Indian textile industry

Market overview
‡ The textiles industry accounts for 14 per cent of the total industrial production in India. ‡ At current prices, it accounts for 4 per cent of the GDP ³ US$ 51.36 billion. The textiles segment, comprising cotton, wool, silk, manmade and jute textiles and textile products, has grown by 7.5 per cent between April and November 2009, as compared to 1 per cent in the same period in 2008. ‡ The industry provides direct employment to more than 35 million people and is the second-largest employment generator after agriculture.

Market segments
‡ The textiles and apparel industry can be broadly segmented as ‡ Yarn and fibre (including natural and manmade fibre and yarn) ‡ Processed fabrics (including woollen textiles, silk textiles, jute textiles, cotton textiles and technical textiles), readymade garments (RMGs) and apparel

‡ Abundent raw material availability  Allows the industry to reduce costs and lead times  India is one of the largest producers of natural and man made fibres ‡ Low cost skilled labour Provides a competitive advantage for the industry Hourly wage comparison India ² 0.69 England ² 14.24 Italy ² 15 Japan ² 26 Spain - 8

‡ GROWING DOMESTIC MARKET Low per capita consumption of textiles so lots of scope for growth. Global average-6.8 U.S ² 20 Japan ² 12 India ² 2.8 It is extremely sensitive to fashion trends and fads Cases : Arvind mills: increasing its cotton shirting production from 27 million meters to 34 million meters, thus making excellent use of abundant raw materials. Madura garments: small cities are also getting fashion conscious so MADURA GARMENTS have started setting up exclusive retail outlets in second rung cities like thanjavur and trichy

Fragmented industry ‡ Reduces the ability to expand as few sectors influence the whole industry. ‡ In fabric, large section of the industry is in the power loom and handloom sector. Power loom sector- 63% Handloom sector -19% Mill sector -14% Hosiery sector- 11% Historical regulations ‡ Absence of a viable exit option for industry players. ‡ Certain sectors are reserved for SSI·s like garmenting and knitting.

Global textile industry is likely to grow from US$ 309 billion to US$ 856 billion by 2014  Market share of India now is only 4% , so huge scope of expansion is present  Indian companies need to increase focus on new products  Increase usage of CAD and Trends forecasting to improve efficiency

Case: Welspun India has ties with 12 of the top 20 retailers in the world namely Wal-Mart,JC Penny, Target thereby exploiting the opportunities

Increased competiton Increase in competition due to entry of lower priced imports , who have a better brand name. Ecological and social awareness ‡ Issues such as polluting dyes, child labor, unhealthy working conditions are in the firing line of the industry. ‡ Standards like SA 8000 are being implemented in the industry, resulting in increased pressure on the industry.

Porter s five force model
Threat of new entrants (Low)
‡ Retailing not allowed for foreign players ‡ Huge investments in infrastructure is required ‡ Availability of skilled labors and technical know-how is low

Availability of substitutes (high)
‡ Unorganized retailing ‡ E-retailing ‡ Catalogue sales

Bargaining power of buyers(moderate)
‡ Individually, customers have very little bargaining power within the organized retail stores ‡ Lots of various shopping formats available to shop from ‡ Lots of brand choices available for similar qualities with different price

Bargaining power of supplier¶s(low)
‡ Being bulk purchases done by organized retailer¶s suppliers have very little bargaining power in organized retailing. ‡ Many retailers are doing backward integration and coming out with private labels, thus decreasing dependence on traditional suppliers.

Competitive rivalry(moderate)
‡ Very few national level players ‡ Growth rate ‡ Presence of regional and local players ‡ High competition between the national brands and retailer¶s own