Porter's five-factormodel .1)Threat of New entrants Indian Textile Industry is very dependent on personal contacts andexperience.

The new actors would have to bring some kind of client base along with the new establishment. Product differentiation may constitute a barrierof entry as manufacturers are heavily dependent on references and word of mouth. Without any established client portfolio it is difficult to attract, endureincreased costs in creating sample collections to show potential customers.Hence, in startup phase costs are not only associated with the manufacturingrequired but also with the costs for designers and creating samples. In thesense of reference dependency, barriers of entry are considered as very strong. As the new entrant has limited experience in textile manufacturing and thereare no built up relationships with customers, they might experiencedisadvantages relative to the established competitors.Governmental policies do affect the business environment to some extent. Anexample of this is subsidies, which are offered to companies establishingproduction in certain regional areas.In addition to these potential barriers of entrance, new entrants may havesecond thoughts about entering the new market, if existing manufacturersmay retaliate on new entrants. The Indian textile industry though, has such alarge population of manufacturers so any new actors may hardly be noticed by the competition, which minimizes the risk for retaliation 2)Bargaining power of customers (demand scenario) Global textile & clothing industry is currently pegged at around US$ 440 bn.US and European markets dominate the global textile trade accounting for64% of clothing and 39% of textile market. With the dismantling of quotas,global textile trade is expected to grow (as per Mc Kinsey estimates) to US$650 bn by 2012 (5 year CAGR of 10%). Although China is likely to become the'supplier of choice', other low cost producers like India would also benefit asthe overseas importers would try to mitigate their risk of sourcing from only one country. The two-fold increase in global textile trade is also likely to driveIndia's exports growth. India's textile export (at US$ 15 bn in 2005) isexpected to grow to US$ 40 bn, capturing a market share of close to 8% by 2012. India, in particular, is likely to benefit from the rising demand in thehome textiles and apparels segment, wherein it has competitive edge againstits neighbors.Hence, the bargaining power of customers is strong. For that reason, it is of importance for a producer of apparel to differentiate their products orproduction so it will not compete with price as primary mean.Differentiation is accomplished either by quality or service. Differentiationcan be considered as especially important in the Indian textile industry sincecontracts are usually set on short-term basis and are rarely set more than sixmonths ahead. Hence, there is a need to tie the customer to manufacturers without the need of explicit contracts. And Thus, the bargaining power for theCustomer is improved. 3)Bargaining power of suppliers (supply scenario) India is a country where we have numerous players in textile industry whichall are varied in terms of size and power. There has been increase inproduction and supply of textile products in last few decades globally, mainly due to rapidly changing social and economic structure of the countries worldwide. In

past few years, especially after the removal the trade relatedtariffs and non tariff barriers in 2005, Asian countries such as India, china,Hong Kong and Japan have emerged as major players in this particularindustry, mainly due to their changes on economic front and infrastructuredevelopments. The large number of available suppliers in India gives an initial indication of a weak bargaining position for the supplier group.Additionally, the supplier group lacks switching costs and has a low level of product differentiation. This leads to great possibilities for textilemanufacturers to scout the supplier group for best terms and prices forproduction. As a result, manufacturers can contact a large number of suppliers and play suppliers against each other. Such behavior weakens the bargaining power for suppliers and as a result pushes prices down and makesprices similar among suppliers An advantage which the Indian Suppliers group have capitalized on is,Due to their ability to integrate forward in value added chain, they haveachieved a better bargaining position towards textile manufacturing.As previously seen, companies in the textile and apparel sector haveestablished forward to create vertically integrated company groups.Deep relationships between manufacturers and suppliers illustrate how important the textile manufacturing industry is for the supplier group. Anexample of this is how suppliers and manufactures interact in activities suchas research and development (R&D). By this process the supplier obtainsknowledge on what customers downstream in the value added chain demands. 4)Threat of substitute products When using such a broad term as Textile, there are obvious reasons foridentifying substitute product groups proves difficult.Of course, there are variations in types of clothing and material. Variations intextile segment can also be identified as trends in fashion and styles. Henceproducts within the apparel segment can act as substitutes but the generalconclusion still stands; theres no substitute to apparel. 5)Competitive rivalry within the industry The textile manufacturing segment in India is made out of numerousmanufacturers which all are varied in terms of size and power. It is a massivesector with thousands of companies producing apparel. The apparent highgrowth rate of total textile exports indicates that the rivalry betweenmanufacturers is low. The growth rate is high in some product segments buteven negative in others. Hence, the rivalry between apparel manufacturers isdiverse since they enjoy different growth rates. Additionally, textile as a perishable product group is in the risk of temptationsto cut prices when demand slackens. For example, when there are recessionsin the business cycle apparel prices will drop significantly in price. Both thesefactors exemplify and indicate that the rivalry between manufacturers is high. As Indian apparel manufacturers are pressured to lower prices in order to stay competitive with companies abroad, the overall rivalry within the industry gets companies to expand their customer base in order to keep profits up. It istherefore reasonable to believe that such expansions may occur on the behalf of competitors if possible, and thereby increase the rivalry in the industry