Chapter 12

Industrial Analysis:
Textiles, Electronics
and
Automobiles

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 Learning Objectives

• Analyse the impact of economic reforms

on different industries

• Understand the strength, weakness,

opportunity and threat of various sectors

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 INDUSTRY STRUCTURE

Textile Industry
Spinning Weaving & Knitting Fabric Processing Garment Manufacturing

Power-Loom Hand-Loom Mill

• Fragmented
• Large number of intermediaries

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 Importance of Textiles In Economy
● Employs 3.5 crore people and is the second highest
employer
● Contributes 1/5th to the total export earnings
4% to the GDP
● One-fifth of the total industrial production
● Fortunes of one out of every 6 households
● High capital employment ratio has immense potential to
promote employment
● Pervasive across the length and breadth of this country

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 Major Players and Performance
Table 3: Quarterly Performance
Net Profit (Rs Crore)
Company
Name April-June 05-06 April-June 04-05 % change
Arvind Mills 45.1 18.2 148.3
Century
Textiles 46.1 19.9 131.7
Raymonds 18.8 3.1 506.5
Suryalakshmi 8.7 3.8 129.7
Welspun India 10.8 4.2 157

Source: Balance-sheet of the companies

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Major Players And Performance

Indices Comparison Chart

120.00
100.00
80.00
60.00
CITI Index Month-on-
40.00 Month % Change
20.00 BSE Index Month-on-
Month % Change
0.00
-20.00
-40.00
-60.00

Source: Textile Times

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 Government Initiatives
● Ministry of Textiles
● FDI is freely allowed in the sector
● Provided an additional allocation of Rs. 1000 crore in the
10th Plan period
● National Textile Policy (2000)
● Apparel Parks for Export Scheme (APE)
● Textile Centre Infrastructure Development Scheme (TCIDS)
● Provide 10% Capital subsidy for processing under TUFS

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 Government Initiatives
● Duty structure reforms
● Formulated Hi-tech Weaving Park Scheme
● Group Insurance Scheme
● The government is also actively promoting the “Made in
India” brand around the world.
● De-reserved knitting sector from the ambit of Small Scale
Industries (SSI)
● Accelerating Labor & Power reforms to enhance the
competitiveness of the Indian textiles
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 Growth and Opportunities

● Strong domestic demand

● Growth rate of 18.2% in 2004-05 as compared to a
negative growth of 3.2% in 2003-04
● Possible to achieve a growth of the textile economy
from the current $ 37 billion to $ 85 billion by 2010
● Creation of additional 12 million jobs in Textile Sector
● Share in world textile trade would most likely rise from
the current 4% to 8% by 2010

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 Growth and Opportunities

● Achieving export value of $ 50 billion by 2010

● The country could nearly quadruple its share of the

US market to 15 per cent from 4 per cent in 2002 –WTO

● The Indian textile industry has seen an investment of

about Rs 50,000 crore in the last five years
● Foreign labels like Walmart, Levis, Gap, JC Penny,
Marks & Spencer

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 Growth and Opportunities
Product
exported
(billions $
USD) 2000-2001 2006 Target CAGR
Yarn,
Fabric,
and Made-
Ups 6.53 12 13%
Apparel 5.57 11 16%
Total 12.1 23 14%
Sources: Ministry of Textiles and Various Export Councils
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India As A Sourcing Hub

Sources: Ministry of Textiles and Various Export Councils

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India As A Sourcing Hub

Source- Foreign Trade Statistics of India (Principal

Commodities & Countries) DGCIS

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 Problems and Threats

● Obsolete technology
● Unwillingness of the banking sector to finance the
● modernization
● Restrictive labor regulations
● Infrastructural constraints/bottlenecks
● Small scale also brings with it the problem of
productivity
● Global logistics disadvantage
● Competition from China
● Lack of Investment

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 Strengths

● Indian industry is amongst the very few in the world

that is truly vertically integrated
● Indian industry has over the years steadily
diversified its raw material base
● In addition to this, Indian industry has consistently
remained flexible in terms of production quantity and
lead time.
● During recent years there has been qualitative
improvement in management assets as well

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 Strengths

Source of Export/Import data from DGCI&S, Kolkata

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 Strengths

● India has the second largest

spinning capacities in the world.

● Among the abundant

workforce, the fabric or garment-

making skill is very high

● India's cost advantage

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 Recent Developments

● The Quota Free World

● Standardization

● Right to Information Act

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 Concluding Remarks

Gandhiji always said, “The swaraj of my dream

is the poor man’s swaraj. The spinning wheel
and the spinning wheel alone will solve, if
anything will solve, the problem of the
deepening poverty in India.” The textile sector is
indeed poised to play a huge role in alleviating
the economic problems of millions.

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 TEXTILES SECTOR
CITI for Competitiveness

The projections of CITI – Indian textile industry would

be worth US$ 85 billion by 2010 from the present level
of US$ 36 billion. Other targets – textile exports of US$
40 billion and 12 million additional jobs in textile
industry – achieve India’s share of 8% in the world
textile markets.

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INDUSTRIAL PRODUCTION – GROWTH RATES
IN TEXTILES (% change)

Year Industry
2000-01 2
2001-02 4.1
2002-03 5.3
2003-04 7.9
2004-05 9.6
Source: Textile Times, CITI, August 2005

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 MARKET WATCH

CITI Index covering 30 textile scripts from different

textile segments, i.e., spinning and weaving units,
garmenting and textile machinery companies, with
January 2002 as base period. Index is based on full
market capitalisation.

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 CITI STOCK INDEX AND BSE SENSEX
COMPARISON
CITI Index % change BSE Index % Change
Jan ’02 100 3311
Jan ’04 665.99 5696
June ’04 548.25 -6.77 4795 -15.8
Jan ’05 529.01 -3.03 6556 33
Feb ’05 1051.91 98.84 6714 2.41
Mar ’05 1141.98 8.56 6492 -3.29
April ’05 872.87 -23.56 6154 -5.21
May ’05 1002.58 14.86 6715 9.11
June ’05 1009.72 0.71 7194 7.13
July ’05 1081.44 7.01 7248 0.75

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 MARKET WATCH contd.

CITI Index moved up much faster compared to

BSE SENSEX, indicating that textile is a
sunrise sector. Price of scripts of JK
Synthetics, Racron Fibres, Century Tex,
Bombay Dyeing, Dawn Mills, Malwa etc.,
increased at rapid rate.

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 CONCLUSION
● India’s increased openness has been an important factor
in explaining healthy industrial growth in the mid 1990s.
● Indians do not purchase domestically produced goods.
Therefore, no demand for items made in India. The
market in India has become destination of many
exporters from foreign countries and the Indians have
entered into a stage where consumer’s sovereignty rule
in its real sense. Free Trade force domestic companies
to compete with MNCs.
● Opportunities at the top of the pyramid.

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 BIBLIOGRAPHY

●Textile Times by CITI India

●Foreign Trade Review by IIFT
●http://texmin.nic.in/
●http://www.ciionline.org
●http://www.ibef.org/industry/textiles.aspx
●http://www.taindia.com/index.htm
●http://www.textileintelligence.com/
●http://www.citiindia.com/

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