Texcen 19 DRIVING INDIA TOWARDS USD 5 TRILLION ECONOMY CORO ee NRC rT ta technopakEXECUTIVE SUMMARY India is already the Sth largest economy in the world in nominal terms (USD 3 Trillion GDP in 2019) and 3rd largest economy in the world in PPP (Purchasing Power Parity) terms. Most of the experts predict that India’s GDP will grow around 7-8% for the next 10 years. India took 4 years to move from USD 2 Trillion to USD 3 Trillion mark. Weare now striving to become USD 5 Trillion economy by 2025. Textile and apparel sector plays a very important role in India’s economy. Textile industry contributes approx, 4% to India’s Gross Domestic Product (GDP) and approx. 14% to overall Index of Industrial Production (IP) Textile industry is the second largest employer In India after agriculture. It is also one of the most important sectors in terms of exports, foreign exchange earnings and manufacturing of goods. Indian textile and appare! sector was estimated to be USD 111 billion in 2018. Domestic market was estimated to be USD 74 billion and exports was around USD 37 billion. We expect that Indian textile and apparel sector will grow around 10% and reach USD 300 billion by 2028. Growth of textile industry in India over the next 10 years is very crucial to achieve the USD 5 Trillion GDP target by 2025, There are various pressing issues which the textile industry faces today. We need to overcome these issues and leverage all possible opportunities which are there for India, especially in exports sector. We need to goall out to increase our share in global exports of textile and apparel from 5% currently to 15% by 2025. This growth will help in creating huge number of quality jobs and address the major issue of employment. We believe that this conference will provide a common platform for various industry stakeholders and policy makers to conduct a detailed discussion on ‘Driving India towards USD 5 Trillion economy’. The discussions and deliberations in the conference will lead to the output of various ideas, recommendations, intervening measures which will benefit the industry stakeholders across the value chain in the long run.CONTENT Global Economy & Global Textile & Apparel Market. Major Trends in Global Textile & Apparel Industry. Growth of Indian Economy & Role of Textile & Apparel Sector. Major Trends in Indian Fashion & Retail Market, Major Challenges Faced by Indian Textile & Apparel Industry. Recommendations for Faster Growth of Textile & Apparel Industry. About Cll About Technopak Page no. 1 o7 n 14 7 19 20am Global Economy and Global Textile & Apparel Market Global GDP is expected to grow from USD 84 trillion to USD 108 trillion from 2018 to 2023, United States is the largest economy in terms of GDP and had approximately 24% share in the world’s GDP in 2018, China and Japan are the second and third-largest economies. India contributes approximately 3.2% to the global GOP. India’s GDP was USD 2.6 Trillion in 2018 and is expected to cross USD 3 Trillion in 2019, India is expected to be USD 51 Trillion economy bby 2025. Table1- Top 10 Global Economies ‘country Rank GOP in 2018 (In USD Billion) | % share 2018 United States 20518 242% ‘china 2 13.457 159% Japan 3 507 8% Germany 4 4028) 48% India 5 2.690 32% France 6 2795 33% uk 7 2.809 33% Tealy 3 2.087 23% Brazil 9 1909 23% Canada io 1738 2% RoW, 21876 329% Total 84764 100% Source: IMF Secondary Research, Technopak Analysis Global apparel market was around USD 1800 Billion in 2018. Biggest apparel market was EU followed by US and China. India’s apparel market was USD 54 Billion in 2018 and is the sixth largest apparel market in the world and is expected to growata CAGR of 8% till 2023, China will grow ata CAGR of 10% till 2023 and will grow to become a TEXCON | Global Textile & Apparel Market Pat USD 508 Billion apparel market, making it the largest apparel consuming country in the world. Brazil and Australia are 2 other major apparel markets in the world. All major apparel exporting countries target these big apparel markets to sell their products. From exports point of view, these are the major markets for India as well‘Table 2- Global Apparel Market (USD Billion) eohnopak | (GH) TAGE 201346) 20186) 207°) | eo1e-2022) china 15 35 306 10% ery 50 Ter ae m United States I aa 368 me nda a or 78 me Tapa 108 3 708 me Tassie 7 5 7 oa Tread % w a me Canada 7 7 En m Austeaia 30 2 ee me Row ae Tos W800 Source ~ Statista, Secondary Research, Technopak Analysis Global T&A (Textile & Apparel) production was estimated to be USD 1.67 Trillion in 2018 and is expected to grow at a CAGR of 3.2% till 2021 Textile and Apparel production has been growing in conjunction with growing apparel 2500 Graph1- Global Textile & Apparel Production 6.00% 2000 1,953 5.00% 1500 4.00% $ Billion 1000 3.00% 500 2.00% 1.00% 0.00% 2016 2017 2018 2019 Year Source: Market Line, Secondary Research, Technopak Analysis 2020 2021 consumption. Itis expected to reach from USD 1.5 Trillion in 2016 to USD 1.9 Trillion by 2021. Graph 1 represents the global production of Textiles and Apparel from 2016-2021. %CAGR ‘TEXCON | Globs Textile & Apparel Market Pa 2In the past decade, global T&A trade has seen a growth from USD 651 Billion in 2008 to USD 818 Billion in 2018. The global T&A trade is expected to grow at a CAGR of 3.7% till 2028 and reach USD 1176 Billion in 2028. Textile trade has increased from USD 290 Billion in 2008 to USD 345 Billion in echnooak| Gi) 2018 and expected to reach USD 442 Billion by 2028. Apparel trade is expected to grow faster than textile trade over the next 10 years. Apparel trade will grow from USD 473 Billion in 2018 to USD 725 Billion in 2028 sh 2 - Global Textile & Appar (USD Billion) CAGR2018 28: 3.7% 1176 980 798 651 sms Textiles sm Apparel 2008 2013 2018 (E) 2023 (P) 2028 (P) —Total Source ~ Statista, Secondary Research, Technopak Analysis China dominates the T&/ export market, with the highest share of overall exports. In each category, China has a share as in 10% in fiber exports, 25% in yarn exports, 47% in fabric exports, 30% in apparel export and 46% in Made-ups in 2018. The overall T&A export from China has decreased at a rate of 0.5% since 2013. India is the second largest textile exporter in the world. The growth of global textiles exports will be lower than the growth of global apparel exports. The global textile sector will grow at a CAGR of 2.5% and Apparel sector will grow at a rate of 4.5%. Apparel sector contributed around 58% to the total T&A global exports in 2018. Graph 3- Top 5 Textile & Apparel Exporting Nations 2018, Fibre Exports “10% China 90% mindia 2% Vietnam murky m Others Source ~ Statista, Seconclary Research, Technopak Analysis ‘TEXCON | Global Textile & Apparel Market | Pa 3 Yarn Exports “280% China 880% miIndia Vietnam mTurkey ~ 20% ml Others 70% 30%Fabric Exports anon China ison India mw Turkey, m Pakistan = Others Source ~ Statista, Secondary Re rch, Technopak Analysis China was the largest exporter and importer of Fiber, Yarn and Fabric, in 2018, Other major importing nations in the T&A sector are Japan, US, India and Europe. Europe 28 imports increased from USD 248 billion to USD 282 billion between technogak | Gl) Apparel Exports * 9° China sa0% ™ Bangladesh Vietnam Windia 80% mi Others 0% 30% 2013 and 2018. EU is the largest textile and apparel importing nation block. The second- largest textile and apparel importing nation is USA, with total imports of USD 120 Billion in 2018. ‘TEXCON | Global Textile & Apparel Market| Pa 4eohnopak | (GH) Major Trends in Global Textile & Apparel Industry 1. Emergence of New Garmenting Hubs Increase in labour and raw material cost has brought a shift in global Apparel manufacturing destinations. Garmenting hubs are shifting from high cost countries to countries like Ethiopia, Myanmar and Cambodia. Myanmar has emerged 8 a garmenting hub at the time when other regional production hubs have become ‘expensive sourcing and producing a destination for brands. The Apparel export from Myanmar has increased from USD 1 Billion in 2013 to USD 4.1 Billion in 2018. That is a fourfold increase in just 5 years. Similarly, Ethiopia has become a hot sourcing destination for buyers from Europe for the last few years. 2.Increasingimportance of Industry 4.0 Industry 4.0 is a fourth industrial revolution towards automation and data exchange in manufacturing technologies and processes which inclucle cyber-physical systems (CPS), the internet of things (loT), industrial internet of things (IIOT), cloud computing, cognitive computing and artificial intelligence. The application of the Industrial Internet of Things (lloT) in textiles has impacted the whole value chain right from Spinning to retail Textile 4.0 is an independent production value TEXCON | Major Tends in Global Textile & Apparel Industry [Pg chain with automation in spinning, weaving and other aspects of the textile manufacturing industry. In Textile 4.0 information carrier would be a material container, bobbin, warp beam, and fabric. The plant of 4.0 industry will self-optimize and self-configure quickly and flexibly to meet custom manufacturing orders. 3. On-Shoring and Near-Shoring of apparel manufacturing The consumer buying pattern has become difficult to predict, thus leading the brands to have shorter lead time and on-time availability of products. The future belongs to the brands with off-shoring or near-shoring business operations, asthey havea shorter lead time. Traditionally, Asia was a preferred location for Apparel brands to relocate their operating activities, due to the availability of low-cost labour and raw materials. Today, as the labour costs converge, brands are questioning their traditional sourcing and production strategy. Brands based out of US, UK, and Europe are setting up near-shore ot on-shoring centres to improve lead time and freight costs. To ensure that new styles hit the store after every two weeks, Spanish Apparel retailer ZARA produces 80% of the total apparel near to its headquarters in Spain as it also gives it tremendous flexibility and control4. Development of New Trade Blocs: Ttrade blocs are a step taken by governments to provide businesses to different nations within the bloc by creating a level playing field, making it easier for consumers to find better quality merchandise at lower prices. Increase in FDI endorses the rise of trade blocs between countries. One of the recently signed trade blocs is ACFTA which was launched in 2018, it is a trade agreement which is in force between 27 African Union member states. It will lead to an increase of 52.3% in intra-African trade by 2022. Another emerging trade block is the RCEP (Regional Comprehensive Economic Partnership). Itis proposed FTA between the 10 member states of ASEAN and its 6 FTA partners (China, Japan, India, South Korea, Australia, New Zealand). Negotiations are still on for RCEP and it will affect many textile-producing nations in a big way. 5. Shift Towards Sustainable Fashion: Textiles and Apparel industry is one of the world's biggest polluting industry, Global Apparel industry creates 53 Million tons of landfill waste a year. Globally, brands are trying to decrease the negative impact of their practices on the environment right from the production to the retail level. The modern consumer is more cautious about how their buying practices are impacting the environment and is shifting towards brands offering eco-friendly and sustainable fashion. Twenty fashion retailers and brands like Gucci, Kering, H&M and Inditex will be joining G7 leaders as part of a movement to fight the climate crisis echnooak| Gi) and protect biodiversity and the oceans. The global acceptance of sustainable fashion brands has increased over the past years. H&M Conscious is a collection launched by the H&M group. The garments are made of sustainable fibres like organic cotton and recycled polyester. The brand also offers a discount to customers who offer their clothing at H&M stores for recycling. The company uses 57% recycled or sustainably sourced fibres and aims to reach 100% by 2030. 6. Smart Apparel: The world is moving towards technology-oriented products and with the growing use of technology and lo in T&A sector, the industry has seen an emergence of smart clothing. Big brands are investing in making their garments smart and provide tech-integrated clothing, Like Levi's Jacquard connected jacket, developed in collaboration with Google ATAP team. The jacket featuring the style aesthetics of Levi's Commuter denim jacket and is outfitted with gesture controls and more. The jacket lets the User access their digital world through the jacket sleeve using a snap tag. The snap tag features let the user know about the incoming call, access navigation and change the song by giving light and haptic feedback. The user can customize and control the ability using the Jacquard app. ‘TEXCON | Mejor Trend in Global Texte & Appar! Industry [Pa &am Growth of Indian Economy & Role of Textile & Apparel Sector Indian economy is one of the fastest-growing economies in the world. India is expected to be among the top 5 global economies by 2020. The sustained real GDP growth of over 6% since FY 1991, has led to a fundamental transformation of the Indian economy. India has become the fastest-growing G20 economy since FY 2015, Graph 4- GDP Growth of with growth rates hovering around 7%. India's economy is projected to expand by 7.3% and 7.4% in FY 2019 and FY 2020, respectively, benefiting from strong private consumption. By 2025, India is expected to be a USD 51 Trillion economy and will grow at a CAGR of 9.36% from 2018 to 2025 india (USD ion) CAGR (2018-2025) CAGR (2005-2018) us il - 2005 2010 2015 Source: Statist, Seconclary research, Technopak Analysis Globally, India is seen as one of the key consumer markets from where future growth is likely to emerge. The growth in consumption will be driven by both services and merchandise consumption. As more people move beyond the basic sustenance level in any country, it reflects in consumption expenditure. Although, the share of Private Final Consumption Expenditure TEXCON | Growth of Indian Economy & Role of Texte & Apparel Sector |?a7 2018 2020(°) 20254) (PFCE) as a percentage of GDP is slowly decreasing, in absolute terms it increased from US$ 61 Billion to US$ 1,308 Billion (FY 1991 to FY 2016). Rising income levels coupled with growing young working-age population will lead private final consumption expenditure to grow steadily over the years and is expected to reach -US$ 2 Trillion by FY 2020.Indian Textile and Apparel sector contributes 7% to the industry output in value terms and 4% to the country’s GDP. Indian Textile and Apparel industry has a share of 5% in the global T&A trade and is the second-largest manufacturer and exporter in the world after China. The sector is one of the largest sources of eohnopak | (GH) employment in the country and provides direct employment to over 50 Million people. The sector contributed 12.4% to total Indian exports, in 201718, EU-28 and USA being the major T&A. export destinations for the country with a total weightage of 47% of the total T&A export CAGR (2018-28) 10.4% 180 1 2018 (E) 2023 (P) Source: Technopak Analysis India’s T&A industry was estimated to be worth USD 111 Billion in 2018, including both domestic consumption and exports, and is projected to reach USD 300 Billion by 2028. In 2018, total T&A exports of India were estimated to be USD 37 Billion and domestic consumption was USD 74 Billion. The overall domestic market is expected to grow from USD 74 Billion in 2018 to USD 108 300 CAGR 2018-28 mm Domestic 8.1% mmmExports 14.1% —rotal 10.4% 2028 (P) Billion in 2023 and USD 161 Billion in 2028. Indian domestic T&A market is expected to grow at a rate of 8.1% till 2028, with 8.1% growth in Apparels, 8.1% growth in Home textiles and 8% growth in technical textiles. With the growing demand and disposable income of consumers, all three categories will grow in future. Graph 6 represents the growth of these three categories till 2028. TEXCON | Growth of Indian Economy & Ree of Texte & Apparel Sector PgGraph 6- Domestic Market Size Projections ico Tet) (Oexeee el} en 2018 (€) Total 2023(°) Percy (Nearer) cn) con Trey 2028 (P) (NR SCH ECul ‘cAGR 2018-28 81% 81% 8% 8.1% Source: ITC tademap, Technopak Analysis With the overall growth in the T&A sector, all growth rate of 8.9% over the next decade. categories (menswear, womenswear, boyswear Future projections of all four categories are and girlswear) will grow in future. However, represented through Graph 7. girlswear is expected to depict the highest Graph7- Segment wise Market Projection Menswear (USD Billion) Womenswear (USD Bilion) CAGR 7.6% 28.8 CAGR 8. 42.8 33.4 28.7 23.4 a 19.5 a 2018(E) -2023(P)—-2028(P) 2018 (E) 2023 (P)—2028(P) Boyswear (USD ailion) Girlswear (USD Billon) 13.0 CAGR BS CAGR 89: 24 8.6 81 5.7 a 5.3 2018 (E) 2023 (P) 2028 (P) 2018 (E) 2023 (P) 2028 (P) Source: Technopak Analysis TEXCON | Growth of Indian Economy & Roe of Textile & Apparel Sector Pgechnooak| Gi) Exports are expected to grow from USD 37 Billion and Fabric worth USD 1.5 Billion. The gap Billion in 2018 to USD 72 Billion in 2023 and USD in T&A imports and exports indicates scope for 139 Billion in 2028. In 2018, India imported growth in this sector. Fibers worth USD 17 Billion, Yarn worth USD 11 in TRA Exports Break Up (USD Bn) 2013 2018 © Apparel Textiles ‘Source: ITC trademap, Secondary Research, Technopak Analysis. USA is the major apparel importing nation from for 60% of the total apparel exports from India. India with a share of 26% in the total apparel The top textile importing nations are UAE, exports in 2018. UAE, UK, Germany and Spain Bangladesh, China, Pakistan and Viet Nam with are other top apparel importing nations from a total weightage of 48% to India's total textiles India after the USA. These top five nations stand export. Graph 9-India's Major Export Partners in 2018, ‘Top Apparel Export Partners, Top Textile Export Partners, 2018 2018 = USA UAE UAE Bangladesh BUK China = Germany wm Pakista istan Spain Viet Nam = Others 1m Others. Source: ITC trademap, Secondary Research, Technopak Analysis. TEXCON | Growth of Indian Economy & Roe of Textile & Roparel Sector Pg 10eohnopak | (GH) Major Trends in Indian Fashion & Retail Market 1. Increased Apparel sales in e-commerce linitially, e-commerce attracted sales because of high discounts and now consumers buy online due to the factors like ease of purchase, wide variety, easy payment options and easy returns. There has been a continuous increase in e- ‘commerce sales figure. From 2017 to 2019 the e- commerce sector has increased by 141% in Apparel & Lifestyle category and is expected to grow at a rate of 9.9% till 2025. According to a report by IBEF, Apparel contributed 29% to the E- Commerce Retail in 2018, 2. Sustainable Fashion is gaining momentum in the Indian market With incteasing consumer awareness towards sustainable fashion, brands are becoming more conscious about how their practices are impacting the environment. To cater to these environmentally conscious consumers, brands ate portraying themselves as sustainable and eco- friendly labels. Indian brands like Nicobar, Doodlage and Grassroot started with the vision of offering sustainable fashion and lifestyle products. Brands ‘TEXCON | Maor Trends in insan Fashion & Retail Market] Pa 1 are taking initiatives such as using plastic bottles to manufacture garments, making water less clothing and reducing the use of non-eco-friendly chemicals and raw materials. 3. Increasing use of Technology at the retaillevel In the current era, technology has become an. essential part of our lifestyle. Whether it’s a smartphone or a digital watch, technology plays an important role in every part of our life. Brands are using technology at every stage to provide a seamless experience to its customers. Retailers have started using technology to provide an in-store experience that makes shopping easy and fun for the customers. For example, Shoppers Stop has installed a Magic Mirror at their outlet in Mumbai which gives customers the liberty to browse and view the apparel & accessories on themselves without having to physically “try on" their selected products By launching ‘Style Studio’, Van Heusen has tried to provide an array of digital solutions to customers in helping them to find the perfect fit, size, colour, etc. This has certainly transformed a brick and mortar store to a more convenient platform for shopping.4, Growth of Private Label E-Commerce : With the rise in e-tailing, Indian fashion retail is evolving. Brands are increasing their focus on private labels as they have low advertising and promotion costs and it helps retailers to differentiate themselves from other brands Private labels have a higher margin and help to build customer loyalty. Due to less cost involved, private labels ate sold at a competitive price making them a win-win for both retailers and customers. Private labels in offline retail have always been a trend with brands like Shoppers Stop, Max fashion and Pantaloons offering a variety of options in private labels. Over the past few years, private labels in the e-commerce sector have got a boost with big e-commerce players launching their private labels. Myntra, an Indian fashion e-commerce platform has around 13 private labels in its portfolio generating 25% of the total revenue. Myntra’s fastest-growing private label is Roadster, which contributes around 10% of Myntra’s overall Revenue. Other big private labels of Myntra are Dressberry, Anouk and HRX The retail industry has shifted its approach from just focusing on in-store experience towards providing an integrated shopping experience to the customers. Omni-channel retailing aims to provide a seamless shopping experience to the customers, irrespective of the channel of purchase. Omni-channel retailing has made it easy for the customers to access the relevant information easily at their convenience. Example, a customer can visit an H&M store and at the time of purchase she/he can order the same product by scanning the product code on their mobile application and get it delivered at their doorstep. ‘TEXCON | Major Tends in Indian Fashion & Retail Market P126. Continued Proliferation of International brands: India is a growing economy and Indian domestic T&A sector is expected to grow at a CAGR of 8.1% in the coming decade. Indian domestic T&A market shares 66% of the total T&A market Making India an attraction for international brands. Over the past few years many international fashion brands like Kate Spade, Scotch and Soda, Under Armour and Steve Madden have entered Indian Apparel market. UNIQLO, a Japanese retail brand, has launched the first store Ambience Mall, Vasant Kunj. The brand offers affordable apparel wear, targeting men, women and kids. India is one of the fastest-growing industries for many international fashion brands. In H&M's 2018, annual report, the company stated an increase of 45% in the number of H&M's stores and 29% increase in their net sales in india, TEXCON | Major Tends in indian Fashion & Retail Market Pa 13, echnooak| Gi) 7."Need to Speed” for apparel manufacturers: In this constantly changing world, quality and price are no longer the only factors that influence the customer buying decision. With an increasing consumer buying capacity, there has been an increase in the options they are looking for. To cater to this consumer need, brands have adopted “need to speed” “Need to speed” is a process that starts when the production is accelerated in order to get the trend at retail level quickly. Zara is one example of a need to speed; the brand offers new fashion as soonasit emerges asa trend. The brand hasalead time of two weeks ie. after every two weeks new collection is offered on both online and offline retaileohnopak | (GH) Major Challenges Faced by Indian Textile & Apparel Industry There are many challenges which require to be overcome by Indian Textile & Apparel Industry. Some of the major challenges are summarized below: 1. Economies of scale for large size orders Except spinning all other sectors are non- organized in India. There is a lack of enough capacities in most of the clusters to complete the supply chain. Indian firms are typically smaller than their Chinese counterparts. Global competing nations like China, Bangladesh, Vietnam, etc operate on the model of large-scale production and large manufacturing set-ups. Indian Textile industry is dominated by the SSI sector which has limited resources and a lack of awareness. Due to this Indian textile manufacturers are unable to offer competitive prices and cater to substantially larger orders. Customers go where they see both capacity and capabilities. Large capacity typically goes with standardized products. Firms in India also need to develop the managerial capabilities required to manage a large workforce and design an appropriate supply chain, For the size of the Indian economy, it will have to have bigger firms producing standard products in large volumes as well as small and mid-size firms producing large variety in small to mid-size batches (the gap between the organized and unorganized sectors will have to be addressed first). Then there is the need for the emergence of specialist firms that will consolidate orders, book capacities, manage warehouses and logistics of order delivery. 2. Higher costs due to Fragmented Nature of the Industry One of the major hindrances in the Indian manufacturing scenario is the fragmented industry structure. The textile industry in India is distributed across the country in multiple clusters. Most of the cotton is grown in Gujarat, Maharashtra. But spinning is concentrated in Tamil Nadu, Punjab. Fabric production is spread across the country but there are major clusters in Ahmedabad, Surat, Ludhiana, Tirupur. Major garmenting clusters are at Delhi NCR and Bangalore. The movement of material from raw cotton to yarn to fabric to a garment makes the final garment cost quite high. There is a lack of enough capacities in most of the clusters to complete the supply chain. Existing textile clusters are randomly distributed and have developed naturally over the years and are spread across India without enough infrastructure back up or supply chain linkages. For eg. Punjab - Woolen Knitwear, Haryana- Handlooms & Made & Made-ups, Uttar Pradesh - Defense-related Textiles , Rajasthan - Hand block printing & apparel manufacturing, Gujarat - Power loom, Weaving & Processing , Tripura - Handlooms , West Bengal - Cotton Hosiery, Orissa - Handlooms, Maharashtra - Power loom Weaving, Andhra Pradesh - Handlooms, Cotton Ginning & Power loom weaving & Processing, Tamil Nadu — Surgical Textiles, Cotton Knitwear, Handlooms Made-ups & Home furnishings & Power looms, Kerala - Handlooms & Home Furnishings. TEXCON | Major Challenges Faced by naan Texte & Appate! Industry [P983. Need for Modernization Despite India being 2nd largest T&A manufacturer in the world, Textile machinery used by the industry is outdated in terms of technology ian T&A industry nised sector advancement which leads to products. In levels and qu s largely dependent on the uno! son quality & innovation, Textile which lacks f companies spend less amount on Research & Development, product development ete. herefore, India has very little presence in the technical textiles, high value-added segments, etc. 4. Skills eisa ity of technical manpower. For tream, there are about 30 programmes at graduate engineering (including diploma) levels, graduating about 1000 student. This is hnolog’ insufficient for bri change in the sector. Indian firms invest very i nd the skills is a shortage nd supervisors in India. The 1g to be the ning its existin e imited to existin; d operator of train ttleneck to growth availability of skilled manpower at the worker level, junior, mid & senior management levels in textile companies. 5. Higher Input Costs in comparison to Competing Nations ;on to competing nations like China, desh Turkey, etc. India has one ich makes Vietnam, Bang! of the highest less competitive in terms of overall ction costs. Lending rates are also higher to 12.5% while in India which ranges from 11.0 of China, Bangladesh, and Turkey rangesAlthough India is one of the largest producers of cotton & polyester in the world, fiber costs in India are consistently higher than major ‘competing nations. Man-made fibre prices in India are higher for many years now because of anti-dumping duties on feedstock or fibre itself. ‘This makes India uncompetitive for exports of value-added MMF products. 6. Absence of key FTAs compared to other Competing Nations ‘Competing nations like Bangladesh, Turkey, Pakistan, etc enjoy duty advantage to the extent of 10% to 30%, depending on the product being India does not have any trade agreement with the major Textile markets which would have helped India in rapid growth. These differential duties have made India less competitive in the world market. We have seen that this high gap cannot be filled by means of subsidies. 7. Institutional Support The textile policy has come a long way in reducing impediments for the industry ~ sometimes driven by global competition and, at other times, by international trade regulations. However, few areas of policy weakness stand echnooak| Gi) out - labour reforms (which is hindering movement towards higher scale of operations by Indian firms), power availability and its quality, customs clearance and shipment ‘operations from ports, credit for large scale investments that are needed for up-gradation of technology, and development of manpower for the industry. These are problems facing several sectors of industry in India and not by the textile sector alone, but these issues affect the textile sector more due to multiple other related issues 8. Outdated Labor Laws The regulatory framework for labour with the multiplicity of laws and reporting requirements with burdensome transaction costs is one of the major reasons for the inability of the sector to expand and acquire a global scale. This is particularly true for the labour-intensive segments of the value chain viz garmenting. In order to attract large scale investments, acquire a global scale and bring the Indian sector at par with other competing countries, there is an immediate need to review the labour laws to make them investor and labour-friendly. The labour laws, most of which were drafted in the earlier part of the last century, need to be repealed and replaced by one, or, at best a few, user-friendly law(s) suited to the current conditions. TEXCON | Major Challenges Faced by naan Texte & Appa! Industry |P916am Recommendations for Faster Growth of Textile & Apparel Industry 1. Time-bound and Faster approvals There is no denying that India is improving its “ease of doing business” rank regularly. But the ground reality is that it still takes a lot of time for land-use change approval, environmental clearance, power connection, water connection, etc. All such approvals need to be done quicker & ina time bound manner. The government should look for solutions like automated approvals or self-approvals or ‘approved if not reverted’. These can be combined with checks & balances like heavy fines for non-compliance. 2. Adopting new methods of Manufacturing (Textile 4.0) ‘The application of the Industrial Internet of Things (lloT) in textiles has impacted the whole value chain right from Spinning to retail. This revolution is characterized by Artificial Intelligence, Internet of Things, Autonomic Robots, virtual reality, 3-D printing, tech-integrated textiles, and others Textile 4.0 is an independent production value chain with automation in spinning, weaving and other aspects of the textile manufacturing industry. In Textile 4.0 information carrier would be a material container, bobbin, warp beam, and fabric. The plant of the 4.0 industry will self- optimize and self-configure quickly and flexibly to meet custom manufacturing orders. 3. Quality & Productivity Improvement Quality and productivity improvement in the sector (especially in garmenting) is of the utmost TEXCON | Recommendations for Faster Growth of Textile & Apparel industy| 17 importance for global competitiveness. Credible mechanisms for assessing levels of quality and productivity in segments of the supply chain as well as in individual enterprises are needed. While the Ministry of Textiles works with the Quality Council of India and the National Productivity Council for achieving this objective. The onus to improve quality, productivity and efficiency lie with individual companies. 4. Diversification of Exports in terms of products and markets Indian exports of textile and apparel products have been growing steadily, but they have been limited to only a few markets. The EU and the US remain the major export destinations with a 50% share of the Indian export market The higher share of global trade that is envisaged can be attained only if Indian exporters also start looking beyond traditional products and markets and begin succeeding soon. Specific strategies for achieving a significant share would need to be evolved for individual countries such as Japan, China, Brazil, Russia, etc. The product mix would need to be tailor-made for each major market. This would need to be worked out by the Ministry of Textiles in partnership with the Indian industry. Country specific market studies by institutions in that country would need to be financed by the Ministry for this purpose. The study would form the basis for the implementation of the country- specific marketing strategy.5. Promoting Innovation and R&D The Indian textile and apparel sector is known for its traditional products. India is yet to make its presence felt on the global stage with brands, chains, products, and processes. Without innovation and R&D this would not happen. Business process innovation, building brands and creating designs should be the immediate priority. Environmental concerns would keep rising in this century and India should try and position itself as an eco-friendly hub in the entire value chain of the textile and apparel sector. This combined with being labor-friendly could become India's USP as it tries to achieve a 15% share of the global trade over the next 10 years. 6. Attracting investment in the Sector The key to getting investments in this sector is for returns on investments to appear attractive enough. Investments need to be adequately incentivized. The most important requirement is the maintenance of a competitive exchange rate. The essential prerequisites for getting investments on the scale required would be the ready availability of developed land with adequate infrastructure, skilled manpower and easy connectivity to ports, Creating new mega textile eco system could be the way forward. Lowering the cost of production as well as the cost of logistics would be of paramount importance and should be given the highest priority. Attracting new entry, both through start ps and FDI is essential and would need to be given focusedattention. 7. State Governments’ Support Realizing the employment and value addition potential of the textile and apparel manufacturing sector, several State Governments have come out with their own Textile policies tailored to attract investment in specific sub-segments and specific areas within the State. This is a positive development for the sector. Genuine and constructive partnership with the State Governmentsis essential. Important clearances & approvals like land-use change, land allocation, environment clearance, and power & water echnooak| Gi) connections are all state subjects. To achieve the full potential of the schemes and programmes of the Ministry of Textiles need the cooperation and support of the State Governments. The initiatives of the Central and State Governments need to ‘complement each other for the attainment of the shared national objective. ing Schemes Ministry of Textiles has many schemes and programmes for the textile and apparel sector. Some of the flagship schemes are Technology Upgradation fund Scheme (TUFS), Scheme for Integrated Textile Parks (SITP), Integrated Skill Development Scheme (ISDS), etc. These have been useful and have been contributing to the increasing growth and development of the sector. For the scale and growth momentum that is envisaged, these schemes need to be scaled up substantially. They also need re- engineering and re-calibration to suit the ambitious goals being targeted. 9. New Approach towards Handloom and Handicrafts Handloom and Handicraft sectors employ 15 million people and provide a livelihood to some of the weakest sections of the society. They ‘embody the rich cultural heritage and traditions of India, With development, increasing per ‘capita incomes and change in popular tastes, the scale, and share of production in this sector are experiencing a decline. It is necessary to ‘ensure that the weaker sections who are dependent for their livelihood on Handloom and Handicraft do not experience distress. Measures for supporting the sector need to be augmented, for the attainment of this objective. Itis also necessary to ensure that these rich crafts and traditions survive with higher wages as the income in the country rises. This would be possible only if the demand for these products at higher prices reflecting higher wages is nurtured, both in the domestic as well as international market. This would need imaginative and sustained promotional efforts. TEXCON | Recommendations for Faster Growth of Textile & Apparel Industry 2g 18eohnopak | (GH) Confederation of Indian Industry ‘The Confederation of Indian Industry (Cll) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes Cilis a non-government, not-for-profit, industry- led and industry-managed organization, playing a proactive role in India's development process. Founded in 1895, India's premier business association has around 9000 members, from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 300,000 enterprises from around 276 national and regional sectoral industry bodies. 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We have the ability to be strategic advisors providing customized solutions during the ideation phase, implementation guides through start-up assistance, and be a trusted advisor overall Drawing from the extensive experience of 85+ professionals, Technopak focuses on four major divisions, which are Retail and Consumer Products; Fashion (Textile, Apparel, Skilling and Engineering); Food Services & Agriculture and Education. 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