APPAREL INDUSTRY

Presented by: Amitesh Pandey ± F06 Anisha Walia± F07 Walia± Jasmine Malhotra ± F31 Ruchi Rachna ± F57 GROUPGROUP- 3 SECTIONSECTION- F

OVERVIEW ± Global Perspective 

Global garment exports are valued at more than US$310 billion a year, of US$ which the world's top 15 clothing exporters account for more than 80%. 80% Developing countries in Asia continue expanding their Garment Industry due to their very-low-cost production. very-lowproduction. India is the second most preferred country after China for textile and apparel sourcing. Its Apparel industry is likely to achieve an export target sourcing. of US$ 25 billion by 2010-11. Factors effecting like vast sources of raw US$ 2010-11. materials, low labor costs, entrepreneurship and design skills of Indian traders, changes in the policies to open up Indian economy to the outside world etc. etc. Recent data released by Apparel Export Promotion Council (AEPC) showed that apparel exports plunged 11.29% in November 2008 to $621 11.29% million dollars, compared to $700 million during the same period in 2007. 2007. Bangladesh has emerged as a key player in RMG sector (Ready Made Garment Industry). Industry).    

OVERVIEW- Indian Perspective OVERVIEW      

 

14% of total industrial Production and 30% of total exports (in India) Current share in world clothing export ± 3.5-4 % 3.5One of the largest foreign exchange earners. earners. 2nd largest exporter and producer of Apparel Products. Products. 30, 30,000 manufacturing units and 35 million employed. employed. Industry is dominated by sub-contractors and consists mainly of small subunits. units. 55% 55% of investment in technology done for spinning. spinning. Supply base is medium quality with small volume. volume. During 2008, exports of apparel and textile products to US declined by 2008, 0.43% in value terms though export volumes increased by 7.49% due 43% 49% value increase in Rupee

. India.PRODUCTS Major Products:  Garments and Clothing  Home Decor and Furnishings: Furnishings: The majority of home textiles are produced in Asia. and high volume products have contributed to the expansion of exports particularly from China and India. Lower prices Asia.

up gradation of technology.Clothing and other Products: Comprises of jackets. factors. Kanpur. measures. welfare measures. 30% of 30% nd highest mill area after china. UK.Industry and Products: One AccessoriesProducts: of the major manufacturer of accessories with low price and quality products    .PRODUCTS  Handlooms : 30 lakh Weavers. with 7% share in etc. Agra. Textiles. LeatherLeather. importers: USA and UK. 2 competition on quality and value addition factors. promoted through input support. Apparel Accessories. etc. 50% consumption within India. Top importers: Germany. exports. 50% people. Fabrics and Yarns: 8% of GDP. Jalandhar & Delhi employing 15 lakh people. publicity. market support. 23% of total cloth 23% produced. India. footwear. major centers include Chennai. facing export earnings.

APPAREL INDUSTRY : SUPPLY CHAIN Converted to Powerlooms/ Handlooms Distribution Channels .

Large skilled/ unskilled workforce with cheap rate. Sound Export Potential Comprises of effective Supply Chain( Diverse Fabrics to large market) Heavy Production Capacity India has a large fiber base Have a large and organized mill area Economic Upgraded Technology .Competitiveness         Caters basic requirement of people.

Production Centers        LUDHIANA TIRUPUR NEW DELHI BANGALORE MUMBAI CHENNAI JAIPUR .

000 manufacturer-exporters export apparel. need to be exported.000 knitting units registered as producers or exporters. while manufacturerthe roughly 26. exported. brokers. 2. Women ± 17%. India has more than 6. Kids ± 37% 46% 17% 37% 50% prod. merchantexport brokers.000 merchant-exporters serve as 26. the majority are SSI units . 50% of prod. exports has increased from around US$ US$ 14 billion to US$ 19 billion (04-06 to 06-07 ) US$ 0406Current share in world export 3.5-4% Men¶s Apparel 46%.Domestic Industry       Domestic market has grown from US$ 23 billion to US$ US$ US$ 30 billion.

43% April2007. followed by 28.Trends in Export            Exports of Apparel rise up by 18.65 share in apparel). 2006-07) During the period April-Jan 2007. exports of apparel to US declined by 0.21% 29. Italy as compared to last year. Indian Apparel Industry facing competition within Asian countries. apparel). (2006-07).33% of total. Japan.62 billion US$ 19.21% & Export Share grown up by 29. Major export market ± Europe (22% share in textiles & 43% share in apparel). comparing to last year. 22% 43% apparel). Decline in exports to US.(HS 62) year. France. year. Single largest buyer ± US ( 10% share in textiles and 32. Japan. 62) . Largest export segment ± Readymade Garments (45% share in textile exports 45% and 8. year. 10% 32. 43% in value terms though export volumes increased by 7.49% as compared to last 49% year. UK.33% Germany. the total exports has increased to ± US$ 19. countries.25 share in India's total exports) Exports increased from US$ 14 million (2004-05) to US$ 18 million (2007-08) US$ 2004-05) US$ 2007-08) With continuing growth.2% 18. India exports products to more than 200 countries US leads the row of imports from India with 28.

2010. Industry is aiming an export turnover of $50 billion by 2010.50% to reach Rs. US$10.EXPECTED  The demand for ready-made garments in rural India will surge readyat an annual rate of 16.41 billion by 2010. 2010.289 Crore in 2010.50% Rs.918 Crore or 16. 2010. 52. US$10. amounting to more than US$ 100 billion including that for US$ domestic consumption   . 42. 52. 42. The organized apparel retailing in India is projected to surge at an annual averaged growth rate of 30% from 2008 to reach Rs. 30% Rs.

.

Source: Compiled from Apparel Export Promotion Council (AEPCINDIA.COM) .

72 Woven Apparel 5061.21 5423.84 3524.12 Source: Compiled from Apparel Export Promotion Council (AEPCINDIA.94 5221.COM) .05 8948.44 9218.Exports From India In Million US $ Products 2005-06 2005- 2006-07 2006- 2007-08 2007- RMG 8078.84 Knit Apparel 3016.50 3997.

Major Exporters in India           Madura Garments (Indian Rayan) Arvind Mills Ltd Raymonds Ltd. Ltd    Provogue India Ltd. Alok Industries Ltd. Welspun India Ltd. . Bombay Dyeing JNS Fabrics & Exports. Wills Lifestyle Gokaldas Exports Ltd. Primex Apparel Sourcing Services The Outlook Sourcing Services Pratibha Syntex Pvt.

COMPETITIORS (Top 10) China Vietnam Bangladesh Indonesia Mexico Hong Kong Dominican Republic Korea Thailand Philippines .

0 0.8 0.8 0.0 3. China domestic exports re-exports Turkey b Bangladesh b India Viet Nam b Indonesia Mexico a United States Thailand Pakistan Morocco a Tunisia Sri Lanka b Above 15 Share in world exports/imports 1980 1990 2000 2007 Annual percentage change 2000-07 2005 2006 2007 115.2 3.3 11.6 0.6 5.0 86.3 4.0 0.4 24.5 0.9 2.1 4.5 12.8 14.1 1.7 . 2007 (Billion dollars and percentage) Value 2007 Exporters China a European Union (27) extra-EU (27) exports Hong Kong.4 2..3 18 9 10 2 -9 8 12 10 7 22 3 -7 -9 1 9 6 7 2 - 20 3 5 9 -11 18 6 19 26 10 16 -2 -1 3 19 -6 -5 4 - 29 7 10 4 -7 8 2 28 10 19 16 -13 -2 4 8 14 -3 6 - 21 13 19 1 -26 10 16 4 2 29 2 -19 -12 -4 -3 11 18 8 - Sources: INTERNATIONAL TRADE STATISTICS 2008..2 8..3 1.6 2.2 8.3 0.4 1.2 33.4 6.1 0.4 4.2 28.4 79.1 1.4 6.0 10.6 3.9 0.3 2.1 1.8 2.3 298.3 0.2 1. WORLD TRADE ORGANIZATION . 0.7 1.0 23.3 0.1 4.4 29.1 3..2 5.Leading exporters and importers of clothing.1 2.9 5.7 1.8 5.0 1.0 1.4 4.0 1.5 2.9 4.8 28.3 - 8.7 0.2 103.9 7.9 14.2 1.1 0.0 12.2 5.8 3.7 7.6 - 18.2 1.6 3.9 1.6 3. 1.9 2.0 7.1 9.3 .5 0.1 1.5 1.7 3.2 0.

thereby strengthening the quality of the ultimate/final product. surface designs and the final finished garment products. satisfaction. heavy metals. Apparel Industry have ISO Certification Operation incurs heavy expenditure to the manufacturers. etc should be permitted to prevent ecological requirements.Quality Standards  For textile and apparel industry product quality is calculated in terms of quality and standard of fibers. relationship. color fastness. expectations for export are related to the type of customer segments and the retail outlets.     . requirements. which leads to performance improvement. factual approach towards the decision making process. ultimately increasing the level of customer satisfaction. are implemented to lower its operating costs and improve the quality of its output. Only limited use of various chemicals like azo dyes. ISO standards manufacturers. and a mutually benefiting suppliers relationship. ISO standards enable the industry to enhance the quality of raw material input. yarns. odour. fabric construction. However quality products. outlets.

Internal audit and external audit performed periodically ensures effective implementation of Quality Management System Periodical feedback from customers reveals their level of satisfaction Standards are specified on selection of Cotton Yarn. Inspection and testing at each stage of manufacture assures quality requirements are met. Plan-Do(i. met. which complies with the requirements of ISO 9001. Plan-DoCheckCheck-Act). 9001. which gives better results in achieving better quality and on time shipments. Each process is carried out with the PDCA process approach (i.e.Quality Standards (cont«)  Right from yarn purchase to shipment every activity is governed by documented standard operating procedures and instructions.      . shipments.

India has reduced peak rate of customs duty to 20%. in view of the WTO Agreement. and obtain an acknowledgement and part B after the commencement of commercial production. Further more the manufacturers of these products are exempt from obtaining a license to manufacture though they are required to file an Industrial Entrepreneur Memoranda (IEM) in Part 'A' with the Secretariat of Industrial Assistance (SIA).Foreign Trade Policy  Clothing and accessories are classified under HS code 61 and 62.83 61per cent which includes 30 per cent basic duty. All the products listed under these codes are freely importable. 16 per cent additional duty and 4 per cent special additional duty. In the foreign trade policy. certain amendments and inclusions have been done pertaining to specific sectors of textiles and garments specially the handlooms. Certain items of clothing are reserved for small scale industries. Most of the articles falling under HS 61-62 carry an import duty of 56.   .

. contributing 1.     Import duties on capital equipment are low (the majority of the capital equipment used by the apparel industry. Sewing Thread. Duty free import of old pieces of hand knotted carpets on consignment basis for rereexport after repair shall be permitted. Badges. New towns of export excellence with a threshold limit of Rs 250 crore shall be notified. Garment Stay. Fabrics can be imported duty-free if made up into garments and re-exported dutyreImport duties on fabrics and other raw materials are duty free for export production.6% of industrial production and 30 % of total exports. Sequin. textile.FOREIGN TRADE POLICY: TEXTILE & APPAREL INDUSTRY  Handlooms      Specific funds would be earmarked under MAI/ MDA Scheme for promoting handloom exports.  The textile and apparel industry is an important one to India. The apparel industry can import duty free specified trimmings and embellishments like Fasteners. Duty free import entitlement of hand knotted carpet samples shall be 1% of FOB value of exports during the previous financial year. Rivets. can be imported at 5% basic customs duty). Duty free import entitlement of specified trimmings and embellishments shall be 5% of FOB value of exports during the previous financial year. like sewing machines. Tape & others for export production.

the GOI under the quota entitlement policy increased the share of quotas The GOI grants automatic approval within 2 weeks of all proposals involving foreign equity up to 51 percent in the manufacture of textile products in the composite mills and in the manufacture of waterproof apparel products. products. . The GOI created a $16 million ³cotton technology mission´ to increase research on improving cotton productivity and quality.Government Policies Affecting the Industry      Removal of ready-made apparel articles from the list of readyproducts reserved for the SSI sector make foreign firms to invest up to 100 percent in the apparels GOI implemented the Technology Up gradation Fund (TUF) to spur investment in new textile and apparel technologies To boost exports and encourage new industry investment. quality.

Amount of Rs 1000 crores set aside for Technology Up gradation Fund Scheme (TUFs). as the allocated amount in the year¶s Budget is insufficient. to produce 50 percent of its yarn for the domestic market in hank form for use in the handloom sector. (TUFs). insufficient. To promote modernization of Indian industry. Government has decided to sanction additional funds required by textile industry. The GOI plans to reduce the hank yarn obligation from50 percent to 30 from50 percent for all other spinning units. units. sector. which permits a firm importing new or secondhand capital goods for production of articles for export to enter the capital goods at preferential tariffs. .Government Policies Affecting the Industry (cont«)      EOUs and composite mills that produce yarn for captive consumption are exempt from the GOI¶s hank yarn obligation of . tariffs. set up of EPCG scheme.

etc. Appreciation of Rupee Low Institutional Support .Challenges to Indian Apparel Sector        Policies of the Government of India favoring small firms Small units use low levels of technology and produce mostly low valuevalue-added goods of low quality that are less competitive globally India¶s Apparel industry depends heavily on domestically produced cotton Small Unit sector had restricted the entry of large-scale units and largediscouraged investment in new apparel manufacturing technologies India have high energy and capital costs. multiple taxation etc. raw material costs.

. it has over 40 offices in just a span of 30 years. technical guidance. information on international fairs and assistance in participating at these fairs. From just being a quota monitoring entity.APPAREL EXPORT PROMOTION COUNCIL (AEPCINDIA. potential markets. AEPC is quite literally a one-stop shop for information.   For Indian exporters. workforce and market intelligence. oneadvise. It also plays a large role in identifying new markets and leading trade delegations to various countries. Apparel Export Promotion Council (AEPC) has been the moving force behind lot of achievements:   From one office in 1978. AEPC is today a powerful body for the promotion and facilitation of garment manufacturing and their exports.COM)  Incorporated in 1978. Members have access to updated trade statistics. AEPC is the official body of apparel exporters in India that provides invaluable assistance to Indian exporters as well as importers/international buyers who choose India as their preferred sourcing destination for garments.

AEPC showcases the best of India's garment export capabilities through the prestigious India International Garment Fair. identifying the best countries to source machinery and other infrastructure and brokering several path breaking deals for its members and finally helping exporters to showcase their best at home fairs as well as be highly visible at international fairs the world over. while international buyers get superior solutions for their garment imports. the haute. skills and proficiency. playing host to over 350 exhibitors displaying the exotic.   . the contemporary and much more. it makes for a truly win-win situation ± Indian exporters grow stronger each year in their winachievements. Twice a year. With AEPC's expertise and all the advantages that India has.APPAREL EXPORT PROMOTION COUNCIL OF INDIA  In recent years. AEPC has worked tirelessly in integrating the entire industry ± starting at the grass root level of training the workforce and supplying a steady stream of manpower to the industry. the prêt.

The buyer can explore a perfect blend of fashion. textures. . etc. Constructing Apparel House in Gurgaon having 229 manufacturers under one roof. networking with leading Indian and global sourcing agents. style. etc. Features like Showcase of the latest and the trendiest collection of garments at one single platform. conferences. etc. Delhi. quality. designs. fabrics. etc. Asia.PROMOTION AEPC: AEPC:      Introduced project of a world class Trade Mart cum Exhibition Complex in Delhi. fashion shows. which are a mark of quality and style. colors. patterns. accessories and other textile products. A one stop sourcing point for all types of apparel. world class hub for b2b trade. manufacturers and suppliers by organizing activities like exhibitions. the only one of its kind in South Asia.

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