removal of quota restrictions. this trend is also reducing due to changed economic conditions and policies in the neighboring states.

Any new worker learn the skill on the job . the cluster is not attuned to employing women workers. therefore. Most of the local knitwear training institutes provide training largely irrelevant to the needs of the industry and are .Also there is need to include the local labor in the industry mainly female population so that the acute shortage of labor can be dealt with.7 Inventory management is a major issue: The current system of order booking and production synchronisation gives serious problem of piling up of huge inventories in the . Moreover. most preferably an institute. The immediate result of these kinds of factors is lower productivity and discouraged innovation. Since the requirement for training is huge. It is also proposed to train the labourers in their own working place.and have the ability to respond faster for their needs and can quickly run the production. There are very limited channels of training as explained in the pervious sections. it is essential to identify and promote BDS. in association with their employers. 4. now days the industry is catering to the summer knitted garments in a big way. Even the entrepreneurs come from trading background with minimum formal education.2.2. Lack of skilled work force is important area identified for intervention under the project.1 FACTOR CONDITIONS HR Development: The most important need felt in the cluster is of skilled or unskilled labor in all the major sectors . Changes in the climate condition as well as change in the dressing style of today’s new generation have made the Ludhiana industry change its strategies. of limited use. While earlier winter was a busy season for the industry. Also earlier Ludhiana was mainly a bulk market and domestic buyers used to move to Mumbai and Delhi for hi fashion garments.2 Areas of Intervention 4. Earlier there was an emphasis on the production as well as demand of sweaters of heavy gauge which has shifted to finer gauge. Also. 4. It is also necessary to do capacity building for these institutes and provide some training to trainers. who got experience in training workforce. the production reporting system is required to be much faster through the electronic medium. This trending is changing day by day although a bit slowly and the industry needs support for the changing market.

9 Environmental Issues: With the focus on climate change.2 FIRM STRATEGY STRUCTURE AND RIVALRY Weak Institutional Linkage: Ludhiana has about 70 odd different industry associations. 4. PSEB imposes a compulsory cut on power supply for as much as 33 hours in a week.industry. Currently. inappropriate washing.there is an acute shortage of power supply to the industry. delivery period as well as pollution issues. 4. Most of the small-scale units. Availability of BDS providers and lack of motivation .2. 4. these days . The dyeing units are a major pain point for the industry for quality.2. There is a need to look for innovative ways for such inventory and order management. one of the key pain points is environmental pollution. A notice to install zero discharge ETP or closing down the units has already been issued to dyeing units at Focal Point and Bahadur Ke Road. Also.2. power & energy audits are not in great demand. dyeing units. Guidance about Inventory management and a resource centre for stock lots sale is a major requirement for the industry and the project need to work in this direction.discharge ETP.8 Energy: In the summer season power supply always becomes a critical issue. The competitiveness of the industry can also be addressed by tackling firm level issues such as inefficient energy usage. delivery period as well as pollution issues. . For the last 2-3 years . garment units and furnace units don’t have generators to run their units. There is need for up gradation in this field. Although industry have some awareness about the benefits of these audits. Linkages between the support institutions and industrial associations are dormant and the atmosphere of dialoguing with confidence in each other is missing. Power cuts also increase the cost of production and high rejection. etc. The dyeing units are a major pain point for the industry for quality. effective presentation is a hurdle in streamlining the audits. lack of proper organization. ETP plants for zero discharge are the key requirement for dyeing units imposed by the Pollution Board. All are usually engaged in activities related to petty Local problems or lobbying for fiscal concessions without any developmental activities. Most of the units are very small and don’t have land and funds to install zero.

challan and accounting purposes. Majority of the SME understand that it is important to adopt the IT practices for survival but are unable to afford the cost involved. There is a feeling in the industry that the sector should be a leader instead of being a fashion follower and thus a vision and participation in national and international events is required. BDS who can work on CAD/ CAM are required. IT usage is limited to challan. there is a requirement for the same to promote Brand Ludhiana. On top this existing infrastructure available in the cluster is mainly used for non industry purposes to earn revenue and sustain it. Therefore. The information source must have linked with professional bodies and connected with good ICT means so that information can be gathered within minimum time frame.Poor branding of Ludhiana: There is common feeling among clusters actors (with so many associations-70) industry feels that a shared vision is missing in the cluster. A portal/ Association or BDS is required which can provide them required information related to their business. Presently Main Source of Information is through relatives which are not professionals in their fields. accounting software is Tally. This will also help in marketing and branding of Ludhiana. Information and communication Technology (ICT) : The industry is not very much aware of IT usage . Also CAD / CAM professionals are required in the cluster to overcome traditional system of cutting in firms. CAD can reduce their wastage level and can increase efficiency. . It is felt that there is need to introduce some small industry specific software of low cost so that the industry requirement is fulfilled. accounting inventory management only. The evolved vision can help cluster to utilise such infrastructure in better way. There are some initiatives of joint marketing in domestic market such as KAMAL (see annexure III). Small and micro have some locally Mostly used manufactured software for invoicing. Only a few big Players have ERP & SAP. Which is technically not true. Even some firms are still believing that Masters (cutters) can cut fabrics with greater efficiency as compared to CAD software. This is necessary for industry to become a leader instead of being a fashion follower. The industry is not ready to spend much on software because the major transactions of MSMEs are done in cash without proper invoicing. Also awareness need to be created about the existing software so that the same can be adopted by the industry. There is need to institutional such initiative. So a sensitization is required to change their mind set. Also .

4. wholesalers. patents.IPR (Intellectual Property Rights ): Awareness about issues like Copyrights.3 DEMAND CONDITIONS Weak International Market Intelligence: Selling their products through agents deprives the manufacturer-cum-exporters of gaining crucial market intelligence of the changing international demand pattern. RELATED SUPPORTING INDUSTRIES Lower Penetration of BDS in Strategic Areas with innovations and motivation: There is an urgent requirement of trained professionals in marketing . geographical indications is very low in the cluster. regarding trademarks.2. Yarn diversification existed only in terms of blends of cotton. national and international buyers/sellers under the . Lack of proper finishing techniques restricted entry into high. wool and acrylic. process planning and management sector so that they can introduce new techniques across the value chain and the traditional face of the industry can change as per the changing environment and the industry competitiveness can increase . Brand building is an immediate need for the cluster. Thus. product development. Most manufacturer-cum-exporters are also deprived of the process of planning in advance. BDS in areas like pollution control. new products is required at the cluster level. Employees are not aware of 4. 4.value segments. acrylic and cotton. patent of designs. etc. wool. creating new products with confidence and ultimately searching for new markets. Stagnant Growth in Domestic Market: Manufacturers specializing in the domestic market used to sell through agents. work environment . In this respect an annual or biannual event at the industry level for local. The industry continued to use basic yarns with standard materials namely. Patents. Clearly. Safety issues at workplace. product finish. plant layout are very low in the cluster. Even BDS in this area is not easily available in Ludhiana because of low demand. product diversification.2. they also lacked market intelligence related to yarn diversification. retailers and end-product users. This appears to be even more important in the present recessionary scenario which has affected adversely the cluster firms’ business due to heavy dependence on export markets. BDS services have a major role to play in introducing/expanding this market for the cluster firms. Awareness their Legal rights . Supply Chain management technology planning.There is need to train the industry about ways of productivity improvement and innovative marketing methods like e marketing etc. designs.

seminars and workshops at worker . PEDA. awareness about ways to minimize pollution. NITRA Energy audit experts . No. 6 entrepreneurs Brand Consultants. Motivation of workers and training to them about the soft skills and ethical issues is also a requirement as per the industry stakeholders Lack of Original Designs capabilities in the cluster: As regards product design development is concerned the main source of product design is the design supplied or provided by the buyer. waste water management Establishing linkages between industry associations on one side and firms & BDS on the other Brand promotion and Development of firms BDS/INSTITUTIO NS TO BE INVOLVED ATDC. TEXTILE COMMITTEE.PEDA Software provider and management experts PCB. it is important to support fashion institutions like the Designing and Knitwear Fashion Institute to establish linkages with reputed fashion design institutions abroad. Therefore. source information relating to fashion trends and to work with private BDS in fashion design whose designs are acceptable to the industry. Very few firms rely and have established facilities to develop their own design. 1 AREAS OF BDS INTERVENTIO N HR Development PROPOSED INTERVENTION INVOLVED PERSONNEL FROM MSMEs worker. APPEAL. 2 Energy manager and entrepreneur level 3 Inventory Management Environmental Issues Weak institutional linkage Poor Branding manger and entrepreneur level entrepreneurs 4 5 association members FEKTAA. TERI . a bird’s eye view of the Implementation Strategy can be had from the following table : field level S. In view of the above implementation description. supervisor. PAU SIFT. supervisor and managerial Energy audits and promoting ways of reducing energy consumption of a manufacturing unit Training. CETP. LDA. advertising agencies . manager level Upgrading human resource and technical skills through training programs. introducing software for inventory management.aegis of the industry associations would be a big step towards brand building of Ludhiana Knitwear cluster.

a huge inventory of many types of yarns and fabric is maintained. and effective distribution strategy Designing softwares. emarketing.3 Major Pressure Points The critical issues which hamper the competitiveness of the cluster can be summarised as under : 1.awareness of recent trends in fashion / design. Software developers. innovative ways of capturing market share. management experts 4. 2 Inventory management : Most of the firms face significant challenges in managing inventory of items . finished material. raw material . unskilled labor without proper training the quality of products suffers in global markets which are highly conscious of the product quality. Non Availbility of skilled & unskilled labour : The labor mainly consists of casual /temparory workers. Because of uneducated . reworks & rejections which ultimately results in loss of revenue to the firm. and involving professional institutes Introducing BDS to ramp up systems of SMEs in Productivity / Quality / Waste minimization manager and entrepreneur level merchandiser and manufacturer level 12 manager and entrepreneur level process planning expert. Advertising agencies Software provider and marketing advisors designers 10 11 Stagnant growth in domestic market Lack of original design capabilities Lower Penetration of BDS in Strategic Areas Product diversification. This results in alterations . buyer seller meet manager and entrepreneur level manager and entrepreneur level manager and entrepreneur level Software experts Legal advisors and IPR specialists Buying Agents. spares consumbles.Marketing advisors. WIP. Because of small order size. Managing and tracking a large number of SKUs (stock keeping unit) is a very difficult task and often results in dead inventory. store. the major concern is the inventory of raw material. However .7 8 9 ICT IPR 3 Weak demand market intelligence Promotion of Industry specific ICT usage Sensitization on IPR and legal Issues Enhancing linkages with International market . .

this trend is reversing due to changed economic conditions and labour policies in the neighboring states. This has an reinforcement impact on the target market audience and needs to be addressed. Historically the time has come to reposition Ludhiana Knitwear and Apparel cluster from a high low road strategy (cheap labour) to a high road strategy (Niche and unique). Hence the industry is loosing that advantage. In addition to cost efficiency.5 Strategy A major factor of the competitiveness of the Ludhiana knitwear industry was its cheap and skilled labor availability though most of it was migrant population. This would be required to be clubbed with skilling of labour through industry matched linkages with local institutions to induce quality production and cost efficiences through better inventory control. the strategy for Ludhiana will focus on efficiency and innovation tools. market based reach and strategy has grown to be an important tool in the overall current growth perspective of business entities.4. In recent years. Other quality related initiatives like designing would be needed so as to carve out good value addition in the markets. and a Skill Development perspective of firms alongside proper linkages with cluster institutions . Major BDS intervention areas to effectively facilitate this vision would be Marketing (branding. 4. Therefore . particularly in the export markets through better networking with the market related BDS to facilitate this process.4 Cluster Vision Improving market reachout. Technology Upgradation including ICT usage. research). Higher number of Quality related BDS in deficient areas like designing.

Annexure-I Cluster Map and BDS in Value Chain Research & Development Designer Software Vendors (15-18) Quality Consultants (12) Management Consultants (9-10) Marketing and Branding (5-6) Advertising Agents (80-100) Logistics INPUTS PRODUCTION DISTRIBUTION & SALES Fibre Natural & s Synthetic Spinning (5060) Yarn **Solid **Blended Dyeing Units (200 –250) 250) Finishing Units (225 – Knit Panels Flat Knit Units Circular Knit Units Linking & Finishing Stitching & Finishing PRODUCTS Sweaters T-shirts Track Suits SALESMEN Markets AGENTS Sweat Shirts Kids Wear Body Warmers Machinery Suppliers (6070) TRANSPORTER EXPORTS S (450) Fabric Chemical Supplier (200) Yarn Wholesalers (150180) Blankets Job Workers (Knitters) Embroidery Units (1250) Accessories Supplier (225 – 250) Printers (100 – 125) Job Workers (Tailoring) Packaging & Labeling (150 – 200) BUYING AGENCIES (6-7) DISTRIBUTO RS (650 – 700) RETAILERS LOCAL Shawls DOMESTIC SALES FRIEGHT FORWARDERS (450 .500) INSTITUTIONAL SALES Socks n Gloves Home Sports n Leisure Industrial Fabrics Fabric Wholesalers (350) Plant Layout Experts (12-15) Government Resources (4-5) Finance (22-25) Training Institutes (9) Testing Facilities (2) Industrial Association (70) Certification Agencies HR Consultants (15) Supporting Environment ntnntnnn .

OF SUCH EGENTS AVAILABLE PUNJAB. MEDIUM. AMPLE NO. TYPE BUSINESS DEVELOPMENT SERVICES OF WHO DOES WHO PAYS PLACE REMARKS 1 YARN AGENTS SPINNING MILLS YARN DEALERS & . SOUTH INDIA.INTERTEK . SMALL AND MICRO) . HIMACHAL PRADESH. MEDIUM .ALL FIRMS (LARGE .ALL FIRMS . DELHI PART OF THE BACKWARD LINKAGE VALUE CHAIN. SOME OTHER YARNS 2 PACKAGING MATERIAL SUPPLIERS SMALL. MORE NEED TO BE INTRODUCED LUDHIANA.TRANSACTION TYPE : CASH AND CREDIT .TRANSACTION TYPE : CASH .Annexure II BDS Analysis – Who does. AMPLE NO. DELHI USED 99 % IN THE CASE OF EXPORTS ONLY’.MARKET WELL DEVELOPED. who pays? Sl.MARKET WELL DEVELOPED. HOWEVER.VERY FEW BDS OPERATING (2-3).ALL FIRMS (LARGE . OF SUCH SUPPLIERS LUDHIANA. FIRMS AND MICRO . SGS .AWARE NESS NEEDED TO IN DOMESTIC SEGMENT INDUCE THE USE BY FIRMS . 3 TESTING LABS TEXTILECOMMITTEE. SMALL AND) . HIMACHAL PRADESH. DELHI. AHMEDABAD CASHMERE AND ARE IMPORTED. SPECIFIC PACKAGING DESIGNS COULD FORM PART OF THE EMBEDDED BDS COMPONENT.TRANSACTION TYPE : CASH AND CREDIT . No.

MEDIA . TUV.BVQI. OF INSTITUTES BUT CURRICULUM NOT CUSTOMISED TO LUDHIANA. NIIFT.TRANSACTION TYPE : CASH AND CREDIT - LUDHIANA DELHI.TRANSACTION TYPE : CASH .TRANSACTION TYPE : MOSTLY CASH (ADVANCE) . NEWS AGENCY.JD INSTITUTE .ALL FIRMS (LARGE AND MEDIUM) .SGS .SIFT. CURRENTLY CERTIFICATION DONE ON DEMAND ONLY BUYERS’ 5 BARCODE PRINTING MACHINES LABELLING SUPPLIERS & TRADERS IMPORTERS AND .INDIVIDUAL CLIENTS AND FIRMS (ONLY MEDIUM/SMALL) .TRANSACTION TYPE : CASH AND CREDIT LUDHIANA DELHI 7 ADVERTISING ADVERTISING AGENCY. INHOUSE PERSONS PAPER ALL FIRMS (LARGE AND MEDIUM) TRANSACTION TYPE– CASH AND CREDIT LUDHIANA DELHI MUMBAI 8 TRAINING INSTITUTES ATDC.A LARGE NO.4 CERTIFICATION AGENCIES PRIVATE CONSULTANTS. MEDIUM) .PIFT.ALL FIRMS (LARGE . GOVT POLYTECHNIC. MOHALI. MUMBAI MOSLY OF SOME FAMOUS USED IN THE CASE EXPORTS ONLY OR FOR DOMESTIC BRANDS.PRIVATE CONSULTANTS. DELHI - MORE INDUSTRY INVOLVEMENT AND MODULAR SHORT COURSES SUITED TO TERM .. MORE AWARENESS NEEDED FOR THE CLUSTER TO HAVE MEDIUM TERM EDGE ON QUALITY COMPETITIVENESS LUDHIANA.ONLY 5 SUCH BDS IN THE CLUSTER. NIFD.INDIVIDUALS AND FIRM SPONSERED CANDIDATES . MUMBAI 6 HR CONSULTANCY PRIVATE CONSULTANTS. DELHI. INHOUSE EXECUTIVES .

CURRICULUM UPGRADATION CAN BE DONE ON PPP BASIS 9 TRANSPORTERS AND LOGISTICS PVT TRANSPORTERS. MEDIUM . DELHI FREIGHT FORWARDERS AND CLEARING AGENTS 10 MARKETING AGENTS MOSTLY. INDIVIDUALS. BASIS ON INVOICE VALUE -CURRENTLY NO MORE THAN 6 BUYING AGENTS IN THE CLUSTER LUDHIANA RESPONSIBLE FOR QUALITY & TIMELY DELIVERY 12 DESIGNERS FUNCTION ASSUMED MOSTLY BY BY .TRANSACTION TYPE : 3-5% COMM. SMALL AND MICRO) . FOR OTHER SMALL & MICRO FIRMS SOME INTERVENTION NEEDED ALL STATES CITIES MAJOR & ALSO FUNCTION AS INFORMAL GUARANTORS IN CASE DEFAULT PAYMENTS OF IN 11 BUYING AGENTS AGENTS OF BUYERS AT A SITUATION ABROAD .EXPORTER FIRMS .MARKET WELL DEVELOPED LUDHIANA. MUMBAI.TRANSACTION TYPE : CREDIT .TRANSACTION TYPE : CASH AND CREDIT . DESIGNERS NEED TO DEVELOP PROFESSIONAL LUDHIANA NEED INVOLVE FASHION DESIGNING TO ENTREPRENEURS COPYING DESIGNS INSTITUTES IN DESIGN TREND .ALL FIRMS (LARGE .MOSTLY DONE INHOUSE CURRENTLY. . CHENNAI.INDUSTRY REQUIREMENTS INDUSTRY REQUIRED .ALL FIRMS (LARGE . MEDIUM .MARKET DEVELOPED FOR MEDIUM AND SOME SMALL FIRMS.IN-HOUSE.EXPORTER FIRMS . CASH . APPOINTED BY FIRMS ON THEIR OWN . SMALL AND MICRO) .

SMALL AND MEDIUM MANUFACTURERS.ALL FIRMS (LARGE .TRANSACTION TYPE : CASH AND CREDIT . . IMPORTERS . SMALL AND MEDIUM .TRANSACTION TYPE : CASH AND CREDIT .LARGE FIRMS . MEDIUM .TRANSACTION TYPE : CONTRACT BASIS .ALL FIRMS (LARGE .LARGE NO. LUDHIANA OVERSEAS CHINA AND HONGKONG ARE THE MAIN COUNTRIES FROM WHERE ACCESSORIES ARE IMPORTED 16 MACHINERY SUPPLIERS TRADING AGENCIES AND DIRECT COMPANY OUTLETS . MUMBAI. MEDIUM .MU MBAI BANGALORE NEED TO BE INVOLVED IN SUPPLY CHAIN INTEGRATION 15 ACCESSORY SUPPLIERS TRADERS. AND CUSTOMISED MACHINERY PROCUREMEN T (EMBEDDED SERVICE) TO FALL UNDER BDS MARKET DEVELOPMEN T ISSUES .DEVELOPED MARKET LUDHIANA .DELHI.000) LUDHIANA.TRANSACTION TYPE : PART CASH PART CREDIT . SMALL AND MICRO) . EXIST (>1. SMALL AND MICRO) .ALL FIRMS (LARGE . DELHI . OVERSEAS MACHINERY TECHNOLOGY UPGRADATIO N.FORECASTING 13 GENERAL MANAGEMENT CONSULTANTS PRIVATE CONSULTANTS.DEVELOPED MARKET DELHI.CUREENTLY NOT MANY SERVING THE CLUSTER DELHI. SMALL AND MICRO) . LUDHIANA. MEDIUM . 14 SOFTWARE VENDORS SOFTWARE COMPANIES .

T-shirts. It’s a good start towards joint marketing & branding. KAMAL is an outcome of collective effort to bring buyers to Ludhiana instead of every individual approaching his buyer and selling product to a limited market . Buyers from All over India were invited to Buy Ludhiana products. coats.Annexure-III Knitwear and Apparel Manufacturers Association of Ludhiana (KAMAL) KAMAL was started in 2008 with 50 members having domestic knitwear brands . jackets. The major products include Shawls. Sweaters. Accessories in short it includes all winter & summer range for every age group. It is the first effort of its type in cluster towards collective marketing and branding of different products under one brand name KAMAL. The idea was to cater the whole market of every age group & every season. . Last year it was start and buyer seller meat was organised at Maharaja regency. The main aim was to promote Ludhiana brands. Till yet they have organised 2 Buyer Seller meets.

Annexure IV Estimated BDS Usage and size Estimated BDS Usage and size Name of the area Testing Labs Certification Agencies Designers Management consultants Quality Consultants Software vendors and trainees Advertising agencies Marketing and branding consultants Logistics – C and F agents Transporters Machinery maintenance Financial services Training Institutes Associations HR consultants R and D Buying Houses Number of providers 3 5 15 10 12 15-18 80-100 6 450-500 450 TBC 22-25 11 70 15 2 6 Usage level Medium Medium Low Low Medium Low Medium Low Medium Low Low Medium Low Low Low Low Low .

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