SCHOOL OF COMMERCE

Devi Ahilya Vishwa Vidyalaya, INDORE

Bachelors in Commerce
(Accounting and Tax Management)
2018-21

A study on cotton textile industry

Guided By-
Submitted By-
BATM/18/1256
 CONTENTS

Chapters

01 INTRODUCTION
02 INDUSTRY PROFILE
03 LITERATURE REVIEW
04 OBJECTIVE OF STUDY
05 RESEARCH METHODOLOGY
06 EXPORT TREND
07 MAJOR MARKETS
08 POTENTIAL MARKETS
09 POTENTIAL PRODUCTS
10 GOVERNMENT SCHEMES
11 DATA INTERPRETATION &
ANALYSIS
12 S.W.O.T ANALYSIS
13 CONCLUSION
14 BIBLIOGRAPHY
INTRODUCTION

The textile industry is primarily concerned with the design, production and
distribution of yarn, cloth and clothing. The raw material may be natural or
synthetic using products of the chemical industry. Its outputs are- Denim, cotton
cloth etc.

Cotton is the world's most important natural fiber. In the year 2007, the global yield
was 25 million tons from 35 million hectares cultivated in more than 50 countries.
There are five stages:

Cultivating and Harvesting

Preparatory Processes
Spinning — giving yarn
Weaving — giving fabrics
Finishing — giving textiles
Cotton can be obtained in many ways like from weaving, knitting, even by using
hand looms and power looms

Synthetic fibres
Artificial fibres can be made by extruding a polymer, through a spinneret into a
medium where it hardens. Wet spinning (rayon) uses a coagulating medium. In dry
spinning (acetate and triacetate), the polymer is contained in a solvent that
evaporates in the heated exit chamber. In melt spinning (nylons and polyesters) the
extruded polymer is cooled in gas or air and then sets. All these fibres will be of
great length, often kilometers long.
Artificial fibres can be processed as long fibres or batched and cut so they can be
processed like a natural fiber.

Natural fibres

Natural fibres are either from animals (sheep, goat, rabbit, and silk-worm) mineral
(asbestos) or from plants (cotton, flax, sisal). These vegetable fibres can come from
the seed (cotton), the stem (known as bats fibres: flax, hemp, jute) or the leaf
(sisal).Without exception, many processes are needed before a clean even staple is
obtained- each with a specific name. With the exception of silk, each of these fibres
is short, being only centimeters in length, and each has a rough surface that enables
it to bond with similar staples.

1.1 History

The archaeological surveys and studies have indicated that the people of Harrapan
civilization were familiar with weaving and the spinning of cotton for as long as four
thousand years ago. Reference to weaving and spinning materials is found in the
Vedic Literature. There was textile trade in India during the early centuries. A block
printed and resist-dyed fabric, whose origin is from Gujarat, was found in the tombs
of Foster, Egypt. This proves that Indian export of cotton textiles to Egypt or the
Nile Civilization in medieval times were to a large extent. Large quantity of north
Indian silk was traded through the silk route in China to the western countries. The
Indian silks were often exchanged with the western countries for their spices in the
barter system. During the late 17th and 18th century there were large export of the
Indian cotton to the western countries to meet the need of the European industries
during industrial revolution, apart from the domestic requirement at the Indian Ordnance
Factories.

The Textile industry was the major component of economic income in India before
the English colonies. "The hand-loom and the spinning-wheel, producing their
regular myriads of spinners and weavers, were the pivots of the structure of that
society," described by Karl Marx. The English colonies had changed the structure
of the old Textile industry and pushed it moving from small workshops into
factories. They had exported extremely huge amounts of cotton and
brought industries and English free trade into India. Eventually, the traditional type
of Textile industry was weeded out.

1.2 PRESENT SCENERIO

Indian textile industry is one of the largest industries in India. It is the second
largest industry in terms of providing employment opportunities to more than 35
million people in the country. Indian Textile industry contributes to 7 per cent of
industrial output in terms of value, 2 per cent of India's GDP and to 15 per cent of
country's export earnings.
India's overall textile exports during FY 2017-18 stood at US$ 39.2 billion. The
size of India's textile and apparel market recorded USD 108.5 billion in 2015 and is
expected to reach USD 226 billion by 2023, growing at a CAGR of 8.7 per cent
between 2009 and 2023.
India is the second largest producer and exporter of cotton in the world at $6.3
billion, marginally close to China.
India has emerged as the largest producer of cotton in the world with the
 production of 345 lakh bales in 2016-17 and second largest exporter after
China.
Currently, the cotton industry is sustaining livelihoods of 5.8 million farmers and
40-50 million people engaged in other activities like processing and trading.

India is the largest producer of jute in the world.

The Sericulture and Silk Sector: India is the second largest producer of silk in the
world, producing around 18 per cent of the world's total silk.
Mulberry, Era, Tasar, and Mugna are the main types of silk produced in the
country. It is a labor-intensive sector.
In order to follow the goal of making India's development inclusive, the central
government is focusing on a number of policies in providing best manufacturing
and infrastructure to local artisans, technology and innovation, enhancing skills and
strengths of the local industry.

‘
INDUSTRY PROFILE

REFERENCE:https://commerce-app.gov.in/eidb/ecom.asp
MAJOR LOCATION OF COTTON TEXTILE INDUSTRY IN INDIA:
 REFERENCE:https

://www.sarthaks.com/745195/describe-briefly-factors-affecting-localisation -textile-industry-
mention-textile-producing
CHAPTER-3
EXPORT TRENDS
Total export of cotton products for 10 year i.e.,2009 to 2019
YEAR EXPORT (Values in US $ Million)

2009-10 4,612.28

2010-11 6,926.14

2011-12 8,922.04

2012-13 8,937.03

2013-14 9,926.42

2014-15 7,717.95

2015-16 7,313.24

2016-17 6,611.05
 2017-18 7,045.26

2018-19 7,888.29

The Compound Annual Growth Rate (CAGR)

FORMULA: - CAGR = (EV / SV) ^ (1/n)-1
EV= INVESTMENT'S ENDING VALUE = 7888.29
SV=INVESTMENT'S STARTING VALUE = 4612.28
N= NO. OF INVESTMENT PERIOD
( For %= CAGR*100)
CAGR = 6.14

NEXT FIVE YEARS PROJECTION :

YEAR EXPORT DATA

2019-20 836.691

2020-21 880.063

2021-22 942.591

2022-23 1000.466

2023-24 1061.894

CHAPTER-4
MAJOR MARKETS

5205 - COTN YRN(OTHR THN SWNG THRD)CNTNG 85% OR MORE BY WT OF COTON NT

PUT UP FR RETL SALE

Year 2018-2019
others 1,315.98

CHINA P RP 1,270.10

BANGLADES 708.65
H PR

PAKISTAN IR 199.39

EGYPT A RP 176.38

KOREA RP 135.27
REFERFENCE:https://commerce-app.gov.in/eidb/ecom.asp
5208 - WOVN FBRCS OF COTON CONTNG>=85% BY WT OF COTON WEGHNG NT MORE
THN 200 G/M2

Year 2018-2019
others 676.14

BANGLADES 136.68
H PR

SRI LANKA 107.84

DSR

SENEGAL 82.65

KOREA RP 67.95

TOGO 51.04
REFERFENCE:https://commerce-app.gov.in/eidb/ecom.asp
5209 - WOVN FBRCS OF COTTON, CONTNG >=85% COTN BY WT WEIGHING>200 GM
PER SQM

Year 2018-2019
others 151.77

BANGLADES 225.54
H PR

USA 27.43

KOREA RP 23.54

SRI LANKA 23.51

DSR

EGYPT A RP 14.53
 REFERFENCE:https://commerce-
app.gov.in/eidb/ecom.asp
6302 - Madeups Linen( Kitchen/Bed/Toilet)

YEAR 2018-19

Others 369.77

USA 971.42

UK 82.97

GERMANY 70.99

CANADA 48.42

AUSTRALIA 40.21
 REFERFENCE:https://commerce-
app.gov.in/eidb/ecom.asp
6304 :OTHER FURNISHING ARTICLES, EXCLUDING THOSE OF HEADING 9404

YEAR 2018-19

others 509.13

USA 1,042.03

UK 93.14

GERMANY 84.31

SPAIN 50.71

AUSTRALIA 41.69
 REFERFENCE:https://commerce-
app.gov.in/eidb/ecom.asp
6305: SACKS AND BAGS, OF A KIND USED FOR THE PACKING OF GOODS

YEAR 2018-19

others 444.23

USA 206.72

UK 75.36

GERMANY 71.34

NETHERLAND 67.83

SPAIN 63.19
 REFERFENCE:https://commerce-
app.gov.in/eidb/ecom.asp
6307: OTHER MADE UP ARTICLES, INCLUDING DRESS PATTERNS

YEAR 2018-19

others 247.42

U ARAB EMTS 88.92

USA 85.86

NIGERIA 55.94

UK 26.63

AFGHANISTA 20.98
N TIS
REFERFENCE:https://commerce-app.gov.in/eidb/ecom.as
CHAPTER-5

POTENTIAL MARKET

CHAPTER - 52 - COTTON ( YARN, FIBRE, FABRIC)

1. Bangladesh
2. China
3. Pakistan
4. Portugal
5. Korea
REFERFENCE:https://commerce-app.gov.in/eidb/ecom.as
CHAPTER - 63 - COTTON ( MADE UPS )

1. Australia
2. Canada
3. Fiji
4. Georgia
5. Spain
REFERFENCE:https://commerce-app.gov.in/eidb/ecom.as
CHAPTER- 6

POTENTIAL PRODUCTS
HSCode Commodity 2017-2018 %Share 2018-2019 %Share %Growth

5205 COTN YRN(OTHR THN SWNG 3,367.23 1.1094 3,805.84 1.153 13.03
THRD)CNTNG 85% OR MORE
BY WT OF COTON NT PUT
UP FR RETL SALE

5208 WOVN FBRCS OF COTON 1,019.40 0.3359 1,122.43 0.34 10.11

CONTNG>=85% BY WT OF
COTON WEGHNG NT
MORE THN 200 G/M2

5209 WOVN FBRCS OF COTTON, 444.93 0.1466 466.37 0.1413 4.82

CONTNG >=85% COTN BY
WT WEIGHING>200 GM PER
SQM

6302 BED LINEN, TABLE LINEN, 1,542.25 0.5081 1,583.84 0.4798 2.7
TOILET LINEN AND
KITCHEN LINEN

6304 OTHER FURNISHING 1,623.26 0.5348 1,821.12 0.5517 12.19

ARTICLES, EXCLUDING THOSE
OF
HEADING 9404
 6305 SACKS AND BAGS, OF A 798.09 0.2629 928.71 0.2814 16.37
KIND USED FOR THE
PACKING OF GOODS

CHAPTER-7

GOVERNMENT SCHEMES
1 MEIS

2 ALL INDUSTRY RATES OF DUTY DRAWBACK

3 INTEREST EQUALIZATION SCHEME

4 TECHNICAL TEXTILE SCHEME

5 SCHEME GUIDELINES FOR PILOT PHASE TO SET UP CENTERS

IN MANUFACTURING

6 SCHEME GUIDELINES FOR TEXTILE INDUSTRY WORKERS

7 IPDS- INTEGRATED PROCESSING DEVELOPMENT SCHEME

8 MEGA CLUSTER SCHEME

9 SCHEME FOR POWERLOOM SECTOR

10 COMPREHENSIVE CLUSTER EVELOPMENT SCHEME

11 REVISED COMPREHENSIVE POWERLOOM CLUSER DEVELOPMENT SCHEME

REFERENCE: https://www.hepcindia.com/latest-policy/
http://texmin.nic.in/schemes
CHAPTER-8

SWOT ANALYSIS
8.1.STRENGTH
I. Raw material base
India has high self sufficiency for raw material particularly natural fibres. India’s cotton crop is
the third largest in the world. Indian textile Industry produces and handles all types of fibres.
II. Labour
Cheap labour and strong entrepreneurial skills have always been the backbone of the Indian
Apparel and textile Industry.
III. Flexibility
The small size of manufacturing which is predominant in the apparel industry allows for greater
flexibility to service smaller and specialized orders.
IV. Rich Heritage
The cultural diversity and rich heritage of the country offers good inspiration base for designers.
V. Domestic market
Natural demand drivers including rising income levels, increasing urbanisation and growth of the
purchasing population drive domestic demand.

8.2. WEAKNESS
I. More dependence on cotton
Due to over specialization in cotton, the bulk of the international market is missed out, synthetic
products in India are expensive and fabric required for items like swimsuit, sky-wear and
industrial apparel is relatively unavailable.
II. Spinning Sector
Spinning sector lacks modernization and there is a need of introducing new
technology. III. Weaving Sector
India has relatively less number of shuttle-less loom.

IV. Fabric Processing

Processing is the weakest link in the Indian textile value chain, adversely affecting its ability to
compete in exports.
V. Poor Infrastructure
High power costs and long export lead times are eroding India’s export competitiveness across
the textile chain.
VI. Low Labour Productivity
Productivity levels for manufacturing various apparel items are far lower in India in comparison
with its competitors.

8.3. OPPORTUNITIES
I. Growing Industry
World textile trade would continue to grow at a rate of 3-4% to reach $200-210 billon by 2010.
II. Market access through bilateral negotiation
The trade is growing between regional trade blocs due to bilateral agreements between
participating countries.
III. Integration of Information technology
‘Supply Chain Management’ and ‘Information Technology’ has a crucial role in apparel
manufacturing. Availability of EDI (Electronic Data Interchange), makes communication fast,
easy, transparent and reduces duplication.
IV. Opportunity in High Value Items
India has the opportunity to increase its UVR’s (Unit Value Realization) through moving up the
value chain by producing value added products and by producing more and more technologically
superior products.

8.4. THREATS
I. Decreasing Fashion Cycle
There has been an increase in seasons per year which has resulted in shortening of the fashion
cycle.

II. Formation of Trading Blocks

Formation of trading blocks like NAFTA, SAPTA, etc; has resulted in a change in the world
trade scenario. Existence of bilateral agreements would result in significant disadvantage for
Indian exports.
III. Phasing out of Quotas
India will have to open its protected domestic market for foreign players thus domestic market
will suffer.

REFERENCE:
https://www.ukessays.com/essays/marketing/swot-analysis-of-indian-textile-industry-marketing
essay.php
CHAPTER-9
CONCLUSION
Cotton is under constant threat from artificial fibres, and presence of contamination is one of its
main weaknesses. If this not controlled at the origin, it will have a serious impact on the whole
cotton industry in the long run. Spinners might prefer to spin artificial fibre yarns and blends,
rather than investing in expensive electronic equipment and still running a high risk in spinning
cotton and its blends. It is high time for cotton growers, ginners and supporting organizations to
get together and act on this issue, especially to minimize fibrous contaminants such as
polypropylene, coloured threads, coloured cloth pieces and hair.

Textile industry contributes 14% to industrial production and 4 per cent to GDP. With
employment to 45 million people, textile industry is one of the largest source of employment
generation in the country. The industry accounts for nearly 13 per cent of total export earnings of
India ..

The Indian textile industry is at present is one of the largest and most important sector in the
economy in terms of output foreign exchange earnings and employment in India. The Textile
industry has the enriched 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. 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. Bricks re
gistered a further growth of 9 percent over the corresponding period of the previous year.

REFERENCE: http://www.cottonguide.org/cotton-guide/cotton-value-addition/conclusion/