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Indian textiles and Clothing Industry

Indian economy is one of the largest economy in producing and exporting in

the Textile and garments. But recent down trend made Indian Textile
Industry to become one of the sufferers in the world.

Indian textile industry is multi-fiber based, using cotton, jute, wool, silk and
mane made and synthetic fibers. In the spinning segment, India has an
installed capacity of around 40 million spindles (23% of world), 0.5 million
rotors (6% of world). In the weaving segment, India is equipped with 1.80
million shuttle looms (45% of world), 0.02 million shuttle less looms (3% of
world) and 3.90 million handlooms (85% of world).

The organized mill (spinning) sector recorded a significant growth during the
last decade, with the number of spinning mills increasing from 873 to 1564
by end March 2004. The organized sector accounts for production of almost
all of spun yarn, but only around 4 percent of total fabric production. In other
words, there are little over 200 composite mills in India leaving the
production of fabric and processing to the decentralized small weaving and
processing firms. The Indian apparel sector is estimated to have over 25000
domestic manufacturers, 48000 fabricators and around 4000 manufacturer-
exporters. Cotton apparel accounts for the majority of Indian apparel exports.

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Indian textile industry can be divided into several segments, some of which
can be listed as below:

• Cotton Textiles
• Silk Textiles
• Woolen Textiles
• Readymade Garments
• Hand-crafted Textiles
• Jute and Coir

India textile industry is one of the leading in the world. Currently

it is estimated to be around US$ 52 billion and is also projected to be around
US$ 115 billion by the year 2012. The current domestic market of textile in
India is expected to be increased to US$ 60 billion by 2012 from the current
US$ 34.6 billion. The textile export of the country was around US$ 19.14
billion in 2006-07, which saw a stiff rise to reach US$ 22.13 in 2007-08. The
share of exports is also expected to increase from 4% to 7% within 2012.
Following are area, production and productivity of cotton in India during the
last six decades:

Glimpse of the Indian Textile Industry

India produces a wide range of home furnishings, household linen, curtain

tapestry and yardage made with different textures and varying thickness.
The Handloom industry mainly exports fabrics, bed linen, table linen, toilet
and kitchen linen, towels, curtains, cushions and pads, tapestries and
upholstery's, carpets and floor coverings, etc. The Handloom industry has
adopted various measures and techniques to provide high quality and eco-
friendly products to the world market. The manufacturers in India are well
aware that AZO free colors and dyes should be used. India has discarded the
usage of banned materials in the dyeing process with safe substitutes, to
ensure eco-friendliness of the products manufactured by the industry.

India’s Handloom Production

The Handloom industry mainly exports fabrics, bed linen, table linen, toilet
and kitchen linen, towels, curtains, cushions and pads, tapestries and
upholstery's, carpets and floor coverings, etc. The Handloom industry has
adopted various measures and techniques to provide high quality and eco-
friendly products to the world market.

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In the world of handlooms, there are Madras checks from Tamil Nadu, ikats
from Andhra and Orissa, tie and dye from Gujarat and Rajasthan; brocades
from Banaras, jacquards form Uttar Pradesh. Daccai from West Bengal, and
phulkari from Punjab.

The Surat tanchoi based on a technique of satin weaving with the extra weft
floats that are absorbed in the fabric itself has been reproduced in Varanasi.
Besides its own traditional weaves, there is hardly any style of weaving that
Varanasi cannot reproduce. The Baluchar technique of plain woven fabric
brocaded with untwisted silk thread, which began in Murshidabad district of
West Bengal, has taken root in Varanasi. Their craftsmen have also borrowed
the jamdani technique. In the deportment of Woolen textiles, Woolen weaves
are no less subtle. The Kashmiri weaver is known the world over for his
Pashmina and Shahtoosh shawls. The shawls are unbelievably light and

The states of Kashmir and Karnataka are known for their mulberry silk. India
is the only country in the world producing all four commercially known silks -
mulberry, tasser (tussore), eri and muga. Now gaining immense popularity in
the U.S.A. and Europe Assam is the home of eri and muga silk. Muga is
durable and its natural tones of golden yellow and rare sheen becomes more
lustrous with every wash. The ikat technique in India is commonly known as
patola in Gujarat, bandha in Orissa, pagdu bandhu, buddavasi and chitki in
Andhra Pradesh.

Cotton in India

Cotton is the most famous textile material associated with the Indian
Subcontinent. The export of fast dyed cotton cloth to Europe revolutionized
the garment and furnishing fashions, agricultural practices and the textile
manufacturing industries of the seventeenth and eighteenth centuries.
Cotton has been cultivated within the Indian Subcontinent for the
manufacture of textiles since 1750 BC, the date ascribed to the Mohenjodaro
fragments of the Indus Valley Civilization. The perennial form of cotton plant
is a slow growing and warmth and water demanding shrub. Its
cultivation in the north was therefore limited.

Production of Cotton

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Today cotton is produced in many parts of the world, including Europe, Asia,
Africa, America and Australia using cotton plants that have been selectively
bred so that each plant grows more fiber. In 2002, cotton was grown on
330,000 km² of farmland in Texas. 47 billion pounds (21 million t) of raw
cotton worth 20 billion US dollars was grown that year. The cotton industry
relies heavily on chemicals such as fertilizers and insecticides, although some
farmers are moving towards an organic model of production, and chemical-
free organic cotton products are now available. Historically, one of the most
economically destructive pests in cotton production has been the boll weevil.
Most cotton is harvested mechanically, either by a cotton picker, a machine
that removes the cotton from the boll without damaging the cotton plant, or
by a cotton stripper which strips the entire boll off the plant. Cotton strippers
are generally used in regions where it is too windy to grow picker varieties of
cotton and generally used after application of a defoliant or natural
defoliation occurring after a freeze. Cotton is a perennial crop in the tropics
and without defoliation or freezing, the plant will continue to grow. Cotton is
a close relative of okra and hibiscust. The logistics of cotton harvesting and
processing have been improved by the development of the cotton module
builder, a machine that compresses harvested cotton into a large block,
which is then covered with a tarp and temporarily stored at the edge of the


Silk is a natural protein fiber that can be woven into textiles. It is obtained
from the cocoon of the silkworm larva, in the process known as sericulture.

Today, silk is cultivated in Japan, China, Spain, France, and Italy, although
artificial fibers have replaced the use of silk in much of the textile industry.
The silk industry has a commercial value of $200-$500 million annually. One
cocoon is made of a single thread about 914 meters long. About 3000
cocoons are needed to make a pound of silk. To gather silk from cocoons, boil
intact cocoons for five minutes in water turning them gently. Remove them
from water. And using a dissecting needle or similar tool, begin to pick up
strands. When you find a single strand that comes off easily, wind the silk
onto a pencil. Several of these strands are combined to make a thread.

The beautiful and expensive golden-colored "wild" silk called "Muga" is

produced only in the Brahmaputra Valley - mainly Assam and adjoining parts
of Burma. This silk has always been highly prized - not only for its beautiful
natural golden sheen, which actually improves with aging and washing - but
for the fact that it is the strongest natural fiber known. Garments made of it
outlast those made of ordinary silk - commonly lasting fifty years or more.
Kancheepuram, Tanjore and Kumbakonam, which are the important pilgrim
centers, are also important textile centers of Tamil Nadu. Sangarneddy and

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Dharmaswaram in Andhra Pradesh, Kolegal and Molkalmoru in Mysore are

also famous silk-weaving centers.

Tanjore specialized in weaving the all over gold-work saris used for
weddings and for offering to temples. These carried rich broad borders in
gold work and pallus with patterns derived from temple frieze. The youli, the
stylized lion form, the hamsa, swan, and the shardul, tiger were common
motifs. Molkalmoru in Mysore had its own distinctive tradition of simple ikat
weave, combined with a rich silk or gold border carrying stylized motifs of
parrots. The ikat was always in white.Care of your silk garment It is best to
dry clean your silk garment either by individual or bulk method, in order to
maintain the characteristic of the silk.


The share of textiles and garments exports in India’s total exports in the year
2003-04 stood at about 20 percent, amounting to US $ 12.5 billion. The quota
countries, USA, EU and Canada accounted for nearly 70 percent of India’s
garments exports and 44 percent of India’s textile exports. Amongst non-
quota countries, UAE is the largest market for Indian textiles and garments;
UAE accounted for 7 percent of India’s total textile exports and 10 percent of
India’s garments exports.

In terms of products, cotton yarn, fabrics and made-ups are the leading
export items in the textile category. In the clothing category, the major item
of exports was cotton readymade garments and accessories. However, in
terms of share in total imports by EU and USA from India, these products hold
relatively lesser share than products made of other fibers, thus showing the
restrain in this category.

Critical Factors that Need Attention

Though India is one of the major producers of cotton yarn and fabric, the
productivity of cotton as measured by yield has been found to be lower than
many countries. The level of productivity in China, Turkey and Brazil is over 1
tonne/ha., while in India it is only about 0.3 tonne/ha. In the manmade fiber
sector, India is ranked at fifth position in terms of capacity. However, the
capacity and technology infusion in this sector need to be further enhanced

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in view of the changing fiber consumption in the world. It may be mentioned

that the share of cotton in world fiber demand declined from around 50
percent (14.7 mn tons) in 1982 to around 38 percent (20.12 mn tons) in
2003, while the share of manmade fiber has increased from 44 percent
(13.10 mn tons) to around 60 percent (31.76 mn tons) over the same period.

Apart from low cost labour, other factors that are having impact on final
consumer cost are relative interest cost, power tariff, structural anomalies
and productivity level (affected by technological obsolescence). A study by
International Textile Manufacturers Federation revealed high power costs in
India as compared to other countries like Brazil, China, Italy, Korea, Turkey
and USA. Percentage share of power in total cost of production in spinning,
weaving and knitting of ring and O-E yarn for India ranged from 10 percent to
17 percent, which is also higher than that of countries like Brazil, Korea and
China. Percentage share of capital cost in total production cost in India was
also higher ranging from 20 percent to 29 percent as compared to a range of
12 to 26 percent in China.

In India, very few exporters have gone in for integrated production facility. It
is noted that countries that would emerge as globally competitive would have
significantly consolidated supply chain. For instance, competitor countries
like Korea, China, Turkey, Pakistan and Mexico have a consolidated supply
chain. In contrast, apart from spinning, the rest of the activities like weaving,
processing, made-ups and garmenting are all found to be fragmented in
India. Besides, the level of technology in the Indian weaving sector is low
compared to other countries of the world. The share of shuttle less looms to
total loom age in India is 1.8% as compared to Indonesia (10%), Bangladesh
(10%), Sri Lanka (12%), China (14%) and Mexico (29%).

The supply chain in this industry is not only highly fragmented but is beset
with bottlenecks that could very well slow down the growth of this sector. As
a result the average delivery lead times (from procurement to fabrication and
shipment of garments) still takes about 45-60 days. With international lead
delivery times coming down to 30-35 days, India needs to cut down the
production cycle time substantially to stay in the market. Besides, erratic
supply of power and water, availability of adequate road connectivity,
inadequacies in port facilities and other export infrastructure have been
adversely affecting the competitiveness of Indian textiles sector.

The handloom sector was a very vibrant industry in Kerala, till just a few
years ago. But various factors, of which government neglect tops, amongst
the reasons for the dismal state of affairs in the Kerala handloom industry.
About five years ago, there were around 510,000 weavers, which has now
dropped down to just 195,000. The handloom weaver’s cooperatives
societies have also fallen by a sharp 50 percent in the same period.

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The Agreement on Textiles and Clothing

ATC is a transitory regime between the MFA and the integration of trading in
textiles and clothing in the multilateral trading system. The ATC provided for
a stage-wise integration process to be completed within a period of ten years
(1995-2004), divided into four stages starting with the implementation of the
agreement in 1995. The product groups from which products were to be
integrated at each stage of the integration included (i) tops and yarns; (ii)
fabrics; (iii) made-up textile products; and (iv)Clothing.

The ATC mandated that importing countries must integrate a specified

minimum portion of their textile and garment exports based oln total volume
of trade in 1990, at the start of each phase of integration. In the first stage,
each country was required to integrate 16 percent of the total volume of
imports of 1990, followed by a further 17 percent at the end of first three
year and another 18 percent at the end of third stage. The fourth stage
would see the final integration of the remaining 49 percent of trade. After the
expiry of Multi Fiber Agreement in 1st January 2005, the share of Indian
Textiles exports in imports of USA is decreased from 5% to 4%. The share of
Indian Textiles exports in imports of EU is decreased from 7% to 5%.

Global Trade in Textile and Clothing

World trade in textiles and clothing amounted to US $ 385 billion in 2007, of

which textiles accounted for 43 percent (US $ 169 bn) and the remaining 57
percent (US $ 226 bn) for clothing. Developed countries accounted for little
over one-third of world exports in textiles and clothing. The shares of
developed countries in textiles and clothing trade were estimated to be 47
per which is very low when compared with the previous year records



Import Trends in USA affecting Indian Exports

In 1990, restrained or MFA countries contributed as much as 87 percent (US

$ 29.3 bn) of total US textile and clothing imports, whereas Caribbean Basin
Initiative (CBI), North American Free Trade Area (NAFTA), Africa Growth and
Opportunity Act (AGOA) and ANDEAN countries together contributed 13
percent (US $ 4.4 bn). Thereafter, there has been a decline in exports by
restrained countries; the share of preferential regions more than doubled to
reach 30 percent (US $ 26.9 bn) of total imports by USA.

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The composition of imports of clothing and textiles by USA in 2007 was 80

percent (US $ 71 bn) and 20 percent (US $ 18 bn), respectively. Asia was the
principal sourcing region for imports of both textiles and clothing by USA.
Latin American region stood at second position with a share of 12 percent
(US $ 2.2 bn) and 26 percent (US $ 18.5 bn), respectively, for textiles and
clothing imports, by USA. In most of the quota products imported by USA,
India was one of the leading suppliers of readymade garments in USA.
Though China is a biggest competitor, the unit prices of China for most of
these product groups were high and thus provide opportunities for Indian

Import Trends in EU affecting Indian Exports

EU overtook USA as the world’s largest market for textiles and clothing. Intra-
EU trade accounted for about 40 percent (US $ 40 bn) of total clothing
imports and 62 percent (US $ 32.5 bn) of total textile imports by EU. Asia
dominates EU market in both clothing and textiles, with 30 percent (US $ 30
bn) and 17 percent (US $ 8 bn) share, respectively. Central and East
European countries hold a market share of 11 percent (US $ 11.3 bn) in
clothing and 7.5 percent (US $ 4 bn) in textiles imports of EU.

As regards preferential suppliers, the growth of trade between EU and

Mediterranean countries, especially Egypt and Turkey, was highest in 2003.
As regards individual countries, China accounted for little over 5 percent (US
$ 2.8 bn) of EU’s imports of textiles and over 12 percent (US $ 12.4 bn) of
clothing imports.

In the EU market also, India is a leading supplier for many of the textile
products. It is estimated that Turkey would emerge as a biggest competitor
for both India and China. However, with regard to unit prices, India appears
to be lower than both Turkey and China in many of the categories.

Import Trends in Canada affecting Indian Exports

Amongst the leading suppliers of textiles and clothing to Canada, USA had
the highest share of over 31 percent (US $ 8.4 bn), followed by China (21% -
US $ 1.8 bn) and EU (8% - US $ 0.6 bn). India was ranked at fourth position
and was ahead of other exporters like Mexico, Bangladesh and Turkey, with a
market share of 5.2 percent (US $ 0.45 bn). Finally the problem with Indian
export is the lack of huge capacity and the Technology which lags India

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Potential Gains

It may be noted that clothing sector would offer higher gains than the textile
sector, in the post MFA regime. Countries like Mexico, CBI countries, many of
the African countries emerged as exporters of readymade garments without
having much of textile base, utilizing the preferential tariff arrangement
under the quota regime. Besides, countries like Bangladesh, Sri Lanka, and
Cambodia emerged as garment exporters due to cost factors, in addition to
the quota benefits. Thus, it may be concluded that these countries are likely
to lose their market share in the future scenario.


Estimated Gains in USA and EU For China and India

(US $ Billion)

Textiles Clothing Total

ts Present Future Present Future 2014
(2003) (2014) (2003) (2014)

Gains Chin Chin Chin Chin Chin

India India India India India
in a a a a a
USA 3.6 1.5 13.0 5.0 12.0 2.3 67 13 80 18
(20) (8.4) (32) (13. (16.9 (3.2) (42) (8) (40) (9)
5) )
EU 2.8 1.9 12 8 12.3 3.0 60 16 72 24
(5.3) (3.2) (12) (8) (12.2 (3.0) (30) (8) (24) (8)

It may be said that countries like China, USA, India, Pakistan, Uzbekistan and
Turkey have resource based advantages in cotton; China, India, Vietnam and
Brazil have resource based advantages in silk; Australia, China, New Zealand
and India have resource based advantages in wool; China, India, Indonesia,
Taiwan, Turkey, USA, Korea and few CIS countries have resource based
advantages in manmade fibers. In addition, China, Pakistan, USA, Indonesia
have capacity based advantages in the textile spinning and weaving. Finally
due to only few reasons like Technology and huge Capacity in the
manufacturing production units for textile industry, India is in back seat.

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China is cost competitive with regard to manufacture of textured yarn,

knitted yarn fabric and woven textured fabric. Brazil is cost competitive with
regard to manufacture of woven ring yarn. India is cost competitive with
regard to manufacture of ring-yarn, O-E yarn, woven O-E yarn fabric, knitted
ring yarn fabric and knitted O-E yarn fabric. According to Werner
Management Consultants, USA, the hourly wage costs in textile industry is
very high for many of the developed countries. Even in developing
economies like Argentina, Brazil, Mexico, Turkey and Mauritius, the hourly
wage is higher as compared to India, China, Pakistan and Indonesia.

From the above analysis, it may be concluded that China, Pakistan, Taiwan,
Hong Kong, Brazil, Indonesia, Turkey and Egypt would emerge as winners in
the post quota regime. The market losers in the short term (1-2 years) would
include CBI countries, many of the sub-Saharan African countries, Asian
countries which are Bangladesh, Sri Lanka and India.

The market losers in the long term (by 2014) would include high cost
producers, like EU, USA, Canada, Mexico, Japan and many east Asian
countries. The determinants of increase / decrease in market share in the
medium term would however depend upon the cost, quality and timely
Review of Indian Textiles and Clothing Industry The textiles and garments
industry is one of the largest and most prominent sectors of Indian economy,
in terms of output, foreign exchange earnings and employment generation.
Indian textile industry is multi-fiber based, using delivery. In the long run,
there are possibilities of contraction in intra-EU trade in textile and garments,
reduction of market share of Turkey in EU and market share of Mexico and
Canada in USA, and thus provide more opportunities for developing countries
like India.

It is estimated that in the short term, both China and India would gain
additional market share proportionate to their current market share. In the
medium term, however, India and China would have a cumulative market
share of 50 percent, in both textiles and garment imports by USA. It is
estimated that India would have a market share of 13.5 percent in textiles
and 8 percent in garments in the USA market. With regard to EU, it is
estimated that the benefits are mainly in the garments sector, with China
taking a major share of 30 percent and India gaining a market share of 8
percent. The potential gain in the textile sector is limited in the EU market
considering the proposed further enlargement of EU. It is estimated that India
would have a market share of 8 percent in EU textiles market as against the
China’s market share of 12 percent.

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Export under cotton reduced about 1% during 2008-09.

The productivity of cotton which was growing up over the years has
decreased in 2008-09.

Cotton exports couldn't pick up owing to disparity in domestic and

international cotton prices.

Imports of cotton were limited to shortage in supply of Extra Long

staple cottons.

The share of Textile Industry to country’s total exports is reduced to


The major sectors for exports are: Readymade Garments, Cotton

Textiles, Textiles made from Man-Made fiber, Wool & Woolen Goods,
Silk, Handicrafts, Coir & Jute. India’s contribution in global textiles and
apparel market is 3.9% and 3 % respectively.

Exports in 2006-07: US $ 16 billion, exports in 2007-08: US $ 14 billion

are registered 22% decline. Finally the Textile exports of India had
decreased substantially by 11.43 % in rupee terms.

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Trend in value of export of cotton handloom

Fabrics & Made-ups

Year Fabric Made-Ups Total

Rs. In Crs Rs. In Crs Rs. In Crs

2004-05 503.58 1414.76 1918.34

2005-06 488.48 1491.57 1980.05

2006-07 489.63 1637.82 2127.45

2007-08 496.47 1568.47 2064.94

2008-09 842.94 1790.33 2633.27

Export Performance Category wise

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Trend in value of export of cotton handloom product

group-wise – Fabric

Fabrics Export Trends over Last 5 Years

Fabrics Value Of Exports Over 5 Years

Product 2004- 2005- 2006- 2007- 2008-
Name Group 05 06 07 08 09
RMHK 26.63 19 30.4 17.53 12.14
Lungies 67.06 43.14 46.05 46.54 40.23
123.2 339.5
Dothies 77.38 78.48 74.88 8 8
Sarees 20.58 12.02 14.78 9.45 10.94
Shirtings 53.07 37.97 40 29.09 51.11
Furnishings 25.28 18.45 15.18 17.51 23.42
Other 233.5 279.4 268.3 253.0 365.5
Fabrics 8 2 4 6 3
TOTAL 503.5 488.4 459.2 496.2 496.4
FABRICS 8 8 3 3 6

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SL NO. TEXTILE USA(2008) USA(2009) EU(2008) in EU(2009) in

SEGMENTS in Crs in Crs Crs Crs
1 Cotton 5.7 3.2 3.6 2.76
2 Silk 4 2.36 4.32 3.90
3 Woolen 5.89 4.37 4.86 4.13
4 Readymade 8.60 6.17 5.21 3.46
5 Jute & Coir 3.25 3.06 4.37 2.58
6 Hand-Crafted N.A N.A 2.34 2.02

Hence this table show clearly how much money wise the Indian Exports been
reduced from 2008 to 2009. There was a drastic change all of the sudden in
the Indian Textile Industries.

2006-07 2007-08 2008-09

Rs. Mn Rs. Mn Rs. Mn US
ITEMS Crore US $ Crore US $ Crore $
Garments 40237 8884 39001 9692 50291 10954
Cotton Textiles 25197 5564 27600 6859 21808 4750
Man-made Textiles 10863 2399 12783 3177 15088 3286
Wollen Yarn, Fabrics,
Madeups,etc 385 85 374 93 457 99
Silk Textiles 2000 442 1553 386 1669 364
TOTAL 78682 17374 81311 20207 89313 19453
Handicrafts 6181 1365 5844 1452 4940 1076
Manufacturers 660 146 645 160 681 148
Jute 1178 260 1319 328 1376 300
TOTAL 8019 1771 7808 1940 6997 1524
GRAND TOTAL 86701 19145 89121 22147 96310 20977
Source: Foreign Trade Statistics of India (Principal Commodities &

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1. The composition of Imports of Textiles by USA in 2007 was 80% (us $

71 bn). Due to the agreement on textiles to abolish quotas marked a
significant down turn.

2. The share in Total Imports by Europe and USA from India, (Cotton yarn,
fabrics & made-ups) hold relatively lesser share than products made by
other category.

3. Major producers in India of cotton yarn and fabric productivity of cotton

as measured by yield is very low.

4. The capacity and technology infusion need to be further enhanced.

5. Affected by technological obsolescence.

6. High power costs for manufacturing Textiles compared with other


7. Total production costs were higher than other competitor’s countries.

8. Level of Technology in the Indian weaving sector is low compared to

other countries.

9. High production process Time (45-60 Days) when compared with other
countries whose time period is just 30-35 days.

10. High Input Cost and Low Demand Hit the Indian Textile Industry

11. India had very insignificant foreign direct investment in the

textile and clothing sector –receiving only $450.02 mn between 1995
and March 2008, amounting to just 1.16% of total FDI of $ 38.96 bn.
12. Another consequence as also a factor for the poor FDI was the
relative absence of global retailers and textile chains till almost
13. Another factor which hindered India’s export growth was its
absence from practically very major regional free-trade agreements. In
the last decade, the fastest growing apparel exporters –Mexico,
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Romania, Bangladesh, Turkey –have all been part of preferential trade



Cause and Effect:

Cause and Effect Diagrams is used to think through causes of a problem thoroughly.
Their major benefit is that they push you to consider all possible causes of the
problem, rather than just the ones that are most obvious.

The approach combines brainstorming with use of a type of concept map.Cause and
Effect Diagrams are also known as Fishbone Diagrams, because a completed
diagram can look like the skeleton of a fish.

Follow these steps to solve a problem with a Cause and Effect Diagram:

1. Identify the problem:

Write down the exact problem you face in detail. Where appropriate identify
who is involved, what the problem is, and when and where it occurs. Write the
problem in a box on the left hand side of a large sheet of paper. Draw a line
across the paper horizontally from the box. This arrangement, looking like the
head and spine of a fish, gives you space to develop ideas.

2. Work out the major factors involved:

Next identify the factors that may contribute to the problem. Draw lines off
the spine for each factor, and label it. These may be people involved with the
problem, systems, equipment, materials, external forces, etc. Try to draw out
as many possible factors as possible. If you are trying to solve the problem as
part of a group, then this may be a good time for some brainstorming. Using
the 'Fish bone' analogy, the factors you find can be thought of as the bones of
the fish.

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3. Identify possible causes:

For each of the factors you considered in stage 2, brainstorm possible causes
of the problem that may be related to the factor. Show these as smaller lines
coming off the 'bones' of the fish. Where a cause is large or complex, then it
may be best to break the it down into sub-causes. Show these as lines coming
off each cause line.
4. Analyze your diagram:
By this stage you should have a diagram showing all the possible causes of
your problem that you can think of. Depending on the complexity and
importance of the problem, you can now investigate the most likely causes
further. This may involve setting up investigations, carrying out surveys, etc.
These will be designed to test whether your assessments are correct.

Cause & Effect analysis (or Fishbone Analysis) provides a structured way to help
through all possible causes of a problem. This helps you to carry out a thorough
analysis of a situation. Some of exports which include fabric and Made-ups during
the period between 2004to2009 is increasing from 1918 to 2633 but export in
fabrics is fluctuating similar fluctuation with lesser intensity is found in Made-ups.
The fish bound diagram examines the causes in the fluctuation of fabrics and Mad-


India’s textiles exports have declined to US$ 18.52 billion during April-
February’ 2008-09 from US$ 19.55 billion (5.31 %) as compared to the
corresponding period of the previous financial year. India’s textiles and
clothing export has indicated a growth of over 7% in Indian rupee terms
during April-February’ 2008-09 over the corresponding period of previous
year. However, in US dollar terms, it recorded a decline of 5.31%.

Indian Textile Industry:

Textile exports grow from US$ 14 billion in 2004-05 to US$ 17.52 billion in
2005-06 at an average of nearly 25%. These were US$ 19.14 billion in 2006-
07. Registering an increase of 9.3%. Textiles exports during 2007-08 were
US$ 21.46 billion, registering a growth of 12.10%. Textiles exports in 2008-09
will be 20% more than what were achieved in 2007-08. It has been recently
reported that textile exports in 2009-10 period will be equal or could be even
lower than the one achieved in 2008-09. As per government data, India’s
total textile exports for the fiscal year ended March 2008 stood at $ 22

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billion. The rupee fell about 4% since the beginning of 2009, bringing some
cheer to exporters battling a global downturn.

Cotton Textile Industry:

Cotton production reached 244 lakh bales (170 kg each) in the cotton season
(October- September) of 2005-06, 270 lakh bales in the cotton season of
2006-07, and was 315 lakh bales, a record, in the cotton season of 2007-08.
The productivity jumped from 399 kg/hectare in the cotton season of 2003-
04 to 560 kg/hectare in the cotton season of 2007-08. 58 lakh bales of cotton
were exported in 2006-07 against 47 lakh bales in 2005-06, and 0.84 lakh
bales in 2002-03. In 2007-08, exports were 100 lakh bales.

India’s position in World Organic Cotton:

The country’s organic cotton output increased 292 % during 2007-08 to
73,702 tones compared with the previous year. But this is what the Organic
Exchange’s Organic Cotton Farm and Fiber Report 2008 had to say: “While
this (production details) is partially the result of more accurate data, the
increase is also a result of unavailability of fertilizers, prohibitive cost of
synthetic pesticides and general disenchantment with genetically modified
cotton production.”

However, it says India is undeniably the world leader in this field and showing
signs of continued increase in production. And in turn, it has pushed global
organic production by 152 % to 1.46 lakh tones. This means India contributes
exactly half of the world’s organic cotton output.

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Weaving Sector:
The textile industry has been very badly affected by the global slowdown of
2008, with the handloom and powerloom production declining 3.8% and 3.2%
respectively. During 2007-08, the total production of fabric was 57 billion sq
mtrs, compared to 36.10 sq mtrs in 2005-06 and 33.10 sq mtrs in 2004-05.

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The textiles sector has witnessed a spurt in investment during the last four
yrs, increasing from Rs 7,941 crore in 2004-05 to Rs 16,194 crore in 2005-06,
to Rs 61,063 crore in 2006-07, and to Rs 19,308 crore in 2007-08. The
investment between 2004-08 was Rs 1,04,506 crore and it is expected that
investments will touch Rs 1,50,600 crore by 2012. This enhanced investment
will generate 17.37 millon jobs by 2012. According to the provisional data
available, production in the handloom sector in 2008-09 stood at 6,677
million square metres, as compared to 6,947 million square metres the year
before. But, the production in mills increased a marginal 0.8% from 1,781
million metres to 1,796 million square metres. Also, the hosiery sector
witnessed an increase of 2.4% in its annual production.

Following are area, production and productivity of

cotton in India during the last six decades:

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Year Area in lakh hectares Production in lakh bales of 170 kgs Yield kgs per hectare

1950-51 56.48 30.62 92

1960-61 76.78 56.41 124

1970-71 76.05 47.63 106

1980-81 78.24 78.60 170

1990-91 74.39 117.00 267

2000-01 85.76 140.00 278

2001-02 87.30 158.00 308

2002-03 76.67 136.00 302

2003-04 76.30 179.00 399

2004-05 87.86 243.00 470

2005-06 86.77 244.00 478

2006-07 91.44 280.00 521

2007-08 94.39 315.00 567

2008-09 93.73 290.00 526

Cotton Exports from India

Year Quantity (in lakh bales of 170 kgs) Value (in Rs./Crores)

1996-97 16.82 1655.00

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1997-98 3.50 313.62

1998-99 1.01 86.72

1999-00 0.65 52.15

2000-01 0.60 51.43

2001-02 0.50 44.40

2002-03 0.83 66.31

2003-04 12.11 1089.15

2004-05 9.14 657.34

2005-06 47.00 3951.35

2006-07 58.00 5267.08

2007-08 85.00 8365.98

2008-09 50.00 8753.64

During the year 2008-09, the industry had to face adverse agro-climatic
conditions due to which the production has been affected.



High Lead Time The average delivery lead times (from procurement to fabrication
and shipment of garments) takes about 45-60 days. With
international lead delivery times coming down to 30-35 days.

Poor supply chain The supply chain in this industry is not only highly fragmented but

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management is beset with bottlenecks that made the growth of this sector slow.

Major sectors of the value-chain including weaving, processing still

fragmented and still to be fully modernized.
Huge unorganized Furthermore, this policy also envisages the inclusion of the huge
and decentralized unorganized and decentralized Indian textile sector under the
sector organized textile industry. This is because the unorganized textile
manufacturing sector in India accounts for 76% of the total textile

Affected by Apart from low cost labor, other factors that are having impact on
technological final consumer cost are relative interest cost, power tariff,
obsolescence structural anomalies and productivity level (affected by
technological obsolescence).

Increased global Increased global competition in the post 2005 trade regime under
competition in the WTO which made the Textile producers to produce for cheaper
post 2005 trade textiles from other Asian neighbors. High production cost with
regime respect to other Asian competitors lagged India behind.

The capacity and Though India is one of the major producers of cotton yarn and
technology infusion fabric, the productivity of cotton as measured by yield has been
found to be lower than many countries. The level of productivity in
China, Turkey and Brazil is over 1 tone/ha., while in India it is only
about 0.3 tone/ha. In the manmade fiber sector, India is ranked at
fifth position in terms of capacity.

High power costs A study by International Textile Manufacturers Federation revealed

for manufacturing high power costs in India when compared with other countries like
Textiles Brazil, China, Italy, Korea, Turkey and USA. Percentage share of
power in total cost of production in spinning, weaving & knitting of
yarn for India ranged from 10% to 17%, which is also higher than
that of countries like Brazil, Korea & China. Percentage share of
capital cost in total production cost in India was also higher ranging
from 20% to 29% as compared to a range of 12 to 26% in China.

High Input Cost and The outlook for the Indian textile industry for 2009 remained grim
Low Demand Hit as most of the developed markets are facing recession, leading to
the Indian low textile demand and due to negative impact of the recession on
international markets.
Textile Industry


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4. 3.Materi 2. 1.


4. 3.Materi 2. 1.


1. Method

 Huge unorganized and decentralized sector,

 High production process Time, High production cost with respect

to other Asian competitors,

 Poor supply chain management,

 The capacity and technology infusion need to be further


2. Man Power

 Increased global competition in the post 2005 trade regime under

 Most of the workers have rural routes hence they are not
innovative. Labour absenteeism is high in the first week when
they get their wages most of them spend their earning for
unproductive activities.
 Labors don’t have waste consciousness, cost consciousness and
method consciousness. Hence labour productivity is low in most
of the textile mills.

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 Due to the agreement on textiles to abolish quotas marked a

significant down turn.

3. Material

 Material Packaging and Quality is low & due to Monsoon

production decline.
 Major producers in India of cotton yarn and fabric productivity of
cotton as measured by yield is very low.
 The share in Total Imports by Europe and USA from India, (Cotton
yarn, fabrics & made-ups) hold relatively lesser share than
products made by other category.

4. Machine

 Affected by technological obsolescence.

 High power costs for manufacturing Textiles compared with other


 Level of Technology in the Indian weaving sector is low compared

to other countries.

 There is only break down maintenance in most mills. Only in

modern mills we see preventive maintenance but they are very
small in number

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Strategies and Recommendations

Cost competitiveness in Indian garments sector has been restrained by

limited scale operations, obsolete technology and reservation under SSI
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policies. While retaining its traditional cost advantages of home grown cotton
and low cost labour, India needs to sharpen its competitive edge by lowering
the cost of operations through efficient use of production inputs and scale
operations. Besides, there are needs for rationalization of charges, levies
related to usage of export logistics to remain cost competitive. As fallout to
the quota regime, there would be consolidation of production and restriction
on supplying countries, which would necessarily mean improved scale
operations. Indian players should also integrate to achieve operating
leverage and demonstrate high bargaining power.

It is reported that Chinese textile firms have already invested heavily to

expand and grab huge market share in the quota free world. In India,
organized players in this sector would require huge investments to remain
competitive in the quota free world. These players need to expand and
integrate vertically to achieve scale operations and introduce new
technologies. It is estimated that the industry would require Rs. 1.5 trillion
(US $ 35 billion) new capital investment in the next ten years (by 2014) to lap
the potential export opportunities of US $ 70 billion. It is estimated that USA
and EU together would offer a market of US $ 42 billion for Indian textiles and
garments in 2014.

Technology would play a lead role in the weaving and processing, which
would improve quality and productivity levels. Innovations would also be
happening in this sector, as many developed countries would innovate new
generation machineries that are likely to have low manual interface and
power cost. Indian textile industry should also turn into high technology
mode to reap the benefits of scale operations and quality. Foreign
investments coupled with foreign technology transfer would help the industry
to turn into high-tech mode.

Internationally, trading in textile and garment sector is concentrated in the

hands of large retail firms. Majority of them are looking for few vendors with
bulk orders and hence opting for vertically integrated companies. Thus, there
is need for integrating the operations in India also, from spinning to garment
making, to gain their attention. This would also bring down the turn around
time and improve quality. Indian players should also improve upon their soft
skills, viz., design capabilities, textile technology, management and
negotiating skills.

Garment manufacturing business is order driven. It would be difficult for the

players to keep the workforce full time, even in lean season. This calls for
changes in contract labour laws.

Logistics and supply chain would also play a crucial role as timely delivery
would be an important requirement for success in international trade. The

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logistics and supply chain management of Indian textile firms are relatively
weak and needs improvement and efficiency. China has already created a
world class export infrastructure. Given the volume of projections for exports
by India, it may be necessary to create additional export infrastructure,
especially investment for modernization of ports. In addition, India needs to
invest for creating brand equity, supply chain management and apparel
industry education.

To sum up, the ability of Indian textile industry to take advantage of quota
phase-out would depend upon their ability to enhance overall
competitiveness through exploitation of economies of scale in manufacturing
and supply chain. The need of the hour therefore is to evolve a well chalked
out strategy, aimed at improvement in the levels of productivity and
efficiency, quality control, faster product innovation, quick response to
changes in consumer preferences and the ability to move up in the value
chain by building brand names and acquiring channels of distribution so as to
outweigh the advantages of competitors in the long run.

---------- THE END ----------

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Source: Export-Import Bank of India.

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