India Textile Sector Report Roll No 1 2 3 4

8/13/2019 India Textile Sector Report Roll No 1 2 3 4

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Submitted By

Abhay kumar 12810001

Abhimanyu Malik 12810002

Abhinav Mishra 12810003

Abhishek Kumar Dubey 12810004

MBA1st Year

Department Of Management Studies,

IIT Roorkee

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The growth rate of the clothing industry has almost doubled in the last 8 years and knitted

segment has grown faster than the woven segment and the hopes are pinned to this segment

to drive the textile industry and act as an engine of growth.

The steady flow of foreign exchange is one of the dominant features of the economic

contribution of the textile industry. Successive government policies have encouraged ways to

exploit our comparative advantage to increase exports.

The Indian textile industry can be divided into several segments:

Cotton Textiles Silk Textiles Woollen Textiles Ready-made Garments Hand crafted garments Jute & Coir

Today, rapid changes in the world trading system have endangered the stability of the Indian

textile industry. In a world that is fast losing its traditional boundaries & boundaries seem

insignificant there is a need to bring about technological & structural changes.

Opening up of vast markets for Indian textiles that were earlier regulated has given us an

opportunity of free trade & secure our well deserved position of leaders in the world textile

arena.


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not coastal. These places were used to cater internal demands and carry on trade with foreign

countries through the land. Examples are Rajputs and Mughals.

Kashmir was famous for its woollen weaves and embroidery. Cities like Banaras, Ujjain and

Indore were known for their fine silks and brocades. Rajasthan excelled in patterned prints

and dyed cloths. Museums at Ahmadabad and Delhi showcases collection of Indian textiles.

Early textile machines produced in Germany and Britain were modelled on the basis of

Indias manually operated machines.

In 19thcentury once flourishing Indian textile industry began to decline. The reasons behind

the decline of Indian textile industry are - the invention of powerloom , monopoly East India

Company I, heavy tariff on Indian cotton exported to Britain, exemption of duty on British

staples imported into India and raising of duties on Indian goods from time to time. Below

data shows the decline of Indian cotton industry India-

Year 1814 1821 1828 1835

British cotton

imported, 1000

yards

81.8 1913.8 4282.2 5177.7

Year Export (1000 Pounds) Import (1000 Pounds)

1815 1300 26.3

1832 100 400

The modern textile industry had its origin in the early 1800s when the first textile mill in the

country was established at fort Gloster near Calcutta in 1818.

The first cotton mill In India was established in 1854 in Bombay by Parsi family. That

marked the start of modern cotton industry. Parsi where pioneer in early modern mill

establishment and they used to export their products to Asia and Africa. In 1861 the first

cotton mill was established in Ahmadabad which soon became a famous centre for textile

industry. Gujarati community played a crucial role in the establishment of Ahmadabad as a

major force in textile industry. In second half of 19 thcentury cotton industry spread quickly

and there were 178 cotton mills. However the cotton industry was badly hit by great famine

in 1900s and many mills has to be closed. World wars proved to be a stimulus for Indiantextile industries supported by Swadeshi movement. , during the period 1922 to 1937 the


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industry was in bad shape as these mills owners changed. There was a steep increase in

number of mills from 178 to 249 during a period of 1901 to 1921.Consequently the number

of looms also had seen a rise to 13.35 lakhs from 4 lakhs during the period. By the end of the

world war number of mills operational were 417 and it gave employment to about 5 lakhs of

workers. The cotton textile industry is indeed a swadeshi indsutry as it was developed by

Indian businessman and capital during the struggle for freedom.Partition of India had

negative impact on the textile industries as 14 mills along with 22% of land producing cotton

where now a part of Pakistan.

2.2 Post-Independence EraPost-independence, the textile industry made quick development under the various five year

Plans on government of India. In order to promote the growth of textile industry it has past

important acts.

Some of them are listed as below-

Central Silk Board Act, 1948

The Textiles Committee Act, 1963

The Handlooms Act, 1985

Cotton Control Order, 1986

Number of spindles rose to 22 million from 11 million during the tenure 1952 to 1982.

It increased further to well over 26 million by 1989-90.

In 1974 Multi Fiber Agreement was implemented as a short duration step for giving a limited

a time period to the developed countries for making adjustments in their textile industries so

that they can cope up with the stern competition faced by developing countries. The textile


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industries are characterized by their labor intensive nature of goods production. Availability

of surplus labor at low cost puts developing countries at an advantageous position. They can

supply goods at low price. The motive behind this policy was to remove all types of quota

system from the apparel and textile industry all over the world so that a level playing field

could be established.MFA was removed ion 01.01.2005.

The Indian textile industry went through major structural changes after the quota era. Many

industry expert expected Indian textile industry to grow at much higher rate and become a

major force in world.

Below bar graph showcases the production of fabric from year 2002 to 2007


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With the increasing understanding of the underlying strengths and weaknesses of the industry

arose a need for utilizing the opportunities and minimizing threats, the government has come

up with many policy measures. Some of them are listed as below

The Technology Upgradation Fund Scheme (TUFS) was enacted in April 1999 toprovide easy access to capital for technology upgrade by various sections of the

Industry.

In order to address the serious issues faced by core fabric of cotton like lowproductivity,lack of storage capacity ,contamination e.t.c. the government has

enacted The Technology Mission on Cotton (TMC) was enacted in February 2000 .

Textiles Export Quota Policiy 2000-2004 National Textile Policy -- 2000 National Jute Policy-2005 Textile Export Quota Policy 2000-2004

2.3 Current scenarioIn the 2nd decade of 21st century the prospect of Indian textile industry looks bright though it

has to overcome a number of roadblocks. Currently it contributes about 14 percent of

industrial production, 4% of Indias GDP and 17% of net export earnings. Production of raw

cotton grew to 32.5 million bales in 2011 from 28 million bales in 2007.While the production

of raw cotton rose to 1281 million Kgs in 2011 from 1139 million Kgs in 2007.India has

potential to increase its textile and apparel share in world from its current level of 4.5 percent

to 8 percent .During 2008-2009 recession textile industry was badly hit however it is on the

course of recovery.FICCI has projected CAGR of textile industry to be 9.5 percent and its

size to be $221 billion by 2012.

The Indian textile and apparel market worth $58 billion and is expected to grow at a rate of 9

percent. If it grows at the forecasted CAGR it will be worth $141 billion by 2021. Overall,India's textile and apparel exports were at $31 billion in 2011 and are growing at an annual

rate of 10 per cent since 2005.Contribution of apparel export is the most in terms of revenue.

It is followed by the contributions from other types namely fibre, fabrics .However in recent

years in terms of cumulative annual growth rate fibre tops the list.

Below are the stats provided by ministry of textiles with respect to Indias recent

performance.
http://texmin.nic.in/policy/policy_2000.pdfhttp://texmin.nic.in/policy/jutepolicy2005.pdfhttp://texmin.nic.in/policy/jutepolicy2005.pdfhttp://texmin.nic.in/policy/Gar-quota.pdfhttp://texmin.nic.in/policy/Gar-quota.pdfhttp://texmin.nic.in/policy/Gar-quota.pdfhttp://texmin.nic.in/policy/jutepolicy2005.pdfhttp://texmin.nic.in/policy/policy_2000.pdf


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.

One of the recent development in the field of textiles is the advent of FDI . Below data

presents the current FDI status in textile sector.


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irrigation and the latest technological knowledge do not reach to the farming community.

The price of cotton is very encouraging in the last decade due to high demand of cotton both

in the national market as well in the international market particularly import demand from

China.

The cotton price had reached record high Rs 168 due to increased price the demand of

synthetic cotton has increased and the price of cotton settled to normalcy. According to Crisil

research the demand of cotton will continue to grow at a CAGR of 4.5 to 5.5 percent.

Jute is a major industry in Eastern India particularly in West Bengal, it is mainly used for

packaging its and demand is constantly increasing in the past decade. India is the largest

producer of Jute, the production of jute has increased by 28%.Silk is an oldest textile industry; India is the 2nd largest producer of Silk after China. India

produces four varieties of silk mulberry, Erie, Muga and Tasar silks. Mulberry dominates

the silk industry with 80.2% .In 2011-12 the production of raw Mulberry silk has increased

by 11.2% YOY basic .Indian Silk textile industry is facing stiff competition from artificial

silk which is both cheaper and good in quality . In order to improve the quality of raw silk

and bring new technology government has established Central Silk board .The Central Silk

Board is doing research and development activity to improve the quality of silk even it is

collaborating with developed countries like Japan.

Wool and Woollen Textile: Wool textile industry is very small in India and India is the

seventh largest producer of Wool in the world. Woollen textile mills are mainly located in

northern India, around 40% of the woollen textile mills are located in Punjab, 27 % Haryana

, 10% in Rajasthan. The production of indigenous wool was 47 Million kg in the 2010-11.

India depends on imports for high quality wool particularly from Australia and New Zealand.

The wool processing sector is very un-organized due to which the production of wool has not


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increased as per expectation .The government has established the Central wool development

Board in Jodhpur to look into Woollen Textile industries.

3.2 Man-made Fibre (MMF) :With the advent of new technology and increasing innovation the consumption and demand

of MMF is increasing, in international market the consumption ratio of natural fibre to

artificial fibre is 60:40 but in India it is viceversa. The total value added export market of

MMF is 146.7 billion USD in which India contribution is mere 3.3 billion USD .MMF

Textile constitutes 63 percent of the world trade but in India textile is still predominated by

cotton and MMF constitute just 16.4 percent.

Issues faced by the Indian MMF Industry

High Excise duty: Cotton and natural fibre are always favoured it in India, While cotton and

natural fibres exempt from excise duties. MMF is burdened with a high excise duty, in last

decade excise duty is reduced but still MMF has an excise duty of 8%.

Few players: There are very few players in the manufacture of MMF fibres in India.

Lack of indigenous specialized MMF: In spite of having potential we are dependent on

imports for high quality MMF such as nylon66, nylon 11, acetate etc.


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In domestic industry the rural segment constitutes 54% of ready-made garments and urban

segment constitute 46% .The growth of domestic market size is very consistent at a rate of

6.4% CAGR. Like other sector of textile this sector is also very fragmented with numerous of

player. This sector is quite different from traditional textile sector design, marketing,

branding are key elements of this segment. Latest fashion and innovation are key for success

in this segment. The government has taken right initiatives by opening technical institute like

National Institute of Fashion Technology to increase the manpower and increase the technical

capability of Indian textile in the field of textile and fashion technology, Many new private

institutes is also coming in the field of textile and fashion technology. These institutes will

play a pivotal role in giving a new dimension to emerging ready-made garment sector


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Private Limited , Visakhapatnam; Inspira Infrastructure (India) at Butibori Industrial Area

.,Nagpur; Deccan Infrastructure and Land Holdings Limited, Akutotapally and Mahabub

Nagar ; Alok Infrastructure Private Limited, Silvassa; Mahindra City SEZ , Tamil Nadu;

Surat Apparel Park ,Surat; Welspun Anjar SEZ Limited,Rajkot ; KIADB ,Hasan; Brandix

India Apparel City Private Ltd, Achutapuram ;Pradip Overseas Limited, Ahmedabad;

Mahindra World City,Jaipur; Orient Craft Infrastructure , Gurgaon;Jindal WorldWide

Limited,Ahmedabad; Gokuldas Exports Apparel and Textile Park Pvt. Ltd ,Bangalore.


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The market is likely to grow to US$31 billion by 2020, implying a CAGR of 10%. Thetextile industry plays important role in growth of defence, railways, & other

government institutions.

The Government of India has proposed the establishment of several Centers ofExcellence for training the workforce in textile industry. These are aimed at creating

facilities for testing & evaluation and developing resource centers.

Calendar year wise break up for FDI approved by Govt. Of India from January 2000March

2012

Year FDI approved Amount of FDI Approved (in Billion)

Rs US $

2000 47 2.321 0.054

2001 22 0.291 0.006

2002 28 0.657 0.014

2003 36 0.379 0.008

2004 20 1.098 0.024

2005 9 2.972 0.068

2006 7 0.647 0.015

2007 1 0.005 0.0001

2008 4 0.209 0.005

2009 2 0.284 0.006

2010 2 0.228 0.005

2011 2 0.191 0.004

Total 180 9.283 0.209

Updated on 07.09.2012

Source: Department of Industrial Policy & Promotion, Ministry of

Commerce and Industry, Govt. of India


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The nearing advent of FDI in retail will boost the FDI in textile & help the downwardtrend (as shown in above table).

With consumer trends & per capita income on the incline, the retail sector has rapidlygrown in the past decade. Several international retailers are also focusing on India dueto its emergence as a potential market.

5.2 Challenges

While Indian exports are on the rise, profits are sliding as the prices have come downby 8-20 % and the industry is on a verge of shakeout.

Importing nations now prefer suppliers with vertical production system rather thanspread out production facilities, Indian exporters are expected to work on their mass

production techniques.Of 1,500 Indian exporters only 15 have turnovers of $50

million plus.

Infrastructure development is the need of the hour. With power & water constitutingnearly 37 % of the cost, there should be proper supply in adequate quantities.Subsidies to SMEs should be reinstated.

India also has to deal with inefficient port handling facilities. Competitors like Chinawith excellent infrastructure & port handling techniques have a competitive edge.

FDI in retail is an opportunity but if not handled well the MNC retailing organizationsmay hijack the Indian garment industry & reduce India to an outsourcing center for

major textile & garment exports.

The recent bloom in technical textile has emerged as the major cause in the fall of thehandloom industry of our country. The local weavers & artisans involved in manual


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weaving are facing extreme internal competition from the power looms. If not andled

properly the handloom industry may die a premature death.

To offset competitive disadvantage the Indian textile industry will have to expandvertically & set up scale of economic units while dealing with infrastructure

bottlenecks.


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6. .32.@:;632India has a long history of quality textile production right from the Indus valley

civilization.It suffered setback during the british rule because of unfair policies and

competition from powerloom and new tecgnology for production.However afterindependence it flourished once again and now is a force to reckon with.In global textile

industry, India is still a small player contributing just 4.5 percent of the export.The major

global forces are China and USA.With increasing labor wage,aging population and

environmental concern Chinas domination in Textile is not sustainable for long.This really

gives a good chance for India textile industry in International market.In domestic market too

textile sector have huge growth potential.India domestic textile and apparel market is

growing at a rate of 10 % annually .With the huge availability of raw material in the country

, new technology , government support, educated and technically competent population India

textile sector's future looks very bright.


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H0 5(8(5(2.(; Ministry of Textile ,Annual Report. Crisil Annual Report on Textile sector. India Textile Report By: Dr. P. Chellasamy and N. Sumathi http://texmin.nic.in/

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India Textile Sector Report Roll No 1 2 3 4