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

EXPORT
(Rs. in crores)

The total Indian market for the textile machinery (the latest year for which complete data are available) was estimated at USD 895 million. The market is projected to grow at an average annual nominal growth at least 6 percent during the next 5 years. In the Apparel sector, Zuki, alone has created presence in over 20,000 garment units of India. Company has the market share of 25% in India. In the year 2005, it has supplied 35,000 sewing machines in India with a expected growth of 30% in 2006. Looking to the huge potentiality, Zuki plans to set up its manufacturing unit in India in near future.

There are at least 20 domestic companies offering textile machinery for spinning, weaving, texturising and finishing. The Lakshmi Group of Coimbatore has been the most successful of these companies. Lakshmi success is attributable to its longevity in the sector and its ability to offer a range of textile machinery directly or through its sister companies. Consequently, Lakshmi can meet the needs of a variety of end users

Gross receipts for the Industry were nearly US$ 1000 million. The industry employs about 3.0 lakh workers directly and an equal number indirectly. The demand for textile machinery is mainly from end user in the cotton textiles, manmade fibers and wool units textile sectors. However, industry is facing various constraints due to-

On the other hand, the major factors that are likely to produce growth for this sector include:

Share of Imported Machineries are estimated to be from U.S. 3 %; Germany 15%; Switzerland 20%; the U.K. 6%; Japan 20%; Italy 7%; and Korea 6%.  The Market share for used textile machinery is approximately 20 percent of the total market for textile machinery. Imported textile equipment include: Auto cone winders; open-ended spinning units; single-cylinder knitting machines; CAD systems; continuous fusing machines; air-jet looms; and texturizing machines.  Indian market has been quite receptive to the import of used textile machinery from Korea, Switzerland, and Germany.  Imports currently constitute 40 percent of the total textile machinery market. However, this value is likely to increase to 50 percent for next few years, due to a liberalized import policy that features a reduction in customs duties.  Significant suppliers of critical textile machinery are - Airjet Looms of Tsudokama of Japan, Auto Coners Scalfhorsdt of Germany and Mitsubishi of Japan, Texturizing Machines of Marubeni, Japan, Ring Frames of Laxmi Rieter, India.  India is the fourth largest importer of German textile machinery at 108 million euros (Rs 583 crore) for the first half of 2005.

The US' and Turkey's imports are $173 million (Rs 796 crore) and 170 million euros, respectively. Going by the current surge in the export of German machinery to India, which rose by 30 per cent at 140 million euros in 2004 and by another 84 per cent during the current year. India's import of spinning machinery this year is up 367 per cent to 52 million euros and the textile finishing machinery too has gone up 38 per cent to nine million euro.

The textile machinery from Korea stood at $40 million in 2003-04 has gone up by 25 per cent to $50 million by 2004-05 fiscal. A strong player in synthetic textile machinery and also in textile finishing-line including dyeing equipment, garmenting and embroidery machinery, Korean textile majors have cast their eyes on the Indian market. India's import of embroidery machinery, one of the high-demand items in Korea's textile machinery export basket, which was at $3 million in 2003-04 continued to thrive through 2004-05 and as per the figures available for the first eight months of the fiscal, the value of the import of Korean embroidery units had gone beyond $3.3 million.

Small textile weavers have evinced interest in China-built rapier looms weaving machine models - TW733 and KT566. These two new machine models, which run at 350 rpms and 450 rpms respectively, can be an alternative choice for those looking at importing second-hand looms from Europe. China is also supplying cheaper varieties of embroidery machinery in places like Surat.

Keeping in view of changing situation and ongoing competition and updated technology requirement world over, objective need to be framed not only doubling the exports of textile machinery and accessories in the existing markets but also to set a foothold in the new markets around the globe. However the current capacities on textile & apparel machinery manufacturers in India are much less than that required making this investment possible. This opens up an opportunity for international textile & apparel machinery manufacturers to set up manufacturing units in India to cater to this unfulfilled demand.

Conclusion

Opportunities are everywhere.  It is in Cotton, Silk, Wool and Synthetic Textile or in Textile for Industrial and Specialised application.  Decentralised Powerloom still maintains its major role with its share of 60% fabric produced in the country.  But technology level is far behind the expectation and need.  There needs to be a special attention by the Industries, Research Institutions and Government together.

But our innovation and design development is yet to be improved in a faster space. Need is to speed market, create flexibility of the product-mix and build a strategic sourcing.  Information Technology is our strength, but lead-time is still very high.  Textile and Apparel may be brought into a status of priority sector, so that even port clearance can be done by 2 hours and work for 365 days and 24 hours.  Even country like Sri Lanka is having better port efficiency with skilled manpower.  One of the largest Apparel Units of Asia – BRANDIX – could, therefore, be established in Sri Lanka.

Garment Sector, which is fashion driven and more of seasonal, is again the engine of growth for the complete value chain.  Need is, therefore, to have flexible labour laws, ensuring certain social security to the workmen like retrenchment compensation, minimum wage, health, hygiene and good working condition.  These, otherwise, are the prime requirement of the international buyers as their pre requisite of social audit before buying the textile from India.

Textile is still a low margin industry.  Internationally, net profit as % sale after providing for depreciation and interest cost is only 5% of sale value.  Under these circumstances, some time, it is difficult to compete globally with power cost disadvantage of around 8% of the sale value.  Power cost in India is higher even than Pakistan, Bangladesh, Brazil and China and it constitutes about 20% of conversion cost up to fabric stage.  However, power reforms policy of government of India is expected to encourage more number of power generations in private sector, allowing 3rd party sale of excess power.  This will, in turn, create quality power supply in a competitive price.  In the meantime, all the textile exporters may be provided subsidised power tariff and exempted for all duties.

High transaction cost, on account of inordinate delay due to underdeveloped infrastructure and port and imposition of various taxes is also loosing the substantial cost competitiveness in the export market.  Intervention needs to be made lowering this transaction cost significantly which is otherwise about 15% of the gross revenue of the exporting firm.

Textiles and Clothing segment in India has become the 2nd largest category (40%) in the Retail Sector i.e. next to Footwear.  Only organised retailing in India estimating at around US$ 7.8 billion in 2005 and is expected to grow around 25 – 30% per annum for next 5 years.  Fashion retailers on the other hand are growing over 35% per annum.

Currently, FDI in retailing is restricted due to which many global retail giants have their plans to enter on hold.  Besides, the on-going expansion of Pantaloon and Shoppers’ Stop, many others are planning for more and more outlets in the coming years, targeting cities like Ahmedabad, Delhi, Mumbai, Kolkata, Surat, Vadodara, Jamnagar, Rajkot and other parts of the country.  Now, price is no longer a factor in retail, rather demands for quality of service is going to play.

Today plans of many international players in Textile Machineries for entry into India is constrained by the low volumes of sales in the market, which do not justify setting up a manufacturing facility in the country.  This is especially true of the weaving segment, which is incidentally also a weak link in the textile value chain.  For example, shipments of shuttle less looms to India in 2004 were around 2,146 while that to China and Hong Kong were 58,837.  Likewise, shipments of large circular knitting machines (over 165 mm) and electronic flat knitting machines to India were around 650 and 56 respectively, compared to 3,143 and 7,237 respectively for China and Hong Kong combined.  Developing a supplier based for high-precision castings and components may not be feasible at current volumes.

This is however changing with large groups such as ITEMA actively considering India as a manufacturing location.  Developing a vibrant textile machinery-manufacturing base in India is critical as indigenously manufactured goods would help lower the capital cost for textile and clothing manufacturers, shorten lead times for equipment delivery, lower the cost of repairs and maintenance through indigenisation and help develop products that meet the requirements of Indian textile and clothing companies.  These companies could also serve as manufacturing hubs to cater to their global requirements, especially in South and Southeast Asia, resulting in foreign exchange earnings for the country.  In the meantime, existing small Indian Textile Machinery Manufacturers may think to go for indigenisation of imported technology through Reverse Engineering with cluster approach especially for Weaving Machinery.

Finally, Indian Textile is moving towards a Glorious future by 2015. But, Some of the major changes, may be looked in, across the Industry are: -

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