India: The Next Big Frontier for Textiles
5th August 2014
Prashant Agarwal
Jt. MD and Co Founder - Wazir Advisors
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Presentation Flow
1 Global Trade
2 Changing Pattern of Fibre Consumption at Global Level
3 Disconnect in Fiber Consumption in India vis-à-vis Global Level
4 Opportunities for Indian Textiles Industry in Domestic & Export Market
5 Action Plan for Indian Textile Players
6 Global Study: ‘India: The Next Big Influence in Global Textile’
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360
504 556
616 628 542
630
738 686
770
2000 2005 2006 2007 2008 2009 2010 2011 2012 2013
Global trade of textile & apparel stands at US$ 770 bn. today
The global trade in textiles and apparel has grown at a CAGR of more than 6% from 2000 to 2013
In 2012, it slightly dipped to US$ 686 bn. from US$ 738 bn. in 2011 but grew at a level of US$ 770 bn. in 2013
In US$ Billion
Global Trade in Textile and Apparel
Date Source: UN Comtrade
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India is the second biggest exporter of textile & apparel
Country 2013 Exports
China 274
India 40
Italy 36
Germany 35
Turkey 28
USA 27
Bangladesh 26
Vietnam 22
Belgium 16
France 16
Rep. of Korea 16
Spain 16
Pakistan 14
Indonesia 13
Largest Exporters of T&A
Date Source: UN Comtrade
2nd in Textile
Export with 7% Share
6th in Apparel
Export with 3.7% Share
2nd in Global
Export with 5.2% share
India’s Ranking in Global T&A Trade in 2013
India has potential to double its export share from present
5% to 10% in next 10 years
Values in US$ Billion
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Globally polyester consumption is growing & will continue to grow further
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2000 2005 2010 2015
Kte
s
World Mill Consumption by Fibre
Polyester Nylon Acrylic
Viscose PP&Other Cotton
0
2,000
4,000
6,000
8,000
2000 2005 2010 2015 2020
Kte
s
World Mill Consumption by Fibre (excl Polyester and Cotton)
Nylon Acrylic Viscose PP&Other
20%
25%
30%
35%
40%
2000 2005 2010 2015 2020
Cotton Share of World Mill Consumption
Cotton Share
Polyester continues to grow market share. Other MMFs have relatively flat volumes
Date Source: PCI
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Polyester 63%
Nylon 15%
Acrylic 1%
Viscose 21%
Industrial Textile
Apparel 50%
Home 7%
Industrial 43%
Nylon 6 & 66
Apparel 65%
Home 27%
Industrial 8%
Polyester
Polyester 83%
Nylon 6%
Acrylic 4%
Viscose 7%
Fibre Market by Product
Polyester dominates in all end use categories
Polyester 85%
Nylon 5% Acrylic
4%
Viscose 6%
Apparel
Polyester 91%
Nylon 2%
Acrylic 4%
Viscose 3%
Home Textile
Apparel 60%
Home Textile
24%
Industrial Textile
16%
Textile Market by End Use
2012 Total 51,920 KT
2012 Total 31,332 KT
2012 Total 8,216 KT
2012 Total 12,372 KT
Apparel 65%
Home 30%
Industrial 5%
Acrylic
Apparel 46%
Home 9%
Industrial 45%
Viscose
2012 Total 41,080 KT
2012 Total 2,859 KT
2012 Total 1,872 KT
2012 Total 3,642 KT
2012 Total 49,453 KT
Excludes PP & Others
Date Source: PCI
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But Indian textile industry is still Cotton focussed
Indian textile industry is primarily cotton focused with cotton accounting for nearly 55% of total fibre consumption in 2012
However, consumption of polyester fibre is gaining momentum due to factors like fluctuation of cotton prices, increased presence & sourcing by global brands where polyester fibre dominates, growth of women’s wear segment, growth of value retail etc.
60% 59% 59% 59% 58% 56% 55%
34% 35% 35% 35% 36% 37% 38%
6% 6% 6% 6% 6% 7% 7%
2000 2007 2008 2009 2010 2011 2012
Cotton Polyester Others
Date Source: Fibre Policy 2011, Wazir Analysis
Fibre Consumption Trend in India
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India’s overall share in global textile and apparel trade is about 5% in 2013.
However, out of total 864 textile and apparel commodities* traded in 2012 there are 317 commodities in which India had a share less than 1%.
Collective trade in these commodities is ~ US$ 208 bn., while India’s trade in them is only ~US$ 385 mn. (0.19%).
The untapped opportunity remains in MMF based product categories, which can give an exponential growth to India’s export of textile and apparel.
India’s presence is insignificant in some of the major MMF based product categories
* At 6 digit HS code level Data Source: UN Comtrade
India’s Trade Share in Top Traded MMF based Apparel Categories in 2012
Category End user Type Total Trade
(US$ Billion) Indian Trade (US$ Billion)
Share
Jerseys, pullovers, cardigans, waistcoats - Knitted 18.05 0.03 0.20%
Overcoats, capes, cloaks, wind-cheaters, etc. M/B Woven 6.58 0.001 0.02%
Overcoats, capes, cloaks, wind-cheaters, etc. W/G Woven 5.94 0.001 0.02%
Dresses W/G Woven 5.1 0.35 6.90%
Trousers, bib and brace overalls, breeches and shorts M/B Woven 4.85 0.07 1.40%
Blouses, shirts and shirt-blouses W/G Woven 4.3 0.37 8.60%
Dresses W/G Knitted 4.07 0.06 1.50%
Note: M/B – Men’s/Boys’; W/G – Women’s/Girls’
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Globally consumption of polyester will increase further
Till 2000, fibre consumption at global level was majorly cotton focussed.
By 2030, it is expected that consumption of polyester will be more than double to that of the cotton fibre.
37% 36% 36% 35% 33% 31% 31% 30% 27%
36%
43% 44% 46% 48% 50% 50% 52%
59%
27%
21% 20% 19% 19%
19% 18% 18% 14%
2000 2007 2008 2009 2010 2011 2012 2020 (P) 2030 (P)
Cotton Polyester Others
Date Source: PCI Fibres
Widening gap between
Polyester and Cotton fibre
consumption
Global Fibre Consumption Trend
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Consumption of Polyester based products will increase in domestic market as well
Volatility and upward trend of cotton price has already pushed the fibre mix in favour of Polyester for major apparel an home textile products. Following are the few major trends which will help increased consumption of Polyester fibre in domestic market:
Increasing women participation in workforce will push the demand of western office wear, party dresses as well as lingerie
India’s large young population base with increasing awareness towards fitness will increase the consumption of active-wear / sportswear
Increasing no. of school going children & consciousness of corporates towards their image are likely to create more usage of school & corporate uniform
Awareness of Indian women towards health and hygiene will cause increased women hygiene product usage
India’s emergence as global automobile manufacturing hub will surge the demand of technical textile products like seat belts, airbags, seat covers and headliners
Stricter compliance norms and increasing workers’ awareness towards health and safety will create large demand for protective wear products
To reap maximum benefit of the future scenario, India needs to focus on manufacturing of Polyester based textile products
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China, Taiwan & South Korea are the Global leaders in MMF based fabric
Top ten exporters of MMF based fabrics constituted 75% of world’s total trade in 2012
China has over dominance in the exports of MMF based fabrics with 40% share followed by Taiwan having export value only one eighth of China
35%
4% 4% 4% 5%
5%
5%
6%
6%
27%
2007
China
Italy
Taiwan
Germany
South Korea
USA
Turkey
France
Japan
Others
36%
4% 4% 4% 5%
5%
6%
6%
31%
2008
China
Italy
Taiwan
Germany
South Korea
USA
Turkey
Japan
Others
34%
4% 4% 4% 5%
5%
5%
6%
33%
2009
China
Taiwan
Italy
South Korea
Germany
USA
Turkey
Japan
Others
37%
4% 4% 5% 5%
5%
5%
35%
2010
China
Taiwan
South Korea
Italy
Germany
USA
Turkey
Others
36%
4% 4% 5% 5% 5%
5%
38%
2011
China
Taiwan
South Korea
Germany
Italy
USA
Turkey
Others
38%
4% 4% 4% 5% 5%
40%
2012
China
Taiwan
South Korea
Germany
Italy
USA
Others
No. of Countries
9 8 8 7 7 6
Countries with > 4% Share in Global Exports of MMF Based Fabrics
Date Source: UN Comtrade
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Taiwanese competitor Chinese competitor South Korean competitor
Far Eastern New Century
Jiangsu Hengli Group
Hyosung
Polyester fibre & filament, spun yarn, knitted & woven fabric, apparel
Polyester filament yarn, garment fabric and home textile fabric
Polyester, Nylon, Spandex fibre & filament, Aramide & carbon fibre, performance fabrics and carpets
Fibre & filament manufacturing , spinning, weaving/ knitting, processing and apparel manufacturing
Filament manufacturing and weaving
Fibre & filament manufacturing, weaving and processing
PSF: 360,000 MT PFY: 150,000 MT Spun Yarn: 395 MT Fabric: 22,000 MT Apparel: ~83 million pcs.
PFY: 600,000 MT Loom: 12,000 (hydraulic & air-jet)
Spandex: 150,000 MT Processing: 2.3 million meter
Company reported revenue of US$ ~8 billion in FY 2013
Group had consolidated revenue of US$ 5.3 billion in FY 2010
Group reported consolidated revenue of US$ 10 billion in FY 2013
Leading companies in MMF based textile manufacturing are mostly vertically integrated with big capacities
Company
Products
Revenue
In-house Facilities
Capacities
Date Source: Company Websites
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India has to work across its value chain
Staple fiber
Filament
Yarn spinning
Knitting Weaving
Processing
Garments Home
Textiles Technical textiles
• Existing Indian manufacturers can scale up the capacities but for specialty fibers, we will see international players investing on their own or in partnership with Indian players
• Existing Indian yarn spinners are competitive globally. They will be able to meet the demand growth through expansions as and when required
• Significant investments will be required in knitting including warp knitting.
• Weaving infrastructure will need to be upgraded to handle specialty yarns and complex fabric types
• Processing will be the main challenge for Indian sector
• Players will have to opt for tie-ups with international partners for technical and market exposure
• Industry will have to focus on design and product development aspect to sensitize demand growth
• Technical textiles investments will be required from Indian as well as international players
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Fiber Manufacturing
Spinning Fabric
Manufacturing Processing Garmenting
Attractive Investment opportunities
Investment in MMF based fabric manufacturing, processing as well as garmenting is an attractive investment opportunity
India is leading man-made fibre manufacturer of the world and has over capacity of manufacturing polyester fiber
India is globally very competitive in spinning and enjoys leading position. The intra-industry competition level is very high and it is majorly a commodity business. It would be difficult for any new entrant to establish itself in this business scenario.
• Investment in fabric manufacturing will open immense opportunities in garment sector
• Bigger players can leverage this opportunity by setting large scale factories with defined process systems
• Indian players can bring high end garment manuf. technology in JV with Korean, Chinese, Japanese companies
• Weak-link in manmade fibre based textile value chain of India
• Smaller units are unable to take the advantage of economy of scale
• Too many players are involved in this part of the value chain, which increases the cost & degrades the quality of service
• Most units have old technology, which are not suitable for high quality products
• Focus is on commodity products
• Lot of MMF based processed fabric are imported to India
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Indian textile industry will consume more Polyester than Cotton within next five years
Share of manmade fibre in total mill consumption is expected to reach ~65% by 2030. However, the share of cotton is expected to decrease from current level of ~55% to 32% by 2030.
A drastic change is expected in the mill consumption of polyester fibre, share of which is projected to grow to 53% (9,455,000 MT) by 2030
Values in ‘000 MT
Source: Wazir & PCI Analysis
40% 41% 42% 43% 44% 45% 46% 53%
6% 6% 6% 7% 7% 8% 8% 11%
51% 48% 47% 46% 45% 44% 43% 32%
3% 4% 4% 5% 4% 3% 3% 5%
2014 2015 2016 2017 2018 2019 2020 2030
Polyester Other MMF Cotton Other Natural Fibres
10189 9163 9741 10670 11093 11392 17951 11678
Total Fibre Consumption At Mill Level
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The Next Big Influence In Global Textiles
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Coverage of Study Report
Chapter 1 • Global economic scenario with India in perspective (FY2013 – FY2025)
Chapter 2 • Global Textile & Apparel Industry
Chapter 3 • Indian Textile & Apparel Industry
Chapter 4 • Current and future structure of India’s polyester industry (Fibres, PET and Film)
Chapter 5 • India’s polyester based textile value chain (yarn, weaving, knitting to apparel)
Chapter 6 • Investment climate for India’s textile industry
Chapter 7 • Textile industry profiling of selected Asian countries
Conclusion
• Based on the analysis done, it will be concluded how India can influence the global textile industry by playing a major role in global polyester based textile trade
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Benefits of the Study
This report provides a comprehensive study of global textile supply chain. Investors as well as existing players can understand various trends which will lead textile industry’s future.
Benefits of the study
Insights of global scenario in Textile Supply Chain
India’s positioning in global textile industry
Investment opportunities in India
Analysis of various gaps in Indian textile industry vis-à-vis its competing countries will divulge various opportunities in the Indian textile industry.
To bridge the gaps in Indian textile industry, investment opportunities will be identified. Thus, enhancing the prospects of investment through FDI or JVs with Indian companies.
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Prashant Agarwal Joint Managing Director [email protected] +91 9871195008 Wazir Advisors Pvt. Ltd. Tel : +91 124 4590 300 www.wazir.in