Presented by Gaurav Goyal

Roadmap of the Presentation

Why did we choose the Indian textile industry? SWOT Analysis of Indian Textile Industry Agreements related to textiles Government initiatives European Union India- EU trade relations Conclusion

Why Indian Textile Industry?

Sunrise Sector The textile industry is the one of the largest industries of modern India as it contributes about
14 % to industrial production, 4 % to the country's GDP 17 % to the countrys export earnings 12% share of the country's total exports basket
[Source: Annual Report 2009-10 of the Ministry of Textiles]

Single largest employer in the industrial sector employing over 35 million people

Indian Textile Industry

Indian Textile Industry

Cotton Textile

Man-made

Silk

Woolen

Jute

Organized Sector

Decentralized Sector

Cotton Mills

Handlooms

Power Looms

Vision

To ensure the growth of the Indian textile industry at 16 percent per annum in value terms, to US$ 115 billion, by the end of the Eleventh Five Year Plan (2007-2012)

To secure a 7 percent share in global textile trade by the end of the Eleventh Five Year Plan.
Source: planningcommission.nic

Catalysts for exponential growth

Buoyant Domestic economy Substantial increase in cotton production Government Policies
TUFS Quotas Expiration of MFA on 31st Dec 2004

Problems and Challenges

Sickness Obsolete Technology Cotton grown per hectare of land is very low Competition from man-made fibers

FDI in Textiles

[Source: cci.in]

 Apparel Export Promotion Council (AEPC) Sponsored by Ministry of Textile Monitors Quotas and conducts trade fairs Cotton Textile Export Promotion Council Autonomous, non-profit export promotion council International face of Indian textile

Handloom Export Promotion Council Statutory body

Indian Silk Export Promotion Council

Strengths
Independent and self-reliant Vertical and horizontal integrated textile value chain Globally competitive spinning industry

Low wages
Unique strength in traditional handlooms and handicrafts

Weaknesses
Highly fragmented and technology backward textile processing sector Except spinning, all other segments are predominantly in decentralized sector Rigid labour laws Infrastructural bottlenecks in terms of power, utility, road transport, port handling capacities etc. Higher taxes and interest rates

Opportunities
Large potential domestic and international market

Revolution in organized retailing

Increased disposable income Availability of cheap finance Emerging retail stores and malls

 Global recession triggered by a weakening dollar

Higher competition from China, Pakistan, Bangladesh Non-availability of indigenous textile machinery. Lack of domestic capital

Abundant availability of raw material Low cost Flexibility Skilled labour Ability to produce customized apparels

Dominated by unorganized sector Highly competitive and fragmented Entry of foreign players

Product development /design Cheap and abundant raw material Well developed IT capabilities Developed textile machinery industry

Large domestic potential Favourable demographics Growing income and purchasing power Growth of organized retail malls

On January 1st 1974, the Arrangement Regarding the International Trade in Textiles known as the MFA came into force. Non-Tariff Barriers Short term agreement Agreement on Textiles and Clothing (ATC)

 In 1993, a study found that the price of cotton yarn per kilo was cheapest in India at US$ 2.79 In US textile and apparel imports, China and Hong Kong had higher market shares than India. The effect of trade liberalization on India :

increased output
employment increased profits

 Introduced on 1999 To overcome technological obsolescence and create economies of scale Transition from quantitatively restricted textiles trade to market-driven global merchandise Crucial for all the inter-connecting sectors such as spinning, weaving, knitting, processing and garmenting

 Launched to create new textile parks of international standards. Merging of APE & TCIDS Objective: to provide the industry with worldclass infrastructure .

Birth of European Union

After the second world war, Politicians in several countries of Europe were convinced that the only way prevent another war in Europe is to unite the countries economically and politically

 Single currency managed by European Central Bank (12/27 members) Free movement of persons, goods, services and capital

Common Agricultural, Trade, Fisheries, Foreign and Security Policy

 Relations between ancient India, Greek, and Roman empires are 2000 years old. Relations between India and EU began in 1963 with EEC

EU AND INDIA
The year 2009 marked 46 years of formal relations between India and the EU. India is one of the growing economies. The EU is Indias first and largest partner.

India-EU Round Table is a significant steps towards greater mutual cooperation in all fields.

EU-INDIA Merchandise Trade

 In 2004 India became one of the few EU strategic partners.

In addition to multilateral and bilateral negotiations with India, the European Commission works on a day to day basis.
To assist India in continuing its efforts to better integrate into the world economy.

The EU-India FTA

India was an obvious partner for one of the new generation of EU FTAs launched as part of the Global Europe strategy in 2006.
Negotiations for such FTA were launched in June 2007 and, so far, nine negotiating rounds have been held.

INDIA TRADE WITH EU

EU-India trade has grown impressively over the years. The EU accounts 1. 21% of Indias total exports 2. 16% of Indias total imports. India accounts for a more limited but rapidly growing share of EU trade: 1. 2.4% of EUs total exports 2. 1.9 % of the EUs total imports. India ranked 10th in the list of the EUs main trading partners in 2008, up from 15th in 2002.

 EU-India trade:28.6billion in 2003 to over 55billion in 2007. EU investment to India:759million IN 2003 to 2.4billion in 2006. EU- India trade in commercial services:5.2billion in 2002 to 12.2billion in 2006 Trade in goods EU goods exports to India 2009: 27.5 billion EU goods imports from India 2009: 25.4 billion Trade in services EU services exports to India 2009: 8.6 billion EU services imports from India 2009: 7.4 billion Foreign Direct Investment EU outward investment to India 2009: 3.2 billion Indian inward investment to EU 2009: 0.4 billion EU technical and financial trade assistance to India 13.4million

Global Trade in Textile and Clothing

In 2003, the overall global trade in textiles and clothing amounted to US $ 385 billion, of which textiles alone contributed 43%. Developed countries contribute about one third of the total global exports of textile and clothing. List of products and services which are exported from India. Indias export stats to the world. India Export to EU.

Indian Export Of Textiles To EU

EU overpowered USA as becoming the largest market for textiles and clothing. Asia predominates the EU market in both clothing and textiles, with 30% and 17 % share. India is one of the leading suppliers of textile products and ranked fourth with a market share of 5.2% (US $ 0.45bn).

Implications on Indian Exports.

Effects Of The Economic Crisis Since 2008

Production as well as consumption levels have experienced a sharp decrease from June 2008 to June 2009. For the entire year 2009 a general decrease of 11% .

EU Textile and Clothing export figures, exports have decreased by 17% with a decline of textile exports by 18% and by 16% of clothing exports.
Since July 2009 a slow stabilization of these levels can be observed and since January 2010 a recovery is observed.

 According to FICCI, 71% of participating companies have said their organization perceives the EU as an important export market. Present status of doing business with central and Eastern Europe, according to industry response:Not exporting, 45%

Exporting, 55%

Plans for exporting the EU, Of the companies that are not presently exporting to the EU , 85% intent to export to this region in the near future.

 According to FICCI, 71% of participating companies have said their organization perceives the EU as an important export market. Present status of doing business with central and Eastern Europe, according to industry response:Not exporting, 45%

Exporting, 55%

Plans for exporting the EU, Of the companies that are not presently exporting to the EU , 85% intent to export to this region in the near future.

 There are tremendous opportunities. As per FICCI Indias trade volume with each country can easily de doubled in less than three year. Uniform trade regulations. A uniform duty structure. Common technical specification. In those countries that have joined the EU there is a big possibility of entering into joint ventures as well as outsourcing services from these countries. Good time to set up representative offices in these countries and undertake tailor-made marketing campaigns.

 Invest in research and development. India needs to move from the lower-end markets. The government also needs to make policy changes like dereserving the small-scale sector. Handlooms by their very nature can adopt a strategy of niche marketing. Need for a cradle-to-grave approach. Efficiency and output of handloom and power loom sectors also needs to be increased.

commerce.nic.in wto.org planningcommission.nic texmin.nic.in aepcindia.com worldtradelaw.net ec.europa.eu