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CHAPTER 1

INTRODUCTION

HISTORY OF TEXTILE

No one knows when exactly the spinning and weaving of textile began. It has been said

that people knew how to weave even 27000 years ago. This was even before humans were

able to domesticate animals. The oldest actual fragment of cloth found was in southern

Turkey.

People used fibers found in nature and hand processes to make fibers into cloth. Even

though high technology was not available, skilled weavers created a wide variety of

fabrics. Dyeing of fabrics was done to satisfy the universal human need for beauty.

Within time, more complex social and political organization of people evolved. With the

growth of cities and nations, improvements in technology came into place and there was a

substantial development in the international trade, both of which involved textiles.

Chinese textile was considered to be the most significant in international trade. Historians

have claimed that silk from China has reached ancient Greece and Rome along a trade

route called the Silk Road in the latter part of the second century B.C. and Egypt in 1000

B.C. The Romans also imported cotton from nearby Egypt and from India. Archeologists

have found facilities for dyeing and finishing cotton fabrics in settlements throughout the

Roman world. During the middle ages, the production and trading of the plant called

woad,an important source of dye, was a highly developed industry. During the fifteenth

century, Trade Fairs in southern France provided a place for the active exchange of wools

from England and silks from the Middle East. The economic activities surrounding these

events gave rise to the first international banking arrangements. Even the discovery ofAmerica was a result of the desire of Europeans to find a faster route not only to the

spices but also to the textiles of the Orient. Textile trade quickly took root in America, as

colonists sold native dyes such as indigo and cochineal to Europe and bought cottons

from India. Although advances were being made in the technology of textile production,

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the manufacture of cloth in Western Europe in 1700 was still essentially a hand process.

Yarns were spun on a spinning wheel and fabrics were woven by hand-operated looms.

A major reorganization of manufacturing of a variety of goods occurred during the latter

half of the 1700s in Western Europe. These changes, known as the IndustrialRevolution, altered not only technology, but also social, economic, and cultural life. The

production of textiles was the first area to undergo industrialization during the

seventeenth and eighteenth centuries as the result of an economic crisis. Good quality

textile products, produced inexpensively in India and the Far East, were gradually

replacing European goods in the international market. In Britain, it became imperative

that some means be found to increase domestic production, to lower costs, and to improve

the quality of textiles. The solution was found in the substitution of machine or nonhuman

power for hand processes and human power.

Many important inventions, most importantly spinning machines, automatic looms, and

the cotton gin, improved the output and quality of fabrics. These inventions provided the

technological base for the industrialization of the textile industry. Each invention

improved one step of the process. For example, an improvement that increased the speed

of spinning meant that looms were needed that consumed yarn more rapidly. More rapid

yarn production required greater quantities of fiber. The growth of the textile industry was

further hastened by the use of machines that were driven first by waterpower, then by

steam, and finally by electricity. The textile industry was fully mechanized by the early

part of the nineteenth century. The next major developments in the field were to take

place in the chemists laboratory. Experimentation with the synthesis of dyestuffs in the

laboratory rather than from natural plant materials led to the development and use of

synthetic dyes in the latter half of the nineteenth century. Other experiments proved that

certain natural materials could be dissolved in chemical solvents and re-formed intofibrous form. By 1910, the first plant for manufacturing rayon had been established in the

United States.

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The manufacture of rayon marked the beginning of the manufactured textile fibers

industry. Since that time, enormous advances have been made in the technology for every

field in the textile industry. Today, the textile industry utilizes a complex technology

based on scientific processes and vast economic organizations.

With the application of advanced technology to the textile field, textile use has expanded

from the traditional areas of clothing and home furnishings into the fields of construction,

medicine, aerospace, sporting goods, and industry. These applications have been made

possible by the ability of textile scientists to utilize textile fibers, yarns, and fabrics for

specific uses. At the same time that textile technology is making strides in new directions,

the fabrics that consumers buy for clothing and household use also benefit from the

development of new fibers, new methods of yarn and fabric construction, and new

finishes for existing fibers and fabrics.

Today, a huge international industrial complex encompasses the production of fiber,

spinning of yarns, fabrication of cloth, dyeing, finishing, printing, and manufacture of

goods for purchase. Consumers purchase many different products made of textiles. The

story of the journey that these products make as they progress from fiber to yarn to fabric

to finished product is not just the story of spinning yarns, weaving or knitting fabric, or

constructing the end product. It is also the story of a complex network of interrelated

industries.

HISTORY OF INDIAN TEXTILE INDUSTRY

The history of textiles in India dates back to nearly five thousand years to the days of the

Harappan civilization. Evidences that India has been trading silk in return for spices from

the 2nd century have been found. This shows that textiles are an industry which has

existed for centuries in our country. Recently there has been a sizeable increase in the

demand for Indian textiles in the market. India is fast emerging as a competitor to China

in textile exports. The Government of India has also realized this fact and lowered the

customs duty and reduced the restrictions on the imported textile machinery. The

intention of the governments move is to enable the Indian producers to compete in the

world market with high quality products. The results of the governments move can be

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visible as Indian companies like Arvind Mills, Mafatlal, Grasim; Reliance Industries have

become prominent players in the world. The Indian textile industry is the second largest in

the world-second only to China. The other competing countries are Korea and Taiwan.

Indian Textile constitutes 35% of the total exports of our country.

The history of apparel and textiles in India dates back to the use of mordant dyes and

printing blocks around 3000 BC. The foundations of the India's textile trade with other

countries started as early as the second century BC. A hoard of block printed and resist-

dyed fabrics, primarily of Gujarati origin, discovered in the tombs of Fostat, Egypt, are

the proof of large scale Indian export of cotton textiles to the Egypt in medieval periods.

During the 13th century, Indian silk was used as barter for spices from the western

countries. Towards the end of the 17th century, the British East India Company had begun

exports of Indian silks and several other cotton fabrics to other economies. These included

the famous fine Muslin cloth of Bengal, Orissa and Bihar. Painted and printed cottons or

chintz was widely practiced between India, Java, China and the Philippines, long before

the arrival of the Europeans.

India Textile Industry is one of the largest textile industries in the world. Today, Indian

economy is largely dependent on textile manufacturing and exports. India earns around

27% of the foreign exchange from exports of textiles. Further, India Textile Industry

contributes about 14% of the total industrial production of India. Furthermore, its

contribution to the gross domestic product of India is around 3% and the numbers are

steadily increasing. India Textile Industry involves around 35 million workers directly

and it accounts for 21% of the total employment generated in the economy.

Strengths of Indian Textile Industry are as follows -

Huge textile production capacity

Efficient multi-fiber raw material manufacturing capacity

Large pool of skilled and cheap work force

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Entrepreneurial skills

Huge export potential

Large domestic market

Very low import content

Flexible textile manufacturing systems

Weaknesses of Indian Textile Industry are as follows -

Increased global competition in the post 2005 trade regime under WTO

Imports of cheap textiles from other Asian neighbors

Use of outdated manufacturing technology

Poor supply chain management

Huge unorganized and decentralized sector

High production cost with respect to other Asian competitor

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CHAPTER-2REVIEW OF LITERATURE

1.)Title: STRATEGIES FOR REALISING VISION 2010 OF INDIAN

TEXTILE AND APPAREL INDUSTRY

Author: J. N. SINGH

Textile Commissioner, Ministry of Textiles, GOI

Source:http://www.textileassociationindia.org/JTA_ISSUES/Art%206.pdf

Date: Vol 67, Jan-Feb 2007

Review:

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Indian textile industry has been growing really well. Increase in the young population and

also due to the increase in the use of plastic money the demand is increasing in the

domestic market which is met by the increasing supply supported by the new women

working force. Also our stand in the world market is stronger than ever, with the

quantitative restrictions on china we are in a better position now. Many Indian companies

have bought western brands which has made penetration in the EU and the USA fairly

easy further strengthening our exports, but we are facing stiff competition from countries

like Indonesia and Bangladesh so theres a lot more to be done. The industry needs more

investment in this sector and also needs to modernize to compete with the other countries

as our equipments and machinery are still outdated and even our labour laws are

restrictive which pose a serious threat on the further growth of this industry. So though

India has its strengths it also has its weaknesses which are needed to be taken care of to

increase our share in the world textile trade.

2.)

Title: SCOPE OF BIOTECHNOLOGY IN TEXTILES

Author: G. V. N. SHIRISH KUMAR

Department of Fibres and Textile Processing Technology, MUICT,

Matunga, Mumbai

Source:http://www.textileassociationindia.org/JTA_ISSUES/MA-Art2-07.pdf

Date: Vol 67, Mar-Apr 2007

Review:

India has a wide range of textiles of varied designs and manufactured by different

techniques when compared to other countries of the world. The specialty in the weave of

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the textiles in each region is developed based on location, climate and cultural influences.

The rich and beautiful products of the Indian weavers have been rightly called, exquisite

poetry in colourful fabrics.

But with the advent of globalisation and modern technology we always find ourselvescompeting with the countries that not only have better technology but are always looking

for new and modern fabrics to meet consumers varied wants. India also has been spending

a lot on the manufacturing of new and more appealing fabrics. We are spending more and

more on the research of such fabrics. A very new way to go about this research is through

Biotechnology. It offers the potential for new industrial processes that require less energy

and are based on renewable raw materials. It helps in the production of fabrics free of

loopers, bollworms and bud worms in cotton etc providing almost 50% greater strength

and better quality. These fibre materials are also called biopolymers. Biotechnology is one

of the revolutionary ways to advance the textile field.

3.)

Title: GROWING IMPORTANCE OF COTTON BLENDS IN

APPAREL MARKET

Author: Dr. SHILPA P. CHARANKAR, Mrs. VEENA VERMA, Ms. MITTU GUPTA

Department of Textiles and Clothing

Dr. Bhanuben Mahendra Nanavati College of Home Science, Matunga, Mumbai 400 019.

Source: Journal of textile association

Date: Vol 67, Jan-Feb 2007

Review:

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As the need for innovation is increasing by every passing day due to the global

competition and also todays consumer is seeking not just clothing but a clothing with a

difference which not only has good appearance but is also durable and is climate specific.

These things can be achieved by improving the spinning, weaving, and finishing

efficiency. Rather than just producing cotton which is less durable than a fabric which is a

blend of nylon/ wool/ cotton should be produced.

Blending is a complicated and expensive process, but it makes it possible to build in

combination of properties that are permanent. It makes the fabric better and gives it a

competitive edge. Its inevitable in a global economy where everyone needs to be prepared

for the competition ahead and where the competition is not just from the domestic but also

from the international players.

4.)

Title: WOMEN ENTREPRENEUER DEVELOPMENT

IN GARMENT MAKING

Author: Dr. N. VASUGI

Reader Family Science & Community Development Department

Avinashilingam Deemed University

Source: Journal of textile association

Date: Vol 67, Mar-Apr 2007

Review:

Textile industry is the largest foreign exchange earner and also the second largest

employment provider next to agriculture. Worldwide garment industry is the third largest

employer of the women even in Indian garment industry 80% of the people employed in it

are women. Further also it has a lot of job opportunities for everyone women included

with the increased investment to push the growth forward and also with more and more

small and medium entrepreneurs coming up in this industry. But that doesnt mean we are

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free of weaknesses. If we are able to meet up the internal challenges of production we will

be unstoppable.

5.)

Title: TRADE REFORMS AND EFFICIENCY OF FIRMS IN INDIA

Author: UMA S. KAMBHAMPATI

Source: Oxford Development Studies

Date: Vol. 31, No. 2, 2003

Review:

In this paper, we analyze efficiency levels in the cotton textile industry before and after

the reforms. The cotton textile industry is one of the oldest and most highly regulated of

Indias industries. Inefficiency, relative to the frontier, is therefore likely to be widespread

in this industry. The last two decades have seen a number of reforms that may be expected

to decrease this inefficiency. This paper, however, is mainly concerned with the impact on

firms of the reforms undertaken in 1991.

Liberalization increased overall welfare by increasing output in sectors with excess

profits; allowing firms in sectors with unexploited scale economies to increase output; and

by increasing technical efficiency, increasing competition and decrease market power,

increasing the elasticity of demand facing domestic firms while at the same time shifting

their demand curve to the left. Second, it is expected that the domestic sector will become

more efficient as firms exit the industry in the face of increased competition. Surviving

firms, in their turn, may experience an increase in technical efficiency because

liberalization increases competition.

Another dynamic benefit from liberalization is expected to be an increase in technological

innovation

Firms locating in certain regions may benefit from external economies of scale and scope,

dynamism of a certain location as against the inertia displayed by firms in other locations.

We also find that these changes in efficiency do have a regional dimension:

while all firms fared less well after the reforms, those in Gujarat the fared less

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well than that in Tamil Nadu. The paper indicates that geographythe

location of the firm within a state and its proximity to a major urban centre

influences the efficiency levels of firms within it. The paper indicates that

average efficiency seems to have increased in the post-reform period. We find

that the behavior of many of these variables changed considerably in the

post-reform period and led to changes in efficiency levels. This framework

enables us to consider whether efficiency has increased because of factors

such as market shares, exports, imports and capital.

6.)

Title: IS THE URBAN INDIAN CONSUMER READY FOR CLOTHING WITH ECO

LABELS

Author: Paromita Goswami

Department of Marketing, Xavier Institute of Management, Bhubaneswar, India

Source: International Journal of Consumer Studies ISSN 1470-6423

Date: 2008

Review:

The technological development in global textile industries has been rapid, but the textile

industry in India has largely been driven by small units that practice age-old methods of

bleaching and dyeing, which adversely affect the balance of the local ecology.

The textiles industry in India is traditionally one of the worst offenders of pollution, with

its small units following outdated technology processes. One opportunity to reduce the

environmental impact of clothing industry in India is to concentrate textile production

within environmentally certified or eco labeled clothing.

Environment-friendly labels or eco-labels manifest the efforts of an industry to become or

be perceived as environment-friendly. Eco-labels are normally issued either by

Government supported or private enterprises once it has been proved that the product of

the applicant has met the criteria set by them for the label. Again, although no strong

relationship was found between environmental knowledge and attitudes, environmental

attitudes are found to be the most consistent predictor of pro environmental/ ecological

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purchasing behavior. Shoppers responded more positively to product related

environmental messages when purchasing clothing than cause-related messages; and

environmental claims were more credible if attributed to the green brands than to neutral

brands. Consumers may opt for higher-priced eco-labeled apparel as it may indicate

higher quality of the product. The results suggest the existence of a segment of consumers

who are positively motivated towards eco-labeled garments. This segment profile is

described in terms of demographic and psychographic variables. Managerial implications

and future directions are suggested.

7.)

Title: Estimation of Cost of Quality in an Indian Textile Industry for Reducing Cost of

Non-conformance

Author: ARUP RANJAN MUKHOPADHYAY

SQC &OR Unit, Indian Statistical Institute, Kolkata, India

Source: Vol. 15, No. 2, 229234

Date: March 2004

Review:

In todays world which is packed with competition a company has to exhibit certain

competitive advantage to outperform its competitors. This can be in terms of cost cutting

which is displayed by Indian textile industry. Quite naturally, this facilitates survival and

further growth of the company.

Costs of non-conformance (CONC) are all the costs incurred because failures occur. Had

there been no failure, there would have been no requirement for appraisal and correcting

activities. However, prevention inevitably involves some costs. These are preventive

costs, or the costs of conformance (COC). This includes all the costs associated with any

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activity designed to ensure that the right activities are carried out right first time. Indian

textile industry can reduce its cost of non-conformance and strengthen its competitive

position by focusing on customer orientation.

And, of course, reduction of cost of non-conformance is much more preferable toincreasing the volume of sales turnover, especially in a competitive market or a recession

which is our present scenario.

8.)

Title: Impact of Global Meltdown on India's Garment Exports

Author: Mr.Montek Singh Ahluwalia

Source: AEPC

Date: NA

Review:

Apparel exports contribute around 8% to India's overall exports and 48% to textile

exports. It exports to many countries but due to global recession, sales are falling and

thus, companies are cutting down on employees. Many are reducing the working hours

there by reducing the earnable income by these people.

But even in such times there are countries like Bangladesh which are gradually taking

over our share of business. They can do so because they have many advantages like

favourable government policies , cheaper power and labour etc. , but if we take proper

measures now we can turn the situation around for our benefit.

9.)

Title: Textile Artist Works to Inspire New Generations by Designing Maine-Made Hand-

Printed Fabrics

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Author: Carol Arnold

Source:http://www.fibre2fashion.com/industryarticle/pdffiles/18/1727.pdf?

PDFPTOKEN=c10276b37d42b3971e69790b98416a1fc025654a|1238622560#PDFP

Date: NA

Review:

The article talks about the beauty of the 100% natural fibers and the different hand made

designs and prints on these fabrics. These fabrics are not manufactured or computer

generated, thats what makes it so special. As everything made out of it is original and

authentic which is evident in the slight imperfections that the fabric has. This sort of a

creation is not an easy one as everything is custom made.

The article talks about how a personal favorite accessory inspired a woman to start

making and designing these fabrics and using them for her personal line of related

accessories. Its to bring awareness of the craft of traditional textile art to the new

generation.

10.)

Title: The Global Textile and Clothing Industry post the Agreement on Textiles and

Clothing

Author: Hildegunn Kyvik Nords

Source: World Trade Organization

Geneva, Switzerland

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Date: NA

Review:

The clothing industry is labour intensive and it offers entry-level jobs for unskilled labour

in developed as well as developing countries. As even the developed countries need this

industry to be successful as it provides jobs to many and finding an alternative job may be

a difficult task. Also this is a low wage industry and a dynamic and innovative sector,

depending on which market segment one focuses upon.

Its actually easier for the developing countries to adopt the modern technology as it

involves low investment. After all impact of liberalization can be felt on this industry too.

Theres suddenly a need to be abreast with the latest technology and the managerial

developments happening in the other parts of the world.

The countries that are most likely to lose market shares are those located far from the

major markets and which have had either tariff and quota-free access to the United States

and EU markets, or which have had non-binding quotas. These countries will undoubtedly

face adjustment challenges. there is no doubt that both China and India will gain market

shares in the European Union, the United States and Canada to a significant extent, but

the expected surge in market share may be less than anticipated, as other developing

countries are catching up in terms of unit labour costs in the textile and clothing sector.

11.)

Title: Traditional Ethnic Designs

Author: Fiona Muller

Source:http://www.fibre2fashion.com/industry article/pdffiles/18/1780.pdf?

PDFPTOKEN=4881e56316ac72c0d3b27d5c5390d254e344 d6e|1238622720#PDFP

Date: NA

Review:

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This article talks about the amazing heritage that a country like india has, which is filled

with varied and unique designs like buta work, chikankari, bandhez, block printing and

many more. Most of these attractive designs originated from the state of rajasthan. The

residents of this state have been involved in these creations since a very long time.

These textile techniques are used for producing wonderful original dresses, kurtas, skirts

etc. which we see later in the various high street stores. This is among the various reasons

which make the Indian textile industry so attractive and its garments so unique.

12.)

Title: FUNCTIONAL TEXTILES AND APPARELS

Author: M. D. TELI, G. V. N. SHRISH KUMAR

Department of Fibres and Textile Processing Technology

Institute of Chemical Technology

Source: journal of textile association

Date: may- jun 2007

Review:

In fast developing economies like that of India and China, non implantable healthcare and

hygiene products are gaining significant importance because of specificity of their end

uses. Todays customers are a very conscious about the money they spend. While buying

apparels too this sense of theirs is quiet strong. They want the fabric and the clothes to not

just look good or be reasonable but also to provide certain functions which will make the

user of such apparels enjoy some benefits. These are the new age functional textiles.

These have opened new doors for the textile and apparel industry. These applications are

highly crucial as these materials carry high end performance properties. Protective textiles

offer protection from hazardous chemicals, heat, extreme cold, radiation and have special

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application potential in today's technologically advanced world. In addition to this, advent

of nano-technology has opened innumerable avenues giving rise to high performance

textiles and apparels.. Producing such textiles will reduce indias dependence on imports

of similar fabrics and products.

13.)

Title: Global Recession Impacts on Fashion Industry: Strategies for Survival

Author: NA

Source: http://www.teonline.com/articles/2009/03/global-recession-impacts-on-fashion-

industry-strategies-for-survival.html

Date: March 20, 2009

Review:

The article talks about the impact of recession on the fashion apparel industry and how its

earnings have reduced due to the recession. The customers are not spending lavishly

anymore; they have become very conscious of the money used by them. They no longer

pay just for the garments etc. but for the kind of services that their suppliers are providing

them even at the time like this. Due to controlled spending these manufacturers get less

revenues and thus many are losing their jobs and also theres a credit crunch in the

market. So many companies are looking for ways to turn the situation around by either

merging with other companies and firms or by asking private financers to help them with

their financial issues.

At a time like this the only thing that can save these companies and their brands is getting

their customers committed to their brand and making them loyal to it. Its all about

gaining their trust by providing consistent and reasonable products to them and to build

strong relationships with them.

14.)

Title: Innovations in the Apparel Industry to Keep Up With the Competition

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Author: Dagur Jonnson

Source: http://www.articlesbase.com/business-articles/innovations-in-the-apparel-

industry-to-keep-up-with-the-competition-192218.html

Date: Aug 2nd, 2007

Review:

The abolition of global textile quota system from America has made the big players of the

industry to restructure their business again to survive in the strong competition of the

American apparel market. This trend of reorganizing the business for stiff competition is

visible in American apparel industry. The areas in which this industry is concentrating

more are better merchandising, better inventory management, consolidating sources and

more involvement in sourcing the country. The only target behind all these is reaching the

market in a better way and that to with a wide range of products. These innovations are

what makes one player different from the other so everyone is investing in R&D, just so

that the benefits could be reaped of the new creations developed by them.

15.)

Title: Apparel Industry Keeps Watch on Wall Street's Financial Crisis

Source: http://www.articlesbase.com/international-business-articles/apparel-industry-

keeps-watch-on-wall-streets-financial-crisis-580190.html

Date: Sep 26th, 2008

Review:

With the financial crisis in the U.S., the fates of Lehman Bros. holding inc, Merrill Lynch

and Co. etc., the customers are getting more and more tight in their expenditure. A lot of

people assess their wealth based on the value of their holdings. If their holding vale drops

they feel poor and if they feel poor they spend less. Apparel manufacturers have several

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things to worry about. A slump in consumer demand obviously means fewer orders. Even

credit is likely to get tighter. But obviously for those companies that are in a stronger

financial position, credit is still available.

Factors that give loans based on accounts receivable are being more cautious, scrutinizing

retailers to make sure they are credit-worthy. They are keeping a very close eye on

everyone.

Also its a great time for anyone who has enough money to carry out buyouts as

companies can be obtained at a bargain price at this time.

CHAPTER -3

GLOBAL SCENARIO

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The textile and clothing trade is governed by the Multi-Fibre Agreement (MFA) which

came into force on January 1, 1974 replacing short-term and long-term arrangements of

the 1960s which protected US textile producers from booming Japanese textiles exports.

Later, it was extended to other developing countries like India, Korea, Hong Kong, etc.

which had acquired a comparative advantage in textiles. Currently, India has bilateral

arrangements under MFA with USA, Canada, Australia, countries of the European

Commission, etc. Under MFA, foreign trade is subject to relatively high tariffs and

export quotas restricting Indias penetration into these markets. India was interested in

the early phasing out of these quotas in the Uruguay Round of Negotiations but this did

not happen due to the reluctance of the developed countries like the US and EC to open

up their textile markets to Third World imports because of high labour costs. With the

removal of quotas, exports of textiles have now to cope with new challenges in the form

of growing non-tariff / non-trade barriers such as growing regionalisation of trade

between blocks of nations, child labour, anti-dumping duties, etc.

Nevertheless, it must be realised that the picture is not all rosy. It is now being admitted

universally and even officially that the year 2005 AD is likely to present more of a

challenge than opportunity. If the industry does not pay attention to the very vital needs of

modernisation, quality control, technology up gradation, etc. it is likely to be left behind.

Already, its comparative advantage of cheap labour is being nullified by the use of

outmoded machinery.

With the dismantling of the MFA, it becomes imperative for the textile industry to take on

competitors like China, Pakistan, etc., which enjoy lower labour costs. In fact the

seriousness of the situation becomes even more apparent when it is realised that the non-

quota exports have not really risen dramatically over the past few years. The continued

dominance of yarn in exports of cotton, synthetics, and blends, is another cause for worry

while exports of fabrics are not growing. The lack of value added products in textileexports do not augur well for India in a non-MFA world.

Textile exports alone earn almost 25 percent of foreign exchange for India yet its share in

global trade is dismal, having declined from 10.9 percent in 1955 to 3.23 percent in 1996.

More significantly, the share of China in world trade in textiles, in 1994, was 13.24

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percent, up from 4.36 percent in 1980. Hong Kong, too, improved its share from 7.06

percent to 12.65 percent over the same period. Growth rate, in US$ terms, of exports of

textiles, including apparel, was over 17 percent from 1993-94 to 1995-96. It declined to

10.5 percent in 1996-97 and to 5 percent in 1997-98. Another disconcerting aspect that

reflects the declining international competitiveness of Indian textile industry is the surge

in imports in the last two years. Imports grew by 12 percent in dollar terms in 1997-98,

against an average of 5.8 percent for all imports into India. Imports from China went up

by 50 percent while those from Hong Kong jumped by 23 percent.

CHINA:

China's investment spending in the textile industry slumped 20 percent in the first two

months of this year from the same period in 2008, the National Bureau of Statistics said.

Textile industry spending accounted for 0.9 percent of the nation's overall investment of

1.03 trillion yuan, down 0.5 percentage point from a year earlier, the statistics bureau said.

China's garment and textile exports tumbled 15 percent to $21.9 billion in the two months

from a year earlier, customs data show. Exports of yarn, fabrics and textile products

totaled $7.29 billion, down 21 percent, while apparel exports fell 11 percent to $14.6

billion, the Beijing-based Customs Bureau said on March 11.

Textile firms, once an export engine of China, are fighting for their survival this year with

rising costs and dismal overseas market hit by the subprime crisis. Those firms wooing

foreign buyers at the 103rd China Import and Export Fair, the largest trade fair in the

country also called the Canton Fair, felt the pinch. Few buyers visited their exhibition

stall, and fewer still signed contracts. Chinese product competitiveness was not much as it

was. The reduction in tax rebates and the devaluation of the dollar have made Chinese

products 20 percent higher than what it was. The Chinese currency has ventured below

the seven yuan mark since the government loosened the units peg to the dollar in 2005.The yuan has gained about 18 percent since then. This has made Chinese textile products

more expensive and its price advantage has almost vanished compared with products from

Vietnam and India. The yuan appreciation, together with the rising material and labor

costs, has driven some textile firms to the brink of bankruptcy.

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BANGLADESH:

Swedish Firms have Expanded Outsourcing in Bangladesh. Swedish firm engaged in

outsourcing home textiles and home furnishing items is planning to expand its operations

in Bangladesh. RMG Exports is expected to Surge despite global recession. The readymade garment sector, one of the pillars of the Bangladesh economy, is definitely in a

positive mode despite global financial meltdown. The three-day Bangladesh Apparel and

Textile Exposition (BATEXPO) wooed foreign buyers to buy apparel products.

CAMBODIA:

Cambodia's garment industry is the country's biggest industrial employer, and is now

struggling against stiffer global competition and slowing demand. Many Chinese and

Korean companies have established a presence in Cambodia for years. Now, more than

10 Chinese-owned factories have moved to cheaper markets, leaving hundreds of

thousands of garment workers from the provinces facing destitution, reported Phnom

Penh Times in early 2008.The garment industry earns 80 percent of Cambodia's foreign

exchange earnings and employs an estimated 350,000 people in more than 300 factories.

The industry began to grow after a the country passed a new labor laws encouraging

labour unions and allowed the International Labour Organisation (ILO) to inspect

factories and publish its findings. In turn, the United States agreed to cut tariffs on

Cambodian garment exports, buying 70 percent of all of the country's textiles in the

1990s.

Cambodia maintained its higher working conditions after the deal expired in 2005, and

garment-making has made the national economy one of the fastest growing in the region.

The World Bank reported that the industry grew only 8.0 percent in 2007 compared to the

growth of up to 20 percent previously. The Cambodia Ministry of Commerce said that the

apparel exports had declined since October 2007, mainly due to the US economic

slowdown. Exports to the United States slipped 1.44 percent in the first quarter of 2008,

compared with the same period in 2007. Predicted Trend .The Cambodia's Free Trade

Union (FTU) said that the factory owners are looking abroad for greater productivity and

lower costs. Kaing Monika, Manager at the Garment Manufacturers Association of

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Cambodia, commented that many manufacturers could move to Vietnam, Bangladesh or

India if they could get lower costs. Production costs, oil and power, are high in Cambodia,

and the demand for higher wages also put the country's garment industry in danger, he

said. Factory owners are also facing a proliferation of labor unions and illegal strikes.

Experts predict that in 2009 Cambodia would even see more competition when US

restrictions on Chinese textile exports are scheduled to end. China and Vietnam are still

Cambodia's direct competitors. Cambodia's labor ministry said that to counter this

competition, Cambodia must increase productivity, quality and extend their reputation as

having high labor standards.

MAJOR MANUFACTURERS AND THEIR MARKET SHARE

In 2006, the largest apparel manufacturers and exporters were countries from the Asia-Pacific region which included countries like China, Hong Kong, Phillipines, Malaysia,

Indonesia, Bangladesh, Srilanka, Pakistan, Thailand and India. The other major apparel

manufacturing nations were USA, Italy, Germany and Mexico.

Diagram No: 3.1 Country wise Market Share

Source: www.fashionproducts.com(http://www.fashionproducts.com/fashion-apparel-overview.html)

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GLOBAL TRADE VOLUME AND TRENDS

As the apparel manufacturing industry has become more labour intensive and requires

less capital investment, its concentration is shifting more towards the developing

countries and even constituting large amount of their exports. They are concentrating

more on developing countries as the labour cost is very less in such countries. This can be

analyzed by the fact that the apparel production in industrialized countries decreased

between 1980 and 1996, where as the production increased in developing countries during

the same period. Similar trend was seen in exports, the apparel exports of developing

countries increased six times between 1980 and 1997, and that of developed economies

rose by 150%.

The global apparel industrys total revenue in 2006 was US$1,252.8 billion, which was

approximately 68% of the overall industry value. Asia Pacific constitutes the largest

amount of production and trade in the apparel industry worlwide.

Table No: 3.1 Region wise Share of Total Trade Revenue (2006)

Region % Share

Asia Pacific 35.40%

Europe 29.40%

USA 22.30%

Rest of the world 12.90%

Source:www.fashionproducts.com(http://www.fashionproducts.com/fashion-apparel-overview.html)

China had captured 65% of the global market share towards the end of 2006 in total

apparel exports. The other major apparel exporting nations include USA, Germany, Hong

Kong, Italy, Malaysia, Pakistan, Thailand and India. Some of the apparel trade statistics

are presented below.

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INDIAN TEXTILE INDUSTRY

INTRODUCTION

The textile industry is the largest industry of modern India. It accounts for over 20percent of industrial production and is closely linked with the agricultural and rural

economy. It is the single largest employer in the industrial sector employing about 38

million people. If the employment in allied sectors like ginning, agriculture, pressing,

cotton trade, jute, etc. are added then the total employment is estimated at 93 million. The

net foreign exchange earnings in this sector are one of the highest and, together with

carpet and handicrafts, account for over 37 percent of total export earnings at over US $

10 billion. Textiles, alone, account for about 25 percent of Indias total forex earnings.

Indias textile industry since its beginning continues to be predominantly cotton based

with about 65 percent of fabric consumption in the country being accounted for by cotton.

The industry is highly localized in Ahmedabad and Bombay in the western part of the

country though other centers exist including Kanpur, Calcutta, Indore, Coimbatore, and

Sholapur.

The structure of the textile industry is extremely complex with the modern, sophisticated

and highly mechanized mill sector on the one hand and the hand spinning and handweaving (handloom) sector on the other. Between the two falls the small-scale power

loom sector. The latter two are together known as the decentralized sector. Over the

years, the government has granted a whole range of concessions to the non-mill sector as

a result of which the share of the decentralized sector has increased considerably in the

total production. Of the two sub-sectors of the decentralized sector, the power loom

sector has shown the faster rate of growth. In the production of fabrics the decentralized

sector accounts for roughly 94 percent while the mill sector has a share of only 6 percent.

Being an agro-based industry the production of raw material varies from year to year

depending on weather and rainfall conditions. Accordingly the price fluctuates too.

The Ministry of Textiles under the Government of India has taken some significant steps

to arrest these problems. It has framed "The National Textile Policy 2000" to address the

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aforesaid issues. This policy aims at negating these problems and increasing the foreign

exchange earnings to the tune of US$ 50 billion by the year 2010. It includes rational

road-maps for the development and promotion of all the sectors involved directly or

indirectly with the textile industry of India. Further, the policy also envisages to bring the

unorganized decentralized textile sector (which accounts for 76% of textile production) at

par with the organized mill sector. Furthermore, the policy also aims at introducing

modern and efficient manufacturing machineries and techniques in the Indian textile

sector

INDUSTRY SUPPLY CHAIN

The apparel industry supply chain can be broadly categorized into six major components -

raw materials, textile plants, apparel plants, export chains, retail stores and customers.

Diagram No:4.1 Supply Chain of the Textile Industry

Source:www.fashionproducts.com (http://www.fashionproducts.com/fashion-apparel-overview.html)

CURRENT INDUSTRY SCENARIO:

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Close to 14% of the industrial output and 30% of the export market share is contributed

directly by the Indian textile industry. Indian textile industry is also the largest industry

when it comes to employment that generates jobs not just within but also in various

support industries like agriculture. As per a recent survey the textile industry is going to

contribute 12 million new jobs in India by 2010 itself.

Indian textile industry is as old as the word textile itself. This industry holds a significant

position in India by providing the most basic need of Indians. Starting from the

procurement of raw materials to the final production stage of the actual textile, the Indian

textile industry works on an independent basis.

The final phase-out of the Multi-fiber Arrangement (MFA) and the system of quotas that

has governed the global trade in textiles and apparel for the last forty-two years has

significantly altered the institutional rules of trade in the textile and clothing industry.

With the elimination of all remaining quotas on apparel from January 1 2005, the textile

and clothing sector is now fully integrated into the regulatory framework of the General

Agreement on Tariffs and Trade (GATT) of the World Trade Organization (WTO).

Buyers are now free to source textile and apparel in any amount from any country;

suppliers are similarly free to export as much product as they are able, subject only to a

system of national tariffs. As global competition intensifies under the new quota-freetrading regime, countries are bracing for major changes in the structure of sourcing and

apparel supply worldwide. With the removal of the quotas, it was expected that the

developing countris, who have a major play in the textile industry will benefit themselves

as they have stable supply network, experience in networking, capacities for scaling up

and the ability to offer a full bundle of services. It was also expected that smaller

countries, which enjoyed the restriction on trade will fall out from the picture.

The textile sector has increased their investment in projects to upgrade their equipment

amid fierce market competition and to meet the growing demand for more textile

products. Total investment in the textile industry between 2004 and 2008 was around

Rs.65,478 crore in India, which is expected to reach Rs.1,50,600 crore by 2012. This

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enhanced investment would generate 17.37 million jobs-- 12.02 million direct and 5.35

million indirectby 2012.

Investments in the textiles sector can be assessed on the basis of three factors:

Plan schemes such as the Techno Up-gradation Funds Scheme (TUFS),

Technology Mission on Cotton, Apparel Parks, etc. Under the TUFS scheme, a total of

Rs 916 billion has been disbursed for technology up gradation. There are around 26

Apparel Parks in eight states in India, with a total estimated investment of Rs 134 billion

Industrial Entrepreneurship Memorandums implemented from 1992 to Aug 06,

amounting to Rs 263 billion

Foreign Direct Investments inflows worth US$ 910 million have been received by

the textile industry between Aug 91 and May 06, which account for 1.29% of total FDI

inflows in the country.

Though significant investments are being made in the textiles segment, the bulk of them

are in the spinning and weaving segments. A cumulative total of US$ 6.67 billion in

investment was done in 2008. Of this, more than two-thirds is in the spinning and

weaving segments, while only 25% is in processing and garment units

The elimination of global textile quotas is expected to drive garment production to China,

benefiting consumers in North America and Europe at the expense of developing nations

where apparel manufacturing has become a bridge to an industrial economy. Africa

received record high foreign direct investment (FDI) inflows in 2005 of US$31 billion,

but this was mostly concentrated in a few countries and industries. The textile sector has

increased their investment in projects to upgrade their equipment amid fierce market

competition and to meet the growing demand for more textile products.

The global fibre industry will continue to shift to the Asia/Pacific region, particularly

China, South Korea and Taiwan. Textile trade in the world is estimated to be around US$

300 billion currently. Industry experts predict that by 2014 the facilities in the west will

close down and they will source their textiles from more efficient areas of the world

resulting in the trade volume of around US$ 800 billion. The Indian textile industry,

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which has accelerated to an annual growth of 9-10 per cent, is expected to grow at a rate

of 16 per cent in value terms and reach a level of USD 115 billion by 2012. With 8.6%

growth rate, Turkey also recorded a very strong average annual growth rate of its textiles

and clothing exports but from a much lower basis. It could increase its exports from 8.6 to

17.6 billion US-Dollars. Pakistan exports amounted to 9.9 billion US-Dollars in 2005

which translates into an average annual growth rate of 5.4%.

As of now, the general impression any individual would get about the Indian textile

industry leaders in the past few months is that it is in a major decline state. The following

could be the reasons that attribute to this decline.

Global recession

Less export orders due to reductions in inventories by global retail giants like Wal-

Mart

Rising price of raw materials like cottons

Infrastructure bottlenecks such as power, particularly in Tamil Nadu

In the times of adversity, like what we are facing right now, it is an immediate task for all

stake holders to pause for a moment and take stock of the difficulties and chart plans for

sustainability and growth of the Indian textile industry.

With the opening of world markets and the abolition of textile quotas since 2005, there

came a negative situation as well. But, hindsight is always 20-20. Indian textile industry

should have focused on all major sectors right from fibre to fashion and planned for anorganized growth across the supply chain so as to compete with China and even countries

such as Pakistan, Vietnam and Thailand, which are also growing from the textile

perspective. Instead, the industry had put majority of its stock in the spinning sector. This

is clearly evident in the utilization of Technology Upgradation Fund Scheme effectively

by the spinning sector. Although it is a positive outcome, the industry did not focus on

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many other value adding segments such as weaving and finishing. Indian powerloom

sector, which enables value-addition is a highly unorganized industry and needed major

upgradation. As of now, the powerloom segment is also picking up where in many of the

unorganized powerlooms are becoming organized. Technical textiles sector is still in its

infancy and a tangible growth will be highly visible by 2035 when the growth in this

sector will be exponential.

The weak links in the Indian conventional industry such as weaving and finishing have to

be strengthened. There must be consolidated efforts by Indian Textile Machinery

Manufacturers Association, end-users and the Government to undertake a major step and

come-up with alternatives to European Machinery, which the Indian weaving sector can

afford. This should be put into practice within the next five years, if dedicated efforts are

undertaken with the financial support for R & D by the Government through its various

schemes. Technical textiles sector must transform from a non crawling phase to at least a

crawling industry in the next three years. General awareness on nonwoven and technical

sectors has been created with the recent marathon training workshops and conferences

such as, "Advances in Textiles, Nonwoven and Technical Textiles", organized for the past

five years in Coimbatore by Texas Tech University, USA and those such as the

Texcellance and IIT's Technical Textiles conferences. These have put India on the

international map in technical textiles. These conferences are of less use if they do not

translate into investments and new projects.

TEXTILE INDUSTRY BENEFITS OTHER INDUSTRIES TOO

The pursuit of a better fibre and a better fabric is yielding products used in medicine,

aeronautics, astronautics, seawater desalination, and construction of buildings and roads.

The new kinds of textiles possess characteristics that make them useful in numerous

formerly unexpected applications. Although textiles are still the major component of the

clothes we wear and of many furnishings in our homes and offices, they are also used

widely in medicine, aeronautics, astronautics, pollution abatement, and numerous other

fields. Innovation in textile technology continues and more unusual products will almost

surely emerge.

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MEDICAL

Certain fibres and textile materials are especially suitable for use in building synthetic

body parts and medical scientists are steadily expanding the types of body parts whose

function can be mimicked. The artificial kidney is made from 7,000 hollow fibres, each of

which is about the size of a human hair. Patients whose kidneys no longer function

normally must have their blood freed by dialysis of metabolic wastes and excess water

about every three days. This is accomplished by pumping the blood through a textile,

hollow-fibre module while clean-sing solution rinses the blood free of urea. Patients with

diabetes have a tendency to suffer from cholesterol blockage of arteries leading to their

feet. If not corrected, poor circulation can lead to gangrene and loss of limbs. Artificial

arteries that look like pencil diameters are surgically inserted to bypass the blockages,

thus restoring circulation and saving limb functions. These implants require crucial textile

technology to prevent clotting and rejection. It is estimated that more than 150,000 people

in the United States have now had these artificial arteries for over five years.

SPACE

NASA space suits for launch and for space walks require zero-defect performance. The

launch suits are made from PBI non-flammable high-performance fibres. The space-walksuits have different requirements. They require air-purifying, cooling, and pressurizing

systems. Each suit is tailor-made for a particular astronaut and costs $1-1.5 million. Since

the astronaut is under an oxygen pressure of eight pounds per square inch in this suit,

special flexibility is needed to allow him or her to bend an elbow or grasp an article.

Rocket exhausts and nose-cone covers for space shuttles are made of carbon and other

high-performance fibres. These protect the vehicles from heat from air friction during

launch and re-entry. The flames generated on the launch pad do not ignite the rocket

because of the flame-resisting properties of graphite carbon-fibre-textile exhaust shields.

Similarly on re-entry, the white-hot temperatures from atmospheric friction do not

consume the shuttle because high-performance fibre and ceramic structures provide

protection.

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AERONAUTICS

Airplane parts, other than body construction, are also made of textiles. All U.S.

commercial jets have brakes made from carbon composites. These are the only materials

that can withstand the extreme high temperatures generated if takeoff is aborted. Stopping

a plane weighing many tons in a short distance generates temperatures high enough to

melt metals, making carbon brakes indispensable for heavy jets. Kevlar non-woven felt

liners are now used as fire barriers to cover the urethane foam seats on all aircraft to

prevent the production of highly toxic cyanide gases when such foams burn during

airplane accidents.

PURIFICATION OF WATER AND AIR

Whole-body gas suits are required to protect soldiers from the chemicals used in gas

warfare today. These chemicals can kill by absorption into the bloodstream through skin.

The suits allow for transport of perspiration moisture to prevent soldiers from being

overcome internally as would occur from a non-permeable film covering. It is well known

to chemists that a cube of activated charcoal powder measuring one inch on each side has

an adsorptive capacity equal to a football field. It was therefore believed that properly

constructed porous carbon fibres could exhibit superior gas-adsorption capability.

Drinkable sea water is now available through properly prepared hollow fibre reverse

osmosis modules. Sea water is forced through these modules under a pressure of 400

pounds per square inch. Pure drinking water passes through the hollow fibre wall while

concentrated salt water exudes out of the end. Concentration of liquids that normally

deteriorate from heating is possible with reverse osmosis fibres and membrane systems.

Many liquids, including orange juice and tomato juice, can be concentrated by pressure

without heat to preserve the thermally unstable flavour ingredients. Most orange-juice

concentrate on the market today is prepared this way. Similarly concentration of gases can

be achieved by proper use of membrane and fibre composition. Gas-separation systems

are currently in use at most U.S. petroleum refineries.

CONSTRUCTION MATERIALS

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CHAPTER-5

INDIAS COMPETITIVENESS

CONTRIBUTION TO ECONOMY:

With 3.9 million handlooms, India is the highest handloom producing country in the

World. 30% of the total export income is generated by textile alone, it is second largest

Employer industry after agriculture. The textile industry constitutes approximately 14% of

country's total industrial production.

THE WORLD MARKET SHARE

In spite of the Chinese dominance, India has a fair opportunity to grab a substantial stake

in the projected garment market share. According to PHD Chamber of Commerce and

Industry (PHDCCI), post-MFA, India's market share in the US is expected to go up to 15

per cent from the present 4 per cent. In the EU, the market share increase is expected to be

50 per cent from the current 6 per cent to 9 per cent

Table showing the Indias Competitiveness with Other Country

There is no denying India is competitive enough and will become even more competitive

once its infrastructure issues are sorted out. China has probably already reached its peak

and further improvements may not be as dramatic, henceforth

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Table No: 5.1 Countries and their positive and negative aspects with regard to textiles

Key countries /

regions

Key positives Key negatives

China Efficient, low cost,vertically integrated

Growth at the cost ofprofits

India, Pakistan Vertically integrated,

low cost

Lacks economies of

scale and infrastructure

support

Mexico (NAFTA),

Turkey

Proximity to market,

duty and quota free

Lack China and Indias

degree of

competitiveness

ASEAN (Vietnam,Cambodia, Indonesia) Cheap labor No other cost or locational advantage

AGOA (African)

countries, Bangladesh

Quota and tariff free,

cheap labor

Lacks integration and

China and Indias

degree of

competitiveness

Hong Kong, Korea,

Taiwan

Trading hubs proximity

to China

No cost advantage,

protected currently by

quotas

USA and EU Non-quota barriers

likely to prove irritant

to imports

US$ 400 bn trade loss

likely ov

Source - Industry, I-SEC Research

Indian Textiles targets- 11th Five year Plan (2007-2012)

Market size of US$ 115 Billion

Export target US$ 55 Billion

Domestic market US$ 60 Billion

Indias market share in world textiles trade to grow from 3% to 8 %

12 Million additional jobs

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Investment Rs.150,600 Crs

Table No:5.2 Textiles Export Target (In Billions)

Year ( April March) Target Achievement

2006-07 19.73 19.62

2005-06 15.565 17.80

2004-05 15.16 13.04

2003-04 16.31 13.16

2002-03 15.05 12.41

2001-02 13.72 10.76

Source: Textile India Progress

Top 10 Exporters (Textile)

Country 1990 1997

Billion

US$

% share Billion

US$

% share

Hong Kong 7.99 7.68 14.6 9.42

China 7.10 6.82 13.83 8.92

South Korea 6.04 5.81 13.35 8.61

Germany 14.00 13.46 13.05 8.42

Italy 9.80 9.43 12.9 8.32

Taiwan 6.13 5.90 12.73 8.21

USA 5.03 4.83 9.19 5.93

France 7.21 4.65 5.86 5.64

Belgium-

Luxembourg6.54 6.29 7.01 4.52

Japan 5.88 5.65 6.75 4.35

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Top 10 Exporters (Apparel)

Country 1990 1997

Billion

US$

% share Billion

US$

% share

China 9.41 9.14 31.8 21.06

Hong Kong 15.37 14.92 23.11 15.30

Italy 12.07 11.72 14.85 9.83

USA 2.57 2.49 8.68 5.75

Germany 7.82 7.59 7.29 4.83

Turkey 3.44 3.34 6.7 4.44

France 4.65 4.51 5.34 3.54

UK 3.08 2.99 5.28 3.50

South Korea 8.11 7.87 4.19 2.77

Thailand 2.86 2.78 3.77 2.50

Total (top

10)

69.38 67.36 111.01 73.52

World 103.00 100.00 151.00 100.00

Multifibre Arrangement (1974-94) under which countries whose markets are disrupted by

increased imports of textiles and clothing from another country were able to negotiate

quota restrictions. The MFA was introduced in 1974 as a short-term measure intended to

allow developed countries to adjust to imports from the developing world. The textiles

and clothing industry was, until recently, the only major manufacturing industry that was

not subject to the rules of the General Agreement on Tariffs and Trade (GATT). Instead,

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it was subject to extensive use of quotas by the major importing countries. The quota

system started with the Long Term Agreement Regarding International Trade in Cotton

Textiles (LTA) under the auspices of the GATT in 1962. In 1974 the LTA was extended

to cover other materials than cotton, and became known as the Multi-Fibre Agreement

(MFA). At the end of the Uruguay Round of negotiations it was agreed that t countries

wishing to retain quotas would commit themselves to phasing them out gradually over a

10 year period, with the last quotas being lifted 1st of January 2005, as stated in the

Agreement on Textiles and Clothing (ATC).Developing countries have a natural

advantage in textile production because it is labor intensive and they have low labor costs.

According to a World Bank/International Monetary Fund (IMF) study, the system has

cost the developing world 27 million jobs and $40 billion a year in lost exports. At the

General Agreement on Tariffs and Trade (GATT) Uruguay Round, it was decided to

bring the textile trade under the jurisdiction of the World Trade Organization. The textiles

and clothing (T&C) industry is considered to be an opportunity for the industrialization of

developing countries in low value added goods. The industry is labor intensive and thus

requires a large number of unskilled workers, including a high share of female workers.

The end of the MFA in 2005 will change international trade significantly and lead to a

restructuring of the sector worldwide. This restructuring process will result in major

employment shifts within and between countries. However, the last three decades have

seen various changes in the clothing and textile sector, thus forcing many countries to

adjust to a constantly altering environment. Now, a number of countries fear that a new

wave of cheap textile and clothing products will flood their markets, threatening their

domestic industries that are not adequately prepared to face the new challenge. There are

also those countries that hope for new export opportunities as a result of a free quota trade

environment and a third set of countries that will lose their preferential access to the US

or EU markets, thus facing higher competition for their exports to them. However, large

tariffs remain in place on many textile products. However, the last three decades have

seen various changes in the clothing and textile sector, thus forcing many countries to

adjust to a constantly altering environment. Now, a number of countries fear that a new

wave of cheap textile and clothing products will flood their markets, threatening their

domestic industries that are not adequately prepared to face the new challenge. There are

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also those countries that hope for new export opportunities as a result of a free quota trade

environment and a third set of countries that will lose their preferential access to the US

or EU markets, thus facing higher competition for their exports to them.

CONCLUSION:

India has been repeatedly cited as a major potential beneficiary of the post-quota regime.

The implementation of the ATC, meant as a transition period to full integration of the

T&C sector, occurred in a back-loaded fashion. Before the ATC took effect, a significant

portion of textile and clothing exports from developing countries to the industrial

countries was subject to quotas under a special regime outside normal rules of the General

Agreement on Tariffs and Trade (GATT). These former Multi-Fiber Agreement (MFA)

quotas, when carried over into the ATC on January 1, 1995, represented the starting point

for an automatic liberalization process. Liberalization was to be in four stages, with half

of the integration to take place in the first three stages (1995-2005) and the second half to

take place in the final phase in 2005.Famously inward-looking till the 1980s, the Indian

textile and clothing industry has become increasingly integrated into global markets since

the late-1980s and 1990s, emerging as one of the top ten global exporters of textiles and

clothing after 1998. Indias apparel exports grew at an average compound rate of 22% per

year throughout the 1980s (Chatterjee and Mohan 1993), and by about 13% in the 1990s

(United Nations Statistical Division, 2005). By 2003, India exported more than $13.5

billion worth of textile and apparel, up fifteen-fold from the $0.9 billion it exported in

1985, when apparel exports were just taking off (United Nations Statistical Division,

2005). This export growth, though slow in comparison to exporters like China, is

impressive because it occurred despite the persistence of many of the factors that

observers have cited as shackling Indian productivity in textiles and apparel:

technological obsolescence, fragmented capacities, low scales of operation, lack of an exit

policy, and rigid labor laws. The domestic reforms of the mid-1980s were critical in

triggering growth in the apparel and textile sector. Their initial focus on investment and

technical upgrading in the textile and apparel sector created a tier of strong domestic firms

in the spinning and apparel sector that increased investment, modernized their technical

base, diversified their product mix and over time emerged as leading exporters. Trade

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liberalization of the 1990s deepened the processes that had the process of deregulation

had already begun in 1985 and thus Indias textile and apparel industry went through

many transitions and in the present context is impressive.

CHAPTER-6

INDIAN SUPPLY DEMAND SCENARIO

Textile engineering enjoys good growth in the country. The business in 2004-05

amounted to Rs 1,650 crore, which was a Rs-250 crore increase from the year-ago level.

Despite the Bull Run, textile industry is running short of machinery. Today, textile

companies have to wait one or two year for delivery of machines, whereas, orders are

completed within 10-12 months. This growing demand is a tough challenge to cope with

for Lakshmi Machine Works (LMW), Coimbatore. It takes 18 months to fulfill new

orders, but R. Rajendran, spokesperson for LMW, expects the delivery time to be cut

down to 10-12 months in 2006-07 with its new capacities. Two reasons forwarded for the

delay in delivery of machines: textile companies are expanding capacities rapidly and

pace of supply of machinery not in tune with the current demand.

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Second reason is the Technology Up gradation Fund Scheme (TUFS) of the Textile

Ministry is likely to end by March 2007. As a result, textile companies wishing to make

the most of the scheme are rushing to place orders for the machines, says C V

Radhakrishnan, Advisor, Textile Machinery Manufacturers Association.

Considering the development of textile industry, India would need 12 million spindles in

the next five years, whereas only 10 million spindles would be provided by domestic

textile engineering industry.

In 2008, the Indian textile industry suffered from overcapacity. There was talk that a

consolidation in the local industry would inevitably have to take place if India is to remain

competitive in textiles, but there was also talk that the government may offer a U.S.-styled

bailout of the Indian textile industry in order to keep employment levels high. These

conflicting signals continue to make an assessment of the Indian textile sector difficult to

make.

Chapter-7

FASHION APPAREL INDUSTRY OVERVIEWThe global fashion apparel industry is one of the most important sectors of the economy

in terms of investment, revenue, trade and employment generation all over the world.

Apparel industry has short product life cycles, tremendous product variety, volatile and

unpredictable demand, long and inflexible supply processes. The industry has been in a

transition over the last 20 years. Some of the major contributors are significant

consolidation in retail, increasing use of electronic commerce in retail and wholesale

trade.

The clothing and apparel industry produces finished clothing products made from both

natural and manmade fibers like cotton, silk, wool, linen, polyester, rayon, lycra and

denim. The important segments covered in apparel industry includes children clothing,

mens clothing, clothing for women, bridal wear, mens wedding wear and intimate

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apparel. The apparel is sold through three major channels, which are brick & mortar,

catalog and through internet.

Table No:7.1 Apparel Sales by Channel

Category Sales in $ Billion Market Share (%)

Brick and Mortar 169.256 92.9Catalog 7.177 3.9Online/ Internet 5,873 3.2Total 182.306 100.00

Source: www.fashionproducts.com(http://www.fashionproducts.com/fashion-apparel-overview.html)

INDUSTRY CHALLANGES

The Apparel Industry is growing at a very high rate but still there are some barriers, which

are hindering the growth of this industry. Some of them are:

Though the demand for garments is increasing day by day but the production rate has

still not been able to match with the ever rising demand. More production facilities are

needed to meet the demand

Most of the raw material needed for apparel manufacturing is available in the

developing or under developed countries and these countries do not have enough

resources and manpower to explore them. These countries also do not have finance to setup factories for clothing and garment production

Globalization has helped the trade in many ways but due to globalization the

competition has increased and so it is not very easy for the firms to cope up with so much

competition, as they have to meet the deadlines and also maintain quality

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The importers of developed economies are facing very stiff competition as countries like

China are producing good quality products in low prices due to availability of very cheap

labour

Some trade laws still are very much in favor of developed countries and they need to bereviewed, to facilitate imports from the developing countries

As apparel industry is fashion driven, and fashion keeps changing, the firms have to

cope with the changing apparel industry trends and still complete orders in time. Thus

they usually have to work under pressure

National Textile Policy 2000:

ON NOVEMBER 2, the Government announced the New Textile Policy (NTP), outlining

measures to make India a global player in textiles and readymade garments by raising

exports from $11 billion to $50 billion by 2010. Of this, the share of readymade garments

will be half. The Government has decided to de reserve the garment industry from the SSI

category to make the former internationally more competitive. Till now, the garment

sector was under SSI reservation, with an investment ceiling of Rs 3 crore, and the

maximum foreign direct investment limit of 24 per cent.

There are two more modifications. First, the FDI limit of 24 per cent has been removed,

and foreign companies will be able to make 100 per cent investments through the Foreign

Investment Promotion Board (FIPB) route. Second, the 50 per cent export obligation on

firms with foreign equity has been done away with.

The Government intends to implement, in a time-bound manner, the Technology

Upgradation Fund Scheme covering all manufacturing sectors of the industry. According

to the Textiles Minister, Mr Kashiram Rana, response to this scheme is improving, and

proposals worth Rs 11,000 crore were received.

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According to the RBI, exports of readymade garments in the 11 years from 1987-88 to

1998-99 rose from $1,430 million to $4,444 million -- more than threefold. The annual

average growth rate readymade exports during this period were 10.9 percent, against the

overall export growth rate of 9.7 percent.

Exports of readymade to the developed countries are improving. Against exports of $427

million to the US, in 1987-88, they touched $1,503 million -- again, more than threefold--

in 1998-99. There have been similar increases in despatches to the UK, Germany, France,

Canada, Italy, Japan and the Netherlands. There was a decline in exports to the

Commonwealth of Independent States (CIS) because of the unstable conditions.

India was also able to capture markets in developing countries, especially the UAE. The

rising trend of readymade garment exports, even to the most developed countries, proves

beyond doubt the competitive ability of the small sector.

TECHNOLOGY UPGRADATION FUND SCHEME (TUFS):

Government of India, Ministry of Textiles has launched a Technology Upgradation Fund

Scheme (TUFS) for the Textile and Jute Industries, which is in operation since

01.04.1999 for 5 years i.e. up to 31.03.2004. There is no cap on funding under this

scheme. It is an open-ended scheme depending on the capacity of the industry to absorb

funds in bankable and techno-economically feasible proposals.

The main features of the TUFS are given below: -

i) The scheme provides a reimbursement of 5% point on the Interest charged by the

lending agency on a project of Technology Up gradation in conformity with the scheme.

ii) The identified sectors in the textile industry viz. Cotton ginning and pressing,

spinning/silk reeling and twisting/wool scouring and combing/ synthetic filament yarn

texturising, crimping and twisting, manufacturing of viscose filament yarn (VFY) /

Viscose Staple Fiber (VSF), weaving/knitting including non woven and technical textiles,

garments/made-ups, Jute industry are eligible to avail of these concessional loan for their

technology up gradation requirements. Investments in common infrastructure or facilities

owned by the association, trust or co-operative society of the units participating in the

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TUF Scheme and other investments specified are also eligible for funding under the

scheme.

iii) Technology levels are benchmarked in terms of specified machinery for each sector of

the textile industry. Machinery with technology levels lower than that specified will notbe permitted for funding under the TUF Scheme.

iv) General eligibility condition and sector specific eligibility conditions have also been

specified in the scheme.

v) Nodal agencies for the scheme are as follows: -

For the Textile Industry (excluding SSI sector) IDBI

For the SSI Textile Sector (Cotton Ginning & Pressing, Weaving, Knitting, Processing &

Garmenting Manufacturing) - SIDBI

For Jute Industry - IFCI

vi) The interest @5% would be reimbursed to the respective nodal agency through the

budget (plan) provisions of the Ministry of Textiles.

vii) The functioning of the scheme is being periodically monitored by TAMC Chaired by

Textile Commissioner and Inter-Ministerial Steering Committee, Chaired by Secretary

(Textiles).

viii) A special cell has been set up in the financing institutions for expeditiously

processing loan application received under the scheme.

ix) All the 18 SFCs, 17 SIDCs and 11 Twin function IDCs, EXIM Bank and NCDC have

been co-opted by SIDBI and IDBI. Further SIDBI has co opted 81 commercial banks, 12

coop. banks and NSIC and IDBI has co-opted 36 commercial banks, 1 co-operative bank

and 4 AIFIs (IFCI, ICICI, IIBI and LIC) have also been co-opted by IDBI. IFCI has co-

opted 3 SFCs, 1 SIDC, 6 commercial banks, 3 AIFIs and Exim Bank for financing jute

industry under the scheme.

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x) An option has also been provided to the Small Scale Textile and Jute Industries to avail

of either 12% Credit Linked Capital Subsidy (CLCS) or the existing 5% interest

reimbursement under the TUFS. CLCS-TUFS will be in operation from 1st Jan., 2002 to

31st March, 2004. There is no distinction between public sector, co-operative sector or

private sector mills under the scheme, if project proposal is bankable and techno

economically feasible.

Indian textile industry should have focused on all major sectors right from fibre to fashion

and planned for an organized growth across the supply chain so as to compete with China

and even countries such as Pakistan, Vietnam and Thailand. Instead, the industry had put

majority of its stock in the spinning sector. This is clearly evident in the utilization of

Technology Upgradation Fund Scheme effectively by the spinning sector. Although it is a

positive outcome, in my opinion, the industry turned a blind eye on value-adding sectors

such as weaving and finishing.

TEXTILE WORKERS REHABILITATION FUND SCHEME (TWRFS):

Textile Workers Rehabilitation Fund Scheme came into force with effect from 15th Sept.

1986.The objective of TWRFS is to give interim relief to the workers rendered jobless

due to permanent closure of the mills. Another reason also was to curtail the widespread

disguised employment in the textile industry. Relief under the scheme is available only

for 3 years on a tapering basis, 75% of the wage equivalent in the first year, 50% in the

second year and 25% in the third year.

The government has established various research associations for the textile industry like

Ahmedabad Textile Industry Research Association, Ahmedabad

Bombay Textile Research Association, Mumbai

South India Textile Research Association, Coimbatore

Northern India Textile Research Association, Ghaziabad

Silk and Art Silk Mills Research Association, Mumbai

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It has a few export promotion councils also like

o Handloom Export Promotion Council, Madras

o Apparel Export Promotion Council, New Delhi

o Cotton Textile Export Promotion council, Mumbai

o The Synthetic and Rayon Textiles Export Promotion Council, Mumbai

o Indian Silk Export Promotion Council, Mumbai

o Wool and Woollens Export Promotion council, New Delhi

o Carpet Export Promotion Council, New Delhi

o Export Promotion Council for Handicrafts

o Powerloom Development & Export Promotion Council

CHAPTER -8

COMPANY PROFILE

India being one of the fastest growing economies of the world, which has both positively

and negatively, affected the Indian apparel industry. On one hand it has become a major

retailing hub and a host for various multinational companies on the other hand this has a

negative effect on the domestic players. The emergence of mall, brand slavery, fashion

awareness, rise in the income level has further reinforced the competition among the

multinationals and the domestic players and has lead to opening of number of retail

outlets in India.

The intr

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