MANAGERIAL ECONOMICS

Analysis of Indian Fashion Industry

Submitted By:Rani Kumari

Rani Kumari

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Table of Content

Sr. no Topic Page no1. Brief overview of Indian

fashion industry 3 & 4

2. Its contribution to GDP and Indian economy

5 & 6

3. Comparison with Global fashion industry and SWOT

analysis

7 - 11

4. Conclusion 12

Brief overview of Indian fashion Industry

India has a rich culture and varied textile heritage where each region of India has its own native dress, traditional costumes and accessories.

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After the independence, Indian fashion industry was greatly affected by globalization. Due to this, changes occurred in the dressing style of Indians, which even led to the fusion of Indian and western dresses. Wearing embroidered jeans, halter blouse with saris are the examples showing the effect of western culture on Indian.

Indian fashion industry is growing at a very fast rate with international events such as the Indian Fashion week and annual shows by Fashion designers in the major cities like Mumbai, Delhi, Bangalore, Chennai, Hyderabad and Pune. The designers of India like Ritu Kumar, Ritu Beri, Rohit Bal, J J Valaya, Manish Malhotra etc are known on the international level.

The Indian fashion industry not only involves textiles and apparels but also accessories, jewellery, leather etc. Indian fashion industry is estimated at INR 1.8-2 billion. A report on Indian Fashion Industry recently stated that this Industry can increase from its net worth of Rs 200 crore to Rs 1,000 crore in the next five to ten years. Currently, the worldwide market for designer wear is amounted at $35 billion, with a 9% growth rate, with the Indian fashion industry creating hardly 0.1% of the international industry's net worth.

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According to approximations, the total market in India is calculated to be about Rs 20,000 crore. The branded Fashion market's size is nearly one fourth of this or Rs 5,000 crore. Designer wear, in turn, covers nearly about 0.2 % of the branded apparel market. Today the largest sales turnover within the designer wear segment is about Rs 25 crore.

Fashion Design Council of India (FDCI) study estimates the industry’s growth to INR 10 billion in next 5-10 years.

Indian fashion industry is oligopoly form of industry.

Its contribution to GDP and Indian Economy

The Indian fashion industry has been quite beneficial for the economic life of the country. The worldwide trade of textiles and clothing has boosted up the GDP of India to a great extent by bringing in a huge amount of money in the country. Indian Textile and Apparel is recognized as one of the best sourcing destinations for garments, textiles, accessories and finish. It provides a perfect blend of fashion, design, quality, patterns, textures, colours and finish.

Textile industry contributes about 4 per cent to the country’s GDP, 14 per cent of the industrial production, and India earns about 27% of its total foreign exchange through textile exports. The industry size has expanded from USD 37 billion in 2004-05 to USD 49 billion in 2006-07. During this era, the local market witnessed a growth of USD 7 billion, that is, from USD 23 billion to USD 30 billion. The export market increased from USD 14 billion to USD 19 billion in the same period. 

The textile industry is one of the leading sectors in the Indian economy as it contributes nearly 14 percent to the total industrial production. The textile industry in India is claimed to be the biggest revenue earners in terms of

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foreign exchange among all other industrial sectors in India. This industry provides direct employment to around 35 million people.

Currently the market for designer wear is worth about Rs 1,62,900 crore and growing at 9.5 % every year.

As per the estimates, Indian designer wear is 66 % for male customers and 57 % for female customers. The category engagement in western designer wear is 5%. The per capita per annum on designer wear for men amounts up to Rs 48,627 and Rs 56,271 for women. Readymade garments accounts for 45 percent share holding in the total textile exports and 8.2 percent in export production of India.

Indian fashion industry is expected to grow from Rs. 3.7 lakh crore( $ 70 billion ) to Rs. 10.32 lakh crore( $ 220 billion ) by 2020.

India’s textile market size

The size of India’s textile market is expected to expand at a CAGR of 10.1 per cent over 2009–21

.

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Indian fashion industry at global platform

India Fashion Industry is a very big exporter of Fabrics and accessories for the global fashion industry. Indian ethnic designs are considered as a significant facet for the fashion houses and garment manufacturers all over the world. India's strengths are due to its tradition, and even its raw materials. India is the third largest producer of cotton, the second largest producer of silk and the fifth largest producer of man-made fibres all over the world.

India covers 61 percent of the international textile market. India claims to be the second largest manufacturer as well as provider of cotton yarn and textiles in the world. India holds around 25 percent share in the cotton yarn industry across the globe. India contributes to around 12 percent of the world's production of cotton yarn and textiles. Indian textile industry holds 3.5 to 4 percent share in the total textile production across the globe and 3 percent share in the export production of clothing.

India holds 22 percent share in the textile market in Europe and 43 percent share in the apparel market of the country. USA holds 10 percent and 32.6 percent shares in Indian textiles and apparel.

The organized market for designer apparel is about Rs 250 crore and designer wear calculates to less than 1 % of the apparel market. The global market for designer wear is 5 % of total apparel market. The Indian textile industry contributes 14 percent of the total manufacturing to global brands like Nike, Reebok, Pepe jeans, Armani, Versace for sourcing their merchandise from the country.

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India’s textile exports

Readymade garments were the largest contributor to total textile and apparel exports from India in FY12P; the segment had a share of 39 per cent.

39%

34%

17%

3%3% 4%

INDIAN TEXTILE EXPORTReadymade garment Cotton Textiles Man-made TextilesHandicrafts Silk & handloom Woolen & others

SWOT analysis

SWOT stands for "Strengths," "Weaknesses," "Opportunities" and "Threats."

Strengths

1. Raw material base

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India has high self sufficiency for raw material particularly natural fibres. India’s

cotton crop is the third largest in the world. Indian textile Industry produces and

handles all types of fibres.

2. Labour

Cheap labour and strong entrepreneurial skills have always been the backbone

of the Indian Apparel and textile Industry.

3. Flexibility

The small size of manufacturing which is predominant in the apparel industry

allows for greater flexibility to service smaller and specialized orders.

4. Rich Heritage

The cultural diversity and rich heritage of the country offers good inspiration

base for designers.

5. Domestic market

Natural demand drivers including rising income levels, increasing urbanisation

and growth of the purchasing population drive domestic demand.

Weaknesses

1.Obsolete technology machinery and equipment used for manufacturing.

2. Availability of raw material and inconsistent raw material prices.

3. Unskilled labour (only 1% workers have certificate / diploma from technical training institutions).

4. Absence of research and development culture

5.Lack of synergies between Government support institutions and practical market.

6. Lack of standardization and quality control.

7. Unorganized vendor base.

8. Limited access to information.

9. Poor infrastructure.

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10. Less attention to man power training.

11. Lack of professionalism and integration of supply chain.

 OPPORTUNITIES

1. The Indian textile industry has various opportunities like technical textiles,

product development and diversification, FDI and brand recognition.

2. Market access through bilateral negotiation

The trade is growing between regional trade blocs due to bilateral agreements

between participating countries.

3. Integration of Information technology

‘Supply Chain Management’ and ‘Information Technology’ has a crucial role in

apparel manufacturing. Availability of EDI (Electronic Data Interchange), makes

communication fast, easy, transparent and reduces duplication.

4. Opportunity in High Value Items

India has the opportunity to increase its UVR’s (Unit Value Realization) through

moving up the value chain by producing value added products and by

producing more and more technologically superior products.

 THREATS

1. Competition from countries like India & China, which have more advanced

engineering technology base.

2. Lagging in technology, hence producing substandard goods that hamper

consumer perception about local engineering products.

3. Non-organized manufacturing and vendor base and unhealthy competition

4. Decreasing Fashion Cycle

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There has been an increase in seasons per year which has resulted in

shortening of the fashion cycle.

5. Formation of Trading Blocks

Formation of trading blocks like NAFTA, SAPTA, etc; has resulted in a change in

the world trade scenario. Existence of bilateral agreements would result in

significant disadvantage for Indian exports.

6. Phasing out of Quotas

India will have to open its protected domestic market for foreign players thus

domestic market will suffer.

Conclusion

Indian fashion industry is growing fast. Apparel and export industry has shown strong upward growth.

In India 81 % of the population is below 45 years and is fashion conscious, so India is also becoming a consuming country apart from being only a producing country.

Indian designers have done well in the domestic as well as in international market.

The Indian companies need to focus on product development and diversification in order to capture new market globally. China is the biggest threat to the Indian textile and apparel industry in the global market. Indian textile industry is ranked second, after china.

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Bibliography

www.slideshare.net

www.business.mapsofindia.com

www.wikipedia.org

www.blogs.siliconindia.com

www.ibef.org

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