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Textile Industry Profile

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    INTERNSHIP REPORT SUBMITTED BY: UNDER THE GUIDANCE OF Indian Textile Industry Introduction Indian textile industry contributes about 14% to industrial production, 4% to the country’s gross domestic product (GDP) and 16. 63% to export earnings. Nearly 40% of the textiles produced in the country is exported and the textiles sector is the biggest employment generator after agriculture. The sector is expected to generate 12 million new jobs by 2010. The sector targets US$ 6 billion foreign direct investment (FDI) by 2015 to be invested in green field units in textiles machinery, fabric and garment manufacturing, as well as technical textiles.

    India has made inroads into the markets of its key competitors which include Asian countries such as Sri Lanka, Bangladesh, Vietnam and Cambodia. The Indian textile and apparel industry is taking a new course by entering the Chinese market. Most of the top global apparel retailers, such as JC Penny, Nautica, Docker and Target, have their sourcing network in India. Indian textiles and apparel exports, which is worth US$ 22 billion, is expected to register a four-fold increase to touch US$ 90 to 100 billion in the next 25 years. Government Initiatives

    Government has taken the following initiatives to uplift the Textile Segment: 1. The Government has announced the release of a subsidy of US$ 533. 87 million for the textile industry under the Technology Up-gradation Fund scheme (TUFs). 2. The government extends 10% capital subsidy and 5% interest subsidy on installation of machineries and for processing machinery under the TUFS. 3. A 41-member Working Group has also been announced to be set up with a National Fiber Policy, to ensure self-sufficiency in fiber consumption and export requirements in India. . The Textiles Committee has also been reconstituted in order to ensure standard quality of textiles both for internal marketing as well as exports. The committee will also establish laboratories and test houses for testing of textiles. 5. In addition, an online marketing and sales portal has also been launched by the textile minister. The e-marketing platform, developed by the Central Cottage Industries Corporation of India and the Handicraft and Handlooms Export Corporation of India, will host more than 1,000 wide ranging handicrafts and handlooms products.

    It will also provide online services, such as e-payment facility through major debit/credit card as well as online tracking of the shipment. 6. Moreover, the Ministry of Textiles is considering setting up textile parks at Vidarbha and Marathwada, the largest cotton growing regions in Maharashtra. Currently seven textile parks are already in various stages of completion in Maharashtra. Technical Textile Segment Technical textiles segment is expected to employ over 300,000 additional workers increasing the total employment in the sector to 1. million by the year 2012. The Government has set up four Centres of Excellence (CoEs) for Meditech, Agrotech, Geotech and Protech group of technical textile, providing one-stop facilities for testing, human resource development and research and development. Advantage India India offers cheaper production and marketing costs and enormous opportunities that have tempted Taiwanese companies to work on joint ventures with Indian companies, especially for the manufacture of manmade fabrics.

    Several European textile and textile machinery manufacturing companies have shown interest in sourcing garments from India. Textile companies were keen to set up base in India due to the cheap labour available here. India offers various incentives like low-cost labour and intellectual right protection to foreign investors. The country allows 100% FDI in the textiles sector. Investments According to the Minister for Textiles, Mr Dayanidhi Maran, around US$ 5. 14 billion of foreign investment is expected to be made in India in the textile sector over the next five years.

    Indian textile companies are expanding their manufacturing facilities to industrial fabrics to tap new customers in the construction, automobiles and healthcare sectors, who are currently importing these products. Also, some of the major global luxury apparel retailers are eyeing markets like India. According to industry analysts, the market for luxury and premium brands in India is estimated at about US$ 1. 3 billion – US$ 1. 5 billion and growing at about 25-30%. * Retail apparel firm Koutons India plans to open 100 new stores by fiscal. Alok Industries, S Kumars Nationwide, Jindal Cotex and SRF are keen to expand their footprint. * Ludhiana-based Jindal Cotex is investing US$ 49. 6 million in two units in Himachal Pradesh to make medical and industrial textiles. * S Kumars Group projects to invest 10 billion rupees over the next 5 years to set up new technical textiles facilities in India. It will introduce three international brands by the end of this fiscal. * Tyre cord maker SRF Ltd is setting up a plant for laminated fabrics in Kashipur in Uttarakhand. Mumbai-based real estate developer Ackruti City plans to set up a US$ 65. 19 million textile park on 60 acres in suburban Biwandi near Mumbai. * Raymond Ltd is planning to target revenues of US$ 42. 69 million with the launch of 300 more retail shops by March 2011. * World’s leading lingerie brand, Triumph International, plans to invest over US$ 216. 75 million in India to open 12 more flagship outlets and 30 additional EPS (Exclusive Partner Stores) during the year. Indian Textiles in Global Market India has made a name for itself as a garment manufacturing centre of global renown.

    The textiles and garments industry contributes 16. 63% of India’s export earnings; around 45% of this comes from garment exports alone. The garments industry provides employment to around 3. 5 million people across the country. Delhi, Mumbai, Tirupur, Bangalore and Chennai are the five major garment production hubs, producing exclusively for the exports market. Karnataka has a sizeable presence in the garments and textiles sector; many well-known multinational brands have chosen this state to set up their global sourcing centres.

    Leading garment manufacturers like Tommy Hilfiger, Marks & Spencer, Gap, H&M, Matalan, Mothercare, George, etc, employ Karnataka’s largest un-organized workforce. In Bangalore alone there are 500,000 workers in the garments industry, in 1,200 factories spread across the city. The phasing out of the Multi Fibre Agreement (MFA) in 2005 was a great opportunity for small factories to increase garment production for exports. As the market became highly competitive, only factories that could produce at the lowest cost survived; many were forced to close shop.

    Thus, stiff competition was inevitable among different factories in the country and also among the countries of the third world that were able to produce garments at a much lower cost than India. There were instances where India lost orders to China and Bangladesh. Just a couple of years ago, India was at second position in garment exports, after China; today it stands sixth with countries like Bangladesh and Vietnam higher up the ladder. Again, the pressure to produce at lower and lower costs is adversely impacting the worker at the lowest end of the chain. ———————————————— Note: ————————————————- The Multi Fiber Arrangement (MFA, also known as the Agreement on Textile and Clothing (ATC)) governed the world trade in textiles and garments from 1974 through 2004, imposing quotas on the amount developing countries could export to developed countries. It expired on 1 January 2005. ————————————————- The MFA was introduced in 1974 as a short-term measure intended to allow developed countries to adjust to imports from the developing world.

    Developing countries have a natural advantage in textile production because it is labor intensive and they have low labor costs. Key advantages of India which has lead to steady growth in the Industry 1. Labour advantage * India has abundant availability of manpower with skill sets across all activities of the textiles value chain. * India’s cost advantage over comparative countries has been well established and is applicable for this sector as well. 2. Abundant and low-cost availability of raw-materials * A variety of raw materials like cotton,silk, jute and wool are available in the country. This inherent strength in avalaibility of raw materials prevents any supply-side shocks. * In terms of cost, India has an advantage over comparative countries. 3. Growing domestic demand * Disposable incomes have been rising steadily in India. * The consuming class is expected to constitute 80% of the population by 2010. * Change in consumer mindset has led to an increasing spend on consumption, including textiles. 4. Government Support * Govt. encourages institutes such as National Institute of Fashion Technology (NIFT), Apparel Training and Design Center (ATDC) and engineering colleges to offer courses in textile engineering. The technology Up-gradation Fund Scheme (TUFS) for the textile sector has been extended until 2011-2012. * Revival of sick mills by National Textile Corporation. * Encoraging public – private partnerships in textiles. Source: www. texmin. nic. in – statistics Environmental factors affecting Garment Industry. 1) Demographic Environment * Increase in growing population has fueled to growth in apparels and garment industry * Garments are manufactured different age groups and genders 2) Economic Environment Demographic trends in India are changing, with increase in disposable income levels, consumer awareness and propensity to spend. According to NCAER data, the Consuming Class, with an annual income of US$ 980 or above will reach 80% by 2010 * There is a change in the consumer mindset towards increased consumption on personal care and lifestyle products as well as branded products. * Rapid rise of supermarkets, showrooms, theme stores and franchises across urban India 3) Socio-cultural Environment Diverged Social cultural environment in India has made Indian garment manufactures to produce wide variety of garment * Westernization in most parts of India has given rise to modern garments. * Indian festivals are always hot cake for garment manufactures 4) Natural environment *

    Climatic factors are also contributing garment manufacturing. * Most of cool regions in India use more woolen made garments, hot regions use cotton made cloths. * Leathers garments, which are made of semi-finished hides and skins, flexible polyurethane foam, polyurethane make inevitable damage to the natural environments ) Technological Environment * Revolution in IT sector has also contributed a global edge for Indian garment manufactures * Information gap is filled by using ERP (enterprise recourse planning * Technology are incorporated in cloths to make clothing a pleasure * Smart Fabric Technology™, which gives trousers the amazing power to absorb coolness from the atmosphere (they say an air-conditioned office ) * There also dresses like electromagnetic radiation protection trousers, fire proof wears 6) Political Environment Union Budget 2005-06, the Government of India announced a credit linked capital support of 10%, in addition to the existing 5% interest reimbursement for modernizing the garment processing sector * FDI in the apparel and textile industry has been recently opened up, as liberalization has gathered steam. * Foreign companies act more as partners in building domestic manufacturing capabilities rather than a threat to Indian businesses. Porter’s Five Force Analysis of the Textile Industry SWOT Analysis of Indian Textile Industry Strengths: * Indian Textile Industry is an Independent & Self-Reliant industry. Abundant Raw Material availability that helps industry to control costs and reduces the lead-time across the operation. * Availability of Low Cost and Skilled Manpower provides competitive advantage to industry. * Availability of large varieties of cotton fiber and has a fast growing synthetic fiber industry. * India has great advantage in Spinning Sector and has a presence in all process of operation and value chain. * India is one of the largest exporters of Yarn in international market and contributes around 25% share of the global trade in Cotton Yarn. The Apparel Industry is one of largest foreign revenue contributor and holds 12% of the country’s total export. * Industry has large and diversified segments that provide wide variety of products. * Growing Economy and Potential Domestic and International Market. * Industry has Manufacturing Flexibility that helps to increase the productivity. Weaknesses: * Indian Textile Industry is highly Fragmented Industry. * Industry is highly dependent on Cotton. * Lower Productivity in various segments. * There is Declining in Mill Segment. Lack of Technological Development that affect the productivity and other activities in whole value chain. * Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and transportation Time. *

    Unfavorable labor Laws. * Lack of Trade Membership, which restrict to tap other potential market. * Lacking to generate Economies of Scale. * Higher Indirect Taxes, Power and Interest Rates. Opportunities: * Growth rate of Domestic Textile Industry is 6-8% per annum. * Large, Potential Domestic and International Market. Product development and Diversification to cater global needs. * Elimination of Quota Restriction leads to greater Market Development. * Market is gradually shifting towards Branded Readymade Garment. * Increased Disposable Income and Purchasing Power of Indian Customer opens New Market Development. * Emerging Retail Industry and Malls provide huge opportunities for the Apparel, Handicraft and other segments of the industry. * Greater Investment and FDI opportunities are available. * The growth opportunities exist in following areas: * Medical textiles * Construction textiles Packaging textiles * Baby diapers * Home textiles( with fire-retarded fabric) * Blankets and Traveling rugs * Bed, tale, toilet and kitchen linen * Curtains, drapes, interior blinds * Furnishing articles * Sacks and bags * Tarpaulin, sail, tent, camping goods * Increased use of CAD to develop designing capabilities Threats: * Competition from other developing countries, especially China. * Continuous Quality Improvement is need of the hour as there are different demand patterns all over the world. * Elimination of Quota system will lead to fluctuations in Export Demand. Threat for Traditional Market for Powerloom and Handloom Products and forcing them for product diversification. * Geographical Disadvantages. * International labor and Environmental Laws. * To balance the demand and supply. * To make balance between price and quality. * Need to revamp Consumer Consciousness Future of the Textile Industry Apparel Export Promotion Council (AEPC), which comes under Union Ministry of Textiles has undertaken the task of attracting foreign direct investment by showcasing the huge untapped domestic market in India.

    The AEPC highlighted the conducive environment for manufacturing in the sector and raised the slogan of “come, invest, produce and sell in India”, coined by Textiles Minister, Dayanidhi Maran. The ministry has plans to take delegations to Switzerland, Italy and Istanbul followed by visits to France, Germany and the US. The aim is to tap foreign capital towards establishing green field units in textiles machinery, fabric and garment manufacturing and attracting investments in the field of technical textiles. India offers various incentives to foreign investors like low-cost labour and intellectual right protection.

    The government has allowed 100% FDI in the textiles sector. India has a vertical and horizontal integrated textiles value chain, and represents a strong presence in the entire value chain from raw materials to finished goods. The Synthetic and Rayon Textile Export Promotion Council (SRTEPC) has set a target to more than double the export of man-made textile from the country. Presently, the global man-made fibre (MMF) trade accounts for 60% of total trade in textiles and India accounts for less than 3% at US$3. 41 billion. SRTEPC plans to increase exports to US$ 6. 2 billion by capturing 4% market share by 2011-12.

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