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“SECTOR - TEXTILES”
Batch of 2010
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India is the 3rd largest
producer of cotton with
the largest cotton field in INTRODUCTION & BACKGROUND
its territory.
It is the largest producer Spinning of cotton thread in India dates back to 3000 B.C. The
of Jute. Indian textile industry is one of the oldest and most significant
It is the 2nd largest industries in the country. It accounts for around 4 per cent of the
producer of Silk. gross domestic product (GDP), 14 per cent of industrial
It is the 3rd largest production and over 13 per cent of the country's total export
producer of Yarn. earnings. Moreover, it provides direct employment to over 35
It is the 11th largest million people & indirect employment to around 88 million
producer of Wool. people.
1. Highly Fragmented. In India the Textile sector can broadly be decomposed into-
2. Lack of Investment. 1. Handloom – It is highly price competitive. It caters to
3. Poor Infrastructure. towels & home furnishings.
2. Powerloom – It is also highly price competitive. It
primarily caters to bed sheets. Both the sub-sectors cater to the
lower end of the market.
Opportunity
3. Composite Mill Sector – It is basically the branded
section of the Textile sector where majority of the big players
focus into.
4. Embroidery – It is the segment where India has its
1. Strong market growth. expertise in the small scale segment. The size of the market is
around Rs 750 cr.
Threat
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Bombay Dyeing
cloth and its per capita availability. There is a 7.13 per cent
compounded annual growth rate (CAGR) in cloth production,
1. One of India‟s largest 3.6 per cent in the per capita availability of fabrics and 13.32 per
producers of textiles cent in the export of textiles in the last two decades. The number
Manufactures cotton of textile mills rose from about 700 in the beginning of the 80's
and blended textiles to 1850 by 2000. The growth has been more significant in case
2. Product mix comprises of the spinning mills, which rose from 400 in 1980 to 1565 by
suitings, shirtings,
March 2000, with spinning capacity increasing from 21 million
sarees, towels and bed
linen to 37 million spindles during the same period.
3. Manufacture `Vivaldi‟
The charts below compare the financial performance of key
brand of mens
clothing. players –
4. It is also a
manufacturer of DMT
Indian Rayon
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further extension till 2011-12. A total of 18,773 applications involving a project
cost of US$ 24.91 billion have been sanctioned under TUFS up to March 31,
2008. The government has given a further subsidy of US$ 533.9 million under
TUFs to underpin its modernisation efforts for meeting market challenges and
enabling it to stay competitive in quality and price.
o 40 textile parks are being set up under the Scheme for Integrated Textile Parks
(SITP) which will attract an investment of US$ 4.38 billion.
o The government has also announced a US$ 618 million financial package to
waive loan overdues of handloom cooperatives and make available loans at
concessional rates for the industry.
o The government is also implementing five new schemes during the 11th Five-
Year plan period (2007-12) for the development of the handloom sector and the
welfare of weavers.
o These schemes are namely, the Integrated Handloom Development scheme, the
Handloom Weavers' Comprehensive Welfare scheme, the Marketing and Export
Promotion scheme, the Mill Gate Price scheme and the Diversified Handloom
Development scheme.
India has gained immensely through the abolition of quotas on textiles imports by the US
and EU after the “Agreement on Textiles & Clothing (ATC)” was abolished. From a
regime of quota now they source directly based on quality and lead time thus benefitting
India.
Porter‟s Five Forces model to show the competitive position of the Textile Industry –
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Problems faced by the
Textile Industry –
RECOMMENDATIONS
Economic downturn has
1. Big ticket investment both from public and private sector
severely affected the
is a must.
industry. 2. National Fibre Policy to fibre neutrality and reduction in
Lack of quality, scale & rates.
Finance. 3. Technological Up gradation & Fund Scheme (TUFS) ON
Exports fallen by more weaving as well to help the farmers.
than 10% in last fiscal. 4. Exploration of newer markets such as Japan & Australia
Weaving needs help on to export products to diversify the consumer base. This will
priority basis. prevent India‟s Textile Industry from any furthus economic
Outdated technology leads downturn which hurt the US, the most.
to lesser production , poor 5. Since India has a young and vibrant population with
quality of clothes and median age of just 24, its domestic demand is bound to grow. So
hence less competitive some stimulus must be provided by central ministry to upgrade
edge. and modernize the sector.
Some stakeholders do not 6. India has the lowest wage rate compared to competitors
want to upgrade as that but is unable to use the competitive advantage as its yield per
will take the subsidized hectare for cotton is very low. It must develop its cotton sourcing
power from them and power.
resulting into increase in 7. It can strengthen its Research & Development (R & D)
the range of 5-10 rupee by importing technology and machinery.
per unit of consumption. 8. To minimize the lead time , India can furthur strengthen
Competition from low its supply chain and textile clusters.
cost countries such as 9. India can develop the service aspect of Textile Industry
China, Bangladesh & thus promoting it as a brand to the developed world. For the
Turkey is huge. same to be successful it needs finance and world class training &
development. It will lead to higher FDI.
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REFERENCES
http://www.businessworld.in/bw/2009_08_04_We_Will_Take_Brand_India_To_New_M
arkets.html
http://www.businessworld.in/bw/2009_08_07_Cash_Prop_For_Textiles.html
http://www.businessworld.in/bw/dataPage/tag/textiles
http://www.businessworld.in/index.php/The-New-Stitch.html
http://www.mckinseyquarterly.com/Freeing_Indias_textile_industry_1467
http://www.ey.com/Publication/vwLUAssets/India_in_the_Global_Textiles_Ecosystem_
EY___CII_Report/$FILE/India%20in%20the%20Global%20Textiles%20Ecosystem%20
EY%20&%20CII%20Report.pdf
http://www.adbi.org/e-newsline/090203.html#5
http://www.ficci.com/ficci-in-news-page.asp?nid=2998
http://www.imf.org/external/pubs/ft/wp/2005/wp05214.pdf
http://www.in.kpmg.com/Sectoral_Snippets/Misc/SectoralSnippets_Issue36.pdf
http://www.ibef.org/industry/textiles.aspx
http://in.reuters.com/article/domesticNews/idINBOM15015720090706?pageNumber=2&
virtualBrandChannel=0
http://www.business-standard.com/general/pdf/new_tax_code_090709_05.htm
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