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Textile and Apparel Industry
Dr. J.N. Singh
Joint Secretary, Textiles
Government of India
3rd October, 2009
Size of Indian Textile Industry
Contributing to
• 14% to industrial production,
• 4% to the GDP,
• 17% to the country‘s export earnings and
• Direct employment to over 35 million people
Producing the Complete Value Chain
India is a major producer of textile products – fiber and yarn; and is one of the largest
exporters too in these raw material categories
As one moves across the value chain (fabric and garments), the installed capacities and
production quality and quantity reduce very precipitously
Majority of installed capacity is in Small Scale which falls woefully short on economies of
scale
Handloom– 39 million
Raw Silk
Production – 18 mn. kg
With advantages like….
• Large domestic consumption, and increasing attractiveness of the
domestic Indian market
• An attractive sourcing destination for rest of the world
• Low labor cost
• Availability of managerial and technical talent for developing a cost
effective, sustainable organization structure
Large and increasing domestic
consumption
India’s current domestic consumption of US$ 30 billion is expected to touch
~US$ 180 billion over next 25 years (growing at over 8% per year)
In US$ Billion
An attractive sourcing destination
Most of the top global apparel Current exports of US$ 22 billion have
retailers have their sourcing network the potential to US$ 125 billion in the
in India by 2035
In US$ Billion
Low labor cost
Source: Werner International
With these advantages, how should we position
our self ??
• A lowest cost manufacturing destination ?
– not sustainable with competition from other low cost countries like China, Bangladesh, Vietnam
etc.
• A luxury goods manufacturer ?
– requires many years of positioning as a luxury supplier with relevant cutting edge technology,
creativity, and research & development to back it up
Or, should we leverage India’s
• Tradition
• Diversity
• Culture
• History
• Handwork
• Creativity
Should we not “market” our uniqueness to the
world ? KASHMIR
PUNJAB Kashida, Pashmina
Phulkari
UTTAR PRADESH
RAJASTHAN Chikankari,
Block Print, Batik, Brocade
Mirror Work,
Bandhini
NAGALAND
Naga Shawl
Government is ready to
support this industry to any
extent
Government has taken several initiatives
Investments focused initiatives
The Scheme is intended to facilitate induction of state‐of‐the‐art technology
in Indian textiles & apparel manufacturing sector
Government has so far disbursed ~US$ 14 Billion in more than 25,000
projects
For each textile park, Government provides grant or equity to an extent of
40% of the project cost subject to a ceiling of ~ US$ 9 Mn
Till date, 40 textile parks have been approved with a cumulative project cost
of US$ 930 Mn., out of which Government grant is ~ US$ 320 Mn.
Investment Trends under TUFS
70000 66233
60000
51420
50000
(Rs. in crores)
40000
30000
19917
20000 15032
10000 7349
3289
1438
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
13
TUFS – Sectoral Pattern
9%
3%
3%
29%
10%
16%
30%
Spinning Com pos ite upgradation Weaving Proces s ing Garm enting Knitting Others
14
Government has taken several initiatives
For the benefit of market
• Free Trade Agreements (FTAs)
– The Government is pursuing FTAs with Europe and USA. This will help the
industry to grow further.
Country Status Country Status
ASEAN Recently signed GCC Under negotiation
SRILANKA Operative TAIWAN Under negotiation
MALAYSIA Operative EFTA Under negotiation
THAILAND Operative US Under negotiation
SINGAPORE Operative CHILE Signed on 20th Jan 2005
Turkey Under negotiation SAFTA Operative since 1st Jan 2006
Australia Under negotiation AFGANISTAN Operative
NEW ZEALAND Under negotiation BHUTAN Operative
• Initiative for New Markets : MAI schemes, Foreign Trade Policy
….and Facilitated New Opportunity Areas
Technical Textiles Technical Textiles
Segment Areas of application
Agrotech Agriculture, Horticulture, Forestry and Fishing PM has introduced Four Mini Missions
Buildtech Building and Construction Textiles
Clothtech Technical Components of Shoes and Clothing
For Development of Technical Textiles
Geotech Geotextiles, Civil Engineering
Hometech Furniture, Household Textiles & Floor Coverings
Indutech Filtration, Cleaning & Other Industrial materials
Meditech Hygiene and Medical
Mobiltech Automotive, Marine, Railways and Aerospace Centers of Excellence
Packtech Packaging
Protech Personal and Property Protection
Sportech Sport and Leisure Equipment
Oekotech Environmental protection
MANTRA
NITRA BTRA
New Opportunities Facilitation by Government
2008‐9 was a bad year by all counts.
• A decline of 1.91% in fabric production
• A decline of 2.22% in spun yarn
• The top 45 textile sector companies posted a
meager profit of Rs 116.06 crores over a turnover
of 10768 crores in Q4 2008. Several major
companies suffered a loss.
• The next 48 companies in aggregate actually
suffered a loss of Rs 126.77 crores over a turnover
of 2847 crores in Q4 2008.
Domestic yarn production (in million kg)
Domestic fabric production (in mn sq
meters)
What caused this bad turn?
• As we all know , global downturn had a major impact.
Consumption in US declined drastically. As a result, the
overall T and C import of US declined by 3.34% in the
calendar year 2008 compared to 2007. How ever in 2009
upto July the decline is 14.18%.
• India’s T and C exports decline to US in 2009 upto July is
10.48%.
• A similar problem was faced in Europe as well. One should
remember here that about 65% of our exports are to these
two destinations and exports are over 40% of our production.
How do we see the future now?
• Do we expect some change in scenario or
would be another long and tough period
ahead of us?
• Will the market see some emerging demand
scenario?
• Basically it boils down to the issue – do we
recover from here?
Interesting concept‐ green shoots
• "From a technical perspective, the recession is very likely over at this
point," Ben Bernanke – Fed Chairman on the 15th Sept. On 16th, Warren
Buffet repeats these sentiments.
• Compared to July 2009 the retail sale of clothing and accessories in US
has increased by 2.4% in August 2009,(published on 15th Sept) while
even July 2009 had increased over June 2009 by 0.2%. It should however
be remembered that Aug 2009 is down compared to Aug 2008 still by
5.1%.
• As the next slide will show the housing sector in US – the source of much
consumer wealth‐ has also started improving –(S and P Case‐Schiller
Housing Index) . By June 2009, the decline in home price had been
arrested as shown by the slightly rising curve. And as we all know
demand from the housing sector boosts demand throughout textile sector.
Green shoots in India too
• The months of April‐ July 2009 have shown a positive fabric production
of 2.2%. The yarn production , initially in negative, has shown a positive
trend in July – though minor. What is heartening that after a
disappointing 2008‐9, things are showing some uptrend.
• Though the overall export scenario is still bad, at least in synthetic
sector, uptrend has been seen esp in July and August 2009. Garment
sector is also slightly positive.
• The excise revenue is up by 22% in August 2009 over July figures‐
showing signs of industrial recovery.
• Other sector of economy like auto, manufacturing in general is showing
uptrend.
• Stock market is responding positively to this.
However, too early to predict permanent
return to good times
• What we are witnessing are hopeful signs, it is just too
premature to say that things have permanently changed for
the better. Much depends on the consumers of US and EU. It
should however be noted that it is our own consumers who
helped us survive this downturn.
We hope that the Q1 2009 figure of Rs 392.68 crores profit to
the top 45 textile companies ( an improvement over Rs
116.06 crores in Q4 2008) would definitely improve in the
next quarters and we will experience greater growth in this
sector – which will then help our employment issues for the
masses.
Industry has to take INITIATIVES –if it has to take
advantage of return to somewhat normal times
• Create new product categories
– Product innovation
– Invest in R&D
• Focus to become more cost effective
– Adoption of Lean Manufacturing systems
– Critical re‐evaluation of various cost heads
– Develop operational efficiencies
• Collaborate
– Join hands through tie‐ups and JV with national / international players to
create a pack of complementary services
– Establish as a niche player rather than in a commodity manufacturer
– Position as a ‘designer‐manufacturer’ to provide buyers a differentiating
factor
Industry also has to take INITIATIVES
• Focus on Domestic Market
– Indian domestic consumption has not slowed down to the extent
as in developed markets
– For the time being, India’s own market for several product
categories may be more lucrative
• Exploring new export markets
– This could be the right time to market your product in less
explored markets like Russia, China, Middle East, Eastern Europe,
LAC, etc.
THANKS AND BEST OF LUCK