APPAREL EXPORT INDUSTRY

MADE BY:

Nupur Dhanawat
Akanksha Chaudhry
Priyanka Gosain
MBA-IB ,SEC-G

Submitted to

Ms. Garima Tomar

 INDIAN APPAREL INDUSTRY

INTRODUCTION TO THE INDUSTRY

Apparel is one of the basic necessities of human civilization along with food, water and
shelter. The Apparel Industry reflects people’s lifestyles and shows their social and
economic status. The Apparel and Textile industry is India’s second largest industry after
IT Industry. At present, it is amongst the fastest growing industry segment and is also the
second largest foreign exchange earner for the country. The apparel industry accounts for
26% of all Indian exports. The Indian government has targeted the apparel and textiles
industry segments to reach $50 billion by the year 2015.

The growth of the domestic demand for clothing in India is linked with the success of the
retailing sector. India presently has entered the second phase of growth and is witnessing
a massive rise in the domestic demand. This is primarily due to the rise in the standard of
living caused by the rise in the middle-income groups In our present economic world of
demand and supply, price and quality are the key factors, which determine the success of
any business. The key element here though, is the cost of labor.
 The Indian apparel retail industry grew by 12.1% in 2005 to reach a value of $18.3
Billion.In 2010, the Indian apparel retail industry is forecast to have a value of $29.2
billion, an increase of 59.9% since 2005.

The Indian apparel retail industry consists of three major segments – Men’s wear,
women’s wear and Kid’s wear which are explained below.

Men’s wear

Of these three segments, Men’s Wear segment accounts for around 35 %

of the apparel market and is valued at Rs. 46,500 crore.

 It is growing at a CAGR of 11 per cent and is expected to reach Rs

71,900 crore by 2012.
 In terms of volume, the men's wear market is about 160 crore
pieces, which is 27.3 per cent of the total apparel market. It is
expected to grow to 190 crore pieces by 2012.
 Park Avenue, Allen Solly, Peter England and Zodiac are among the
leading brands in the menswear category.

The men’s wear segment has been further characterized as depicted below:
 COATS
CASUAL

COATS
T-SHIRTS FORMAL

MEN’S
SEGMEN
T

JEANS TROUSE
WEAR R

SHIRTS

Women’s wear

The 32680 crore women’s wear segment comprises a 32.3 % share of

the Indian apparel market in value terms.

 In terms of volume, the market share of women’s wear is 1 %

higher (at 28.7%) than that of men’s wear.
 In value terms its share is 4 % lower than that of men’s wear-
mainly because the branded segment in women’s wear was
practically non-existent till a few years back.
 Increasing at a CAGR of over 17%, women apparel market is
expected to cross Rs. 61,000 Crore by 2010.

The women’s wear segment has been further categorized as depicted

below:
 DRESSE
S

T-SHIRTS SAREES
WOMEN’
S
SEGMEN
T

JEANS
WEAR TOPS

SHIRTS/
TROUSERS

Kids’ wear

 Children's apparel includes clothing for kids between 1 and 14

years of age. The market for kids' apparel in India exceeds Rs.
13000 crore, of which around Rs. 3000 crore is constituted by
branded kids' wear.
 The kids' wear market is growing at the rate of 10% per
annum, which makes it one of the fastest growing markets
 According to the India Apparel Report by Images F&R
Research, which has been published in recently released
Images Yearbook 2008, the kids wear market in India
including uniforms has seen a growth of 18.2 per cent in the
year 2007, while kids wear market witnessed annual value
growth of 22.5 per cent in 2007 as compared to 2006.
 Some of the leading brand in kids’ apparel Gini & Jony,
weekender, lilliput etc.

Kids’ wear segment has further been categorized as depicted:

 REGULA
R
DRESSES

UNIFOR
T-SHIRTS
M
KIDS
SEGMEN
T

JEANS TROUSER
WEAR S

SHIRTS

INDIAN EXPORTERS-“ PAST” & “PRESENT”

Beginning in the 1980s, the Indian garment exporters have witnessed a

phenomenal growth in the quantity of garments exported to various foreign
markets. In fact, India today has garments and apparels on the top of its
export list. The chief reason for the high demand of the Indian garments in
the world is the design models that blend traditional and modern fashion
designs.

However, the period of recession has slowed down the process of garment
exports to the foreign markets. Hence, there are some challenges in front of
the Indian exporters to lure garment wholesalers and retailers from various
countries. Here is a discussion about the growth period and the present day
circumstances faced by the Indian garments exporters.

Growth Period
Before the 1960s, there was absolutely no export of readymade garments
from India. For the fiscal yea of 1960-61, the Indian garment
exporters recorded export revenue of INR 0.85 crore. Within a decade, the
readymade garment revenue hiked to INR 30 crore for the year 1970-71. As
per the records, there were two significant growth periods for the Indian
readymade garment export:
 First period started from 1970-71 and continued up to 1975-76 when
the share of garment exports in the total manufactured export
increased from 3.8 to 11.1 percent.
 The second period began in 1983-84 and it seems to have persisted till
date. A major achievement of the garment exporters from India was
recorded in 1992 when the export figure hiked to INR 4,400 crore,
showing a growth of 21 percent from the last year.

The USA and Europe have always been the two major markets for the Indian
exporters of readymade garments. The demand for the Indian handloom
garments and home-grown fabric varieties increased during the above-
mentioned periods.

Recession Period

The first decade of the 21st century saw the rise of a number of competitors
for the Indian garments exporters. Apart from China, the countries like
Vietnam, Bangladesh and Sri Lanka are giving tough competition to the
garment exports from India. For the fiscal year 2008-09, the Indian garment
exporters recorded the foreign sales of $10.2 billion. This accounts for the
2.6 percent share in the total garment exports in the world.

However, there was only a 4.9 percent turnover recorded for 2008-09 which
is half the value of what was recorded the preceding year. The shipment of
Indian garments reduced to the USA as well as to the European Union.

To overcome the situation, the following measures should help the Indian
exporters of readymade garments:
 • Focus on the garment retailers and wholesalers from Asia-Pacific
and other markets to boost the overseas sales of the garments.
• Focus on new and innovative designs to differentiate the Indian
garment designs from others.
• Keep the prices of the exported garments stable for some period of
time to strengthen the demand for the Indian garments.

Also, there is need to emphasize on the garments that are most demanded in the foreign
markets. For example, the children apparel and baby wear from the Indian garment
exporters are still in great demand. The small and medium sized enterprises should
increase their contributions as they have the potential to change the scene.
 DOMESTIC APPAREL INDUSTRY

 The Apparel and Textile industry, is India’s second largest industry after IT
Industry.

 India is today recognized as one of the best sourcing destinations for garments: it
provides a perfect blend of fashion, designs, quality, patterns, textures, colors and
finish.
 The second largest foreign exchange earner for the country.

 The apparel industry accounts for 26% of all Indian exports.

 At present, it is amongst the fastest growing industry segment

 The Indian government has targeted the apparel and textiles industry segments to
reach $50 billion by the year 2015 .

 China on the other hand, has already reached their target of $52 billion in 2004,
and therefore, it is very possible for India to reach its target soon.
 TREND IN EXPORTS

• Exports of apparel rise up by 18.21%& export share grown up by 29.2%

comparing to last year.

• Major export market- europe(22% share in textile &43% share in apparel)

• Single Largest buyer-US (10% share in textile & 32.65 share in apparel)

• Largest export segment –readymade garments(45% share in textile exports

& 8.25 share in India’s total exports)

• Exports increased from US $ 19.62 million 2008 to US $ 21 million 2009

• During the period April-Jan 2007, exports of apparel to US declined by 0.43% in

value terms through export volumes increased by 7.495 as compared to last year.

• India exports products to more than 200 countries

• US leads the row of imports from India’s with 28.3% of total, followed by
Germany, UK, Japan.

• Indian apparel industry Facing Competition within Asian Countries.

 EX

EX

10000
 Major competitors in the global market

In 2009, the largest apparel manufacturers and exporters were countries from
the Asia-Pacific region which included countries like

• China 50%
• Hong Kong 6%
• Phillipines 2%
• Malaysia 1.5%
• Indonesia 2%
• Bangladesh 2%
• Srilanka 2%
• Pakistan 1.9%
• Thailand 3%
• India. 15%
The other major apparel manufacturing nations were USA, Italy, Germany
and Mexico.
 FTP PROVISIONS

Technology Up gradation Funds Scheme(TUFS)

 TUFS was initially launched on 1999 for a 5 year period, and was
extended by the Ministry of Textiles till 31st march 2011.
 Sectors of apparel industry are eligible for concessional loans (of
about 5%) regarding technology up gradation requirements.
 With TUF, low cost capital has become the sole motivator for
existing businesses to expand, and new businesses to enter in the
arena
 To aid the technological up gradation, EPCG scheme at zero duty has
been introduced.

DUTY DRAWBACK SCHEME

 In the duty drawback scheme, the government refunds the duty

charged on the imported inputs used in the export items.

 The duty drawback rates-

COTTON GARMENTS-7.5%
SILK-10%
WOOL-7.5%

FOCUS MARKET SCHEME

 • FMS benefits have also extended for the exports of apparels to
additional new markets .
• 26 new markets have been added in 2009-14 ftp provisons
• Linked Markets for Apparel Sector-
Japan,Australia,Brazil,Algeria,Egypt,Kenya,
Mexico,Nigeria,SouthAfrica,Tanzania,Ukraine, New Zealand,
Cambodia Vietnam
• Incentives have been raised from 2.5% to 3% of the fob value of
exports .

FOCUS PRODUCT SCHEME

 The objective of the Focus Product Scheme is to incentivise export

of such products which have high employment intensity in rural
and semi urban areas so as to offset the inherent infrastructure
inefficiencies and other associated costs involved in marketing of
these products.

 Exports of notified products to all countries shall be entitled

for duty credit scrip equivalent to 1.25% now 2% of the FOB
value of exports for each licensing year commencing from 1st April,
2006

MARKET LINKED FOCUS PRODUCT SCHEMES

• MLPS has been expanded by including- Synthetic textile fabric,

textile ,made ups Knitted fabrics ,Apparels
SPECIAL ECONOMIC ZONES

The SEZ in India is not only aim for an economic growth but also providing
highly developed infrastructure with a good financial package. Today SEZ
have become a large attraction point for not only domestic but also for the
foreign investment.

 Gokaldas Exports is in the process of setting up a 100 per cent export-

oriented apparel special economic zone near Bangalore

 The Export Oriented Units (EOUs) scheme, introduced in early 1981,

is complementary to the SEZ scheme.
QUALITY STANDARDS
 CHALLENGES FACED BY EXPORTERS

 Though the demand for garments is increasing day by day but the
production rate has still not been able to match with the ever rising
demand. More production facilities are needed to meet the demand.

 Most of the raw material needed for apparel manufacturing is

available in the developing or under developed countries and these
countries do not have enough resources and manpower to explore
them. These countries also do not have finance to set up factories for
clothing and garment production.

 Due to globalization the competition has increased and so it is not

very easy for the firms to cope up with so much competition, as they
have to meet the deadlines and also maintain quality.

 The importers of developed economies are facing very stiff

competition as countries like China are producing good quality
products in low prices due to availability of very cheap labour.

 Some trade laws still are very much in favor of developed countries
and they need to be reviewed, to facilitate imports from the
developing countries.

 As apparel industry is fashion driven, and fashion keeps changing, the

firms have to cope with the changing apparel industry trends and still
complete orders in time. Thus they usually have to work under
pressure.
 PROMOTION COUNCILS & COMMODITY BOARDS

TRADE PROMOTION POLICIES & INSTITUTIONS

Apparel Export Promotion Council (AEPC)-

Incorporated in 1978, AEPC is today a powerful body for the promotion

and facilitation of garment manufacturing and their exports through
activities like-

 India International Garment Fair

 Organizes buyer and seller meet
 Participation in international trade fairs
 Dissemination of information through publishing monthly magazine
“Apparel India”
 Maintaining its website aepcindia.com

For Indian exporters, AEPC is quite literally a one-stop shop for

information, technical guidance to work force and market intelligence.
Members have access to updated trade statistics, potential markets,
information on international fairs and assistance in participating at these
fairs.
APPAREL PARKS

Government of India has launched “Apparel Park for Exports” scheme for
imparting focussed thrust for setting up of apparel manufacturing units of
international standards at potential growth centres. The Apparel Parks for
Exports Scheme has come into operation w.e.f. 23.3.2002.Some details of
this scheme are-

 The State Govt. will provide land free of cost for establishing the park
of sufficient size. (The size of an apparel park may be approx. 150-
250 acres, but this can be determined in each case on merits)

 The location of the apparel park will be such that it can easily have
access to ports, airports, raw materials etc.

 The park will have garment manufacturing units with each unit having
atleast 200 sewing machines

Example Vishakapatnam Apparel Parks

 NEWS ARTICLE
• INDIA-ETHIOPIA TRADE TOUCHES US $ 272 MILLION –
POTENTIAL TO FURTHER INCREASE BILATERAL TRADE:
ANAND SHARMA – MEETS DEPUTY PRIME MINISTER OF
ETHIOPIA Date : 02 Dec 10

There was potential to further increase the bilateral trade between both
countries, especially the Ethiopian exports to India, in view of the Duty Free
Tariff Preference (DFTP) Scheme announced by India. The Scheme
provides for duty free market access on 85% of India’s total tariff lines and
Margins of Preference (MOP) on 9% tariff lines. “There is scope for
increased trade and joint ventures in areas such as agriculture & agro-
processing industries, floriculture, textile and garments.

• AEPC invites proposal for adopting and implementing a Common

Compliance Code in the Garment manufacturing units spread all over
India.

Council is aims at making India the global benchmark for social compliance
in apparel manufacturing and export. With this objective, the Council has
embarked on a project - Driving the Industry towards Sustainable Human
Capital Advancement (DISHA) ( oct 10 )
 Sources

• indian exports and business trade zone [online] Available at:

http://www.india-exports.com/apparel.html [Accessed on
2010/12/15]

• Introduction to apparel industry [online] Available at :

http://www.iigm.in/apparel.html Accessed on 2010/12/15]

• Fashion apparel and industry overview [online] Available at :

http://www.fashionproducts.com/fashion-apparel-overview.html
Accessed on 2010/12/16]

• Apparel overview [online] Available at:

http://www.teonline.com/apparel-garments/industry-
overview.html Accessed on 2010/12/16]

• Department of commerce [online] Available at :

http://commerce.nic.in/ Accessed on 2010/12/17

• Aepcindia.com [online] Accessed on 2010/12/17

• Ftp 2009-14