Texcon 2014

Theme Presentation

Role of Indian Textile and Apparel Industry in Changing Global Supply-Demand Scenario

Prashant Agarwal

Joint Managing Director, Wazir Advisors

15th October 2014

2

What it means for Indian

textile sector?

What are the emerging

sector trends?

Where does India stands

today vis-à-vis competition?

How big is the global market?

Defining Role of Indian Textile and Apparel Industry

B C D A

A. Overview of Global Market

4

Current global consumption of apparel is estimated at US$ 1.15 trillion

Canada US$ 30 bn.

USA US$ 230 bn.

Brazil US$ 60 bn.

EU US$ 355 bn.

Russia US$ 45 bn.

India US$ 46 bn.

China US$ 165 bn.

Japan US$ 110 bn.

Australia US$ 25 bn.

Rest of the World US$ 80 bn.

Global Apparel Consumption

2013 Market Numbers

Source: Wazir Advisors

5

From 2008 to 2013, the global textile & apparel trade has grown at a CAGR of 4%

Global Trade of Textiles & Apparel stands at US$ 781 bn.

Values in US$ Bn. Global Textile & Apparel Trade

643

558

642

751 728 781

2008 2009 2010 2011 2012 2013

4% CAGR

Data Source: UN Comtrade

6

Apparel market size will touch US$ 2.1 trillion by 2025

China 26%

EU-27 21%

USA 14%

India 9%

Japan 7%

Russia 5%

Brazil 5%

Canada 2%

Australia 2% RoW

9%

Values in US$ Bn.

Projected Apparel Market Size and Break-up

Market share 2025

Region 2013 2025 CAGR

EU-27 355 440 2%

USA 230 285 2%

China 165 540 10%

Japan 110 150 2%

Brazil 60 100 5%

India 46 200 12%

Russia 45 105 8%

Canada 30 50 4%

Australia 25 45 5%

Rest of the world 80 195 8%

Total 1,146 2,110 5%

Source: Wazir Advisors

B. India’s Positioning

8

India has a share of approx. 5% of global textile and apparel trade.

India’s trade has grown at 9% per annum from 1995 to 2013 while global trade during this period has grown at 5% per annum.

India became second largest exporter of textile & apparel in the world in 2013

8 11 17 27 33 40

304 363

504

642

728 781

1995 2000 2005 2010 2012 2013

India Exports Global Trade

Values in US$ Bn.

CAGR: 9%

Global Trade and Indian Exports of Textile & Apparel

Data Source: UN Comtrade

9

Current Indian domestic consumption of textile and apparel is estimated at US$ 63 bn.

Indian Domestic Textile & Apparel

Market

US$ 63 billion

Apparel

US$ 46 billion

Home Textiles

US$ 4 billion

Technical Textiles

US$ 13 billion

2 3 3 4 4 4 4 7 8 9 10 11 12 13

25 27 31 35

40 45 46 34

38 43

49 55

61 63

2007 2008 2009 2010 2011 2012 2013

Home Textile Technical Textile Apparel Total

Values in US$ Bn. Indian Domestic Textile & Apparel Consumption

Source: Wazir Advisors

11% CAGR

10

India’s Key Advantages

Key Strengths

Raw Material Availability

Inexpensive Trained Manpower

Presence of Complete Textile Value Chain

Government Support for Textile Sector

Market and Manufacturing Ecosystem

C. Emerging Sector Trends

12

Higher growth of synthetic fibre based categories

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

Widening gap

Global Fibre Consumption Trend

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

Globally polyester consumption is growing & will continue to grow further

But Indian textile industry is still Cotton focussed

Indian Fibre Consumption Trend

Continued… Data Source: PCI Fibres, Fibre Policy 2011 and Wazir Analysis

13

Higher growth of synthetic fibre based categories

India’s Trade Share in Top Traded MMF based Apparel Categories (2012)

Category End user Type Total Trade (US$ Bn.)

Indian Trade (US$ Bn.)

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%

Major Trends Focus Sector

Increasing women participation in workforce Western office wear

Increasing awareness towards fitness Active-wear/ sportswear

Awareness of Indian women towards health and hygiene Women hygiene product

India’s emergence as global automobile manufacturing hub Technical textile products

Stricter compliance norms towards worker’s health and safety Protective wear products

Indian exports needs to be focused on following MMF based product categories, which can give an exponential growth to the India’s T&A exports.

India’s presence is insignificant in some of the major MMF based product categories

Consumption of Polyester based products will increase in domestic market as well

Note: M/B – Men’s/Boys’; W/G – Women’s/Girls’ Data Source: UN Comtrade

14

• There is clear trend of consolidation in global textile and apparel trade, where fewer and fewer countries are having share of some significance in total trade.

• In US and EU markets also, the concentration of textile and apparel imports has increased with top 10 supplier countries reaching 78% and 84% respectively in 2013.

Supply base consolidation by buyers

Countries having more than 3% Share in Global Exports

Buyers are now seeking for long term arrangement with fewer suppliers

Italy

3%

China & HK

4%

6%

8%

9%

3%

1995

Germany

3%

23%

3%

6%

4%

29%

Belgium

Turkey

Japan

Korea

France

USA

Others

India

UK

Germany

USA

Italy

2000

France

India

Turkey

Mexico

Korea

China & HK

38%

Belgium 3%

3%

24%

6%

5%

5%

3%

3% 3%

7%

Others

China & HK

Korea

2005

3%

India

Turkey

USA

39%

3% 3%

Others

Belgium

France

Italy

Germany

29%

4%

5%

3%

7%

4%

38%

4%

5%

5% Germany

India

China & HK

2010

4%

Others

Italy

40%

4% USA

Turkey Turkey

Italy

Others

Germany

India

43%

2013

China & HK

5%

4%

4%

5%

39%

Data Source: UN Comtrade

15

17 48

4,359

8,126

1995 2001 2007 2013

US Apparel Imports from Vietnam

3,264 4,458

7,819

12,234

2000 2005 2010 2013

Bangladesh’s Apparel Exports to EU-27

72 84 82 35 32 48 19 21 42 4 4

5 16 21

25 85 145

221 231

308

423

2004-05 2010-11 2013-14

India’s Textile and Apparel Exports to Japan

Apparel

Fabric

Fibre

Made Ups

Others

Yarn

Total

19%

53%

Before FTA

After FTA 11%

5%

11% Before CEPA

After CEPA

Trade agreements to play an important role

Vietnam has emerged as the 2nd largest apparel supplier to US

Bangladesh has become 2nd largest non-European apparel supplier to EU market

India’ trade has also significantly grown after IJCEPA

United States is negotiating for Trans Pacific Partnership (TPP) agreement with 11 other countries throughout the Asia-Pacific region. The inclusion of a significant apparel producer, Vietnam in this free trade agreement will provide it with great advantage in markets of Canada, Australia and Japan.

Another FTA on the horizon - TPP

Data Source: Office of Textile and Apparel (OTEXA), Eurostat and Ministry of Commerce, Govt. of India

Values in US$ Bn.

D. Way Ahead

17

Growing Indian economy will lead to higher domestic demand.

Flexibility and long term partnership with retailers will be new success mantra.

For exports, establishment of larger, integrated set-ups will be required.

Collaboration between SMEs and larger units as their market front end.

Way Ahead

Invest big and take advantage of ‘Make in India’ focus

Thank you for your attention!