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AMITY GLOBAL BUSINESS SCHOOL
³EXPORTS ANALYSIS OF INDIAN TEXTILE INDUSTRY´
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A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION IN INTERNATIONAL BUSINESS (2010) BY A.V.N.L.SIRISHA (A30601908001) UNDER THE GUIDANCE OF PROF MOHANTHY
AMITY GLOBAL BUSINESS SCHOOL BANJARA HILLS HYDERABAD-50000(A.P)
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I take this opportunity to express my gratitude to all the people who have guided and helped me in the course of completion of my project. A successful project can never be done by an individual to whom the project is assigned, lest the individual get the help and guardianship of a person.
I feel immense pleasure to express a deep sense of gratitude to Dr.PRASAD RAO, Amity Global Business School, and Hyderabad, who has given me an opportunity for doing Project A deep sense of gratitude to PROF. MOHANTHY (FACULTY GUIDE) .His valuable suggestions and helping hands has helped me to complete my project successfully.
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Table of contents:
Executive summary««««««««««««««««««««««««...6 Research methodology«««««««««««««««««««..................7 History of textile industry««««««««««««««««««««««.7 Growth of Textile Industry«««««««««««««««««««««..11 Textile History of Various Countries«««««««««««««««««..12 Structure of India textile industry««««««««.««««««««««...13 Textile Trend in India«««««««««««««««««««««««..15 Role of Textile Industry in India GDP««««««««««««««««....16 Size of Textile Industry in India«««««««««««««««..................19 Swot Analysis of Indian Textile Industry«««««««««««««««......................20 Influences of changes shaping the industry..««««««««««««««...22 The key advantages of the Indian industry are««««««««««................24 Government Initiatives In Textile Industry«««««««««««.................24 India Textile Policy 2000««««««««««««««««««................30 Textile Non Trade Policies«««««««««««««««««««««..30 Textiles FDI policies «««««««««««««««««««..................31 Current Scenario of textile industry««««««««««««««.................32 India major competitors in the world «««««««««««««««««.33 Problems faced by the textile industry in India«««««««««««««...34 Future prospects«««««««««««««««««««««««««..36 Export at glance«««««««««««««««««««««««««...37 Technology upgrading«««««««««««««««««««««««.40 Major textile companies of India«««««««««««««««««««.41 Major textile export promotion councils of India«««««««««««««43
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Textile Trade challenges««««««««««««««««««««««44 Upholding textile Industry«««««««««««««««««««««.45 Milestones of exports textiles««««««««««««««««««««46 Data interpretation: ³LINER TREND ANALYSIS´«««««««««««47 Interpretation««««««««««««««««««««««««««.48 Recommendations««««««««««««««««««««««««.49 Conclusion«««««««««««««««««««««««««««.50 Bibliography««««««««««««««««««««««««««..51
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The Textile Sector in India ranks next to Agriculture. Textile is one of India¶s oldest industries and has a formidable presence in the national economy in as much as it contributes to about 14 per cent of manufacturing value-addition, accounts for around one-third of our gross export earnings and provides gainful employment to millions of people. The textile industry occupies a unique place in our country. One of the earliest to come into existence in India, it accounts for 14% of the total Industrial production, contributes to nearly 30% of the total exports and is the second largest employment generator after agriculture. Textile Industry is providing one of the most basic needs of people and the holds importance; maintaining sustained growth for improving quality of life. It has a unique position as a self-reliant industry, from the production of raw materials to the delivery of finished products, with substantial value-addition at each stage of processing; it is a major contribution to the country's economy. This paper deals with structure, growth and size of the Indian textile industry, role of textile industry in economy, key advantages of the industry, textile industry export and global scenario and strength, weakness, opportunities and treats of the Indian textile industry.
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Objective of Research: Each research study has its own specific purpose. It is like to discover to Question through the application of scientific procedure. But the main aim of our research to find out the truth that is hidden and which has not been discovered as yet. Data sources: Analysis is totally based on primary data. Secondary data was used only for the reference. Analysis has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites. Duration of Study: The study was carried out for a period of three months, from February 1st to April 15h.
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History of textile industry:
India has been well known for her textile goods since very ancient times. The traditional textile industry of India was virtually decayed during the colonial regime. However, the modern textile industry took birth in India in the early nineteenth century when the first textile mill in the country was established at fort gloster near Calcutta in 1818. The cotton textile industry, however, made its real beginning in Bombay, in 1850s. The first cotton textile mill of Bombay was established in 1854 by a Parsi cotton merchant then engaged in overseas and internal trade. Indeed, the vast majority of the early mills were the handiwork of Parsi merchants engaged in yarn and cloth trade at home and Chinese and African markets. The first cotton mill in Ahmedabad, which was eventually to emerge as a rival centre to Bombay, was established in 1861. The spread of the textile industry to Ahmedabad was largely due to the Gujarati trading class. The cotton textile industry made rapid progress in the second half of the nineteenth century and by the end of the century there were 178 cotton textile mills; but during the year 1900 the cotton textile industry was in bad state due to the great famine and a number of mills of Bombay and Ahmedabad were to be closed down for long periods. The two world War and the Swadeshi movement provided great stimulus to the Indian cotton textile industry. However, during the period 1922 to 1937 the industry was in doldrums and during this period a number of the Bombay mills changed hands. The second World War, during which textile import from Japan completely stopped, however, brought about an unprecedented growth of this industry. The number of mills increased from 178 with 4.05 lakh looms in 1901 to 249 mills with 13.35 lakh looms in 1921 and further to 396 mills with over 20 lakh looms in 1941. By 1945 there were 417 mills employing 5.10 lakh workers. The cotton textile industry is rightly described as a Swadeshi industry because it was developed with indigenous entrepreneurship and capital and in the pre-independence era the Swadeshi movement stimulated demand for Indian textile in the country. The partition of the country at the time of independence affected the cotton textile industry also.
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The Indian union got 409 out of the 423 textiles mills of the undivided India. 14 mills and 22 per cent of the land under cotton cultivation went to Pakistan. Some mills were closed down for some time. For a number of years since independence, Indian mills had to import cotton from Pakistan and other countries. After independence, the cotton textile industry made rapid strides under the Plans. Between 1951 and 1982 the total number of spindles doubled from 11 million to 22 million. It increased further to well over 26 million by 1989-90.
Textile constitutes the single largest industry in India. The segment of the industry during the year 2000-01 has been positive. The production of cotton declined from 156 lakh bales in 1999-2000 to 1.40 lakh bales during 2000-01. Production of man-made fibre increased from 835 million kgs in 1999-2000 to 904 million kgs during the year 2000-01 registering a growth of 8.26%. The production of spun yarn increased to 3160 million kgs during 2000-01 from 3046 million kgs during 1999-2000 registering a growth of 3.7%. The production of man-made filament yarn registered a growth of 2.91% during the year 1999-2000 increasing from 894 million kgs to 920 million kgs. The production of fabric registered a growth of 2.7% during the year 1999-2000 increasing from 39,208 million sq meters to 40,256 million sq meters. The production of mill sector declined by 2.6% while production of handloom, power loom and hosiery sector increased by 2%, 2.7% and 5.1% respectively. The exports of textiles and garments increased from Rs. 455048 million to Rs. 552424 million, registering a growth of 21%. Growth in the textile industry in the year 2003-2004 was Rs. 1609 billion. And during 2004-05 production of fabrics touched a peak of 45,378 million square meters. In the year 2005-06 up to November, production of fabrics registered a further growth of 9 percent over the corresponding period of the previous year. With the growing awareness in the industry of its strengths and weakness and the need for exploiting the opportunities and averting threats, the government has initiated many policy measures as follows. The Technology Up gradation Fund Scheme (TUFS) was launched in April 99 to provide easy access to capital for technological up gradation by various segments of the Industry.
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The Technology Mission on Cotton (TMC) was launched in February 2000 to address issues relating to the core fibre of Cotton like low productivity, contamination, obsolete ginning and pressing factories, lack of storage facilities and marketing infrastructure New Long Term Textiles and Garments Export Entitlement (Quota) Policies 2000-2004 was announced for a period of five years with effect from 1.1.2000 to 31.12.2004 covering the remaining period of the quota regime.
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Growth of Textile Industry:
The textile policy of 1985 and the economic policy of 1991 accelerated the economic growth during 1990s. Textile sector growth has been led by the spinning and the manmade fibre industry. The number of cotton/ manmade fibre textile mills rose from 1035 in 87-88 to 1741 by December 1997. The number of spinning mills number rose to 1461 in December 1997 from 752 in 87-88. Liberalization led to the installation of openend rotors and setting up of Export Oriented Units (EOU). Currently India has the second highest spindle age in the world after China. Aggregate production of cloth during 1996-97 was 34,265 million sq. meters, an increase of nine percent over 199596. India's contribution in world production of cotton textiles was about 12 per cent a decade back, while currently it contributes to about 15 per cent of world cotton textiles. India has the second-largest yarn-spinning capacity in the world (after China), accounting for roughly 20 percent of the world¶s spindle capacity. India¶s spinning segment is fairly modernized; approximately 35 to 40 percent of India¶s spindles are less than 10 years old. During 1989-98, India was the leading buyer of spinning machinery, accounting for 28 per cent of world shipments. India¶s production of spun yarn is accounted for almost entirely by the ³organized mill sector,´ which includes 285 large. Man-made fibers, wool and silk segment grew by modest 4.5 per cent per annum during the 5-year period 2000-01 to 2005-06.During the first year of quota-free global trade, production increased leaps and bounds. Textiles production increased 10 per cent over 2004. The growth was fuelled by a 22 per cent rise in production of other textiles (including apparels). Cotton textile also posted an increase of nine per cent. India has already completed more than 50 years of its independence. The analysis of the growth pattern of different segment of the industry during the last five decades of post independence era reveals that the growth of the industry during the first two decades after the independence had been gradual, though lower and growth had been considerably slower during the third decade. The growth thereafter picked up significantly during the fourth decade in each and every segment of the industry. The
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peak level of its growth has however been reached during the fifth decade i.e., the last ten years and more particularly in the 90s. The Textile Policy of 1985 and Economic policy.
Textile History of Various Countries:
India Indian textile enjoys a rich heritage and the origin of textiles in India traces back to the Indus valley Civilization where people used homespun cotton for weaving their clothes.Rigveda, the earliest of the Veda contains the literary information about textiles and it refers to weaving. Ramayana and Mahabharata, the eminent Indian epics depict the existence of wide variety of fabrics in ancient India. These epics refer both to rich and stylized garment worn by the aristocrats and ordinary simple clothes worn by the common people. The contemporary Indian textile not only reflects the splendid past but also cater to the requirements of the modern times.
Japan In 1869 the capital of Japan was shifted from Kyoto to Tokyo and from this time onwards the Nishijin weaving tradition seemed threatened with extinction. The industry again started to grow along with Japan's new capitalist economy by 1890 when the Nishijin weavers embraced and applied modern technology to their own ancient and original textile art. The textile art of Japan particularly reached an epitome of excellence by exhibiting a cultural distinction and remarkable artistic skill in the Edo and succeeding Meiji periods (1868 - 1912). China Chinese textiles enjoy an excellent heritage in textile sector and occupy a prominent position in the global textile market. Chinese textiles are world famous and extraordinary for their fine quality and profound symbolic meanings. Textiles in china often form an integral aspect of its heritage and symbolically reflect its tradition and culture. In China,
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textile is often closely associated with prosperity and involved in the process of elaborate rituals. Parents' spontaneous love for their children is most visibly reflected through the excellent clothes they provide on festive occasions to their children. These clothes are made up of expensive materials and excellent craftsmanship.
Africa In the ancient times the most important aspect of textiles or more precisely cloth in Africa was that cloth was used as form of money. The width of cloth strip was usually standardized in each region of Africa and therefore there used to be a regular number of such standard length cloth strips required to make a woman's wrapper cloth. This would then be used to serve as the unit of value. Cloth was a convenient form of money primarily because it was used by everybody, fairly durable and easily sub dividable. The weavers, dyers and other textile artists of Africa together makes an active contribution in creating exquisite and amazing range of textiles. African textiles usually embody a great variety of styles. Adinkara, kente and bogolan are some of the some of the African textiles which are becoming increasingly popular while some others like Yoruba, aseoke and adire are equally beautiful but less well known.
STRUCTURE OF INDIA TEXTILE INDUSTRY:
The textile sector in India is one of the worlds largest. The textile industry today is divided into three segments: 1.Cotton 2.Synthetic 3. Other like Wool, Jute, Silk etc. All segments have their own place but even today cotton textiles continue to dominate with 73% share. The structure of cotton textile industry is very complex with coexistence of oldest technologies of hand spinning and hand weaving with the most
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sophisticated automatic spindles and loom. The structure of the textile industry is extremely complex with the modern, sophisticated and highly mechanized mill sector on the one hand and hand spinning and hand weaving (handloom sector) on the other in between falls the decentralized small scale power loom sector. Unlike other major textile-producing countries, India¶s textile industry is comprised mostly of small-scale, nonintegrated spinning, weaving, finishing, and apparel-making enterprises. This unique industry structure is primarily a legacy of government policies that have promoted laborintensive, small-scale operations and discriminated against larger scale firm: Composite Mills: Relatively large-scale mills that integrate spinning, weaving and, sometimes, fabric finishing are common in other major textile-producing countries. In India, however, these types of mills now account for about only 3 percent of output in the textile sector. About 276 composite mills are now operating in India, most owned by the public sector and many deemed financially sick. In 2003-2004 composite mills that produced 1434 m.sq mts of cloth. Most of these mills are located inGujarat,Maharashtra. Spinning: Spinning is the process of converting cotton or manmade fiber into yarn to be used for weaving and knitting. This mills chiefly located in North India. Spinning sector is technology intensive and productivity is affected by the quality of cotton and the cleaning process used during ginning. Largely due to deregulation beginning in the mid1980s, spinning is the most consolidated and technically efficient sector in India¶s textile industry. Average plant size remains small, however, and technology outdated, relative to other major producers. In 2002/03, India¶s spinning sector consisted of about 1,146 small-scale independent firms and 1,599 larger scale independent units. Weaving and Knitting: The weaving and knits sector lies at the heart of the industry. In 2004-05, of the total production from the weaving sector, about 46 percent was cotton cloth, 41 percent was
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100% non-cotton including khadi, wool and silk and 13 percent was blended cloth. Three distinctive technologies are used in the sector handlooms, power looms and knitting machines. Weaving and knitting converts cotton, manmade, or blended yarns into woven or knitted fabrics. India¶s weaving and knitting sector remains highly fragmented, small-scale, and labour-intensive. This sector consists of about 3.9 million handlooms, 380,000 power loom enter-prices that operate about 1.7 million looms, and just 137,000 looms in the various composite mills. Power looms are small firms, with an average loom capacity of four to five owned by independent entrepreneurs or weavers. Modern shuttle less looms account for less than 1 percent of loom capacity. Fabric Finishing: Fabric finishing (also referred to as processing), which includes dyeing, printing, and other cloth preparation prior to the manufacture of clothing, is also dominated by a large number of independent, small-scale enterprises. Overall, about 2,300 processors are operating in India, including about 2,100 independent units and 200 units that are integrated Clothing: Apparel is produced by about 77,000 small-scale units classified as domestic manufacturers, manufacturer exporters, and fabricators (subcontractors). with spinning, weaving,orknittingunits.
Textile Trend in India:
India is the world¶s second largest producer of textiles and garments after China. It is the world¶s third largest producer of cotton-after China and the USA - and the second largest cotton consumer after China. The textile and garment industry in India is one of the oldest manufacturing sectors in the country and is currently the largest . The textile and garment industry fulfils a pivotal role in the Indian economy. It is a major foreign exchange earner and, after agriculture, it is the largest employer with a total workforce of 35 mn. In 2005 textiles and garments accounted for about 14 per cent of industrial
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production and 16 per cent of export earnings. In cotton yarn production India has made a mark in the world textile scenario. It is the largest exporter of the cotton yarns in the world. Besides yarn exports, India¶s growing garment industry is working as a driving force to improve the yarn quality and to increase the production ofcottonyarn. During 2004-05, production of fabrics touched a peak of 45,378 million square meters. In the year 2005-06 up to November, production of fabrics registered a further growth of 9 per cent over the corresponding period of the previous year. Textile exports during AprilNovember 2005 were at US$ 9,309.81 million, up 8.21 per cent from US$ 8,603.33 million during the corresponding period of the previous year. The first year of the nonquota regime for textiles has seen Indian exports to the US grow by 27 per cent year on year to US$ 4.6 billion, according to data released by the Office of Textiles and Apparels (OTEXA), USA. In keeping with the trend of textile companies increasing capacity and adding new manufacturing units, the last week of 2005 saw a substantial number of firms, both new and existing, queuing up to file an intent to manufacture document with the Department of Industrial Policy and Promotion (DIPP). Out of 161 companies that had filed Industrial Entrepreneur Memoranda (IEM) in the last week of December, textile firms accounted for more than a quarter of all new applications. In fact, in the last six years, an estimated US$ 6.7 billion has been invested in the textiles sector, aided by the Technology Up gradation Fund (TUF) scheme. The TUF scheme expires in March (2007) and the quotas on China will be lifted in 2008. Hence, companies will continue to add capacities over the next year. Also, according to CRISIL, the sector is likely to rise over US$ 3.5 billion from the capital markets in the next few years
Role of Textile Industry in India GDP:
Textile industry plays a significant role in the economy. The Indian textile industry is one of the largest and most important sectors in the economy in terms of output, foreign exchange earnings and employment in India. It contributes 20 per cent of industrial production, 9 per cent of excise collections, 18 per cent of employment in industrial
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sector, nearly 20 per cent to the country¶s total export earnings and 4 per cent ton the GDP. The sector employs nearly 35 million people and is the second highest employer in the country. The textile sector also has a direct link with the rural economy and performance of major fibre crops and crafts such as cotton, wool, silk, handicrafts and handlooms, which employ millions of farmers and crafts persons in rural and semi-urban areas. It has been estimated that one out of every six households in the country depends directly or indirectly on this sector.India has several advantages in the textile sector, including abundant availability of raw material and labour. It is the second largest player in the world cotton trade. It has the largest cotton acreage, of about nine million hectares and is the third largest producer of cotton fibre in the world. It ranks fourth in terms of staple fibre production and fourth in polyester yarn production. The textile industry is also labour intensive, thus India has an advantage. Role of Textile Industry in India GDP has been quite beneficial in the economic life of the country. The worldwide trade of textiles and clothing has boosted up the GDP of India to a great extent as this sector has brought in a huge amount of revenue in the country. In the past one year, there has been a massive upsurge in the textile industry of India. The industry size has expanded from USD 37 billion in 2004-05 to USD 49 billion in 2006-07. During this era, the local market witnessed a growth of USD 7 billion, that is, from USD 23 billion to USD 30 billion. The export market increased from USD 14 billion to USD 19 billion in the same period. The textile industry is one of the leading sectors in the Indian economy as it contributes nearly 14 percent to the total industrial production. The textile industry in India is claimed to be the biggest revenue earners in terms of foreign exchange among all other industrial sectors in India. This industry provides direct employment to around 35 million people, which has made it one of the most advantageous industrial sectors in the country. Some of the important benefits offered by the Indian textile industry are as follows:
y y y
India covers 61 percent of the international textile market India covers 22 percent of the global market India is known to be the third largest manufacturer of cotton across the globe
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India claims to be the second largest manufacturer as well as provider of cotton yarn and textiles in the world
India holds around 25 percent share in the cotton yarn industry across the globe
India contributes to around 12 percent of the world's production of cotton yarn and textiles
The Role of Textile Industry in India GDP had been undergoing a moderate increase till the year 2004 to 2005. But ever since, 2005-06, Indian textiles industry has been witnessing a robust growth and reached almost USD 17 billion during the same period from USD 14 billion in 2004-05. At present, Indian textile industry holds 3.5 to 4 percent share in the total textile production across the globe and 3 percent share in the export production of clothing. The growth in textile production is predicted to touch USD 19.62 billion during 2006-07. USA is known to be the largest purchaser of Indian textiles. Following are the statistics calculated as per the contribution of the sectors in Textile industry in India GDP: y India holds 22 percent share in the textile market in Europe and 43 percent share in the apparel market of the country. USA holds 10 percent and 32.6 percent shares in Indian textiles and apparel. y Few other global countries apart from USA and Europe, where India has a marked presence include UAE, Saudi Arabia, Canada, Bangladesh, China, Turkey and Japan y Ready made garments accounts for 45 percent share holding in the total textile exports and 8.2 percent in export production of India y Export production of carpets has witnessed a major growth of 42.23 percent, which apparently stands at USD 654.32 million during 2004-05 to USD 930.69 million in the year 2006-07. India holds 36 percent share in the global textile market as has been estimated during April-October 2007
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The technical textiles market in India is assumed to touch USD 10.63 billion by 2007-08 from USD 5.09 billion during 2005-06, which is approximately double. It is also assumed to touch USD 19.76 billion by the year 2014-15
By 2010, India is expected to double its share in the international technical textile market
The entire sector of technical textiles is estimated to reach USD 29 billion during 2005-2010
The Role of Textile Industry in India GDP also includes a hike in the investment flow both in the domestic market and the export production of textiles. The investment range in the Indian textile industry has increased from USD 2.94 billion to USD 7.85 billion within three years, from 2004 to 2007. It has been assumed that by the year 2012, the investment ratio in textile industry is most likely to touch USD 38.14 billion.
Size of Textile Industry in India:
The textile industry in India covers a wide gamut of activities ranging from production of raw material like cotton, jute, silk and wool to providing high value-added products such as fabrics and garments to consumers. y The industry uses a wide variety of fibres ranging from natural fibres like cotton, jute, silk and wool to man made fibres like polyester, viscose, acrylic and multiple blends of such fibres and filament yarn. y The textile industry plays a significant role in Indian economy by providing direct employment to an estimated 35 million people, by contributing 4 per cent of GDP and accounting for 35 per cent of gross export earnings. The textile sector contributes 14 per cent of the value-addition in the manufacturing sector. y Textile exports during the period of April-February 2003-2004 amounted to $11,698.5 million as against $11,142.2 million during the same period in the previous year, showing an increase of around 5 per cent. y Estimates say that the textile sector might achieve about 15 to 18 per cent growth this year following dismantling of MFA
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Swot Analysis of Indian Textile Industr y
Strengths: 1. Indian Textile Industry is an Independent & Self-Reliant industry. 2. Abundant Raw Material availability that helps industry to control costs and reduces the leadtime across the operation. 3. Availability of Low Cost and Skilled Manpower provides competitive advantage to industry. 4. Availability of large varieties of cotton fiber and has a fast growing synthetic fiber industry. 5. India has great advantage in Spinning Sector and has a presence in all process of operation and value chain. 6. India is one of the largest exporters of Yarn in international market and contributes around 25% share of the global trade in Cotton Yarn. 7. The Apparel Industry is one of largest foreign revenue contributor and holds 12% of the country s total export. 8. Industry has large and diversified segments that provide wide variety of products. 9. Growing Economy and Potential Domestic and International Market. 10. Industry has Manufacturing Flexibility that helps to increase the productivity. Weaknesses: 1. Indian Textile Industry is highly Fragmented Industry. 2. Industry is highly dependent on Cotton. 3. Lower Productivity in various segments. 4. There is Declining in Mill Segment. 5. Lack of Technological Development that affect the productivity and other activities in whole value chain. 6. Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and transportation Time. 7. Unfavorable labor Laws. 8. Lack of Trade Membership, which restrict to tap other potential market. 9. Lacking to generate Economies of Scale. 10. Higher Indirect Taxes, Power and Interest Rates.
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Opportunities: 1. Growth rate of Domestic Textile Industry is 6-8% per annum. 2. Large, Potential Domestic and International Market. 3. Product development and Diversification to cater global needs. 4. Elimination of Quota Restriction leads to greater Market Development. 5. Market is gradually shifting towards Branded Readymade Garment. 6. Increased Disposable Income and Purchasing Power of Indian Customer opens New Market Development. 7. Emerging Retail Industry and Malls provide huge opportunities for the Apparel, Handicraft and other segments of the industry. 8. Greater Investment and FDI opportunities are available.
Threats: 1. Competition from other developing countries, especially China. 2. Continuous Quality Improvement is need of the hour as there are different demand patterns all over the world. 3. Elimination of Quota system will lead to fluctuations in Export Demand. 4. Threat for Traditional Market for Power loom and Handloom Products and forcing them for product diversification. 5. Geographical Disadvantages. 6. International labor and Environmental Laws. 7. To balance the demand and supply. 8. To make balance between price and quality.
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Influences of changes shaping the industry
Some of the significant changes that have and are shaping the Indian textile industry they are:
y Changes in Emphasis
There has been a distinct and positive shift from quality to quality. Earlier Indian textiles were considered cheap and of low quality. The industry was at that time driven by large volumes, which were of paramount importance. The best quality was produced in Europe and Japan. Since then, India has come a long way, emerging as a manufacturer of high quality yarns and fabrics. The leading mills such as Raymonds, Read & Taylor, Aravind mills etc. Improved their quality standards prevailing into the world.
Implementation of New Equipment
The textile industry has also become a high technology. The textile industry has also become a high technology industry. No body earlier could have concerned that the industry would require top of the line technical skills. Present day textile machinery is fully computerized and needs totally new skills to effectively manage it.
New Marketing Trend
On the marketing side, there has been a total change , with almost all players in the industry extending their reach to international markets. The impact of these trends on the textile industry is profound. Increasingly any company cannot sustain itself only on local market demand or only the exports. One has to look at the global markets in totality.
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Another visible change relates to the scale of operations. Earlier textile mills were generally reasonably large size becomes a non-constraining factor with the advent of
Another shift in the industry is regarding entrepreneurship. Technocrats have been able to become possible to have small size spinning, weaving and processing mills. All this was earlier the domain, solely of large businesses.
The greater competitive pressure have highlighted the need to control cost of every type of whether it be energy, water or labor all of which were earlier taken for granted now every mill is highly cost conscious and industrial engineers keep detailed trace of every cost parameter including energy consumption including energy consumption, waste control, machine efficiency and productivity. No doubt, this will have to be an ongoing exercise. Since cost have to be ruthlessly and persistently brought down.
Labor intensive industry
The textile industry being labor intensive, is slowly migrating from high cost countries, such as the United states, Europe, Japan, Australia, Taiwan and Korea. All these countries were at one time leading textile manufacturers. But with the high labor cost, capacities in these countries are being diverted elsewhere. This is happening even as the developed economies make large investments in better machinery and automatism.
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The key advantages of the Indian industry are:
India is the third largest producer of cotton with the largest area under cotton cultivation in the world. It has an edge in low cost cotton sourcing compared to other countries. Average wage rates in India are 50-60 per cent lower than that in developed countries, thus enabling India to benefit from global outsourcing trends in labour intensive businesses such as garments and home textiles. Design and fashion capabilities are key strengths that will enable Indian players to strengthen their relationships with global retailers and score over their Chinese competitors. Production facilities are available across the textile value chain, from spinning to garments manufacturing. The industry is investing in technology and increasing its capacities which should prove a major asset in the years to come. Large Indian players such as Arvind Mills, Welspun India, Alok Industries and Raymonds have established themselves as 'quality producers' in the global market. This recognition would further enable India to leverage its position among global retailers. India has gathered experience in terms of working with global brands and this should benefit Indian vendors.
Government Initiatives In Textile Industry:
With a view to raise India's share in the global textiles trade to 10 per cent by 2015 (from the current 3 per cent), the Ministry of Textiles proposes 50 new textile parks. Out of the 50, 30 have been already sanctioned by the government (with a cost of US$ 710 million). Set up under the Scheme for Integrated Textile Parks (SITP), this initiative will not only make the industry cost competitive, but will also enhance manufacturing
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capacity in the sector. Apart from the above, a series of progressive measures have been planned to strengthen the textile sector in India:
Technology Mission on Cotton (TMC) Technology Up gradation fund Scheme (TUFS) Setting up of Apparel Training and Design Centre¶s (ATDCs) 100 per cent Foreign Direct Investment (FDI) in the textile sector under automatic route. y Setting up two design centres in Gujarat in collaboration with National Institute of Fashion Technology. y Setting up a Handloom Plaza in Ahmedabad with an estimated investment of US$ 24.6 million. y Revival plans of the mills run by National Textiles Corporation (NTC). Already, for the revival of 18 textile mills, US$ 2.21 million worth of machineries has been ordered for the up gradation and modernization of these mills. y Setting up a handloom mall with an investment of US$ 24.6 million at Jehangir Mill in Ahmadabad. y Scrapping of the Textile Committee cases being collected from the textile and textile machinery industry under the Textile Committee Act.
The Government of India has also included new schemes in the Annual Plan for 2010-11 to provide a boost to the textile sector. These include schemes for Foreign Investment Promotion to attract foreign direct investment in textiles, clothing and machinery; Brand Promotion on Public-Private Partnership (PPP)) approach to develop global acceptability of Indian apparel brands; Trade Facilitation Centers for Indian image branding; Fashion Hubs for creation of permanent market place for the benefit of Indian fashion industry; Common Compliance Code to encourage acceptability among apparel buyers and Training Centers for Human Resource Development on Public Private Partnership (PPP) mode. Indian Textiles targets to achieve by end of the 11th Five year Plan (20072012)
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Market size of US$ 115 Billion -Export target US$ 55 Billion -Domestic market US$ 60 Billion India¶s market share in world textiles trade to grow from 3% to 8 % 12 Million additional jobs Investment Rs.150,600 Crore
y y y
Textile Industry Policies:
y y y y y y y y
Indian Textile Industry plays a vital role in Indian economy. For the proper functioning and operation of industry it is very essential to have some policies and regulation in place. In India, the Ministry of Textile is responsible for the formulation of policy, planning, execution, development, export promotion and regulation of the Textile Industry and related sectors. There are several other bodies and organizations which help to formulate and execute these policies. All policies should be implemented for the greater development of the whole industry so that it can help to strengthen the economy.
Industry Policy :
y y y y y y y y
There are no restrictions regarding location for establishing manufacturing units. All producers of Clothing and Accessories are exempt from obtaining Industrial License to manufacture. The relicensed undertakings, however, are required to file an Industrial Entrepreneur Memoranda (IEM) in Part 'A' with the Secretariat of Industrial Assistance (SIA), and obtain an acknowledgement. No further approval is required. After commencement of commercial production, Part B of the IEM has to be filled In Certain items of clothing are reserved for small-scale industries
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Policies Related To Textile Industry: y
y y y
Trade Policies Non-Trade Policies Investment & FDI Policies National Textiles Policy 2000
Tariff policy; India & US have reached on an Agreement for reciprocal market access commitments for Textiles and Apparel with the negotiation of the WTO Agreement Textile & Clothing. It provides elimination of Quota system of Textiles & Apparel from 1st January 2005. Under Indo-US Agreement of 1st January 1995, India agreed to reduce tariffs on Textile & apparel and remove all the restrictions on these products. From 1st April 2000, Govt. Of India reduced tariffs on: . Manmade Fibers & Filament Yarns from 35% to 20% · Cotton Yarn from 25% to 20% · Spun, Blended, and Woolen Yarn from 40% to 20 % Grey Fabrics and certain Cotton Yarns are exempt from basic Excise Duty. Customs duty on Polyester Filament Yarns is reduced from 10% to 7.5%. Duty on Other Filament yarns will be remain at 10%. Customs duty on Polyester Staple fibers is reduced from 10% to 7.5%. Duty on Other Man Made Staple fibers will be remain at 10%. Customs duty on Raw Materials such as DMT, PTA and MEG reduced from 10%to 7.5%.
y y y y y y y y
y y y y
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For Small Scale Industries there is Full Exemption Limit being increased from Rs.1 crore to Rs.1.50 crores.
Most of the products fall under HS code 61 and 62 carry an import duty of 56.83% which includes 30% basic duty, 16% additional duty and 4 per cent special additional duty. y y y Excise duty on Nylon Chips has been reduced from 16% to 12%. Optional excise duty on Nylon Fish Net Fabrics is increased from 8% to 12%. Excise Duty Exemption on specified Textile Machinery Items is withdrawn and 8% Excise Duty is imposed. y y CST rate reduced from 4% to 3% with effect from April 1, 2007. Removal of surcharge on income tax on all firms and companies with a taxable income of Rs.1 crore or less. Import Licensing; India has liberalized its Import regime for Textiles and apparel, but some of the part is still limited for market access. Currently, there is no import restriction for yarns & fabrics items. Apparel & Made-up textiles goods require a Special Import License (SIL). Govt. revised Exim Policy on 31st March 1999 by eliminating Import Licensing Requirements for 894 consumer goods, agriculture products and textiles. On 28th December 1999 India and Us signed an Agreement for the elimination of import restrictions of 1,429 agriculture, textiles, consumer goods and apparel. India removed restrictions on 715 tariff items as of 1st April 2000. Custom Procedures: y Marking, Labeling, and Packaging Requirements: Marking, Labeling, and Packaging Requirements for Textile products are technically complex and difficult to implement.
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Duty Entitlement Passbook Scheme: DEPS is available for Indian Export Companies and Traders on a Pre-Export and Post-Export basis. Pre-Export credit requires the beneficiary firm has exported during the preceding 3-year period. The Post-Export credit is a transferable credit that exporters of finished goods can use to pay or offset custom duties on imports of any unrestricted goods.
Export Promotion Capital Goods Scheme: y This scheme is available to export companies and traders who provide the GOI with information about which type of goods and what value of Capital Goods they will import. And they also inform what will be the outcome of export they expect to produce from those imports. Depending upon the export commitment GOI provides them a license to import capital goods duty-free or preferential rates of duty.
Pre and Post Shipment Financing: y The Reserve Bank of India provides Indian Exporters Pre-Shipment Financing through commercial banks for purchasing raw materials and packaging materials by presenting Letter of Credit. RBI also provides Post-Shipment Financing through commercial banks at preferential rates by presenting export documents. Export and Special Economic Zones: y Govt. of India has established Export Processing Zones (EPZs) and Special Economic Zones (SEZs). In EPZs units can import goods free of custom duty. There is 5-year tax holiday to any industrial unit in EPZs. Govt. has allowed 100% Fore3ign ownership of units under EPZs and SEZs. The Govt. considers SEZs as foreign territory for trade and tariff purpose. Units under SEZs may engage in Manufacturing, Trading and Services. Units are exempt from routine checking of exports by customs, and they can sell in the domestic market on payment of duty as applicable to imported goods.
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Duty Drawback Scheme: y The basic objective of this scheme is to reduce the indirect taxes on exports. Exporters can get refund of the excise and import duty. Through this scheme they can be more competitive and have more potential market.
India Textile Policy 2000
y For the growth and development of Indian Textile Industry and to make it more vibrant, Govt. of India passed National Textile Policy in 2000.
Objectives of Policy y To produce and provide good quality cloth in affordable price to fulfill different needs of customers. y y y To increase the share of India in Global Textile Market. To increase the contribution for employment and economic growth of country. Facilitate the Textile Industry to attain and sustain a pre-eminent global standing in the manufacture and export of clothing. y y Liberalization of controls and regulations for the market development of different Textile Segments and to make them stronger to perform in competitive environment. y y y Encourage FDI and R&D to improve the manufacturing capabilities and Infrastructure under the environmental standards. Facilitating financial support and arrangement to sector.
Textile Non Trade Policies:
Technology Up gradation Fund : y As there is huge competition in international Textile Industry therefore the IndianTextile Industry has to be technologically well versed. Industry has been facing problem with high capital cost to improve the technology and modernization of Textile and Apparel Industry. Under the TUF scheme, Textile
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and Apparel Manufacturing Units can take Loan from IDBI Bank, SIDBI, and The Industrial Finance Corporation Of India at interest rate of 5 % points lower than normal rates. This scheme also helps for IT Development, Product Development, Diversification and Research & Development through funding. In 2006-07 Rs.535 crores were allotted for the scheme and, Rs.911 crores have been allocated forthe same for 2007-08. Cotton Technology Mission: y To improve the performance of Cotton sector, there is need for improvement in Research & Development, quality and productivity of products. The Marketing Infrastructure also needs improvement. The Govt. of India is aimed to increase production of cotton by 50% with improved quality and productivity. Quota Entitlement Policy: y Textile and Apparel Industry in India was running under the terms of Multifiber Arrangements (MFA) over the many years. Under MFA, USA, European Union (EU), Canada, and Norway did negotiation for bilateral agreements with India and other textile exporting countries that had limits or quota on their specific textile exports. Construction of Apparel International Mart: Apparel Export Promotion Council has constructed an Apparel International Mart
(AIM) at Gurgaon. This will provide showrooms on lease and license basis to the established exporters to showcase their products.
Textiles FDI policies:
After the economic reforms Indian Govt. has taken many initiatives for investment in Textile Industry. The Govt. has liberalized its investment policies for the Textile Industry. Lot of investment has been made for the growth and development of various sectors of Textile Industry. For this purpose Govt. of India has launched
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many schemes and plans. y y y The RBI provides approval within 2 weeks to all proposals that involve foreign equity up to 51 % in the manufacturing of textile products Investment is increased from Rs.7349.00 crores in 2004-05 to Rs 15,032.00 crores in 2005-06. y During 2003-06 the total investment in Textile and Clothing was around Rs.42,978.00 crores. y For Technology Up gradation Funds Scheme, Rs 916 billion has been issued for technology upgradation.Around 26 Apparel Parks are opened in eight states in India, with a total investment of Rs 134 billion. y Industrial Entrepreneurship Memorandum is implemented from 1992 with the investment of 263 billion.
Current Scenario of textile industry:
Textile exports are targeted to reach $50 billion by 2010, $25 billion of which will go to the US. Other markets include UAE, UK, Germany, France, Italy, Russia, Canada, Bangladesh and Japan. The name of these countries with their background can give thousands of insights to a thinking mind. The slant cut that will be producing a readymade garment will sell at a price of 600 Indian rupees, making the value addition to be profitable by 300 %.Currently, because of the lifting up of the import restrictions of the multi-fibre arrangement (MFA) since 1st January, 2005 under the World Trade Organization (WTO) Agreement on Textiles and Clothing, the market has become competitive; on closer look however, it sounds an opportunity because better material will be possible with the traditional inputs so far available with the Indian market. At present, the textile industry is undergoing a substantial re-orientation towards other then clothing segments of textile sector, which is commonly called as technical textiles. It is moving vertically with an average growing rate of nearly two times of textiles for clothing applications and now account for more than half of the total textile output. The processes in making technical textiles require costly machinery and skilled workers.
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INDIAS MAJOR COMPETITIORS IN THE WORLD:
To understand India¶s position among other textile producing the industry contributes 9% of GDP and 35% of foreign exchange earning, Indias share in global exports is only 3% compared to Chinas 13.75% percent. In addition to China, other developing countries are emerging as serious competitive threats to India. Looking at export shares, Korea (6%) and Taiwan (5.5%) are ahead of India, while Turkey (2.9%) has already caught up and others like Thailand (2.3%) and Indonesia (2%) are not much further behind. The reason for this development is the fact that India lags behind these countries in investment levels, technology, quality and logistics. If India were competitive in some key segments it could serve as a basis for building a modern industry, but there is no evidence of such signs, except to some extent in the spinning industry.India¶s Competitive Position in Stages of Textile Manufacture
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PROBLEM FACED BY THE TEXTILE INDUSTRY IN INDIA:
The cotton textile industry is reeling under manifold problems. The major problems are the following: y Sickness: Sickness is widespread in the cotton textile industry. After the engineering industry, the cotton textile industry has the highest incidence of sickness. As many as 125 sick units have been taken over by the Central Government. Sickness is caused by various reasons like the problems mentioned below. y Obsolescence: The plant and machinery and technology employed by a number of units are obsolete. The need today is to make the industry technologically up-to-date rather than expand capacity as such. This need was foreseen quite sometime back and schemes for modernization of textile industry had been introduced. The soft loan scheme was introduced a few years back and some units were able to take advantage of the scheme and modernize their equipment. However, the problem has not been fully tackled and it is of utmost importance that the whole industry is technologically updated. Not many companies would be able to find resources internally and will have to depend on financial institutions and other sources.
Government regulations like the obligation to produced controlled cloth are against the interest of the industry. During the last two decades the excessive regulations exercised by the government on the mill sector has promoted inefficiency in both production and management. This has also resulted in a colossal waste of raw materials and productive facilities. For example, the mills are not allowed to use
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filament yarn in warp in order to protect the interest of art silk and power loom sector which use this yarn to cater to the affluent section of society.
Low Yield and Fluctuation of Cotton Output: The cotton yield per hectare of land is very low in India. This results in high cost and price. Further, being largely dependent on the climatic factors, the total raw cotton production is subject to wide fluctuation causing serious problems for the mills in respect of the supply of this vital raw material.
Competition from Man-made Fibres: One of the serious challenges facing the cotton textile industry is the competition from the man-made fibres and synthetics. These textures are gradually replacing cotton textiles. This substitution has in fact been supported by a number of people on the ground that it is not possible to increase substantially the raw cotton production without affecting other crops particularly food crops.
Competition from other Countries: In the international market, India has been facing severe competition from other countries like Taiwan, South Korea, China and Japan. The high cost of production of the Indian industry is a serious adverse factor
Labour Problems: The cotton textile industry is frequently plagued by labour problems. The very long strike of the textile workers of Bombay caused losses amounting to millions of rupees not only to the workers and industry but also to the nation in terms of excise and other taxes and exports.
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Accumulation of Stock: At times the industry faces the problems of very low off take of stocks resulting in accumulation of huge stocks. The situation leads to price cuts and the like leading to loss or low profits.
Miscellaneous: The industry faces a number of other problems like power cuts, infrastructural problems, lack of finance, exorbitant rise in raw material prices and production costs etc.
The future outlook for the industry looks promising, rising income levels in both urban and rural markets will ensure a rising market for the cotton fabrics considered a basic need in the realm of new economic reforms (NER) proper attention has been given to the development of the textiles industry in the Tenth plan. Total outlay on the development of textile industry as envisaged in the tenth plan is fixed at Rs.1980 crore. The production targets envisaged in the terminal year of the Tenth plan are 45,500 million sq meters of cloth 4,150 million kg of spun yarn and 1,450 million kg of man made filament yarn. The per capita availability of cloth would be 28.00 sq meters by 2006-2007 as compared to 23.19 sq meters in 2000-01 showing a growth of 3.19 percent. The export target of textiles and apparel is placed at $32 billion by 2006-2007 and $50 billion by 2010.
Vision India 2010 for Textiles:
Textile economy to grow to $ 85 bn. by 2010. Creation of 12 million new jobs in Textile Sector. To increase India¶s share in world trade to 6% by 2010. Achieve export value of $ 40 Billion by 2010. Modernization and consolidation for creating a globally competitive industry.
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EXPORT AT GLANCE:
Textile exports plays a crucial role in the overall exports from India.Throught export friendly government policies and positive efforts by the exporting community, textile exports increased substantially from US$ 5.07 billion in 1991-92 to US$ 12.10 billion during 2000-01. The textile export basket contributing over 46 percent of total textile export. In world textile trade has risen to 3.1 percent in 1999-2000 as against 1.80 percent in early nineties. Exports have grown at an average of 11 percent per annum over the last few years, while world textile trade has grown only about 5.4 per cent per annum in the same years. During the year 2000-01 India¶s textile export was US$ 12014.4 million. It was increased the year 2004-05 US$ 13038.64 million. The exports of textiles (including handicrafts, jute, and coir) formed 24.6% of total exports in 20012002, however this percentage decreased to 16.24% during 2004-2005. The textile exports recorded a growth of 15.3% in 2002-2003 and 8.7% in 2003-2004. Textile exports during the period of April-February 2003-2004 amounted to $11,698.5 million. During 2004-05 textile exports were US$ 13,039.00 million, recording a decline of 3.4% as compared to the corresponding period of previous year. However, during AprilNovember, 2005, the textile exports have shown growth of 8.2% as compare to the corresponding period of previous year. Against a target of US$ 15,160 million during 2004-05, the textile exports were of US$13039 million, registering a shortfall of 14% against the target. The overall export target for 2005-06 has been fixed at US$ 15,565 million. In 2005 textile and garments accounted for about 16% of export earnings. y Strategies for Indian Exports:
Quota free market means competition amongst firms and not nations. Quotas have frozen the growth in market share. They encouraged the high cost domestic industry in many textile-importing countries by freezing the market share. Even the high cost exporting countries (Hong Kong, South Korea, Taiwan) continued to have high market share taking advantage of quotas. Quotas also assured fixed market opportunities in early years to Indian garment industry and textile industry despite low productivity, poor time delivery and quality.
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Number of incentives was provided in India including Duty drawback and cash compensatory support. Garment quotas are distributed by AEPC based on Government policy from time to time regarding past performance, etc and quotas were traded in gray market for long time. This is in sharp contrast to world-class manufacturing and supply chain tried by some units in Europe and USA in online transmission of high sale garment designs in departmental stores and replenishing the sold stocks quickly through a very low delivery cycle. Where as Indian domestic market shall hot up by entry of both retailing chains in India (FDI has been now permitted up to 51% in single brand stores) and Outsourcing centers for International chains like Wal-Mart, the Indian exporters will get on one hand newer opportunities to enter restrained markets, while on other hand they will face stiff competition from countries like Turkey, Brazil, Mexico, Korea, China, Tunisia, Romania, Bangladesh and Pakistan. Quotas by restricting market supply have also kept the export prices artificially high. There is bound to be a price war in post quota regime. Already it has started happening with Indian exporters (at least for price elastic goods). Developed countries have relocated facilities offshore or have shifted to high value products. Developing countries that were free from MFA restraints will loose out due to fall in prices. The Indian textile and clothing Industry except for cotton yarn sector should test waters within domestic markets to establish their global competitiveness and consumer acceptance. Developed countries and many other countries are trying to extend quotas up to end of 2007 as evident from Istanbul declaration in March 2004.USA is developing a DNA marker system to trace the fabric origin. The technology can identify the US produced cotton yarn and check illegal textile imports. Instead of criticizing, countries lie India should hold high vision as regards standards of health, safety and child labor to conform to international standards and to avoid nontariff barriers.
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Technology Up gradation Fund (TUF) has to be better utilized and textile technology training infrastructure has to be improved in country. The textile sector should take lead in this. Global trade is expected to be in range of US $ 800 Billions in 2014 up from US $ 350 Billion in 2002 with share of textiles at 40% and clothing at 60% According to some studies China and India will be major gainers. India could increase their share from present 8 % in US textile market to 13.5% and from 3% to 8% in US Garment market. For EU the projections are from 3.6 to 8% and 3% to 8 % in textiles and garment sectors. As on date China has distinct advantage in terms of supply chain management, low cost and better designs. Whereas Morgan Stanley has projected India to be one of top three exporters of textile and garments, another study by Indian Cotton Mills Federation has estimated Indian textile exports to reach US $ 40 Billion by 2010. GOI on other hand has projected exports to double from US $12 Billion to 25 Billion in next couple of years and eventually to US $ 50 Billion by 2010. Whereas new buying season starting Jan 2005 already has seen demands for 10-15% price reduction by the importers. China lacks capability in value addition and fashion design. India stands to gain in ladies blouses because of strength in hand-works, like embroidery, sequins, printing etc. On the other hand China has clear advantage in Nightwear due to large capacity and lower costs. Therefore, while China will focus on low value high volume capabilities, India should gain through fashion content. India will also be favorite destination as alternative source other than China for major retailers globally. India can emerge as good outsourcing center for EU and US giants.
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Another important factor is under valuation of Chinese currency by at east 20% vis-à-vis Dollar. China may retain their operations in Sri Lanka, Cambodia and Vietnam due to low costs prevailing there, when china set up facilities there for taking quota advantage.
The Indian Textiles Industry has suffered from severe technology obsolescence and lack of economies of scale, which, in turn, had diluted its productivity, quality and cost effectiveness, despite distinctive advantages in raw material, knowledge base and skilled human resources. While the relatively high cost of state-of-the-art technology and structural anomalies in the industry have been major contributory factors, perhaps the single most important factor inhibiting technology up gradation has been the high cost of capital, especially for an industry that is squeezed for margins. Given the significance of this industry to the overall health of the Indian economy, its employment potential and the huge backlog of technology up gradation, it has been felt that in order to sustain and improve its competitiveness and overall long term viability, it is essential that the textiles industry has access to timely and adequate capital, at internationally comparable rates of interest in order to upgrade the level of its technology. The Technology Up gradation Fund Scheme (TUFS), the flagship scheme of Ministry of Textiles was launched on 01.04.1999. Initially proposed for a period of five years, the scheme has now been extended till 31.03.2007, and is designed to ensure the availability of bank finance at rates comparable to global rates. Under this, the Government reimburses 5% of the interest charged by Banks and Financ .The Government has strengthened and augmented the Technology Up gradation Fund Scheme (TUFS). The allocation for the subsidy component of TUFS was enhanced from Rs.249.00 crores in 2004-05 to Rs. 485.00 crores in 2005-06, registering an increase of 95%. This has been further increased to Rs.835 crores in 2006-07, an increase of 91% over 2005-06. Till 31.10.2006, the Scheme has attracted 6142 applications, involving an investment of Rs 53,003.00 crores. Out of this 5882 applications with a project cost of Rs. 47,580 crore have been sanctioned. As such, this Scheme has created such a great momentum that has resulted into an investment
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of around Rs. 50,000 crore from the textile industry only under this Scheme. Owing to TUFS only the textile sector is still in an upbeat mood to modernize itself so that it may take on the global competition with confidence.ial Institutions, thereby ensuring credit availability for the up gradation of technology to industry at global rates.
MAJOR TEXTILE COMPANIES OF INDIA:
The major textile companies of India are as follows: Arvind Mills: Arvind Mills is India¶s largest Textile Mill. It has large production in denim, shirting and knitted garments. It is now adding value by manufacturing denim apparel. It¶s sales are around US$ 300millions. Raymond¶s : it is a brand name of Textiles all over the world. It specialized in the diversified woolen garments. It is expanding it¶s products through the organized retail stores and showrooms. It also looking to also expanding denim capacity and to become second largest denim player in India. Its presence in retail will be big positive in future. Its annual sales are around US$ 300 millions Reliance Textiles: Reliance Textiles is one of the major Textile Company that is in business of fully integrated manmade fiber. It has capacity of more than 6 million tones per year. It has joint venture partners like, DuPont, Stone & Webster, Sinco (Italy) etc. Vardhaman SpinningVardhman deals in spinning, weaving and processing segment of the industry. It is planning to double its fabric processing capacity to 50 million meters. It is an approved supplier to global retailers like GaP, Target and Tommy Hilfiger. Its sales are little over US$ 120 millions
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y y y y y y y
Welspun India (Manufactures terry towels) Century Textiles (Composite mill, cotton & Man-made) Morarjee Mills (Fully integrated Composite Mill) Indo Rama (Cotton and Man-made) Textiles (Cotton Yarn and Knit Fabrics) Ginni Filaments Ltd. (Yarn and Fasbric) LNJ Bhilwara Group (Diversified and vertically integrated denim producer with spinning and weaving capacity)
y y y y y y y y y y y y y y y y y y y y y y
Mafatlal Textiles (Fully integrated Composite Mill) Modern Group (Diversified, producer of denim, syntax and thread) Ashima Syntex (Man-made Fiber) KG Denim (Fabrics) Sanghi Polyesters Ltd. (Manmade Fiber) Nova Petrochemicals (Man-made Fiber) S. Kumar Synfabs Ltd. (Home furnishing and Suit Fabrics) Bombay Dyeing Ltd. (Composite and fully integrated) Rajasthan Petro synthetics (Diversified) BSL Ltd. (Textiles) Garware Polyester (Diversified) Banswara Syntex (Composite) National Rayon Corp. (Man-made fiber) Indian Rayon (Man-Made Fiber) Alok Textiles (Cotton and Man-made Fiber Textiles) Sharda Textile Mills (Man-made Fiber) Birla Group Dormeuil Birla VXL Ltd. (Fully integrated woolen textiles) Gokuldas Images (Diversified) Hanil Era Textiles (Yarn, Cotton & Man-made Fiber) Oswal Knit India (Woolen Wear) Niryat Sam Apparels (Apparel) Filaments India Ltd. (Manmade Textiles) GSL India Ltd. (Threads)
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The industry has several segments such as hosiery and ready-made garments and is divided into the organized and the un-organized sector, with players from both sectors often grouped together in export oriented clusters. Some of the important textile clusters are based in places such as Bhilwara, Sanganer, Panipat, Palli, Jetpur, Jodhpur, Surat, Sambhalpur, Mysore and Bhiwandi.
MAJOR TEXTILE EXPOT PROMOTION COUNCILS OF INDIA
The major export promotion councils of India are given as follows : A) Apparel Export Promotion Council. B) Cotton Textile Export Promotion Council C) Handloom Export Promotion Council. D) Indian Silk Export Promotion Council. Apparel Export Promotion Council: APEC is a nodal agency sponsored by the ministry of Textile, Govt. of India. It performs the following functions:y Monitors garment exports quotas and promotions of exports of readymade garments of India. y Continuously involves in the task of promoting exports by organizing buyer-seller meets, y y y Leads trade delegations to potential markets globally. Participates in specialized international fairs. Organized the Indian International Garment Fair biannually.
Cotton Textile Export Promotion Council: Cotton Textile Export Promotion council is an autonomous, non-profit export promotion body. Its activities includes:43 | P a g e
Acting as an international face of Indian Textile Exports. Collection and dissemination of information.
Handloom Export Promotion Council: y It is a statutory body. Its function is to promote the exports of all handloom products like fabrics, home furnishings, carpets and floor covering etc. Indian Silk Export Promotion Council: y It is the nodal agency for promotion of silk exports from India. Consist of more than 1200 silk exporters as members.
Textile Trade challenges:
The fiber, textile and apparel industries are in the midst of radical changes. Global competition is intense. Although the United States is the world's seventh-largest exporter of textiles and has increased exports by 15 times its 1970 rate, an astoundingly rapid growth of imports, especially in apparel, has caused a major trade deficit. The U.S. textile trade deficit rose 10.4 percent in 1999 and accounted for 1.2 percent of the country's total trade deficit. The apparel trade deficit increased 7.1 percent and now accounts for 14 percent of the total. With only 4.3 percent of the world's population and 16 percent of the world's textile-mill output, the United States consumes nearly 20 percent of the world's textiles and receives close to 20 percent of the world's textile and apparel imports. The industries' markets are becoming more complex. Short life cycles are common, and demands for rapid response and just-in-time delivery are increasing. There are still many hand-offs in the production and delivery processes, and few companies
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are able to control the entire process. As competition continues to increase, U.S. fiber, textile and apparel companies must rely more on superior quality, innovative products and rapid response to customer needs to secure markets and continue to grow. Breakthroughs in nanosciences, electro textiles, nonwovens, medical textiles and geotextiles are providing new hope and new challenges
Upholding textile Industry:
Weak infrastructure may be a hindrance which can be overcome with better network and with the willingness to share profit by loyalty bottom up and patronization from above downwards y y By putting more retail outlets With better value added products, By taking the lowest end of the chain into confidence and building their capability to innovate more and more. y By upholding the market knowledge at every level that happens at higher-end that lifts the chain. y By building on the expertise for technical textiles that include bed sheets; filtration and abrasive materials; furniture and healthcare upholstery; thermal protection and blood-absorbing materials; seatbelts; adhesive tape, etc which need skilled workers who are not easy to find in an Indian market. y By keeping a regular research and development department with regards to the industry y y By building up the peripheral market with regular update of new accessories. By integrating the disorganized sectors into one segment that is functionally independent of each other's unwanted stranglehold y y By putting affiliated efforts into the sector By creating a state owned cargo-shipping mechanism : with rationalizing fiscal duties; upgrading technology through the Technology Up-gradation Fund Scheme (TUFS); y y By setting up of Apparel Parks By clearing off bottlenecks in the form of regulatory practices
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By replacing the indirect taxes with a single nationwide VAT With liberalization of contract norms for textile and garments units
y y y
By controlling export of raw materials By curtailing the drawback claims falsely boosted invoice value of exports By effectively installing a price discovery mechanism to track market trend to take effective measures before hand a slump
Milestones of exports textiles:
y Exports of textiles and clothing products from India have increased steadily over the last few years, particularly after 2004 when textiles exports quota were discontinued. y During 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 exports were of the order of US$13.5 billion, US 14.0 billion, US$ 17.52 billion, US$ 19.15 billion and US$ 22.13 billion respectively, denoting an increase of 64% in last five years. y The volume of exports, as compared to certain other countries, could not register a faster growth due to various reasons like constraints of infrastructure, high power and transaction cost, incidence of state level access and duties, lack of state-of-the-art technology etc.
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Data interpretation: ´LINER TREND ANALYSISµ
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009
price(y) 107.65 124.13 127.91 135.55 175.2 311.74 191.46 221.3 185.2 1580.14
x -4 -3 -2 -1 0 1 2 3 4 0
x2 16 9 4 1 0 1 4 9 16 60
x.y -430.6 -372.39 -255.82 -135.55 0 311.74 382.92 663.9 740.8 905
Trend line: y=a.x+b-----------------------1
Sum of y=a. sum of x+n.b-----------2 Sum of(x.y)=a.sum of (x.x)+b.sum of x-----3 905=a(60)+b(0) 905=60a a = 15.08 1580.14=15.08(0) + 9(b) 9b=1580.14 b = 175.57 Trend line: Y=15.08x+175.57
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If suppose x=0 Y =175.57 If suppose y=0 0=15.08x+175.57 X= -11.64 Estimated for 2010: Y =15.08x+175.57 = 15.08(5) + 175.57 = 250.97 b$ Estimated for 2015: Y = 15.08x+175.57 = 15.08(10) + 175.57 = 326.37 b$
y According to analysis we can see that there is growth in textile industry for 2010 and 2015.
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y y y y y y y y y y y y y y Increase duty drawback rates Moratorium on Term Loans Interest Subvention Extension of Sunset Clause Custom and Excise Duty on Synthetics Technology Up-gradation Fund Scheme Exemption from Service Tax Excise Duty on Textile Machinery & Spares to be reduced Reduction of Custom Duty on Textile Machinery Exemption route to be extended to Export Oriented Units (EOUs) Fringe Benefit Tax under Sec 115 of the Income Tax Act Refund of State Taxes & Duties to Exporters Uniform rate of VAT on Industrial Inputs Reduction of Excise Duty on Man±Made fiber Products
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The Indian textile industry is currently one of the largest and most important sector in the economy interms of output foreign exchange earnings and employment in India The Indian textile industry has a significant presence in the Indian economy as well as in the international textile economy. The Textile industry has the potential to scale new height in the globalized economy. The textile industry in India has gone through significant charges in anticipation of increased international competition. Its contribution to the Indian economy is manifested in terms of its contribution to the industrial production, employment generation and foreign exchange earnings. The industry also contributes significantly to the world production of textile fibres and yarns including jute. In the world textile scenario, it is the largest producer of jute, second largest producer of silk, third largest producer of cotton and cellulosic fibre\yarn and fifth largest producer of synthetic fibre\yarn. Textile Industry is providing one of the most basic needs of people and the holds importance; maintaining sustained growth for improving quality of life. The Government of India has also included new schemes in the Annual Plan for 2010-11 to provide a boost to the textile sector. These include schemes for Foreign Investment Promotion to attract foreign direct investment in textiles, clothing and machinery etc. The industry is facing numerous problems and among them the most important once are those of liquidity for many organized sector units, demand recession and insufficient price realization. The long-range problems include the need for sufficient modernization and restructuring of the entire industry to cater more effectively to the demands of the domestic and foreign markets for textiles as per the needs of today and tomorrow.
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www.fibre2fibre.com www.nic.com www.ministryofcommerce.com www.scribd.com www.googlebooks.com www.indexmundi.com www.textile.com www.arvindmills.com www.raymonds.com www.wto.com www.businessworldindia.com
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