Indian Textile Industry: An Overview
The Textile Industry is offering one of the most basic requirements of the community and it is important; preserve continuous growth for the development of quality of life. From the manufacture of raw materials to the delivery of final products, it has earned its kind of position, as a self-reliant sector and with considerable added value at each stage of the business; It is a key input for the country’s economy.
Today, the textile and garment industry occupies an important position in the Indian economy. Being the main earner of foreign exchange with around 35% in its torso, contributing around 30% of India’s exports and 14% of industrial production, expecting more than 6% of GDP in 2005, and considered as the second largest employment initiator vital sector after agricultural sector.
current scenario
Under the World Trade Organization (WTO) Agreement on Textiles and Apparel, the textile quota scheme of quantitative import limitations under the multi-fibre agreement (MFA) came to an end on January 1, 2005, thus , developing countries like India will prosper in the new competitive atmosphere and as a result, the Indian textile industry will have a stronger place in both its export and domestic markets.
Along with its usual yarns and fabrics, India currently exports more than 100 ranges of garment products. Many world leading brands like Banana Republic, Tommy Hilfiger, Gap, Liz Claibome, Polo etc source products from India.
With huge investments, persistent innovations, the latest product mix and planned marketing, today, India has become a flourishing outsourcing hub for the textile and garment industry to meet the global requirements of manufacturing fiber products and threads. In view of the growing relationship with major global brands, the dismantling of the 2005-era quota system would affect India as the world’s leading outsourcing hub.
Competitive advantage and potential growth in the synthetic textiles sector
India’s synthetic textiles sector is relatively modern and has high growth potential that will help India become a major outsourcing hub. With a compound annual growth rate of over 22%, MMF textile exports have expanded to a level of US$1.62 billion in 2002-03 from small exports in 1954. Export growth in 2002-03 matches the previous year was in the balance of 30 percent, and MMF’s textile sector is the only sector where performance has exceeded this year’s target of US$115 million.
Indian synthetic textiles are increasingly capturing new markets as well as maintaining market share in existing markets. Today, India’s synthetic textile exports are directed to more than 175 countries worldwide, where the Middle East accounted for more than 32 percent of our exports and the share of the extremely quality-conscious in the European Union. , about 23 percent.
Over the years, the Indian MMF textile sector has built an export base; and the share of MMF textile exports in India’s total textile export also increased, the share rising from 10.38% in 2000-01 to 11.46% in 2001-02 and further to about 14% in 2002-03.
Currently, Indian exports of synthetic textiles to the US are increasing by more than 90% per year. It has also been noted that export growth will be surprising for major MMF textile items after the dismantling of the quota system from 2005.
Also, exports of synthetic textiles from Indonesia and Korea are declining compared to the previous year. Korea’s manufacturing capacity has decreased by more than 30% in the polyester filament sector in 2002 and 2003 and is expected to decrease further, which will end with a drop in its exports of polyester filament fabrics. Due to the anti-dumping duty on polyester filament fabrics sourced from Taiwan and Korea, countries like Brazil will have more opportunities for India as a major exporter of synthetic fabrics.
In the world, India’s share of trade in synthetic textiles is also increasing. The export share of Indian synthetic textiles worldwide increased from 0.11% in 1971 to 1.12% in 1991 and further to about 3% in 2002. This suggests an increasing performance of Indian synthetic textiles in the World Market.
There is still an opportunity to explore new market segments such as Latin America and Africa, as well as maintain share in established markets such as the European Union and the US. At this stage, 15% annual growth is expected for synthetic textiles and Exports are expected to reach US$2.5 billion in 2005-05 and US$4.3 billion in 2009-10.
Why has India become a major hub for BPO?
The Indian textile industry with its exclusive return is projected to emerge as the most important supplier in the world. The encouraging aspects, which would promote the emergence of India as a BPO hub for textiles, are as follows:
Strengths:
1. Low labor cost: The industry is mainly labor oriented and automation has been carried out in a large number of processes hence the availability of cheap labor.
2. Low raw material cost: The raw material sourcing cost is lower in India due to the world’s third largest cotton producer.
3. Wide selection of products: Due to many ethnic fashion trends and cultural diversity, it offers a larger selection of products.
4. Increase of the national textile market: There is a huge possible growth of the industry due to the increase in income and population of the middle class.
5. Bulky Exports: In foreign markets, India has been the established exporter of garments.
6. Government Concentration: The textile industry is considered by the government to be the second largest generator of employment, which can work for its support.
Opportunities:
1. An optimistic opportunity: International apparel retailers are excited about doing business in India.
Textile outsourcing in India will expand with buyers in the US, Europe and Africa due to the huge support of low cost and skilled workers and adequate availability of raw materials in India. Due to the cost reduction of successful supply chain management, you will expect global retail customers like Wal-Mart, JC Penney, etc. Previously, JC Penney, an international clothing retailer, sent a team to India to study the trend of the textile industry, and after showing them the benefits, they are showing interest in doubling down on outsourcing from India after the multi-fiber deal ends. And they are optimistic and expect the growth of the Indian textile industry.
2. Innovative Opportunity: Indian Fashion Industry Tagged Outsourcing Signs
Even after computers and textiles, India’s fashion outsourcing attracts international buyers like Saks Fifth Avenue and Browns, who hope to be rich in unique aspects of Indian design that have a ready market abroad. Recently, visiting buyers from Dubai, Pakistan and Hong Kong, the US, the UK and France visited the Lakme India Fashion Week show and drew attention. These buyers are seeing an opportunity for Western clothing with Indian details.
3. Printing opportunity: The Indian textile industry has been famous for its excellence and enchanting colors for more than 5,000 years and has attracted experts from all over the world. The textiles of India bear the imprint of the excellent craftsmanship of the Indian weaver. The ability to weave with dexterous fingers, draw models and generate designs, is a great skill that has been offered through generations from father to son, since time immemorial, also regional areas have their particular types of fabrics and accompaniments providing new attention. . Regional arts skill, generational arts skills, new screen printing and new digital computer software technology will bring evergreen opportunities to India and soon it will emerge as a world center of art and design.
4. Innovative Government Efforts
. Applications with a project cost of Rs 18,467 crore have been approved for funding in the amount of Rs 8,505 crore, under the Technology Upgrade Fund Schemes (TUFS), by the Indian Ministry of Textiles . For the weaving and transformation sector, the interest rate subsidy has also been increased within the framework of the TUFS, which guarantee the production and export of quality products with added value.
. Export Garment Parks and Textile Center Infrastructure Development Plan, Garment Sector Stockpiling, Specialty Textile Parks, EOU and EPZ have been established.
. Investment ceilings rise and FDI is freely allowed in the textile sector
. To improve the productivity and quality of cotton, it presented a Technological Mission on Cotton
. Reduction of the basic customs duty on textile machinery and selected spare parts
. Additional Excise Taxes on Textiles and Textile Goods (AT&T) and Additional Excise Taxes (Quite Important Goods) Act eliminated
. Reduction of excise duty on polyester filament yarn
. Government liberalization policies and innovative supports in recent years have shown tremendous growth.
. Government has adopted the simplification of procedures and paperwork for exporters.
. The small batch diversified production system dominates in the Indian textile industry and can better handle changes in the form of demands.
. Investments in Jacquard Weaving & Printing are increasing in the Indian textile industry, these high value-added quality products will add importance in the world market.
. Market Development Assistance (MDA) has been further increased to enhance marketing and focus on Latin America, Africa and Asia regions.
. With countries like Sri Lanka, Mercosur, Singapore, South Africa, Bangladesh, Thailand and China etc., a number of special trade agreements have been signed which will lead to rapid growth of Indian exports.
. Employment generation:
The textile sector itself has the potential to create employment opportunities of Rs 1.2 crore in the next five years. The government would continue to encourage growth within the textile industry as it has huge potential for employment and exports.
prospecting market
According to a Mc Kinsey study, India could be the main supplier to the EU and US market after the post-quota regime. Although market share in the post-quota regime would determine the basis for the various preservation actions to be taken by the US market.
The study also notes that exports from major players in Hong Kong, Korea, Indonesia, Taiwan, the Philippines and Thailand would decline.
Indian textile exports are projected to reach US$15 billion in fiscal year 2005-06 from US$13.6 billion last year. This includes a significant part of the outsourcing of the largest retail chains. Exports are expected to reach US$50 billion by 2010, of which garments will contribute US$25 billion. The targeted segmented markets for Indian textiles and garments are USA, UAE, UK, Germany, France, Italy, Russia, Canada, Bangladesh and Japan.
