Indian Textiles – 2015
   .... Looking for a Glorious future

Clearly and apparently, in the area of ethnic garments and high quality fashion textile products, India has a clear-cut edge over China, which continues to dominate the global textile market. Yet another plus point of the Indian textiles export venture is the modest successes of the trendy garments, designed by the Indian fashion creators for the high end West European market.

India has a diverse and rich textile tradition.  This is the only industry, which is self-reliant and complete in value chain. The country has a natural competitive advantage in terms of a strong and large multi-fiber base, abundant cheap skilled labour and a presence across the entire value chain of the industry ranging from spinning, weaving, processing, made-ups and garments. However, this industry comprises mostly small-scale, non-integrated spinning, weaving, finishing and apparel-making enterprises.  It contributes 20% of industrial production, 9% of excise collections, 18% of employment in the industrial sector, nearly 20% to the country’s total export earnings and 4% of the GDP.  The country is the 2nd largest producer of textile and clothing with its products being exported to over 120 countries.  With around 68% of Indian Textile Industry is again contributed by domestic demand.  Driven by all these factors, this potential industry has the expectation to achieve turnover of US$ 85 billion by 2010, which is quite possible with the present textile export growth of 25% in 2005-06. 

While China finds it difficult to meet the smaller, custom made requirements, India is well-equipped to provide fashion driven products on a small scale. Further, the Indian handloom products known for their striking and rich designs and excellent finish are slowly finding flavour with a section of high-end buyers in West Europe and North America. But then India's share in the global textiles market is still around 4% against 17% share held by China and India is far behind in almost all parameters of textile and there is a large room to grow as seen in the table below:

INDIA AND CHINA; TEXTILE INDUSTRY UPDATE

Yet, Indian Textile Industry has got an opportunity to strengthen its position due to quantitative restrictions put on the import of textiles and clothing from China by USA and EU.  Tastes of the consumers in the developed countries are switching over to the branded Textile and Clothing, rather than choosing for cheaper items for mass.  However, the Indian Textile Industry is still depending on cotton as major raw material with about 56% cotton and 34% other raw materials being consumed. 

Endowed with inherent advantages of an assured supply of raw material and human skills, Indian Textile industry is undergoing radical changes with a view to upgrading technology as per with the world.  With the amount sanctioned under the TUF Scheme doubling each year since 2002-03 to 2005-06, the total investment required from 2002 to 2010 have been estimated at Rs.1, 40,000 crore. Out of 5161 projects gone for TUF with an investment of Rs. 39,729 crore as on June 2006, share of Gujarat is around 30% (1536 projects). Most dominating sector of Textile Industry is still Powerloom (63% of fabric produced).  But there were 368 units could take this benefits of CLCS-TUF facility for Technology Upgradation in 2005-06 as against 150 in 2004-95 and only 4 units in 2003-04, mainly because of ceiling limit of Rs.1 crore only.

The Indian apparel sector, which has the highest export growth, consist of 27,000 manufacturers, 48,000 fabricators and around 1000 manufacturers cum exporters. In order to boost their export order, many big textile companies in India are making substantial investment in technology upgradation and augmentation of production facilities

A study by the International Textile Manufacturers' Federation shows that the cost of power in India is much higher than in China and Brazil. Another shortcoming of the Indian textiles industry is the absence of an integrated production matrix, which holds the key to India's emergence as a globally competitive player in the US$ 400-billion plus international market for textile products. More importantly, the real estate investment for a Chinese plant is next to nothing whereas in India the real investment forms a major part of the cost of establishing a textile mill. However, looking to the availability of Gas and imported Coal, one may go for own Captive Power Plant or Power Plant within the newly coming up SEZ to become more competitive.

Capacity Expansion

Between 1995 and 2005, the weaving capacity of the composite mills decreased from 139 thousand looms to 86 thousand looms.  However, this decline has been compensated by increase in decentralized power loom and hosiery sector.  In the spinning sector, the number of spindles and rotors increased from 30.70 million spindles and 186 thousand rotors to 34.24 million spindles and 385 thousand rotors respectively.  There were 801 small scale spinning units with installed capacity of 1.51 mm spindles and 26,504 rotors in 19998 which rose to 1161 units with 3.23 million spindles and 114748 rotors in 2005.

The production of spun yarn has increased to 3223 million kg. from 2200 million kg. whereas manmade filament yarn has increased to 1108.85 million kg from 407.97 million kg.  Manmade fibre production reached to 1022.60 million from 478.62 million kg.  Cotton production had got to 243 lakh bales from 138.5 lakh bales.  Silk and wool production increased to 16.50 million kg and 50 million kg from 14.58 million kg and 40.6 million kg respectively.  Overall fabric production increased from 28606 million sq, mtrs. to 45378 million sq. mtrs. with a decline of production in organized mill sector (CAGR 3.90%) and handloom (0.77%).  However per capita availability of cloth increased from 25.98 sq. mtrs. to 33.51 sq. mtrs.  
Entry of Foreign Buyers and Investors
In the recent past, prominent retailers across the world are looking at options of increasing their sourcing from the Indian markets.  Indian manufacturers are also proactively working towards enhancing their capacities to fulfil this increased demand.

Prominent Buyers, Sourcing from Indian Textile may be stated as under:

Other major Buyers’ in India are Impulse, Li & Fung, Triburg India, AMC, H&M, TCNS, Tommy Hilfiger, Federated and many more.  Some of the notable Brands catered by them are: Armani, DKNY, Calvin Klevin, Nantica, Perry Ellis, Izod, Liz Claiborne, Polo Ralph Lauren, Van Heusen, Esprit, Saks Fifth Avenue and Banana Republic.

FDI in Indian Textile Industry is not very impressive. The share of textile sector in FDI was 1.39% in 2005 as against 1.57% in the corresponding period last year. In the year 2005-06, FDI in a Textile has further come down to 1.02% growth as against 4.39% in previous year.   However, this industry needs FDI, not just for investment alone, but also to adopt better technology and practices.

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