Indian Textile Industry
October 2006
© IMaCS 2006Printed 19 Apr 2023
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Contents
Market Overview
Government regulations & policy
Business opportunities and Advantage India
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Indian Textile industry - important from perspective of overall economy
Total market size (2004-05): USD 38 bn Domestic market ~ USD 25 bn
Exports ~ USD 13 bn
Strong contribution to Indian Economy 14% contribution to industrial production
4% contribution to GDP
16% contribution to export earnings
Direct employment to more than 35 million people
Industry functions in the form of clusters (roughly 70 in number) across India,
producing 80% of the country’s total textile
Sector is diverse, with the hand-spun and hand woven sector at one end of the
spectrum, and the capital intensive, sophisticated mill sector at the other
Source: Ministry of Textiles Annual Report, Industry Research
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India has a strong base in raw materials
Cotton dominates the industry Nearly 56% of yarn produced is made of cotton
Country produces nearly 23 varieties of cotton
India is the second largest player in the world cotton trade
India’s position is strong vis-à-vis other countries in most raw
materials Largest producer of jute
Second largest producer of silk
Third largest producer of cotton, accounting for nearly 16% of
global production
Third largest producer of cellulosic fibre/yarn
Fifth largest producer of synthetic fibres/yarn
Eleventh largest producer of wool
Source: Ministry of Textiles Annual Report, Industry Research
Abundant availability of raw material is one of
the key advantages of the
Indian textile industry
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Industry fragmented and dominated by small scale units
The textile industry across the value chain is largely decentralised
Units mostly independent and small scale in nature, rather than
composite units undertaking all activities together
Large scope for entry of organised integrated textile manufacturers
Spinning Weaving Processing & manufacturing
Source: Compendium of Textile Statistics, 2004
Large independent
units 53%
Small independent
units 39%
Composite mills 8%
100% = 2922 mills 100% = 5.83 million units
Handloom sector 67%
Powerloom 31%
Organised sector 2%
Of the 2300 processors in India, only
200 units are integrated with spinning,
weaving or knitting units
Bulk of apparel and home textile
manufacturing accounted for by
77,000 small scale units
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Manufacturing units present at all levels of value chain
Raw materials
Cotton, wool, silk, jute
Petrochemicals
Fibres and yarn
Man-made fibre/ filament yarn*
Grey fabric Knitting Weaving
Processed fabric Dyeing Finishing
Garments
Home textiles
Production unit
Spinning mills
Weaving/ knitting units - handlooms, powerlooms, hosiery units
Hand processing units, independent power processing units, units attached to mills
Garments & home textile producers
Composite Mills
*Includes viscose staple fibre, polyester staple fibre, acrylic staple fibre, viscose
filament yarn, nylon filament yarn, polyester filament yarn
Source: Industry Research
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Industry experiencing high growth
Increased output of yarn and fabric - CAGR of 3.6% and 4.1% respectively;
global market has grown at a CAGR of 2-2.5% in this period
Highest growth seen in 100% non cotton yarn and fabric, followed by
blended yarn and fabric
Cotton cloth continues to dominate the industry
1996 2000 2006
Cotton yarn
Blended yarn
100% non cotton yarn
Yarn production
million tonnes
2.4
3.1
3.4
75%
17%
8%
72%
20%
8%
73%
17%
10%
CAGR
3.2%
3.6%
3.8%
6.0%
1996 2000 2005
Cotton cloth
Blended cloth
100% non cotton cloth
Cloth production
billion sq. mtrs
31.5
38.6
45.0
60%
13%
27%
49%
15%
36%
46%
13%
41%
CAGR
0.9%
4.1%
4.6%
8.9%
Source: Compendium of Textile Statistics
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Exports are dominated by readymade garments
Readymade garments dominate textile exports
Share of manmade textiles in overall textile export basket
has risen, whereas that of cotton textiles has fallen
0
100
200
300
400
500
600
700
800
Readymade garments
Cotton yarn, fabric & made-ups
Manmade staple fibres, yarn, fabric & made-ups
Silk & woolen textiles, cotton raw, incl waste
51%35%
10%4%
52%34%
9%5%
55%25%
13%
7%
100% = INR 654 bn
100% = INR 390 bn
100% = INR 199 bn
Year 1994-95
Year 1999-00
Year 2005-06
Textile exports
Source: Ministry of Textiles
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Dismantling of quotas has resulted in higher growth in large markets
In the first nine months of
CY2005, US imports grew by
7% to USD 8.9 bn and EU
imports grew by 3.7% to Euro
54.5 billion
India has been one biggest
beneficiaries in post quota
regime in these two markets,
while countries like Mexico,
South Korea and Turkey have
lost share
2004 1st 9 months of
2005
2008* 2004 1st 9 months of
2005
2008*
Share in US textile and clothing market
Share in EU textile and clothing market
Source: WTO study on gainers and losers post quota abolishment*Forecasts
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Going forward, exports as well as domestic market to drive growth
Drivers of exports Rising outsourcing budgets of retail giants
Indian companies evolving from mere
converters to vendor partners of global buyers
Large outsourcing orders helping Indian
companies build capacities, lower their per unit
cost and become more competitive
Imposition of caps on certain import segments
from China by EU and US given the surge in
Chinese exports has opened up opportunities
for India
Drivers of domestic market Growing young population
Rising household income levels
Growth of organised retail
2005 2010*
*Forecasts
Market size estimates
USD bn
Domestic market
Exports
25
12
37
35
30
65
Source: Research commissioned by Confederation of Indian Textile Industry
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Contents
Market Overview
Government regulations & policy
Business opportunities and Advantage India
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Industry has witnessed a change in regulations
Pre 1985
Emphasis on small scale sector
Importance given to cotton textiles Favourable fiscal treatment given to
powerlooms (mainly tiny and small-
scale units) as compared to
composite mills Most segments reserved for small-
scale industry (SSI)* Restrictions on installation of
automatic looms
Emphasis on increasing scale
Post 1985
Many segments (especially readymade garments,
knitwear and hosiery) deserved from reservation
for SSI Schemes for technology upgradation and
modernisation introduced Multifibre approach adopted; emphasis on man
made and synthetic fibres, in addition to cotton Taxation structure made simpler
Measures aimed at
improving competitiveness
of industry to face a post
quota regime*Latest definition: Investment in plant & machinery of INR 10 million for
most industries, INR 50 million for specified industries like hosiery, hand
tools, drugs & pharmaceuticals, sports goods and stationery items
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Several government initiatives targeted to attract investments
Technology Upgradation
Fund Scheme
Policy related to
foreign investment
Upgrading
infrastructure
Scheme launched in 1999 to provide firms access low interest loans for
technology upgradation and setting up new units with state-of-art
technology Scheme has disbursed INR 91.61 bn till 31st December 2005
Upto 100% foreign direct investment allowed in textile and apparel
manufacturing industry, with approval of the Foreign Investment Promotion
Board (FIPB) ~ USD 1.02 bn of FDI in the sector approved between 1991 and 2004 Companies free to set up fully-owned sourcing (liaison) offices, as well as
marketing operations
“Scheme for Integrated Textile Parks” (SITP), based on public-private
partnership model to build world class infrastructure facilities Product specific “Cluster Approach” targeting development of 100
additional clusters in textiles Technology Mission on Cotton (TMC), focusing on cotton R&D,
dissemination of technology to farmers, improvement of market
infrastructure and modernisation of ginning and pressing sector
Source: Ministry of Textiles, Industry Research
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Contents
Market Overview
Government regulations & policy
Business opportunities and Advantage India
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India has a cost advantage vis-à-vis competing countries
2.35
0.70
0.06
2.51
0.65
0.04
2.31
0.60
0.07
2.17
0.61
0.06
Cost competitivenessYarn: USD per kg of yarn
Fabric: USD per yard of fabric
1.68
0.55
0.18
1.40
0.51
0.14
0.55
0.20
2.06
0.59
0.21
1.90
Open-ended yarn & fabric Ring yarn & fabric Textured yarn & fabric
Yarn
Woven
fabric
Knitted
fabric
2.68
0.75
1.22
2.76
0.69
1.21
2.61
0.65
1.21
2.45
0.66
1.12
South Korea
China
Brazil
India
India is cost competitive vis-à-vis competing countries in textile
production, except in case of textured yarn and fabric
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There are several other industry specific advantages arising out of the unique nature of the industry in India
Large raw material base India has a rich raw material base, especially cotton which has seen improved productivity in the country
under the Cotton Technology Mission Wide variety of cotton produced India, making India capable of catering to various segments of world
trade Indian industry has ability to handle different materials - cotton, wool, silk and jute with equal skill
Positive developments in the Textile Policy Reservation for small scale sector, especially key segments removed over last few years Fiscal anomalies in terms of excise duty structure removed
Flexibility in production Capabilities across the entire value chain within the country reduces lead time for production and
reduces intermediate shipping time Indian companies have flexibility and skilled manpower to handle small orders with complex designs
Product development and design capabilities Several institutes in India for textile development, the major one being National Institute of Fashion
Technology (NIFT) Several leading colleges also offer courses in Textile Engineering
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Business opportunities exist for foreign players
Investing in India
Sourcing from India
Export to India
Partner with Indian vendors to import from India, by nominating
large Indian companies having credibility in terms of capacities
and quality Readymade garments have maximum opportunity, given India’s
cost competitiveness
Invest in setting up vertically integrated large scale units Invest in setting up retail chains (single brand) Enter into marketing joint ventures with Indian companies Brand licensing to Indian players
With Indian consumers increasingly getting exposure to
international fashion trends, potential exists for export of
lifestyle brands of garments and accessories to India
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Many foreign players have also entered India
Top 10 buyers in India (Gap, Wal-Mart, Li & Fung, The Children’s Place,
JC Penny, H&M, Federated, Fifth Avenue, Carrefour and Synergies India)
account for 35% of total textiles sourced from India Other major companies include El Corte, Ecko, Kellwood, VF Corporation,
Tesco, Next, Karstadt-Quelle
Buying and liaison
offices
Brand licensing - Hugo Boss, Tommy Hilfiger, Mango, Lovable, Nike, Lacoste Master franchisee - Marks & Spencer, Crocodile
Brand licensing/
franchising
Manufacturing/
manufacturing
cum retailing
VF Arvind Brands - joint venture between Arvind Brands and VF
Corporation to manufacture and sell latter’s brands in India Benetton Levi Strauss Reebok Carreman Michel Thierry
Source: News articles
Illustrative, not exhaustive
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Key players in India
Large industry conglomerate, with turnover of USD 279 million and presence in textiles, retail,
engineering goods, personal care and prophylactics Textile products - worsted fabrics, wool and blended fabrics, specialty ring colour and stretch denim
fabric, cotton and linen shirting fabric, readymade garments, woolen blankets and home furnishings
One of the oldest textile companies in the country, having turnover of USD 231 million Produces suitings, shirtings, sarees, towels, bed linen and men’s apparel; significant exporter
of polycotton blended fabrics and made ups
One of the largest producers of denim in the world, having turnover of USD 338 million and
exports to more than 70 countries Produces denim fabric, cotton and blended fabric, knitted fabric, voiles, apparel
Illustrative, not exhaustive
One of the largest textile business houses in India, having turnover of USD 400 million Significant presence in acrylic fibre, cotton, synthetic and blended spun yarns, grey and
processed fabrics, cotton and synthetic sewing threads
India’s largest exporter of readymade garments, having turnover of USD 180 million Supplies to more than 100 retailers and fashion brands across 39 countries
Source: Capitaline, Company websites
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Leading producer of silk yarns and fabric (mainly for decorative and bridal use), with annual
turnover of USD 32 million
Other businesses include retailing of home furnishings in India and manufacture of bed linen
products for domestic and export market
Illustrative, not exhaustiveKey players in India
Source: Capitaline, Company websites
Amongst the top 3 terry towel producers in the world, with annual turnover of USD 132
million Other products include cotton yarns, polyester filament yarn, bathrobes, buttons and saw
pipes Belongs to one of the most diversified business groups in India (Aditya Birla Group) and has
turnover of USD 577 million) Key products in textiles include viscose filament yarn and branded apparel; other interests
include insurance, telecom, IT, carbon black
Having turnover of USD 303 million, company is a major producer of polyester
yarns, fabrics, garments and textiles
Has the largest composite textile mill in India for producing cotton fabric Having a turnover of USD 95 million, its products include viscose filament yarn,
viscose tyre/ industrial yarn, denim, cement and pulp and paper
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