indean textile industry

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Indian Textile Industry


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IMaCS 2006

Printed 19-Nov-12

Page 2www.imacs.in

Contents

Market Overview

Government regulations & policy

Business opportunities and Advantage India


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Indian Textile industry - important from perspectiveof overall economy

Total market size (2004-05): USD 38 bn

Domestic market ~ USD 25 bn

Exports ~ USD 13 bn

Strong contribution to Indian Economy

14% contribution to industrial production

4% contribution to GDP 16% contribution to export earnings

Direct employment to more than 35 million people

Industry functions in the form of clusters (roughly 70 in number) across India,

producing 80% of the countrys total textile

Sector is diverse, with the hand-spun and hand woven sector at one end of the

spectrum, and the capital intensive, sophisticated mill sector at the other

Source: Ministry of Textiles Annual Report, Industry Research


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India has a strong base in raw materials

Cotton dominates the industry

Nearly 56% of yarn produced is made of cotton

Country produces nearly 23 varieties of cotton

India is the second largest player in the world cotton trade

Indias position is strong vis--vis other countries in most rawmaterials

Largest producer of jute

Second largest producer of silk

Third largest producer of cotton, accounting for nearly 16% of

global production

Third largest producer of cellulosic fibre/yarn

Fifth largest producer of synthetic fibres/yarn

Eleventh largest producer of wool

Source: Ministry of Textiles Annual Report, Industry Research

Abundantavailability of rawmaterial is one of

the keyadvantages of the

Indian textileindustry


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Industry fragmented and dominated by small scale units

The textile industry across the value chain is largely decentralised

Units mostly independent and small scale in nature, rather than composite

units undertaking all activities together

Large scope for entry of organised integrated textile manufacturers

Spinning Weaving Processing & manufacturing

Source: Compendium of Textile Statistics, 2004

Large

independent

units53%

Small

independent

units39%

Composite mills 8%

100% = 2922 mills 100% = 5.83 million units

Handloom

sector

67%

Powerloom

31%

Organised sector 2% Of the 2300 processors in

India, only200 units are

integrated with spinning,

weaving or knitting units

Bulk of apparel and home

textile manufacturing

accounted for by 77,000

small scale units


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Manufacturing units present at all levels of value chain

Raw materials

Cotton, wool,

silk, jute

Petrochemicals

Fibres and yarn

Man-made fibre/

filament yarn*

Grey fabric

Knitting

Weaving

Processed fabric

Dyeing

Finishing

Garments

Home textiles

Productionunit

Spinning mills

Weaving/ knittingunits - handlooms,powerlooms, hosieryunits

Hand processingunits, independentpower processingunits, units attachedto mills

Garments &home textileproducers

Composite Mills

*Includes viscose staple fibre, polyester staple fibre, acrylic staple fibre, viscose

filament yarn, nylon filament yarn, polyester filament yarn

Source: Industry Research


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Industry experiencing high growth

Increased output of yarn and fabric - CAGR of 3.6% and 4.1% respectively;

global market has grown at a CAGR of 2-2.5% in this period

Highest growth seen in 100% non cotton yarn and fabric, followed by

blended yarn and fabric

Cotton cloth continues to dominate the industry

1996 2000 2006

Cotton yarn

Blended yarn

100% noncotton yarn

Yarn production

million tonnes

2.4

3.1

3.4

75%

17%

8%

72%

20%

8%

73%

17%

10%

CAGR

3.2%

3.6%

3.8%

6.0%

1996 2000 2005

Cotton cloth

Blended cloth

100% noncotton cloth

Cloth production

billion sq. mtrs

31.5

38.6

45.0

60%

13%

27%

49%

15%

36%

46%

13%

41%

CAGR

0.9%

4.1%

4.6%

8.9%

Source: Compendium of Textile Statistics


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Exports are dominated by readymade garments

Readymade garments dominate textile exports

Share of manmade textiles in overall textile export basket

has risen, whereas that of cotton textiles has fallen

0

100

200

300

400

500

600

700

800

Readymade garments

Cotton yarn, fabric & made-ups

Manmade staple fibres, yarn,

fabric & made-ups

Silk & woolen textiles, cotton

raw, incl waste51%

35%

10%4%

52%34%

9%5%

55%25%

13%

7%

100% = INR 654 bn

100% = INR 390 bn

100% = INR 199 bn

Year 1994-95

Year 1999-00

Year 2005-06

Textile exports

Source: Ministry of Textiles


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Dismantling of quotas has resulted in higher growthin large markets

In the first nine months of

CY2005, US imports grew by

7% to USD 8.9 bn and EU

imports grew by 3.7% to Euro

54.5 billion

India has been one biggest

beneficiaries in post quota

regime in these two markets,

while countries like Mexico,

South Korea and Turkey have

lost share

4.4% 5.2%

15.0%

2004 1st 9

months of

2005

2008*

6.0%7.3%

9.0%

2004 1st 9

months of

2005

2008*

Share in US textile andclothing market

Share in EU textile andclothing market

Source: WTO study on gainers and losers post quota abolishment*Forecasts


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Going forward, exports as well as domestic marketto drive growth

Drivers of exports

Rising outsourcing budgets of retail giants

Indian companies evolving from mere

converters to vendor partners of global buyers

Large outsourcing orders helping Indian

companies build capacities, lower their per unit

cost and become more competitive Imposition of caps on certain import segments

from China by EU and US given the surge in

Chinese exports has opened up opportunities

for India

Drivers of domestic market

Growing young population

Rising household income levels

Growth of organised retail

2005 2010*

*Forecasts

Market size estimates

USD bn

Domestic

market

Exports

25

12

37

35

30

65

Source: Research commissioned by Confederation of Indian Textile Industry


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Contents

Market Overview




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Industry has witnessed a change in regulations

Pre 1985

Emphasis on small scale sector

Importance given to cotton textiles

Favourable fiscal treatment given to

powerlooms (mainly tiny and small-

scale units) as compared to composite

mills

Most segments reserved for small-

scale industry (SSI)*

Restrictions on installation of

automatic looms

Emphasis on increasing scale

Post 1985

Many segments (especially readymade garments,

knitwear and hosiery) deserved from reservation

for SSI

Schemes for technology upgradation and

modernisation introduced

Multifibre approach adopted; emphasis on man

made and synthetic fibres, in addition to cotton

Taxation structure made simpler

Measures aimed at

improving competitiveness

of industry to face a post

quota regime*Latest definition: Investment in plant & machinery of INR 10 million for

most industries, INR 50 million for specified industries like hosiery, handtools, drugs & pharmaceuticals, sports goods and stationery items


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Several government initiatives targeted toattract investments

Technology Upgradation

Fund Scheme

Policy related to

foreign investment

Upgrading

infrastructure

Scheme launched in 1999 to provide firms access low interest loans fortechnology upgradation and setting up new units with state-of-art technology

Scheme has disbursed INR 91.61 bn till 31st December 2005

Upto 100% foreign direct investment allowed in textile and apparel

manufacturing industry, with approval of the Foreign Investment Promotion

Board (FIPB)

~ USD 1.02 bn of FDI in the sector approved between 1991 and 2004

Companies free to set up fully-owned sourcing (liaison) offices, as well as

marketing operations

Scheme for Integrated Textile Parks (SITP), based on public-private

partnership model to build world class infrastructure facilities

Product specific Cluster Approach targeting development of 100

additional clusters in textiles

Technology Mission on Cotton (TMC), focusing on cotton R&D,

dissemination of technology to farmers, improvement of market

infrastructure and modernisation of ginning and pressing sector

Source: Ministry of Textiles, Industry Research


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Contents

Market Overview




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India has a cost advantage vis--viscompeting countries

2.35

0.70

0.06

2.51

0.65

0.04

2.31

0.60

0.07

2.17

0.61

0.06

Cost competitiveness

Yarn: USD per kg of yarnFabric: USD per yard of fabric

1.68

0.55

0.18

1.40

0.51

0.14

0.55

0.20

2.06

0.59

0.21

1.90

Open-ended yarn & fabric Ring yarn & fabric Textured yarn & fabric

Yarn

Woven

fabric

Knitted

fabric

2.68

0.75

1.22

2.76

0.69

1.21

2.61

0.65

1.21

2.45

0.66

1.12

South Korea

China

Brazil

India

India is cost competitive vis--vis competing countries in textile production,

except in case of textured yarn and fabric


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There are several other industry specific advantagesarising out of the unique nature of the industry in India

Large raw material base

India has a rich raw material base, especially cotton which has seen improved productivity in the country

under the Cotton Technology Mission

Wide variety of cotton produced India, making India capable of catering to various segments of world

trade

Indian industry has ability to handle different materials - cotton, wool, silk and jute with equal skill

Positive developments in the Textile Policy Reservation for small scale sector, especially key segments removed over last few years

Fiscal anomalies in terms of excise duty structure removed

Flexibility in production

Capabilities across the entire value chain within the country reduces lead time for production and

reduces intermediate shipping time

Indian companies have flexibility and skilled manpower to handle small orders with complex designs

Product development and design capabilities

Several institutes in India for textile development, the major one being National Institute of Fashion

Technology (NIFT)

Several leading colleges also offer courses in Textile Engineering


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Business opportunities exist for foreign players

Investing in India

Sourcing from India

Export to India

Partner with Indian vendors to import from India, by nominating

large Indian companies having credibility in terms of capacities

and quality

Readymade garments have maximum opportunity, given Indias

cost competitiveness

Invest in setting up vertically integrated large scale units Invest in setting up retail chains (single brand)

Enter into marketing joint ventures with Indian companies

Brand licensing to Indian players

With Indian consumers increasingly getting exposure to

international fashion trends, potential exists for export of

lifestyle brands of garments and accessories to India


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Many foreign players have also entered India

Top 10 buyers in India (Gap, Wal-Mart, Li & Fung, The Childrens Place, JC

Penny, H&M, Federated, Fifth Avenue, Carrefour and Synergies India)

account for 35% of total textiles sourced from India

Other major companies include El Corte, Ecko, Kellwood, VF Corporation,

Tesco, Next, Karstadt-Quelle

Buying and liaison

offices

Brand licensing - Hugo Boss, Tommy Hilfiger, Mango, Lovable, Nike, Lacoste

Master franchisee - Marks & Spencer, Crocodile

Brand licensing/

franchising

Manufacturing/manufacturing

cum retailing

VF Arvind Brands - joint venture between Arvind Brands and VFCorporation to manufacture and sell latters brands in India

Benetton

Levi Strauss

Reebok

Carreman Michel Thierry

Source: News articles

Illustrative, not exhaustive


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Key players in India

Large industry conglomerate, with turnover of USD 279 million and presence in textiles, retail,

engineering goods, personal care and prophylactics Textile products - worsted fabrics, wool and blended fabrics, specialty ring colour and stretch denim

fabric, cotton and linen shirting fabric, readymade garments, woolen blankets and home furnishings

One of the oldest textile companies in the country, having turnover of USD 231 million

Produces suitings, shirtings, sarees, towels, bed linen and mens apparel; significant exporter of

polycotton blended fabrics and made ups

One of the largest producers of denim in the world, having turnover of USD 338 million and

exports to more than 70 countries

Produces denim fabric, cotton and blended fabric, knitted fabric, voiles, apparel

Illustrative, not exhaustive

One of the largest textile business houses in India, having turnover of USD 400 million

Significant presence in acrylic fibre, cotton, synthetic and blended spun yarns, grey and

processed fabrics, cotton and synthetic sewing threads

Indias largest exporter of readymade garments, having turnover of USD 180 million

Supplies to more than 100 retailers and fashion brands across 39 countries

Source: Capitaline, Company websites


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Leading producer of silk yarns and fabric (mainly for decorative and bridal use), with annual

turnover of USD 32 million

Other businesses include retailing of home furnishings in India and manufacture of bed linen

products for domestic and export market

Illustrative, not exhaustiveKey players in India

Source: Capitaline, Company websites

Amongst the top 3 terry towel producers in the world, with annual turnover of USD 132 million

Other products include cotton yarns, polyester filament yarn, bathrobes, buttons and saw

pipes

Belongs to one of the most diversified business groups in India (Aditya Birla Group) and has

turnover of USD 577 million)

Key products in textiles include viscose filament yarn and branded apparel; other interests

include insurance, telecom, IT, carbon black

Having turnover of USD 303 million, company is a major producer of polyester

yarns, fabrics, garments and textiles

Has the largest composite textile mill in India for producing cotton fabric

Having a turnover of USD 95 million, its products include viscose filament yarn,

viscose tyre/ industrial yarn, denim, cement and pulp and paper


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The India Brand Equity Foundation is a public-private partnership between the Ministry of

Commerce & Industry, Government of India and the Confederation of Indian Industry. The

Foundations primary objective is to build positive economic perceptions of India globally

India Brand Equity Foundation

c/o Confederation of Indian Industry

249-F Sector 18, Udyog Vihar Phase IV

Gurgaon 122015, Haryana, INDIA

Tel +91 124 401 4087, 4060 - 67

Fax +91 124 401 3873

Email [email protected]

Web www.ibef.org
http://www.ibef.org/home.aspx


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