Indian Textile Industry

49-Darshan Magia 103-Nikhil Andezhath 109-Tridib Chakravarty 110-Stuti Chatterji 125-Munjal Mehta

Introduction
One of the oldest and most significant industries in the country 4% GDP 14 per cent of industrial production 13 per cent of total export earnings Largest foreign exchange earnings sector in the country Provides employment to over 35million people

Overview
India's share of exports to the world would also increase fromthe current 4 per cent to around 7 per cent Independent industry, from the basic requirement of raw materials to the final products, with huge valueaddition at every stage of processing

Porters Five Force model

Threat Of New Entrants

Low Strong barriers to entry Without any established client portfolio it is difficult to attract, endure increased costs In startup phase costs are associated with the manufacturing required and costs for designers and creating samples Heavily dependent on references and word of mouth

Bargaining power of customers (demand scenario)

Strong Important for producers to diffrentiate India, in particular, is likely to benefit from the rising demand in the home textiles and apparels segment, wherein it has competitive edge against its neighbors European markets dominate China likely to become 'supplier of choice'

Bargaining power of suppliers (supply scenario)

Weak Removal of trade related tariffs and non tariff barriers in 2005, Asian countries such as India, China, Hong Kong and Japan have emerged as major players Changes on economic front and infrastructure developments Lacks switching costs and has a low level of product differentiation

Bargaining power of suppliers (supply scenario) .. contd

Manufacturers scout the supplier group for best terms and prices for production Pushes prices down Due to their ability to integrate forward in value added chain, they have achieved a better bargaining position towards textile manufacturing

Threat of substitute products

Very low Identifying substitute product groups proves difficult There are variations in types of clothing and material Trends in fashion and styles But the general conclusion still stands; theres no substitute to apparel.

Competitive rivalry within the industry

Medium to high Growth rate is high in some product segments but negative in others. Hence, the rivalry between apparel manufacturers is diverse Risk of temptations to cut prices when demand slackens 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

Strengths
Independent & Self-Reliant industry Abundant Raw Material - control costs reduces lead-time across the operation Low Cost and Skilled Manpower Large varieties of cotton fiber and fast growing synthetic fiber industry one of the largest exporters of Yarn in international market (25% share of the global trade in Cotton Yarn)

Weaknesses
Highly fragmented Lack of Technological Development Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and transportation Time Unfavorable labor Laws Declining in Mill Segment Highly dependent on Cotton Higher Indirect Taxes, Power and Interest Rates

Opportunities
Growth rate is 6-8% per annum Large, Potential Domestic and International Market Product development and Diversification to cater global needs Elimination of Quota Restriction leads to greater Market Development Increased Disposable Income and Purchasing Power of Indian Customer Emerging Retail Industry and Malls provide huge opportunities Greater Investment and FDI opportunities are available

Threats
Competition from other developing countries, especially China Continuous Quality Improvement is need of the hour Threat for Traditional Market for Powerloom and Handloom Products and forcing them for product diversification Geographical Disadvantages International labor and Environmental Laws To balance the demand and supply To make balance between price and quality