indian apparel export industry prospects and challenges

UNIVERSITY OF PETROLEUM & ENERGY STUDIES College of Management and Economic Studies, Dehradun

Indian Apparel Export Industry:

Prospects and Challenges

Dissertation submitted to College of Management & Economic Studies for the partial

fulfilment of the degree of

Bachelor of Business Administration in

Oil and Gas Marketing

Dissertation Guide

Prof. Vimal Prasad Mathur

Assistant Professor (Selection Grade)

College of Management & Economic Studies

University of Petroleum & Energy Studies

Dehradun – 248 006

Submitted by:

Vineet Kamboj

Enrollment No: R050208084

SAP ID: 500002837

College of Management & Economics Studies

University of Petroleum & Energy Studies

March 28, 2011


ACKNOWLEDGEMENT

I would like to express my heartfelt gratitude to Mr. Vimal Prasad Mathur, for his able

guidance and consistent support in making this dissertation a success.

I am thankful to the University of Petroleum and Energy Studies for providing me an

opportunity to pursue my Dissertation work and for providing me sufficient help whenever I

needed.

I am grateful to the Internet Lab and Library departments for the immense help extended by

them to me. I would like to add that this report is an outcome of cooperation of all the faculty

members at UPES.

Vineet Kamboj

BBA (Oil & Gas Marketing)

UPES


CONTENTS

ACKNOWLEDGEMENT ......................................................................................................... 2

LIST OF FIGURES ................................................................................................................... 4

RESEARCH OBJECTIVE ........................................................................................................ 6

RESEARCH METHODOLOGY............................................................................................... 7

INTRODUCTION ..................................................................................................................... 8

1. BACKGROUND ..................................................................................................................... 11

APPAREL AND TEXTILE SECTOR IN INDIA ........................................................................ 11

2. APPAREL ................................................................................................................................ 13

3. INDUSTRY OVERVIEW ....................................................................................................... 13

4. INDUSTRY SEGMENTATION ............................................................................................. 14

5. PRODUCTIVITY PERFORMANCE ..................................................................................... 16

6. OPERATIONAL REASONS FOR LOW PRODUCTIVITY ................................................. 17

7. INDUSTRY DYNAMICS ....................................................................................................... 20

8. EXTERNAL FACTORS RESPONSIBLE FOR LOW PRODUCTIVITY ............................. 22

9. EXTERNAL FACTORS LIMITING OUTPUT GROWTH ................................................... 26

10. TRENDS IN INDIAN APPAREL EXPORT INDUSTRY ..................................................... 28

11. MARKET SIZE: ...................................................................................................................... 31

12. OPPORTUNITIES AND CHALLENGES .............................................................................. 35

13. INDIAN APPAREL AND TEXTILE INDUSTRY: BRAND STRATEGY AND EXPORT

CPMETITIVENESS ................................................................................................................ 40

14. TRADE SCENARIO 2002-2006 ............................................................................................. 47

15. INDIA CHEAP LAPOUR GARMENT INDUSTRY ............................................................. 48

16. FASHION IN INDIA ............................................................................................................... 52

CONCLUSTION ..................................................................................................................... 54

LIST OF TABLES

Table 1: Segment-wise Exports, 2002-2006 (US$ bn) ............................................................ 48


LIST OF FIGURES

Figure 1: Indian Apparel and Textile Export ........................................................................... 15 Figure 2: Different Clothes ...................................................................................................... 28 Figure 3: Apparel export to USA ............................................................................................. 32 Figure 4: Month wise India's export of Apparel ...................................................................... 34

Figure 5: stages ........................................................................................................................ 42 Figure 6: Cotton ....................................................................................................................... 46 Figure 7: Labour working in industry ...................................................................................... 49


EXECUTIVE SUMMARY

India ranks among the top target countries for any company sourcing textiles and apparel.

Indeed, apart from China, no other country can match the size, spread, depth, and

competitiveness of the Indian textile and apparel industry. Moreover, the global elimination

of quotas at the end of 2004 has greatly enhanced the opportunities for sourcing from India.

This special report focuses on the opportunities which India now offers as a source of textiles

and apparel. Based on a detailed examination of the performance of a large number of apparel

and home textile products in the US and EU markets, the report identifies those which offer

the greatest scope for sourcing from India. The report includes profiles of Indian textile and

apparel companies which are potential partners for sourcing or collaboration. It also examines

the competitiveness of Indian apparel and textile industry.

India is one of the leading producers of cotton, goatskin and cashmere wool. It ranks top in

goatskin and third in cotton after China and United States. The fabric industry in India

accounts for about 20% of total exports of the country and represent the largest net foreign

exchange earner.

The diversity of fibers found in the country, intricate weaving on its state-of-art manual

looms and its organic dyes has attracted buyers from all across the world for centuries. Before

the introduction of mechanized ways of spinning in the early 19th century, all Indian silks

and cottons were hand spun and hand woven, a highly popular fabric, called the khadi.

Independent India saw the development and building up of textile strength, diversification of

its product range, and its emergence, once again, as an important player in the world

industry.


RESEARCH OBJECTIVE

To study the trends of Indian apparel export industry.

To study the challenges face by the Indian apparel export industry.

Strengths and opportunities of Indian apparel export industry.

To study the prospects of Indian apparel exports to the US, EU countries.

To study the market of Indian apparel export industry in 2010.


RESEARCH METHODOLOGY

The Dissertation on ‗Indian Apparel Export Industry: Prospects and Challenges‘ as presented

in this report, have been conducted solely on a research basis. The research is descriptive but

intensive in nature as it is done with the aim of addressing the apparel and textile industry.

The contents of this report, have been taken from various Journals, Research papers, Internet,

Industry portals, various publications with an objective of understanding ‗Indian Apparel

Export market ‘ better with, pictures and tables wherever deemed necessary.

The study provides an overview of the scope, proposed design and conceptual framework. It

will consider the required market data & a timeline, after which the market volatilities of the

data are not updated. The potential limitations and alternative approaches to achieve research

objectives are considered and discussed.


INTRODUCTION

The apparel industry and garment industry involves advertising, designing and selling of

fashionable clothes. Each outfit fabricated has a specific theme, purpose and target market of

its own. For classifying the upcoming trends, apparel world connects with the designers and

marketers who keep track of all the essential requirement of consumers. The art and work

related with the designers is not only restricted with the designing of clothes but also

broadens to fashion accessories like shoes, bags, jewellery and many more. The interest in

fashion apparel is on endless rise, accordingly the concerned opportunities and competition

are there. As the apparel industry is growing more and more, there is an increasing need for

much specialized and educated staff in the apparel world.

Historically, the apparel sector has not realised its full growth and employment creation

potential. Productivity in the sector has always been low and the sector has remained small.

The productivity of Indian exporters is less than two -third that of Chinese exporters, while

the productivity of Indian domestic manufacturers is 40 per cent lower than that of the Indian

exporters. Consequently, Indian apparel production is less than one-third that of China, while

its exports amount to less than one-seventh of China‘s exports.

Productivity in Indian plants is low because the plants are sub-scale, lack basic technology

and are operated inefficiently. To address these issues, reforms need to be carried out on

multiple fronts. To be more competitive in the export market, India needs to attract more FDI

in the apparel sector. This involves liberalising Indian labour laws and reforming the

upstream textile sector and improving the performance of Indian ports. To encourage

productivity growth in the domestic sector, a level playing field needs to be created between

small and large manufacturers, the downstream retail sector needs to be rationalised and

import duties gradually reduced. To ensure a level playing field, identical labour laws and

taxes need to be imposed on all players. Further, the large-scale players should be allowed to

compete in all segments of the market – currently the knitted and hosiery segments are

reserved for small scale players.


India is the world‘s second largest producer of textiles and garments after China. It is the

world‘s third largest producer of cotton—after China and the USA—and the second largest

cotton consumer after China. The textile and garment industry in India is one of the oldest

manufacturing sectors in the country and is currently it‘s largest. The textile and garment

industry fulfils a pivotal role in the Indian economy. It is a major foreign exchange earner

and, after agriculture. In 2005 textiles and garments accounted for about 14% of industrial

production and 16% of export earnings. The industry covers a wide range of activities. These

include the production of natural raw materials such as cotton, jute, silk and wool, as well as

synthetic filament and spun yarn. In addition an extensive range of finished products are

made. Also, it has the highest loom capacity—including hand looms—with a 61% share.

India accounts for about 12% of the world‘s production of textile fibres and yarns. This

includes jute, of which it is the largest producer. The country is the second largest producer

of silk and cellulose fibre and yarn, and the fifth largest producer of synthetic fibre and yarn.

Textile Industry is one of the largest and oldest industries in India. Textile Industry in India is

a self-reliant and independent industry and has great diversification and versatility. The

textile industry can be broadly classified into two categories, the organized mill sector and

the unorganized decentralized sector. The organized sector of the textile industry represents

the mills. It could be a spinning mill or a composite mill. Composite mill is one where the

spinning, weaving and processing facilities are carried out under one roof. The decentralized

sector is engaged mainly in the weaving activity, which makes it heavily dependent on the

organized sector for their yarn requirements. This decentralized sector is comprised of the

three major segments viz., powerloom, handloom and hosiery.

In addition to the above, there are readymade garments, khadi as well as carpet

manufacturing units in the decentralized sector. The Indian Textile Industry has an

overwhelming presence in the economic life of the country. It is the second largest textile

industry in the world after China. Apart from providing one of the basic necessities of life i.e.

cloth, the textile industry contributes about 14% to the country's industrial output and about

17% to export earnings. After agriculture this industry provides employment to maximum

number of people in India employing 35 million people. Besides, another 50 million people

are engaged in allied activities. India is the largest producer of Jute, the 2nd largest producer

of Silk, the 3rd

largest producer of Cotton and Cellulosic Fibre / Yarn and 5th largest producer

of Synthetic Fibers/Yarn.


Textile Industry contributes around 4% of GDP, 9% of excise collections, 18% of

employment in industrial sector, and has 16 % share in the country‘s export. The Industry

contributes around 25% share in the world trade of cotton yarn. India is the largest exporter

of yarn in the international market and has a share of 25% in world cotton yarn export market

(source: www.fiber2fashion.com). India contributes for 12% of the world‘s production of

textile fibers and yarn. Indian textile industry is second largest after China, in terms of

spindleage, and has share of 23% of the world‘s spindle capacity. India has around 6% of

global rotor capacity. The country has the highest loom capacity, including handlooms, and

has a share of 61% in world loomage. The Apparel Industry is one of largest foreign revenue

contributor and holds 12% of the country‘s total export (www.fiber2fashion.com).

The apparel industry was also subject to changes in technology and to the rapidly changing

conditions of the marketplace. Cleveland firms often did not or could not respond with

sufficient alacrity or astuteness to such changing conditions. Cleveland was perhaps too

divorced from the centre of the market in New York. It lacked a regional market of

importance, and thus many manufacturers lost touch with what consumers wanted, and when

the competitive price structure changed after World War II, some companies could not adapt

to a shifting and rapidly changing marketplace.


BACKGROUND

APPAREL AND TEXTILE SECTOR IN INDIA

The Indian textile and apparel industry is the largest foreign exchange earner for the country.

It is also the second largest employment provider after agriculture and plays a key role in the

development of the economy of India.

The Man-Made Fiber / Yarn and Powerloom Sector:

This part of industry includes fiber and filament yarn manufacturing units. The Power looms

sector is decentralized and plays a vital role in Indian Textiles Industry. It produces large

variety of cloths to fulfill different needs of the market. It is the largest manufacturer of fabric

and produces a wide variety of cloth. The sector contributes around 62% of the total cloth

production in the country and provides sample employment opportunities to 4.86 million

people (www.indiantextilejournal.com).

The Cotton Sector:

Cotton is one of the major sources of employment and contributes in export in promising

manner. This sector provides huge employment opportunities to around 50 million people

related activities like Cultivation, Trade, and Processing. India‘s Cotton sector is second

largest producer of cotton products in the world. The Handloom Sector: The handloom sector

plays a very important role in the country‘s economy. It is the second largest sector in terms

of employment, next only to agriculture. This sector accounts for about 13% of the total cloth

produced in the country (excluding wool, silk and Khadi).

The Woolen Sector:

The Woolen Textile sector is an Organized and Decentralized Sector. The major part of the

industry is rural based. India is the 7th largest producer of wool, and has 1.8% share in total

world production. The share of apparel grade is 5%, carpet grade is 85%, and coarse grade is

10% of the total production of raw wool. The Industry is highly dependent on import of raw

wool material, due to inadequate production.


The Jute Sector:

Jute Sector plays very important role in Indian Textile Industry. Jute is called Golden fiber

and after cotton it is the cheapest fiber available. Indian Jute Industry is the largest producer

of raw jute and jute products in the world. India is the second largest exporter of jute goods in

world.

The Sericulture and Silk Sector:

The Silk industry has a unique position in India, and plays important role in Textile Industry

and Export. India is the 2nd largest producer of silk in world and contributes 18% of the total

world raw silk production. In India Silk is available with varieties such as, Mulberry, Eri,

Tasar, and Muga. Sericulture plays vital role in cottage industry in the country. It is the most

labor-intensive sector that combines both Agriculture and Industry.

The Handicraft Sector:

The Indian handicrafts industry is highly labor intensive, cottage based and decentralized

industry. It plays a significant & important role in the country‘s economy. It provides

employment to a vast segment of craft persons in rural & semi urban areas and generates

substantial foreign exchange for the country, while preserving its cultural heritage.


APPAREL

Apparel is India‘s second largest export segment (after textiles) and employs 4.3 million

people. It is important to this study as it highlights the barriers that constrain FDI in export

oriented sectors. Our study of the apparel industry considers only western style apparel, both

ready-made and tailor-made. This segment accounts for approximately 60 per cent of apparel

sales in India. It excluded traditional style garments such as saris from our definition as they

are unique to India and, therefore, not comparable across countries. In addition, garments

such as saris consist of almost nothing more than the textile itself.

INDUSTRY OVERVIEW

The Indian apparel industry had revenues of US$ 19 billion in 1997, largely consisting of

sales in the domestic market. Exports accounted for only US$ 4 billion and represented 11

per cent of India‘s total exports. Even developed countries such as Germany and the US,

with a labour cost disadvantage, exported twice as much apparel as India. China is the clear

leader in apparel production. It produces thrice as much apparel as India and exports over

seven times as much.

Industry evolution

Only one-fourth of India‘s total apparel output in 1997 was exported while three-fourth was

consumed domestically.

Exports: While India has significantly grown its exports from US$ 1 billion in 1985 to

US$ 4 billion in 1998, it still has less than 2 per cent of the US$ 210 billion world apparel

trade market. In contrast, China and Hong Kong together accounted for almost 20 per cent

of world exports in 1997.

Apparel exports from India have grown over the past 15 years at a CAGR of 13 per cent,

after world export production shifted to South Asia. However, India has grown slower than

both Thailand and Indonesia, which have grown at 17 per cent, and China, which has

grown at 21 per cent (AEPC). China‘s growth is largely due to a shift in exports from quota

countries to non-quota countries, such as Japan, and demonstrates China‘s strong

competitive advantage.The majority of China‘s exports are to Hong Kong and Japan, both


quota-free countries that have invested heavily in Chinese apparel companies over the past

10 years. In contrast, most of India‘s growth has been the result of increasing exports to the

US, which is under heavy quota control.

.

Domestic sales: The domestic market for western style apparel in India stood at around

US$ 16 billion in 2000. Almost one-third of this market consisted of ready-made apparel

(ready-made‘s share is higher in urban areas) while the remainder was tailor-made. The

domestic market grew by about 2 per cent a year between 1990 and 2000, according to the

Ministry of Textiles‘ Research Wing. The ready-made market share grew from 19 per cent

to 38 per cent between 1990 and 2000, largely because of a dramatic price drop in ready-

made clothing.

INDUSTRY SEGMENTATION

Apparel is a fragmented and labour-intensive industry. With low capital and skill

requirements, it is ideally suited to the early stages of industrialisation. To better

understand the industry, we have segmented producers into three categories:

Tailors: Currently, tailors undertake the bulk of production for the domestic market. A

typical tailoring shop consists of a tailor who deals with customers (helping with design and

measurement) and 3-4 workers who stitch the clothes. Consumers generally provide the

fabric, so the tailor has negligible inventory carrying costs. Since tailors have low fixed costs

and pay lower wages, tailor-made clothing is cheaper than ready-made apparel.

Domestic manufacturers: There are two types of domestic manufacturers: Small, mainly

unorganised players who produce exclusively for the domestic market (and are restricted by

law to investments below US$ 200,000) and large players who export over 50 per cent of

their output and are allowed to invest as much as they think appropriate to function

efficiently. The unorganised players dominate the domestic market, resulting in a very

fragmented industry. They sub-contract almost all their jobs and, on average, have only 20

permanent employees on their rolls. The larger manufacturers, who also produce for the

domestic market, mainly target the branded segment, which constitutes only 20 per cent of

domestic ready-made consumption.


Exporters: Exporters are, on average, at least twice as large as domestic manufacturers, in

terms of number of employees. There are two reasons for this: First, manufacturers who

export over 50 per cent of their product are exempt from investment limits imposed by the

government; second, sub-contracting among exporters is less prevalent than among domestic

manufacturers, largely because retailers forbid the use of sub-contractors to maintain

consistency and quality.

Figure 1: Indian Apparel and Textile Export

Source: AEPC

Manufacturing methods

The production of a final garment consists of five steps. First the garment is designed, and

production scheduled and planned. Then, the fabric and designs are decided, the fabric is

marked and cut to fit the pattern. The next step, which constitutes the bulk of the work,

consists of stitching the pieces together. Finally, the garment is finished, pressed and

packed for shipment.

There are three principal manufacturing methods for apparel, with variants. The method

used depends on the product type, quality level, order quantity and the level of technology

and skills available.

Make through: Here, the whole product is made by one operator – the standard method

used by tailors in India. Since a single operator undertakes the whole process, little

supervision and organisation are required. In addition, this method has a very low


throughput time because only one unit has to be finished at a time to complete the order.

The disadvantage of this system lies in the fact that the operator needs to conduct all the

operations required to produce the finished good and, hence, cannot have or learn any

specialisation.

Assembly line: This method is based on extreme division of labour. Its major advantage is

that both workers and machines are specialised, allowing for a dramatic increase in

productivity. In addition, the individual skills required by operators are greatly reduced.

However, this method of production needs excellent organisational ability (e.g., to ensure

that operations match the feed rate) so as to avoid idle time. Factors like variations in

individual operator performance, absenteeism and machine breakdowns can easily upset the

working schedule. In addition, this method has a large amount of work in progress, which

makes it harder to handle style variations and dramatically increases the lead time associated

with a finished batch of products.

Modular: Modular formation consists of grouping tasks, such as the assembly of a collar,

and assigning them to a module (a team of 5-30 persons working together). These workers

are cross-trained and can, therefore, easily move across tasks. Compensation is based on the

module‘s output instead of that of the individual worker. The key benefit of this method is

the reduction in throughput time. However, the costs of switching to this method are very

high as extensive training is required. Although this method is at the frontier in the US, it is

not relevant to China and India yet. It is commonly used for high value-added, high fashion

(and thus very time-sensitive) products.

PRODUCTIVITY PERFORMANCE

Using the number of men‘s shirts produced per hour as the measure, we have estimated

labour productivity in the Indian apparel industry to be at 16 per cent of US levels . Indian

exporters are at 35 per cent productivity. In comparison, exporters in China are at 55 per

cent of US levels. The US provides a benchmark for best practice in terms of labour

productivity, given its high labour costs. However, very little production of shirts is done in

the US nowadays. China provides an extremely relevant comparison, as it is the largest

exporter of shirts in the world and has labour costs comparable to that of India.


We focus on men‘s shirts since they are the single largest apparel item exported by India. In

addition, India is the third-largest exporter of shirts worldwide, and men‘s shirts are the fifth-

largest item of apparel exported across the world, thereby comprising a significant part of

international trade in apparel.

OPERATIONAL REASONS FOR LOW PRODUCTIVITY

Format mix, poor organisation of functions and tasks (OFT), lack of viable investments –

particularly in technology – and low scale are the main operational causes of the low

productivity we see in India:

Poor OFT

This accounts for 10 points of the productivity gap. Improving OFT will increase

productivity levels by 63 per cent from the current levels. This issue applies more to

manufacturers than tailors. Large-scale absenteeism, high rejection levels and delayed

shipments point to poor management of Indian apparel factories. For instance,

absenteeism results in unskilled operators having to do specialised jobs. Since they are not

trained for these positions, they are slow and delay production.

Poor OFT is the main reason for the productivity gap between China and the US too.

Although Chinese exporters have made a concerted effort to improve OFT as evidenced by

their superiority over India, they still have a long way to go.

Low investments in technology and automation: This accounts for five points of the

productivity gap. Increasing investments can improve productivity by 20 per cent, provided

OFT is fixed. The lack of viable investments reduces efficiency, quality and delivery speed,

and manifests itself in two ways:

Lack of basic technology: The lack of basic technology to produce standard quality

products applies mainly to domestic manufacturers. For example, many factories lack proper

ironing equipment and adequate washing and drying facilities. The common use of hand

washing and line drying often results in fading or shrinking.


Lack of specialised machinery: Exporters lack high-tech machinery that can help speed up

the production process. A good example of this is the spreading machine. This machine lays

out the cloth to be cut in a manner that keeps it flat but does not stretch it. The same

operation, when conducted manually, results in the cloth getting stretched. The problem

deepens when further layers of fabric are added; and often, after the fabric is cut into

separate pattern pieces, it contracts and introduces a distortion in the size of the final

garment. Although machines such as the spreading machine provide major benefits to the

production process and are viable even at current labour costs, they are extremely rare in

domestic factories.

There are some external factors that prevent manufacturers from adopting specialised

machinery. Consider cutting room automation. The ability to automate the cutting of fabric

depends on three things:

1). The type of fabric used in terms of roll length, quality, consistency in pattern and

stability;

2). The cutting quality expectations of the buyer; and

3). Considerations of space and fabric savings. As such, the low quality of fabric produced

in India is a deterrent to the adoption of cutting room automation.

Another consideration is the lack of air conditioning. Not only does it result in garment

stains (as a result of sweating), which then need to be removed; it also decreases

productivity as workers find it hard to work in intense heat. Poor working conditions also

contribute to high turnover and absenteeism rates which both reduce productivity.

Supplier relations

An underdeveloped supplier industry can impose productivity costs on its clients by

delivering outputs with low quality. This factor accounts for less than 1 point of the gap and

can improve productivity by 2 per cent. This issue applies only to domestic manufacturers,

who mostly use domestic textiles from power looms. This fabric tends to have defects, which

in turn increase the rejections that occur during production, thereby slowing down the

process and lowering productivity.


Low scale of operations

This accounts for 10 points of the gap and is the key cause of the difference in

productivity between tailors and manufacturers, and between Indian and Chinese

manufacturers. Average tailoring shops in India have 3-4 sewing machines in the back

room, while domestic manufacturers have on average 20 machines exporters have around

50 machines. Compare this with China and Sri Lanka, where factories often have

thousands of employees working under one roof. A 500-machine factory is the minimum

size required to function efficiently and larger factories are even more efficient However,

manufacturers in India prefer to maintain a low number of permanent staff and use sub-

contractors for the bulk of the production to avoid labour problems. In addition, the

reservation for small-scale industry (discussed later) makes this method of doing business

a requisite for producing in the domestic market.

One of the major sources of inefficiencies of small-scale plants is that large orders have

to be split across factories in order to have them ready for delivery in time. However,

short production runs are much less productive as switching costs are high, machinery

needs to be moved around and workers need to learn how to make the product. It can

take 3-7 days, depending on the product, to achieve normal productivity. Larger factories

have another advantage in that they can afford to invest in more efficient machinery and

better training for managers and operators. Most training for workers happens in-house

rather than externally. Therefore, good training in-house is key to high overall

productivity in the factory.

Format mix

This is by far the largest factor and accounts for 59 points of the productivity gap. It

consists of the shift away from tailors and towards manufacturers. In developed countries,

tailors produce made-to-order garments for the high end of the market and constitute a

very small share of the industry. In India, tailors produce the vast majority of clothing for

the mass market.

They are largely transition workers who are low skilled and have typically taken up their

first job outside agriculture. The production process they adopt is inherently low on

productivity. Also, since tailors have a very low opportunity cost of labour, they will


survive as long as they can cover their variable costs (i.e., function almost at subsistence

levels). This segment will go out of business only when wages rise enough to make them

compete with manufacturers on costs.

INDUSTRY DYNAMICS

Although there is strong competition within the segments, the segments rarely compete

with each other. For example, tailors compete with one another quite intensively but face

little threat from domestic manufacturers or the exporters producing for the domestic

market. As a result, even low productivity segments such as tailors are able to survive in

this industry. The lack of exposure to best practice too has a significant impact on

productivity in India.

Little price-based competition

Price-based competition between tailors and small manufacturers is low because

manufacturers are disadvantaged by inefficient retail formats which make the retail selling

price of ready-made apparel much higher than tailor-made apparel. In addition, very low

labour costs allow tailors to undercut ready-made apparel prices.

Three factors keep price-based competition between small manufacturers and large-scale

manufacturers low. First, reservations for small-scale industry (SSI) prevent large domestic

manufacturers from entering the market. Second, large-scale exporters who also sell in the

domestic market are at a disadvantage to small-scale domestic producers due to the l ack of

organised large-scale retail formats (see ―External reasons responsible for low productivity‖

for more detail). Third, large-scale exporters do not compete directly with domestic

manufacturers because they target the upper end branded market. Their competitive

advantage lies in the fact that they can create a distinct brand and produce high quality

products. Since this requires the use of imported machinery for which they must pay a high

duty, they find it more profitable to serve the high end of the market from which they can

extract a large quality and brand premium.

Exposure to foreign best practice

India has not had the opportunity to gain much exposure to foreign best practice methods.

There has been very little foreign direct investment (FDI) in this industry in India. In sharp


contrast, China has benefited enormously from foreign investment, specifically from Hong

Kong in the south (Guangdong) and Japan on the coast (Shanghai, Beijing). Taiwan and

Korea have also heavily invested in the garment industry throughout China. All these

countries have extensive experience in garment manufacturing but can no longer produce at

home because of high labour costs. They are, therefore, able to pass on their know-how to

companies in China. This knowledge transfer, as well as the infusion of capital, has

dramatically improved the performance and competitiveness of this industry in China. Most

of these countries have also invested in Thailand while Sri Lanka has received a reasonable

amount of investment from t he US. The lack of foreign investment in India is an enormous

hindrance to its competitiveness in the global market.

In addition, the domestic market in India was till recently protected from imports

through quantitative restrictions, in addition to a hefty duty of 35 per cent on all

imported apparel products.

Non-level playing field

The apparel industry is characterised by a non-level playing field, because of the

implementation of differential rules among companies within India and the quotas imposed

across countries.

Within India: Although all manufacturing companies are supposed to pay a minimum

wage, small domestic producers manage to avoid doing so and, hence, gain a cost advantage

over large producers. Further, SSI classification automatically exempts small players from

paying excise duty

Across countries: Quotas are the key cause of a non-level playing field across countries.

For example, quotas artificially determine the amount of production to be done in India vis-

à-vis China, thereby helping India to retain its market share despite being less competitive

than China.

Quotas are allocated to developing countries primarily by Europe and the US. Their

allocation largely determines the export production potential across countries. Quotas are

allocated (both in absolute terms and across categories) depending on what the country was

producing when the quotas were first implemented. For example, India was producing very


little bottom wear (pants, shorts, etc.) when quotas were first implemented. As a result, it has

a very tight quota for bottom wear compared to China. This prevents the development of this

segment and will put India in a weak competitive position when quotas are removed.

Concessions based on country of origin further exacerbate this issue. For example, China

and Hong Kong are subject to a special arrangement where if even 40 per cent of the product

is produced in Hong Kong and the remainder in China, Hong Kong may be cited as the

country of origin. As a result, a large proportion of the production from southern China is

exported using Hong Kong quotas.

EXTERNAL FACTORS RESPONSIBLE FOR LOW PRODUCTIVITY In this section, we discuss how external factors, such as government regulations and the

working of related industries, result in low and stagnant productivity in the Indian apparel

industry. These factors result in the different levels of productivity across the industry both

within India as well as in China and the US. To relate the external factors to the operational

causality, we look at the sources of potential productivity improvements, given current

labour costs.

Quotas imposed by the developed world

As we discussed in the previous section, quotas limit competition among countries and

manufacturers. Buyers are forced to order from countries, and therefore companies, which

have a good quota allocation and consequently base their choice first on quota availability

and, then, on the competitive position of the company. This explains why China can

maintain such a powerful position in the export market while still being far less productive

than the US. Since Chinese exporters have a guaranteed market share, they have little

incentive to improve their productivity. This results in sustained low productivity througho

ut the industry. These quotas are imposed by developed countries like the US, Canada and

the EU on imports of garments and textiles from developing countries. These quotas are

administered through the Agreement on Textiles and Clothing (ATC), which mandates that

all quotas must be phased out by 2005. There is no quotas imposed since 2005 and export

freely.


Small-scale reservation and FDI restriction

These constrain both the output and productivity growth of domestic apparel producers.

As mentioned earlier, reservations for small-scale industry restrict investment in fixed

assets to about US$ 200,000 for firms producing more than 50 per cent of their output for

the domestic market. This regulation is constraining because setting up even a very basic

500-machine factory (the minimum size required to function effectively) requires a

minimum investment of US$ 700,000.

As part of the SSI regulation, FDI is limited to 24 per cent in firms that produce over 50

per cent of their output for the domestic market. This results in a limited transfer of skills

and knowledge from foreign best practice and reduces technology adoption (foreign

investors often provide the cash and insist on adoption of high-tech machinery that the

factory would not otherwise bother to invest in). In addition, firms with investments of

less than US$ 200,000 are exempt from paying excise duty, which improves their cost

position vis-à-vis larger manufacturers. This provides further protection to small-scale

plants despite very low productivity. Though SSI reservation in the woven segment of the

industry was removed in November 2000, it remains in the knitted and hosiery segments.

Little support from related industries

Productivity of the Indian apparel industry is further hindered by the poor quality of fabric

produced by the local textile industry. The fragmented nature of retailing in India also

impedes the growth of apparel in India.

Textiles: Large mills that can produce large quantities of quality fabric are very small in

number and export most of their produce. The low quality mills that do exist are dying out.

This is mainly because the thriving powerloom and handloom sectors enjoy several unfair

advantages, despite the fact that they produce small lots of uneven and faulty fabric. For

example, they pay no excise duty, avoid paying minimum wages and receive government

subsidies. In addition, zoning codes and labour laws make it difficult for the older mills to

move to cheaper land and labour cost areas.

Most of the domestic fabric available to apparel manufacturers is, therefore, of poor quality.

Exporters deal with this issue by importing textiles, which is time consuming and increases


the lead time for order fulfilment. Domestic producers are affected even more dramatically

as high duties prevent them from resorting to textile imports. The availability of mostly

poor quality fabric also acts as a deterrent to FDI. All things being equal, a buyer will chose

to produce in a country with a readily-accessible supply of textiles to cut down on

turnaround time and minimise problems with customs clearance.

Retail: The pressure for productivity increase on the domestic apparel industry is also

dependent on retail consolidation. At present, however, the Indian retail market consists

largely of small traditional stores (90 per cent) as opposed to department stores or specialty

stores. Also, the retail industry has very high margins averaging 40 per cent, as opposed to 20

per cent at modern discounters in developed nations. This adds a large premium to the price

of ready-made apparel, further weakening its position vis-a-vis tailor-made garments. This

allows tailor-made apparel to control the bulk of the domestic market, despite being less

productive.

Consolidation in the retail sector would put pressure on manufacturers to reduce costs. It

would also force apparel manufacturers to consolidate, as large retailers prefer to be supplied

by large manufacturers who provide national coverage and marketing. However, since the

retail industry in India is fragmented, small manufacturers can survive by catering to small

local retailers.

Stringent labour laws

Strict labour laws in India make it very difficult to reduce employee strength. As a result,

firms prefer to sub-contract rather than hire permanent labour. The incidence of sub-

contracting in the apparel industry in India is markedly higher than in other countries.

Unfortunately, this results in much lower productivity due to lack of specialised technology

and sub-scale production. In addition, labour laws force retention of unproductive employees

since it is possible to fire only the newest employees as opposed to the least productive. The

enforcement of labour laws also varies according to firm size. For instance, although all firms

are supposed to be subject to the minimum wage provision, the government only ensures that

the larger firms pay minimum wages. This gives the small players another cost advantage. In

addition to the laws themselves, the fear of labour unrest caused by unions keeps factories

from growing too big. As mentioned earlier, average factory size in India is far smaller than

in countries with developed apparel industries. For example, one of the best practice apparel


manufacturers in India has 6,000 employees and works them in groups of 300 across 20

factories, all within a few blocks of each other. The owner of this company admits that it

would be far more efficient to have 3,000-4,000 employees under one roof, but he doesn‘t

want to risk labour unrest. .

In addition to affecting productivity directly, labour laws also deter FDI. Foreign investors

are wary of committing to a joint venture as their ability to exit an unsuccessful venture is

constrained by laws that make it very difficult, costly and time consuming to shut down a

factory (it can often take 2 years). In fact, it was this issue that made a large US apparel

manufacturer decide to invest most of its production capacity in Sri Lanka instead of in India.

Imposition of high import duties

Till recently, quantitative restrictions prevented the import of apparel from more productive

lower cost countries. As a result, the domestic apparel market in India was protected and thus

had less incentive to improve productivity. The restrictions have now been removed, but

import duties on both the import of machinery as well as textiles remain, as high as 45 per

cent1. These duties apply only to apparel manufactured for the domestic market. The

reasoning behind the high duty is to protect the domestic machine manufacturing and textile

industries. However, the apparel machine industry i n India produces only low tech, poor

quality machinery, which cannot act as a substitute for the advanced computer controlled

equipment available in Japan and Germany. In addition, most of the textile industry produces

poor quality powerloom fabric, which is no substitute for higher quality imported fabric. As

such, these duties hinder technology upgrades at factories and prevent the use of high quality

textiles.

Poor infrastructure

Poor infrastructure in India is a strong deterrent to FDI and limits Indian manufacturers‘

exposure to best practice. Power outages cause lost time and quality problems. In addition,

the high price of electricity deters adoption of air conditioning, the impact of which was

mentioned earlier. The poor condition of the roads, meanwhile, makes it difficult to establish

production in the countryside and make use of cheap rural labour.


EXTERNAL FACTORS LIMITING OUTPUT GROWTH Some productivity barriers mentioned in the previous section also affect output. We

discuss these again, pointing specifically to how they affect output. In addition, we look at

how distance to market and high tariffs on exports to the US and Europe have resulted in

a significant decline in Asia‘s share of the US and European import market.

Unavailability of high-quality textiles

As explained in the previous section, good quality mill fabric is difficult to obtain in

India. This means that exporters are forced to import textiles, which is time consuming.

All other things being equal, a buyer will choose to source from a country with a ready

supply of textiles. Consequently, India will have problems growing its export market

unless the textile market is improved.

Red tape

Many procedures complicate and delay the import and export of products. Customs

procedures and port facilities are the main culprits. For example, it takes an average of 9

months for exporters to get a duty free advance licence for export production (which

allows them to import goods for export production without duty). The ports in India are

also plagued by red tape; there are often major delays in carrying goods on and off the

ships.

Goods have to arrive at the port 3-4 days ahead of the shipping date, thereby cutting into

production time. Import of machinery, textiles and accessories is costly and time

consuming. The delays caused by importing fabrics and accessories can cause major

delays in the production schedule. All this deters FDI in apparel in India and reduces

output.

Poor infrastructure

Poor infrastructure in India is a strong deterrent for buyers planning to source products

from India. Poor communication facilities make it difficult for overseas buyers to contact

factories. This is a major problem since buyers need to be in constant touch with the

manufacturers to convey instructions and changes in plan.


Further, while the capacity provided by Indian ports may be adequate for the current low

level of exports, more efficient ports will be needed as India increases its exports. At

present, there are very few ports like the New Bombay port that are efficient and can

handle large volumes of shipments.

Geography

India‘s distance from Europe and the US makes it hard to compete on delivery times with

Eastern Europe (while exporting to Europe) and Mexico and the Caribbean (while exporting

to the US). The revolution in retail is making short transport times critical. The development

of electronic stock taking and reordering systems allows retailers to keep smaller stocks and

rely on just-in-time delivery to replenish shelves, thereby drastically reducing the probability

of stock outs and markdowns. Even seemingly standard products such as men‘s shirts are

subject to these issues as fabric types, colours and patterns change continually. White shirts,

for example, now make up less than 15 per cent of all shirts sold in the US, down from 72 per

cent in the early 1960s.

Free trade agreements

Many duty free trade areas have been formed in the last 10 years but none of them includes

India. This will hinder India‘s export growth in these markets and make it less cost-

competitive than countries such as Mexico, which are party to such agreements. Realising the

benefits provided by free trade agreements, both the US and EU nations have increased the

pace at which they are entering into these agreements.


TRENDS IN INDIAN APPAREL EXPORT INDUSTRY

Textile industry in India is widely comprehensive, integrating whole range of raw material to

finished product that includes fibre manufacturing, spinning, knitting and weaving, and

garment manufacture. Industry provides almost every single aspect.

In recent years, the readymade garment segment has seen vertical growth. Accounting nearly

Rs. 20,000 crores, this industry is growing at the rate of 20 percent, with massive visibility

and consideration margins. The largest segment for the readymade garment segment includes

the age-group of 16-35 that is very brand conscious and gives priority to high quality.

Branded readymade garments account over 21 percent of the readymade garment industry.

Despite substantial growth, comparing to the international readymade garment market of

nearly 183mn USD, the Indian readymade garment market is still in a budding phase. Due to

the higher the introduction cost of brand in India for the foreign players, domestic players

have no fear of any outside competition.

The main obstacle to the organized players is the huge unorganized scenario of the market. In

a move to compete, the organized players have rolled out their own strategy of standardizing

the goods. The brands introduced by these major textile players hold much intrinsic power

and high on quality and pricing factors. They present the inheritance and constancy in the

garment piece.

Figure 2: Different Clothes

Siyaram's is venturing into readymade garment to grip the continuously changing fashion

trends. It is becoming a prominent designer of men‘s readymade garments and accessories


from fabric manufacturer. The two major unique selling points of the recently launched

Siyaram's brand, Monday to Sunday Dressing would be the widespread 30,000 retail outlets,

where it is selling fabrics and second, the fabric quality that Siyaram's has, which guarantees

that the buyer gets the high quality at a cheaper price.

The other growing strategy major textile players adapted is ‗Acquisition‘. Many of

companies have used this strategy to dive into readymade garment segment. Raymond's

acquired ColorpIus to jump in casual-wear, adding brands like Raymond‘s, Parx and Park

Avenue. Opting the similar strategy, Indian Rayon acquired garments division of Madura

Coats, ―Madura Garments‖ and entered the luring apparels market with the successful brands

like Van Heusen, Allen Solly, Peter England and Louis Philippe. Textile leader, Bombay

Dyeing also gets hold of Proline to dive in the sportswear segment, as well as adding Vivaldi

range to its formal menswear. The above initiatives taken by the major brands depicts that the

textile players now started opting strategies to mark their presence in the readymade garment

segment. Their sheer benefits laze in substantial production capacities, which can launch new

products in minimum lead-time, offering high quality.

The suiting brands are also picking up the trend, with the integrating fabric and readymade

garment under the single brand. S Kumar's Nationwide Limited takes lead with introducing

Belmonte brand in both fabric and readymade garment apparel. Other players like Mayur

Suitings and Donear are also planning to enter in the readymade garment market. Arvind

Mills is planning with the usual fabric and readymade garment apparel strategy in the men's

casualwear segment. Apart from the above-mentioned strategies, there is one more initiative

to rule out in the readymade market that is ―foreign collaborations‖.


Indian Exports of Apparel & Textile – Facts & Figures

Exports increased from US$ 14 million (2004-05) to US$ 17 million (2005-06) –

21.77 % increase.

With continuing growth, the total exports has increased to – US$ 19.62 billion (2006 -

07).

Current share in world export of textiles – 3.5 - 4 %.

Current share in world clothing export – 3 %.

Major export market – Europe (22% share in textiles & 43% share in apparel).

Single largest buyer – US (10% share in textiles and 32.65 shares in apparel).

Other major export markets include - UAE, Saudi Arabia, Canada, Bangladesh,

China, Turkey and Japan.

Largest export segment – Readymade Garments (45% share in textile exports and

8.25 shares in India's total exports).

Readymade garments sector has benefited significantly with the termination of Multi-

Fiber Arrangement (MFA in January 2005.

Exports of readymade garments are expected to touch US$ 14.5 billion with a

cumulative annual growth rate of 18-20% (Apparel export Promotion Council).

India's textile exports to the US have shown a good rise of 29.5% between January

and June' 2005. Exports of pillow cases and bed sheets have registered a growth rate

of 56.2% and 56.3% respectively. Products like towel and bed spread also figures

northward by 19% and 12% respectively.


MARKET SIZE:

A leading sector in the Indian economy, textiles contributes 14 per cent to industrial

production, 4 per cent to the GDP and around 17 per cent to the total export earnings. It is, in

fact, the largest foreign exchange earning sector in the country.

India is the world's 2nd largest cotton producing country, after China. BT cotton was a major

factor contributing to higher rate of production, from 15.8 million bales in 2001-02 to 31

million bales in 2007-08.

India accounts for:

61 per cent of the global loomage

22 per cent of the global spindleage

12 per cent of the world's production of textile fibres and yarn.

25 per cent share in the total world trade of cotton yarn.

The textile industry size has expanded from US$ 37 billion in 2004-05 to US$ 49 billion in

2006-07, the domestic market increased from US$ 23 billion to US$ 30 billion, and exports

increased from around US$ 14 billion to US$ 19 billion. India's textiles and apparels industry

is estimated to be worth US$49 billion where 39 per cent is accounted by the exports market.

The total exports in 2006-07 were US$ 19.62 billion. Currently India has a 3.5-4 per cent

share in world export of textiles and 3 per cent in clothing exports.

The cloth production during 2006-07 was 53,389 mn. sq. mtr. The sectorwise compound

annual growth rate during the last five years works out to 6.20%. The non-woven and

technical textile produced by India is approximately US$ 8 billion, which amounts to six to

eight per cent of world production. The handloom sector, which is the second largest sector in

terms of employment accounts for about 13% of the total cloth, produced in the country

(excluding wool, silk and Khadi).

The production of handicrafts during the period 2002-07 has increased from Rs.19, 564.52

crores to Rs.38659.45 crores. The exports during the period increased from Rs.10933.67


crores in the year 2002-03 to Rs 20,963 crores at the end of the year 2006-07 registering a

cumulative growth 91.74 %, and an annual average growth rate of around 17.72 %.

During 2006-07, total production of jute goods stood at 1356.3 thousand M.T. whereas

domestic consumption and export were at 1216.2 thousand M.T and 242.8 thousand M.T.

respectively. During 2007-08 (April- October), total production of jute goods stood at 1024.1

thousand M.T which is higher by 17.8 % compared to production during the corresponding

period of last year. The volume and value of export of jute goods during 2006-07 (April-

October), was recorded at 126.7 thousand M.T valued at Rs.697.33 crore, as against 117.8

thousand M.T valued at Rs.622.94 crores during the corresponding period of last year.

The market size of the Indian Textile Industry is expected to reach US$110 billion by 2012

and the domestic market is expected to reach US $ 60 billion by 2012.

Man-made fibre output in India recovered strongly in the 2009/10 financial year. After

declining by 9.8% in the previous year—due in large part to the global economic crisis—

output increased by 11.6% to a new peak of 2.77 mn tons in 2009/10. The rise reflected an

18.6% hike in staple fibre production and 6.4% growth in filament yarn. Furthermore, there

were increases in all of the main fibre types, namely polyester filament yarn, polyester staple

fibre, viscose staple fibre, acrylic staple fibre, viscose filament yarn and nylon filament yarn.

Figure 3: Apparel export to USA

Productive capacity was also up in 2009/10 although the rise was confined to a modest 2.1%

increase in polyester filament yarn capacity. Furthermore, growth slowed markedly after

surging in 2006/07. Nonetheless, the overall increase was the fourth in a row despite a drop in

production in 2008/09. Consumption of man-made fibre rose by 5.6% to a new peak of 2.51


mn tons in 2009/10, after declining by 2.3% in the previous year. The rise was due entirely to

a 14.0% increase in staple fibre consumption however, as filament yarn consumption

remained more or less stable after increasing in each of the previous three years. Over the

four years to 2009/10, consumption grew at a slower rate than production and, as a result, the

surplus available for export increased.

Fibre consumption for technical textile production in India is dominated by jute, reflecting

the fact that two-thirds of the world‘s jute is produced in the country. In 2009 jute accounted

for 44.7% of all fibre used in the manufacture of technical textiles. Polypropylene represented

19.9% and polyester 14.5%. The technical textile market in India was worth Rs417.6 bn

(US$10.4 bn) in 2007/08, and this is set to grow to Rs701.5 bn in 2012/13. The largest sector

is forecast to be packaging and storage, representing 38% of the market, followed by:

functional components of shoes and clothing, components of furniture and floor coverings

filtration and other products used in industry, transportation construction, equipment and

furnishing, and sports and leisure technical components. The fastest growing sector over the

five-year period is expected to be environmental protection. However, this sector will remain

by far the smallest.

There is strong potential for growth in technical textiles in India over the long term. Domestic

demand is expected to increase significantly as disposable incomes grow, and as production

turns to high added value items rather than commodity products. Consequently, man-made

fibre production and consumption will continue to increase, as will capacity.

In the last eight months, India‘s five-billion dollar strong textile export sector has witnessed a

sharp fall of 33 per cent. Exporters have been asking for a billion dollar aid for market

development and other tax benefits to target newer markets since the U.S. and the European

Union countries, which constituted over 60 per cent of the exports, are saturated. Recently,

the government came to their rescue and decided to give 510 million dollars as financial help

to domestic textile firms to upgrade their manufacturing units.

The aid under the Textile Technology Upgradation Fund Scheme is seen as a stimulus to the

sector. ―3140 crore was allotted to the MoT which was never done earlier. And this was

allotted to promote the Textile Upgradation Fund Scheme, which is the most popular scheme

in independent India, which has really brought in lot of investment to the tune of 166000


crores in the textile industry,‖ said Dayanidhi Maran, Union Minister for Textiles recently.

This is for the first time such a large sum of money has been released at one-go under the

scheme. The fund has been transferred electronically through more than 121 financial

institutions and banks to the accounts of 12,514 beneficiaries.

Figure 4: Month wise India's export of Apparel

Source: AEPC (Apparel Export Promotion Council)

The government has already disbursed 1.64 billion dollars under the scheme launched in

April 1999.‖If we can increase its capacity as well as quality, definitely the foreign buyers

will prefer India instead of China. That means scope for investment in textile industry is still

there. So, I would not say that in the spinning only, spinning is already in a sufficient capacity

in India, but the value added products in garments and accessories. So there is a big scope of

further expansion,‖ said Ajit Lakra, Managing Director, Superfine Knitters Ltd., Ludhiana.

Attracting investment would be government‘s thrust area to push industry growth rate to 8-10

per cent from the current level of six percent. To achieve this target the textile ministry plans

to attract investments worth over 31 billion dollars over the next five years. Also, the Indian

exporters are looking at newer markets like Latin America, Japan, New Zealand and South

Africa. And small-scale apparel and accessories manufacturers and exporters are optimistic

about weathering the crisis.

―In the so-called recession period we are doing better than the past years, because we are

dealing in fashion accessories. So our items start with 50 cents, 1-2 dollars. So in this

recessionary period a woman when she has to change her attire, she would start to change her

look with a cheaper item. She could just change her earrings, she could just change her


bangles and she could change her scarf rather than going for a new dress or a new hand bang

or new shoes. So, that‘s why our sales have increased in these periods,‖ said K.S.Kohli,

proprietor of Kohli Associates Pvt.Ltd.

OPPORTUNITIES AND CHALLENGES

Opportunities

India‘s strong performance and growth in the textiles sector is aided by several key

advantages that the country enjoys, in terms of easy availability of labour and material,

buoyant and large market demand, presence of supporting industries and supporting policy

initiatives from the government.

Abundant availability of Raw Materials

Cotton

Cotton is the predominant fabric used in the Indian textile industry – nearly 60 per cent of the

overall consumption in textiles and more than 75 per cent production in spinning mills is

cotton. India is among the world‘s largest producers of cotton with nearly 9 million hectares

under cultivation and an annual crop of around 3 million tonnes. In the year 2004-05, India

produced nearly 17.7 million bales of cotton.

Wool

India‘s wool industry is primarily located in the northern states of Punjab, Haryana, and

Rajasthan. These three states alone account for more than 75 per cent of the production

capacity, with both licensed and decentralised players. There are more than 700 registered

units in the sector and more than 7000 power looms and other unorganised units. The woollen

industry provides employment to approximately 1.2 million people. India‘s raw wool

production in 2003-2004 was over 50 million kg. The large players in the sector have made

significant inroads into the world market, as a result of supply tie-ups and joint ventures with

important brands in EU and other developed countries.


Silk

India is the second largest producer of silk in the world, contributing about 18 per cent to

global production. The value of silk fabrics produced in India in 2002-2003 was over US$

1.78 billion. India also exported over US$ 190 million of silk goods and over US$ 357

million of silk yarn, fabrics and made ups. Growing demand for traditional silk fabrics and

exports of handloom products have spurred growth in silk demand.

Jute

Jute industry occupies an important place in India‘s economy, being one of the major

industries in the eastern region, particularly in West Bengal. It supports nearly 4 million

farming families, besides providing direct employment to 260,000 industrial workers and

livelihood to another 140,000 people in the tertiary sector and allied activities. Nearly 1

million hectares of land is under jute cultivation.

Handloom

The handloom sector is based on Indian traditional crafts. It employs nearly 7.5 million

people and contributes 13 per cent to cloth production. Handlooms receive preferential policy

treatment as they are highly labour intensive and viewed as a source of employment and

supplementary income for 6-7 million people in over 3 million weaver households.

Low costs

India has significantly lower raw material costs, wastage costs and labour costs when

compared to other countries. A recent study estimated India‘s labour costs (total employment

cost for labour across industries) to be amongst the lowest (2.024 Euro) in the world, a sixth

of even China‘s (13.88 Euro)

Manufacturing flexibility

The fragmented industry structure and small average scale of operation in India‘s textile

industry has created the capability for enhanced flexibility in production. Indian firms are

used to handling small-runs, and have skilled manpower with the ability and willingness to

work on complex designs. Therefore India has the ability to produce not only large orders but

also smaller and complex orders. In contrast, the textile industry in other countries like China

are more industrialised, and production lines are mostly geared to handle relatively simple


designs that can be easily broken down and mass-produced. The flexibility offered by India‘s

textile industry can be a significant advantage for the fashion industry, which typically

demands small lots of complex designs. India also offers flexibility in its ability to handle

different materials such as cotton, wool, silk and jute, with equal skill. These advantages also

enable the Indian industry to produce high value customised apparel that is increasingly

finding demand in several exports markets.

Lower lead times

India is one of the few developing countries today with a fully developed textile value chain

extending from fibre to fabric to garment exports. The presence of capabilities across the

entire value chain within the country is an advantage as it reduces the lead time for

production and cuts down the intermediate shipping time. Indian textile firms have leveraged

this advantage to integrate their operations, either forward or backward. For example, Arvind

Mills, the largest producer of blends and denim in the country and the third largest denim

producer globally, supplies fabric to virtually every major clothing brand in the world, such

as Levi‘s, Gap, Dockers and so on. Three years ago it integrated forward into garment

manufacturing (jeans and T-shirts), investing more than $30 million in ten new factories.

Favourable demand conditions – large, growing domestic market

Demographic trends in India are changing, with increase in disposable income levels,

consumer awareness and propensity to spend. According to NCAER data, the Consuming

Class, with an annual income of US$ 980 or above, is growing and is expected to constitute

over 80 per cent of the population by 2009-10. There is a change in the consumer mindset

that has led to a trend of increased consumption on personal care and lifestyle products as

well as branded products. These trends offer great growth opportunities for companiesacross

various sectors, including textiles. Supporting the increasing demand for consumption is the

revolution taking place in India‘s retail sector. Organised retail is playing a key role in

structuring the Indian domestic market, reinforced by the rapid rise of supermarkets, malls,

theme stores and franchises across urban India. India thus presents a large and vibrant market

for textiles and apparels, with a potential for sustained growth.


Strong presence of related and supporting industries

India‘s textile industry is supported by well established supporting industries and institutions

that provide inputs and expertise to the industry in terms of design, engineering and

machinery.

Product development/ design

India has built adequate infrastructure throughout the various stages in textile development,

that is, design, sourcing, merchandising and production. Apart from institutes such as NIFT

(National Institute of Fashion Technology) and Apparel Training Institutes, there are several

colleges, including the Indian Institutes of Technology and National Institutes of Technology

that offer courses in Textile Engineering. Thus, India has the infrastructure in place to

produce qualified and skilled manpower in areas of textile design and engineering Indian

firms have leveraged this strength to develop a competitive advantage – the ability to

contribute to the design, not only in preparing samples and prototypes, but also in translating

concepts into varieties of finished designs, as well as introducing designs of their own.

Several Indian firms have their own design departments and in the last five years have begun

to work closely with overseas designers and/or agents. High value, up-market specialty

buyers such as Gap, Banana Republic and J. Crew value such expertise and have been

leveraging this while buying from India.

Apparel Machinery

The Indian textile and apparel engineering industry, which began as an offshoot of the textile

industry, is today reckoned as the largest segment in the country. Indian apparel and textile

machinery manufacturers are able to produce at competitive prices sophisticated machines of

higher speed and production capability. The apparel industry also gets significant support

from the well developed IT capabilities of Indian firms.

Industry competition – promotes innovation

Despite a large and growing market, the presence of a large number of small scale players

makes the Indian Apparel Industry highly competitive. A number of MNCs have also entered

India in different areas. The high level of competition in the industry impels the firms to work

to increase in productivity and innovation. India today is one of the lowest cost manufacturers


of quality textiles, not only due to its inherent strengths, but also because industry rivalry has

prompted firms to focus on quality improvement, cost reduction and productivity increase.

Favourable Policy Initiatives

The Indian Government is trying to create an environment to attract an investment of Rs

1,400 billion in the Eleventh Plan period (2007-2012) when the textiles and garment exports

are expected to rise from the current US$14 billion to US$40 billion. The Multi Fibre

Arrangement (MFA) that came to an end on January 1, 2005 has opened up a plethora of

opportunities for the Indian textile industry. Global trade in textiles is expected to increase to

US$ 600 billion by 2010 from US$ 356 billion in 2003. The phasing-out of MFA has ensured

that quota restrictions in US, European Union and Canada which restricted textile and apparel

exports from India to these regions have been removed. India and China are the two countries

poised to derive the maximum benefit from the phasing out of MFA. India‘s quota allocation

for important markets likes the US, EU and Canada was very low. With textiles accounting

for almost 20 percent of Indian exports, and the industry and allied areas providing

employment to around 80 million people in India, the Indian government is turning its

attention to removing the bottlenecks that hinder its growth.

Challenges

The Indian apparel industry faces a host of constraints:

Fragmented structure with the dominance of the small scale sector

High power costs

Rising interest rates and transaction costs

Unfriendly labour laws

Logistical disadvantages in terms of shipping costs and time pose serious threats to its

growth

Foreign investments are not coming in as the overall factors influencing the industry

are not investment friendly

In many instances Indian export consignments faced non-tariff barriers in the US market,

mainly in the form of shipments being subjected to rigorous labelling and marking

requirements, security parameters and document verification at US ports and issues relating


to compliance with labour and environmental norms. The main forms of restrictions that have

been raised, with respect to some Indian shipments in the US, are in the form of norms

violating US child labour policies, sanitary measures in the Indian suppliers' workplace,

suspected use of azo-dyes and security checks of consignments.

INDIAN APPAREL AND TEXTILE INDUSTRY: BRAND STRATEGY

AND EXPORT CPMETITIVENESS

In today‘s market economy, which is characterized by a very changeable environment and

strong, intense competition caused mainly by enlarging globalization; it is becoming more

and more difficult for an enterprise to maintain long-term success. Using techniques such as

simply maintaining low costs or innovative solutions are losing their importance. That is why

the significance and meaning of brands have been growing recently. The brand is a strategic

resource of every firm. Possessing a brand, and knowing how to keep it and manage it well,

are becoming keys to reaching success in the market, a source of competitive advantage.

―The dismantling of the quota regime represents both an opportunity as well as a threat. An

opportunity because markets will no longer be restricted; a threat because markets will no

longer be guaranteed by quotas, and even the domestic market will be open to competition‖.

From 1st January 2005, therefore, all textile and clothing products would be traded

internationally without quota-restrictions5. And this impending reality brings the issue of

competitiveness to the fore for all firms in the textile and clothing sectors, including those in

India. It is imperative to understand the true competitiveness of Indian textile and apparel

firms in order to make an assessment of what lies ahead in 2005 and beyond. The aim of this

paper is to show that a properly used brand strategy is the enterprise‘s most valuable asset

and to evaluate export-competitiveness of the Indian textile and garment exports.

Importance of Brand

The constantly changing market poses new challenges to clothing enterprises, and the clients‘

demands are also continually rising, and so it is necessary every now and again to offer them

a higher added value. This added value is a properly planned brand strategy, the so-called

branding. Firms without any distinct features, without a clear vision or specific mission, or

without permanent values, will sink in the mass of messages hitting the market.


A brand image is defined through its selected symbolic patterns. The most important among

these are the brand‘s name, logo, and composition of graphic elements and colours all

associated with the company. It is crucial for a brand built on these elements to give a clear

message to the customer about the kind of company he is dealing with, what its product is

and who the clients are. All the elements comprising a brand image have to be closely related

to the idea and goals of the company. This certainly helps its positive identification, and as a

result a strong and distinct image is created in the customers‘ mind. It is important that the

customer‘s mind should absorb and retain as much information about a brand as possible;

some time later this is translated into the reconcilability and prestige of a brand on the

market. A brand product offers a sense of safety, and guarantees quality and reliability. Brand

values are features that appeal to the emotional sphere of human perception.

Hence a brand is the most valuable asset of a company, and customer satisfaction is the key

to a long-term success. As consumers must have a reason for selecting this given brand from

among many others, each brand should have a motto apart from its distinctive usability. It is

necessary to define why it is different and what its position is. A brand is not an

advertisement, but rather a whole philosophy underlying a set of combined actions fixed on

the company‘s success. It is certainly an indispensable tool allowing effective conquest of

markets, retention of the market position, and international competition.

Brand Management

Using a brand strategy is possible in two cases. The first is when a company or a product

already exists on the market; the second is when the company wants to enter the market and

wishes to make it known to potential clients. The actions carried out in the first case are

surely much easier. If a product or a firm already exists on the market, more or less clients

have already encountered the brand and have their own concept of it. In such a case, it is only

necessary to look for solutions which would enable them to gain an advantage over

competitors by their action strategy, stressing the values expected by the targeted market and

received positively by them. Here we deal with the strategy of enhancing the existing brand.

Naturally it is necessary to analyse in detail whether or not the brand evokes any negative

images, or whether or not there have been any drastic crisis situations that would suggest

rebuilding the brand under a completely new name.


Although the strategy of enhancing an existing brand surely needs much less financial

outlays, and requires a shorter period of time than creating a new brand, it cannot be used in

every case. Most of all, the company should based its strategy on a great value added,

included in the product, which leads to a high recognisability of the already existing branch.

On the other hand, if we are just introducing a brand onto the market, we must propose some

unique solutions, as potential clients should be given the idea of the need which our company

can fulfil, something they need subconsciously, and which is different from everything on the

market offered so far. Usually, to build a new brand, a company is motivated by the

following factors:

growth of competition in the market where the company is active

the need to differ from its competitors;

the entry of known, strong foreign brands on the market;

unused financial resources, thanks to which a new brand can be built;

lack of brands in the enterprise, allowing for a strategy of enhancement

Building a new brand is time-consuming, and needs great financial outlays, with no guarantee

that the enterprise will be successful. That is why it is important to create the action plan

properly. In order to ensure that the results meet our intentions, it is important to establish

some stages which we must go through before we are able to say that the new brand has been

created. The stages are shown in Figure

Figure 5: stages


Swot Analysis in Brand Building

Opportunities

Indian apparels accounted for a tiny fraction of less than 3 per cent of overall world export of

apparel, suggesting an opportunity for considerable growth. There is a very large domestic

market for Indian apparel manufactures. As per McKinsey study, the market size is of Rs

20,000 crore, out of which only Rs 4,000 crore is catered to by branded apparel. So there is

still a Rs 16,000 crore market, which is catered by the unorganised small size units. The

developed nations, which are the destinations for Indian textile products, use textiles in the

form of apparel. Therefore, in order to improve the presence in these markets and capture

larger values of the chain the focus needs to be shifted towards the effective performance of

the textile-apparel supply chain network, rather than looking at textile industry in isolation.

Threats

Various regulatory, technological and marketing changes were expected to affect India‘s

textile industry over the next few years. For a product line characterised by unpredictable

demand pattern and seasonality on one end and highly labour intensive on other, it is

necessary to have flexibility to balance the labour force employment from time to time. There

are few factors such as infrastructure and government policies that have caused wide gap in

the economic development between India and other nations for textile industry in particular,

in spite of enjoying the benefits of abundant cheap labour, low manufacturing cost, available

raw materials and a large domestic market.

Strengths

The Indian textile industry is globally more competitive than other industries in the country

on relative terms. Most of the inputs required for this sector being available from domestic

sources and there are very little requirements of imports and precious foreign exchange. From

middle of 1990s, manufacturing units of larger capacity with upgraded technology, mostly in

collaboration with a joint venture partner were established. During the same period, Indian

consumers could see availability of international brands in domestic market, which were

made by Indian garment manufacturers. This had raised the expectation level of discerning

consumers and apparel industry faced the challenge to improve its performance from this set

of demanding consumers. Importers of Indian apparels were generally satisfied with price


and enthusiastic about the ability to source small production quantities. With the entry of

international garment companies into India, they bring in new designs, new craftsmanship,

modern scientific management and also the marketing strategies. These all can strengthen the

competition mechanism so that the industry will gain more resources for developing new

products, new brand names, technology development and staff training in order to increase

the market competitiveness.

Weaknesses

The small manufacturing units lacked sophisticated planning and information system and

failed to offer scale economy. The present labour policy in a way discourages Indian apparel

units to set up large size manufacturing set up and achieve economies of scale. A large size

unit, by Indian standard, could well be the smallest in size in the competing countries like

China, Indonesia, Thailand, Bangladesh, and Sri Lanka.

One major area of concern for the Indian apparel exporters is the declining average unit value

realization, which has dropped from $ 4.44 in 1994 to $ 3.70 in 2000. This clearly reflects the

Indian exporters‘ inability to move up the value chain and the threats of being branded as

supplier of low end products in the international apparel market. This leads to the question of

whether it makes sense to promote the brand image that exists at present or improve all on the

weaknesses substantially before we think of further promotion.

Buyers were frustrated by delivery and production lead times, the absence of large capacity

garment manufacturers, and difficulties associated with freight handling. The long and

uncertain lead times seem to be the most serious problem, faced by the buyers of finished

textile products and apparels. At times, products are delayed by three months, missing a

season totally. In such situation, buyers normally ask for discounts, sharing of airfreight

burden or full payment of the airfreight, and in worst case cancel the order.


Competitiveness of Indian Apparel and Textile Industry

India is one of the few countries that own the complete supply chain in close proximity from

diverse fibres to a large market. It is capable of delivering packaged products to customers

comprising a variety of fibres, diverse count sizes, cloths of different weight and weave, and

panoply of finishes. This permits the supply chain to mix and match variety in different

segments to deliver new products and applications. This advantage is further accentuated by

cost based advantages and diverse traditions in textiles.

Indian strength in spinning is now well established – on unit costs on ring yarn, open-ended

(OE) yarn as well as textured yarn, Indian firms are ahead of their global competitors

including China. Same is true on some woven OE yarn fabric categories (especially grey

fabrics) but is not true for other woven segments. India contributes about 23 per cent of world

spindles and 6 per cent of world rotors (second highest in the world after China). Fifty five

per cent of total investment in technology in the last decade has been made in the spinning

sector. Its share in global shuttleless loom, however, is only about 2.8 per cent of world

looms (and is ranked 9th in the world). The competitiveness in the weaving sector is

adversely affected by low penetration of shuttleless looms (i.e., 1.69 % of Indian looms), the

unorganized nature of the sector (i.e., fragmented, small and, often, un-registered units, low

investment in technology & practices especially in the powerloom, processing, handloom and

knits) and higher power tariffs. There is, however, a recent trend of investment in setting up

hi-tech, stand-alone mid-size weaving companies focusing on export markets. India also has

the highest deployment of handlooms in the world (handlooms are low on productivity but

produce specialized fabric). While production and export of man-made fibre (and filament

yarn) has increased over the years, Indian industry still lags significantly behind US, China,

Europe, Taiwan etc. (Texmin, 2005.)

Indian textile industry has suffered in the past from low productivity at both ends of the

supply chain – low farm yields affecting cotton production and inefficiency in garment sector

due to restriction of size and reservation. Add to this, contamination of cotton with

consequent increase in cost (as it affects quality and requires installation of additional process

to clean and open cotton fibres before carding operations), poor ginning (most equipment


dates back to 1940s), high average defect rates in production process (which also leads to

increase in effective labour and power costs), hank yarn requirement, etc. and its

competitiveness gets compromised severely. Similarly, processing technology is primarily

manual and small batch oriented with visual colour matching and sun drying. This leads to

inconsistency in conformance quality.

Lead times across the sector continue to be affected by variability in the supply chain – defect

rates average over 5%, average % of orders on time is about 80%, variance in order size

across firms is high (e.g., the coefficient of variability of average order size for spinning firms

is about 2.6), and on an average, 16 days of sales as work-in-process inventory (the highest

for garment firms) and an average of 30 days of sales in raw material inventory (the highest

for spinning firms) (Chandra 2004). Some of the hurdles (eg., reservation in the garment

sectors) including tariff distortions between the organized and unorganized sectors have now

been systematically removed by policy initiatives of Government of India and have opened

avenues for firms to compete on the basis of their capabilities.

Figure 6: Cotton


TRADE SCENARIO 2002-2006

According to the provisional DGCI&S data, textile exports during fiscal 2005- 06 stood at

around US$17 billion, recording a 22% growth year-on-year. Except for man-made textiles,

all segments in the textile industry, including handicraft carpets, wool and silk, have

recorded a growth in exports during 2005-06 -- the first year since the phasing out of the

quota system in the global market.

Readymade garments (RMG) are the largest export segment, accounting for a considerable

45% of total textile exports. This segment has benefited significantly with the termination of

the Multi-Fibre Arrangement (MFA) in Jan 05. In 2005-06, total RMG exports grew by 29%,

touching US$ 7.75 bn. In 2003-04 and 2004-05, the growth in RMG exports was 8.5% and

4.1% respectively. The jump in 2005-06 exports has been largely due to the elimination of

quotas.

Exports of cotton textiles -- which include yarn, fabric and made-ups -- constitute over 2/3rd

of total textiles exports (excluding readymade garments). Overall, this segment accounts for

26% of total textile exports. According to the Ministry of Textiles, in 2005-06, total cotton

textile exports Source: Ministry of Textiles, GoI Source: Ministry of Textiles, GoI XVI were

worth US$ 4.5 bn, implying a growth of 27% over the exports in 2004-05, which were worth

US$ 3.5 bn.

Man-made textiles exports have witnessed a decline of 2.5% in 2005-06. Between 1999-

2000 and 2002-03, man-made textiles exports were growing at around 30% per annum. The

slowdown began since 2003-04 and has been on the decline since.

Major export destinations for India‘s textile and apparel products are the US and EU, which

together accounted for over 75% of demand. Exports to the US have further increased since

2005, post the termination of the MFA. Analysis of trade figures by the US Census Bureau

shows that post-MFA, imports from India into the US have been nearly 27% higher than in

the corresponding period in 2004-05.


Table 1: Segment-wise Exports, 2002-2006 (US$ bn)

Category 2002-03 2003-04 2004-05 2005-06

Cotton Textiles 3.62 3.68 3.54 4.49

Manmade Textiles 1.53 1.86 2.05 2.00

Silk 0.49 0.56 0.59 0.69

Wool 0.29 0.35 0.42 0.47

Ready Made Garments 5.75 5.92 6.02 7.75

Handicrafts 1.42 1.11 1.01 1.24

Jute 0.20 0.25 0.28 0.29

Coir & Coir Manufactures 0.08 0.08 0.11 0.13

Total 13.37 13.80 14.03 17.08

Source: worldgarmentbuyers.com

INDIA CHEAP LAPOUR GARMENT INDUSTRY

India‘s success in the global garments market has been at the cost of the basic rights of this

industry‘s predominantly female and migrant labour force. These women work in sweatshops

that demand impossible targets of 100-120 garments an hour, with virtually no breaks

allowed. Eighty per cent of TB patients registered with the ESIC, accordingly to one official,

are garment workers exposed to cotton fluff.

India has made a name for itself as a garment manufacturing centre of global renown. The

textiles and garments industry contributes 16.63% of India‘s export earnings; around 45% of

this comes from garment exports alone. The garments industry provides employment to

around 3.5 million people across the country. Delhi, Mumbai, Tirupur, Bangalore and

Chennai are the five major garment production hubs, producing exclusively for the exports

market. Karnataka has a sizeable presence in the garments and textiles sector; many well-

known multinational brands have chosen this state to set up their global sourcing centres.

Leading garment manufacturers like Tommy Hilfiger, Marks & Spencer, Gap, H&M,

Matalan, Mothercare, George, etc, employ Karnataka‘s largest unorganised workforce. In

Bangalore alone there are 500,000 workers in the garments industry, in 1,200 factories spread

across the city.

But India‘s niche in the global garments market has been carved out at the cost of lakhs of

workers in this industry‘s predominantly female and migrant labour force. Roughly 80% of


garment workers are women between the ages of 21 and 25. Most are semi-skilled migrant

workers and the sole earning members in their families.

The phasing out of the Multi Fibre Agreement (MFA) in 2005 was a great opportunity for

small factories to increase garment production for exports. As the market became highly

competitive, only factories that could produce at the lowest cost survived; many were forced

to close shop. Thus, stiff competition was inevitable among different factories in the country

and also among the countries of the third world that were able to produce garments at a much

lower cost than India. There were instances where India lost orders to China and Bangladesh.

Just a couple of years ago, India were at second position in garment exports, after China;

today it stands sixth with countries like Bangladesh and Vietnam higher up the ladder. Again,

the pressure to produce at lower and lower costs is adversely impacting the worker at the

lowest end of the chain.

The work of garment workers is physically demanding, calling for impossible targets of 100-

120 garments an hour as against the normal rate of 60-70 pieces. And this is made more

punishing by the verbal harassment employed to goad women to work faster and longer

hours, often skipping lunch to meet their targets.

―I have experienced verbal abuse when I don‘t meet the production targets. Cloth pieces are

thrown at my face,‖ says Shyla, a garment factory worker in Bangalore. ―The supervisors

shout at us, asking: ‗Why have you come to work if you can‘t work hard? You‘re getting a

salary, aren‘t you? Why don‘t you stay at home if you‘re so slow?‖

Figure 7: Labour working in industry


They say the management is insensitive to the condition of workers. They complain that

women who come in late or take leave without notice are suspended and reinstated only after

strict disciplinary action. Often, women are prevented from leaving the factory during work

hours even for genuine medical reasons. One woman told me that a garment worker who

developed labour pains was not allowed to leave work. She lost her child because she didn‘t

reach the hospital in time.

More than a decade after the Supreme Court issued the landmark Visakha judgment in 1997

mandating the creation of gender committees at all workplaces to deal with cases of sexual

harassment, this direction is largely being ignored by garment industry employers. In the

absence of a non-threatening space where women can report instances of sexual harassment,

workers suffer the sexually-loaded comments passed by supervisors in silence. ―The

supervisor talks to me in a personal way. He does not touch me, but I feel harassed by his

way of talking. I have to tolerate it if I want to keep my job,‖ says one worker.

Health: Whose concern is it anyway?

Garment factory work (tailoring, cutting cloth, fixing buttons, finishing, checking, ironing,

packing) is repetitive and monotonous, involving long hours sitting or standing in one

position. A 2008 study by Cividep on the Bangalore garments industry reported that nearly

half the respondents from among women workers complained of backaches and breathing

problems linked to their work.

―I suffer from backache, leg and knee pain due to constant bending over the table to see the

needle and running the machine with my leg,‖ says Shylaja, a worker interviewed for the

study.

Injuries are common, especially puncture wounds from needles on the fingertips and nails as

the cloth is passed through heavy vibrating mechanised machines. A worker can ill afford to

report this as she may be declared unfit and removed from the job. In cases of severe

puncture wounds through the tips of the fingers, women have had to be hospitalised and have

had to stay away from work for at least a month. Mechanisation brings with it noise; there are

no studies or regular checks to detect sound-induced hearing loss. Noise is also a known risk

factor for stress.


Very few workers get masks to wear during work. They are constantly engulfed in the fluff of

cut pieces of cloth. Women complain of tightness in the chest, breathing difficulties, allergic

sneezing, persistent coughs and runny noses. There were no official statistics available at the

Employees State Insurance scheme (ESI) or its management on the prevalence of respiratory

problems or byssinosis, although illnesses like asthma and tuberculosis are frequently

reported. The ESI medical officer, in conversation with activists of the Garment Mahila

Karmikara Munnade (Garment Women Workers Front), expressed concern over the fact that

80% of all tuberculosis patients registered with the ESI are garment workers.

Workers contribute to the ESI scheme and are entitled to accessible healthcare and social

benefits. But this is not the case in practice. Long hours of sitting, very little water intake, and

the fear of going to the toilet causes constipation and piles. In some sweatshops, supervisors

keep a check on the number of times a worker takes a toilet break. If it is frequent the worker

is asked to leave the job as it is believed speed of production is hampered. As a result, many

workers do not drink much water.

The triple burden of household work, looking after children and being productive in the job

has a longstanding effect on women‘s health. They skip their morning meal to rush to the

factory, they skip their lunch if there is pressure to meet targets at work, and, when they get

home in the evening, the responsibilities of cooking, cleaning and caring take precedence.

Shyla says: ―We are always on the run; we eat just to satisfy our hunger pangs. It is so

difficult to sit down and eat peacefully!‖

This circle of hard work, irregular food habits, reduced food and water intake and limited

resources in the context of the gendered role of women leads to undernourishment. Anaemia

among women garment workers and complaints of gastric ulcers are very common.

Under the Factories Act, crèche facilities, drinking water facilities, and a canteen have to be

made available to workers. Often crèches do exist but are underutilised. Factories provide

water, but with no guarantee of its quality. Indeed, in 2004 and 2008 there were outbreaks in

Bangalore of gastroenteritis due to contaminated drinking water. In both cases women

suffered great physical discomfort, but no action was taken by the regulatory authorities to

put in place a mechanism to monitor the quality of drinking water. In many factories,

canteens are poorly ventilated and too small to accommodate all the workers. As a

consequence, women are forced to sit and eat on the roadside or in an adjoining space.


FASHION IN INDIA

India has a rich and varied textile heritage, where each region of India has its own unique

native costume and traditional attire. While traditional clothes are still worn in most of rural

India, urban India is changing rapidly, with international fashion trends reflected by the

young and glamorous, in the cosmopolitan metros of India. Fashion in India is a vibrant

scene, a nascent industry and a colourful and glamorous world where designers and models

start new trends every day.

While previously a master weaver was recognized for his skill, today a fashion designer is

celebrated for his or her creativity. Young urban Indians can choose from the best of East and

West as Indian fashion designers are inspired by both Indian and western styles. This fusion

of fashion can be seen on the streets and ramps of the fashionable cities of India. Fashion in

India is also beginning to make its mark on the international scene as accessories such as

bindis (red dots worn on the forehead), mehendi (designs made by applying henna to the

palms of the hands and other parts of the body) and bangles, have gained international

popularity, after being worn by fashion icons like the pop singers Madonna and Gwen

Stephani.

Fashion in India has become a growing industry with international events such as the India

Fashion Week and annual shows by fashion designers in the major cities of India. The

victories of a number of Indian beauty queens in International events such as the Miss World

and Miss Universe contests have also made Indian models recognized worldwide. Fashion

designers such as Ritu Kumar, Ritu Beri, Rohit Bal, Rina Dhaka, Muzaffar Ali, Satya Paul,

Abraham and Thakore, Tarun Tahiliani, JJ Valaya and Manish Malhotra are some of the well

known fashion designers in India.

Fashion in India covers a whole range of clothing from ornate clothes designed for wedding

ceremonies to prêt lines, sportswear and casual wear. Traditional Indian techniques of

embroidery such as chikhan, crewel and zardosi, and traditional weaves and fabrics have

been used by Indian designers to create Indo-western clothing in a fusion of the best of East

and West. Traditional costumes in India vary widely depending on the climate and natural

fibres grown in a region. In the cold northern state of Jammu and Kashmir, people wear a

thick loose shirt called a phiran to keep them warm.


In the tropical warmth of south India men wear a sarong like garment called the mundu,

while women drape 5 meters of cloth around their bodies in the graceful folds of the saree.

Sarees are woven in silk, cotton and artificial fibres. Kanjivaram, Mysore, Paithani,

Pochampalli, Jamdani, Balucheri, Benarasi, Sambalpuri, Bandhini are some varieties of

beautiful sarees from different regions of India. In the dry regions of Rajasthan and Gujarat

men wrap and twist a length of cloth in the form of a dhoti around their lower limbs and a

shirt-like kurta above. Colorful turbans complete the picture.

In the northeastern regions the tribal communities such as Khasis, Nagas, Mizos, Manipuris

and Arunachalis wear colorful woven sarong-like clothing and woven shawls that represent

the identity of each tribal group. In urban India the salwar kameez and the churidar kameez,

are commonly work by women and the saree is worn on formal occasions. Men wear kurtas

and pajamas, or a sherwani for formal wear. Western wear such as shirts and trousers are

commonly worn by men across India. Jeans, T-shirts, capris, bermudas and various kinds of

casual clothing are worn by the young and the young at heart, who are the trendsetters

of fashion in India.


CONCLUSTION

Today, the buyers of readymade garment segment are aware of the running trends, and

demand the newest in fashion and products at a reasonable cost. At the front position of this

evolution are the smaller players, which private labels that are thoroughly transforming the

dressing way of men, women and children. With the supply chain limitations eased,

organization in real estate markets, and rationale tax structure, the readymade garment

segment has become more lucrative and it is anticipated that the readymade garment segment

will be the main segment in the coming years.

Apparel exports from India have risen exponentially in the last few years, and are expected to

touch the $10 billion mark by the end of the current fiscal, up from $8.4 billion in the last

financial year. Apparel exports plunged by 11.4% in 2009-10 to $9.7 billion from the $10.95

billion in the year-ago period. They plummeted to 6.7% in March. Garment exporters are

optimistic of sending 10% more in fiscal 2011 though the exports dipped in the last fiscal

because of lesser demand in the EU and the US.

The Indian apparel industry faces Logistical disadvantages in terms of shipping costs and

time pose serious threats to its growth and Unfriendly labour laws are the challenges for the

industry.

The Indian textile industry is globally more competitive than other industries in the country

on relative terms. Importers of Indian apparels were generally satisfied with price and

enthusiastic about the ability to source small production quantities. With the entry of

international garment companies into India, they bring in new designs, new craftsmanship,

modern scientific management and also the marketing strategies.

Exports of readymade garments was touch to US$ 31 billion with a cumulative annual growth

rate of 18-20% (Apparel export Promotion Council).The market size of the Indian Apparel

Industry is expected to reach US$110 billion by 2012.


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