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FOR THE INDIAN TEXTILE INDUSTRY

1. Threat of new entrants: LOW then MODERATE


a. Low during license Raj
b. A few large players but they don’t hold a large market share, but still they are
driving up the competitiveness
c. MFA – Multi-fiber agreement
d. The incumbency advantages independent of size would be high for the big
players in the market. For example, they would have access to better
technology by virtue of being longer in the industry.
e. If there is latest tech with less manpower and less energy consumption and
getting better quality of fabric from the same yarn, then a threat of new
entrant – tech and innovation will drive this cost saving.

2. Threat of Substitute products or services (for the Indian textile industry): LOW to
MODERATE
a. Non woven fabrics
b. Threat to LDC nations according to WTO (Indonesia, Bangladesh, Philippines,
Vietnam)
i. Other countries and their competitive costs (cheap labor and raw
materials)

3. Bargaining power of suppliers: LOW


a. Both natural fibers and man made fibers have no consolidation in the
supplier side. The industry is very fragmented and so is the case for the
suppliers
b. Also there is an excess amount of supply as compared to the demand

4. Bargaining power of customers: LOW


a. There are 2 customer segments both of which there is not consolidated
hence the bargaining power is low
i. Garments – there is no large customers that has a lot of power /
control on the firms in the industry.
ii. Non Garments

5. Jockeying for position (Inter firm rivalry): HIGH


a. High fixed cost increases their barrier to exit
b. There is competition on the basis of price (cost competitiveness) due to the
identical outputs
c. generally, a competitive industry; very fragmented industry overall and no
manufacturer has a very large market share of manufacturing. Find the big
guys of the market (new ones and get market shared) the whole industry is
fragmented
TIMELINE
- 1947-55 – During the partition fertile land with raw materials was lost and the
bargaining power of the supplier was high

- 1980’s – export starts with limited deregulation (threat of new entrant increased
gradually) & GVC – increased the competition in the industry

- 1990’s – LPG – increased the competition in the industry

- MFA - 1974 till 2004


o The buyers (US and UK) they had a lot of barging power
o Loss of MFA took away the bargaining power of the buyers

- ATC - The World Trade Organization (WTO) Agreement on Textiles and Clothing (the
Agreement) provided for the phased liberalization and elimination over the
transition period of quotas on textiles and apparel imported from WTO member
countries.

- Tech up gradation scheme


1. If there is latest tech with less manpower and less energy consumption and getting better
quality of fabric from the same yarn then a threat of new entrant – tech and innovation will
drive this cost saving

2. Textile is yarn then weaving then fabric = woven fabric


There are non woven fabrics which are starting tor replace textiles – starting from non core
areas of garment
Garment are diff to textiles (garment is made from textile) but textile is not limited to
garments

3. natural fibers there Is no consolidation of suppliers because of the disintegrated supplier


base
MMF fibers there is some amount of monopolistic behavior in the counter but over all in the
world there are many suppliers
Supply is in excess of demand (pranoy’s paper)

Way too much supply and there no enough consolidation of suppliers

4. garment, large retailers like Walmart


2 categories – garments and the non garment parts of that
in the non garment industry there is some level of consolidation abroad not it India
no consolidation of the garment industry across the globe
google a large player

5. generally a competitive industry; very fragmented industry overall and no manufacturer


has a very large market share of manufacturing. Find the big guys of the market (new ones
and get market shared) the whole industry is fragmented

Things we have not covered timeline

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