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Indian Garment Industry
INDIAN GARMENT INDUSTRY
Puneet Khurana Manika Pahwa Arushi Bansal
Rachit Dhingra Akanksha Sharma
INDIAN GARMENT INDUSTRY
The fulfillment of any research project work is in consequence of
integrated effort of a number of people. This project report has been
possible only through the guidance and help of many people. We hereby
take an opportunity to express our sincere thanks to all those for their
help and guidance. We would like to express our genuine gratitude to Mr
Rahul Jain for his valuable guidance in research and analysis through out
the project. With his unfaltering support and direction, we have been
able to complete this project and learn a lot. The two log submissions
during the project period really helped us in identifying and rectifying
the mistakes and shortcomings in the project.
We would finally thank all those friends who helped us in the
completion of this project.
INDIAN GARMENT INDUSTRY
TABLE OF CONTENTS
Executive Summary Objective 1. Indian Garment Industry
• History • Growth of Industry
2. Major Segments
• Men • Women • Kids
3. Types of Merchandise and their Demand 4. Supply Chain in Apparel Sector 5. Key Players
• Brief profile of key players • Differentiation
6. Key Issues in Indian Garment Sector 7. Exports in Garment Sector
• Reasons for India’s recent sluggish export performance 8. Analysis of Decade Performance 9. USA and EU Dominancy
• Zero-Zero Benefit 10. Retail Scenario 11. Indian Apparel Sector Trends
• Salient Feature of India Apparel Sector • Production in Apparel Sector • Recent Trends
INDIAN GARMENT INDUSTRY
12. Technology and Indian garment Industry
• Role of Technology • Types of CAD Systems • Apparel Industry and Computers
13. Budgeting implications • Industry Wish List • Sops in Budget
14. Monetary Policy 15. Overview of Fashion Industry Advertising 16. SWOT Analysis 17. Recommendations 18. Conclusion
INDIAN GARMENT INDUSTRY
Fashion is serious business, everywhere. Admittedly, India was a latecomer in the
scene, but the pace now is scintillating. This is testified through the escalating
figures of the garment market as also by the growing tally of fashion brands and
retailers who have occupied substantial share of the country’s retail space. Truly,
the clock cannot be turned back now.
Over the past year, the garment industry has been building up on its capacities at
various levels, expanding its product base, incorporating innovative technology,
and engineering newer avenues of business. This sector, being one of the largest
industrial sectors of the country, is a major propellant of the economy’s growth.
Inherent issues and challenges dominate the industry. With the changing dynamics
of doing business in a rapidly-changing global economic scenario, the sector needs
to identify scopes for potential business ideas and overcome challenges by
converting them into fresh opportunities.
The project aim is to understand how various movements in the economy affect the
garment industry. An in-depth analysis for implications of various government
policies on garment industry has also been done. The project work also highlights
how important is the garment industry to the growth of our economy. The study
also gives insights about the demographics and psychographics of Indian
consumers, the key players in the industry and recent trends in the industry.
INDIAN GARMENT INDUSTRY
The objectives of the project work are:
� To understand the impact of various government policies on Garment
� To analyze various opportunities and threats confronted to Garment
� To understand the demographics and psychographics of Indian consumers.
� To understand the reasons for India’s recent sluggish performance in exports
for textiles & garments.
� To understand the entire process of garment manufacturing and budgeting
implications at each stage of manufacturing process.
� To study the trends in the apparel industry (Retail, Exports & Technology).
INDIAN GARMENT INDUSTRY
INDIAN GARMENT INDUSTRY
The apparel and industry occupies a unique
and important place in India. It is one of the
earliest industries to come into existence in
the country. The apparel industry caters to
one of the most basic requirements of
people and holds importance; maintaining the prolonged growth for improved
quality of life. The sector has a unique position as a self-reliant industry, from the
production of raw materials to the delivery of end products, with considerable
value-addition at every stage of processing. Over the years, the sector has proved
to be a major contributor to the nations' economy. Its immense potential for
generation of employment opportunities in the industrial, agricultural, organized
and decentralized sectors & rural and urban areas, especially for women and the
disadvantaged is noteworthy.
The history of apparel in India dates back to the use of mordant dyes and printing
blocks around 3000 BC. The foundations of the India's textile trade with other
countries started as early as the second century BC. A hoard of block printed and
resist-dyed fabrics, primarily of Gujarati origin, discovered in the tombs of Fostat,
Egypt, are the proof of large scale Indian export of cotton textiles to the Egypt in
During the 13th century, Indian silk was used as barter for spices from the western
countries. Towards the end of the 17th century, the British East India Company
INDIAN GARMENT INDUSTRY
had begun exports of Indian silks and several other cotton fabrics to other
economies. These included the famous fine Muslin cloth of Bengal, Orissa and
Bihar. Painted and printed cottons or chintz was widely practiced between India,
Java, China and the Philippines, long before the arrival of the Europeans.
Growth of Indian Garment Industry
The industry has already given ample hint of ingenuity, as is evident from the
revival of consumer enthusiasm in the seemingly stagnant menswear segment,
besides remarkable growth in categories like sports wear, casual wear and party
wear. The apparel market has grown 15.5% to INR 1,224 billion
Apparel Market Growth Rate
2003>2002 2005>2004 2007>2006
1 Images Yearbook 2008
2 Images Yearbook 2008
INDIAN GARMENT INDUSTRY
Indian Apparel Market Growth
4,422 4,6104,808 5,034
2002 2003 2004 2005 2006 2007 2008
The Indian apparel industry (including garment retail, fashion designing and
accessories trade) is booming like never before. The rapid increase in job
opportunities and expanding earning capabilities has resulted in the inculcation of a
brand new mindset amongst Indian consumers. Spending on brands is no longer an
improbability, with shoppers willing to pay for quality and premium products. The
apparel industry has benefited immensely from these new market trends.
3 Images Yearbook 2008
INDIAN GARMENT INDUSTRY
The country’s organized retail is booming because of increasing private incomes
and changing lifestyles and consumption pattern of consumers is having a positive
effect on the apparel industry. There has been a rapid increase in the market size of
ready-to-wear clothing and lifestyle apparel brands.
Indian Apparel Market Growth
2002 2003 2004 2005 2006 2007 2008
The clothing and apparel segment is the largest organized retail category,
constituting Rs 21,400 crore of the country’s Rs 55,000 crore organized retail
sector in 2006.only 19% of this segment is organized, with a strong potential for
still further retail penetration. The high level of branding exercises undertaken by
4 Images Yearbook 2008
INDIAN GARMENT INDUSTRY
apparel manufacturers, retailers and merchandisers across retail formats- such as
exclusive outlets, multi brand outlets, department stores, discount formats and
hypermarkets – and the heightened interest in the franchise route for retail
expansion are all contributing to the rapid growth of apparel retail.
Considering the country’s present economic preference, fashion retail can only
continue to grow in direct proportion to the rising incomes and spending powers of
Indian consumers. With about 65% of these consumers below 35 years of age,
apparel retail can only reign supreme in the marketplace.
INDIAN GARMENT INDUSTRY
Apparel industry has been broadly classified into three segments:
Market Share of Major Apparel Segments
Total Size: Rs 122,400 Crore
Kids' Apparel +Uniforms
In the total apparel market size of Rs 122,400 crore in 2007, among the three major
apparel segments, menswear formed the largest block with 40.2%6 of market share,
while womenswear followed with 34.8% and kidswear/uniforms followed with its
5 Images Yearbook 2008
6 Images Yearbook 2008
INDIAN GARMENT INDUSTRY
24.9%. Unisex apparel has been apportioned among these broad segments in the
ration of 5: 3.5: 1.5 for men, women and kids, respectively.
SIZE OF MAJOR APPAREL SEGMENTS (VALUE TERMS: INR BILLION)7
2002 2003 2004 2005 2006 2007
252.0 284.3 317.3 355.3 433.8 492.6
207.8 237.6 269.5 309.5 367.6 426.3
153.2 171.4 190.6 218.7 258.3 305.1
TOTAL 613.8 693.3 77.4 883.4 1059.7 1224.0
VOLUME & VALUE GROWTH IN APPAREL SEGMENTS8
2003>2002 2005>2004 2007>2006
Segments Volume Value Volume Value Volume Value
MENSWEAR 3.4% 11.7% 3.8% 11.8% 5.9% 13.3%
WOMENSWEAR 5.1% 13.6% 5.5% 15.0% 5.8% 16.0%
3.9% 23.1% 4.2% 13.6% 6.5% 15.7%
KIDSWEAR 3.5% 8.6% 3.8% 11.4% 4.4% 15.6%
UNIFORMS 6.5% 17.2% 8.0% 21.1% 9.3% 22.5%
Total 4.2% 13.1% 4.7% 13.6% 5.9% 15.5%
Growth trends across various apparel segments during the six-year period from
2002 to 2007 shows that menswear which had registered a steady decline in the
7 Images Yearbook 2008
8 Images Yearbook 2008
INDIAN GARMENT INDUSTRY
growth rate (despite remaining the dominant market segment) since 2002, has
again embarked on an upward curve in 2007. in 2003, volumes in menswear grew
at 3.4% as against 5.1% in womenswear; in 2005, it was 3.8% and 5.5%,
respectively; but in 2007, this has been reversed with menswear volumes growing
at 5.9% as compared to a 5.8% volumes growth in womeswear.
Growth in Apparel Segments during 2007over 2006
0.00% 5.00% 10.00% 15.00% 20.00% 25.00%
Growth in value terms still remains higher in womenswear (16%) as compared to
menswear (13.3%). However, since menswear accounts for 34.5% (Rs 43,270
crore) of the market share in value terms, as compared to womeswear making up
31.4% (Rs 38,440 crore) of market share, the apparel market in India will remain
primarily dominated by the menswear segment for quite sometime to come.
9 Images Yearbook 2008
INDIAN GARMENT INDUSTRY
Highest volumes as well as value growth are recorded in the uniforms segment,
which is currently valued at rs 11,500 crore. While the segment recorded as 9.3%
volume growth in 2007 over 2006, its value growth was as high as 22.5%, over
21.2% annual growth during 2005.
The next highest volumes growth is in unisex apparel (6.5%), where value growth
was to tune of 15.7% resulting in a market size of Rs 11,980 crore. Volume and
value growth in 2005 were 4.2% and 13,6% respectively. With the menswear
segment coming alive and all other segments also growing faster year after year,
the market is sure on a revival track.
INDIAN GARMENT INDUSTRY
VOLUME SHARE OF APPAREL SEGMENTS
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
% Market Share
Menswear Womenswear Unisex Apparel Kidswear Uniforms
With regards to market share of apparel segments, from a 37.3% value in share in
2002, the menswear segment share has steadily declined to 35.4% in 2007.
Womenswear market share, on the other hand, has steadily increased during this
Images Yearbook 2008
INDIAN GARMENT INDUSTRY
period, as also the uniforms segments. From 31.2% market share in 2002, the
womenswear segment share has increased marginally to 31.3% in 2006 and further
to 31.4% in 2007. Uniforms segment, which has shown the fastest growth among
all apparel segments, has increased its market share from 7.6% in 2002 to 8.8% in
2006 and further to 9.4% in 2007.
Unisex apparel has maintained a more-or0less plateau market share at 9.8% during
2006 and 2007, although it increased rapidly from 7.7% in 2002 to the present
level. Kidswear too has maintained a more-or-less plateau market share at 14.1%
during 2006 and 2007, but unlike unisex apparel, its market share had steadily
declined from 16.2% in 2002 to the level in 2006.
INDIAN GARMENT INDUSTRY
TYPES OF MERCHANDISE AND THEIR DEMAND
The consumer has all kinds of demands for apparel. The consumer demand can be
broadly trifurcated into three segments: Basic, Basic Fashion and Fashion Apparel.
Basic apparel consists of highest volume with moderate demand uncertainty and is
priced relatively low. On the other hand, fashionable attire comprises lowest
volume with volatile demand, but is highly priced. Mass-product is the feature of
basic-product segment and customized merchandise becomes the hallmark of
fashion-product category. Therefore, depending to which demand-segment they
cater to, apparel organization needs to formulate suitable supply strategy.
INDIAN GARMENT INDUSTRY
SUPPLY CHAIN IN APPAREL SECTOR
Supply Chain Management is the integration of key business processes from end
user to original suppliers that provides products, services, and information that add
value for customers and other stakeholders.
The Apparel Supply Chain
The Apparel Supply Chain comprises diverse raw material sectors, ginning
facilities, spinning and extrusion processes, processing sector, weaving and
knitting factories and garment (and other stitched and non-stitched) manufacturing
that supply an extensive distribution channel. This supply chain is perhaps one of
the most diverse in terms of the raw materials used, technologies deployed and
This supply chain supplies about 70 per cent by value of its production to the
domestic market. The distribution channel comprises wholesalers, distributors and
a large number of small retailers selling garments and textiles. It is only recently
that large retail formats are emerging thereby increasing variety as well as volume
on display at a single location. Another feature of the distribution channel is the
strong presence of ‘agents’ who secure and consolidate orders for producers.
Exports are traditionally executed through Export Houses or
procurement/commissioning offices of large global apparel retailers.
It is estimated that there exist 65,000 garment units in the organized sector, of
which about 88 per cent are for woven cloth while the remaining are for knits.
However, only 30–40 units are large in size (as a result of long years of reservation
of non-exporting garment units for the small scale sectors – a regulation that was
INDIAN GARMENT INDUSTRY
removed recently). While these firms are spread all over the country, there are
clusters emerging in the National Capital Region (NCR), Mumbai, Bangalore,
Tirupur/Coimbatore, and Ludhiana employing about 3.5 million people.
According to our estimate, the total value of production in the garment sector is
around Rs.1,050–1,100 billion of which about 81 per cent comes from the
domestic market. The value of Indian garments (e.g. saree, dhoti, salwar kurta,
etc.) is around Rs.200–250 billion. About 40 per cent of fabric for garment
production is imported – a figure that is expected to rise in coming years.
INDIAN GARMENT INDUSTRY
Garments & Accessories
Other Textile Products
Distribution Channel (Export & Domestic Markets)
Man-Made: Filament Extrusion Process
Composite Mills (spinning, weaving,
Indian Garment Industry
The weaving and knits sector lies at the heart of the industry. In 2004-05, of
the total production from the weaving sector, about 46 per cent was cotton
cloth, 41 per cent was 100% non-cotton including khadi, wool and silk and
13 per cent was blended cloth. Three distinctive technologies are used in the
sector – handlooms, powerlooms and knitting machines. They also
represent very distinctive supply chains. The handloom sector (including
khadi, silk and some wool) serves the low and the high ends of the value
chain – both mass consumption products for use in rural India as well as
niche products for urban & exports markets. It produces, chiefly, textiles
with geographical characterization (e.g., cotton and silk sarees in
Pochampally or Varanasi) and in small batches. Handloom production in
2003-04 was around 5493 mn.sq.meters of which about 82 per cent was
using cotton fiber. Handloom production is mostly rural (employing about
10 million, mostly, household weavers) and revolves around master-weavers
who provide designs, raw material and often the loom.
Weaving, using power looms was traditionally done by composite mills that
combined it with spinning and processing operations. Over the years,
government incentives and demand for low cost, high volume, standard
products (especially sarees and grey cloth) moved the production towards
power loom factories and away from composite mills (that were essentially
full line variety producers). While some like Arvind Mills or Ashima
transformed themselves into competitive units, others gradually closed
down. In 2003-04, there remained 223 composite mills that produced 1434
million. sq. mts. of cloth. Most of these mills are located in Gujarat and
Maharashtra. Most of the woven cloth comes from the power looms (chiefly
at Surat, Bhiwandi, NCR, Chennai). In 2005, there were 425,792 registered
Indian Garment Industry 23
power loom units that produced 26,947 mn. sq. mts of cloth and employed
about 4,757,383 workers. Weaving sector is predominantly small scale,
has on an average 4.5 power looms per unit, suffers from outdated
technology, and incurs high co-ordination costs. Knits have been more
successful especially in export channels. Strong production clusters like
Tirupur and Ludhiana have led to growth of accessories sector as well, albeit
slowly. The hosiery sector, on the other hand, has largely a domestic focus
and is growing rapidly.
The spinning sector is perhaps most competitive globally in terms of variety,
unit prices and production quantity. Though cotton is the fiber of
preference, man-made fiber (polyster fibre and polyster filament yarn) is
also produced by about 100 large and medium size producers.
Spinning is done by 1566 mills and 1170 Small and Medium Enterprises
(SME). Mills, chiefly located in North India, deploy 34.24 mn. spindles and
0.385 mn rotors while the SME units produce their yarn on 3.29 mn spindles
and 0.119 mn. Rotors producing 2270 mn kg of cotton yarn, 950 mn kg of
blended yarn and about 1106 mn kg of man-made filament yarn every year.
Worsted and non-worsted spindles (producing woolen yarn) have also
progressively grown to 0.604 mn and 0.437 mn respectively. Spinning
sector is technology intensive and productivity is affected by the quality of
cotton and the cleaning process used during ginning.
The processing sector, i.e., dyeing, finishing and printing is mostly small in
scale. The largest amongst these would dye and finish about 5000 m/day.
The remaining are independent process houses (or part of composite mills)
that use automated large batch or continuous processing and have an average
Indian Garment Industry 24
scale of about 20,000 m of cloth daily. About 82.5 per cent or 10,397 units
are hand processors who dye cloth or yarn manually and dry in open
sunshine. Of the remaining (and these use automated and semi-automated
equipment), 2076 are independent process houses.
Cotton remains the most significant raw material for the Indian textile
industry. In 2003-04, 3009 mn kg of cotton was grown over 7.785 mn acres.
Other fibers produced are silk (15742 tonnes), jute (10985000 bales), wool
(50.7 mn kg) and man-made fibers (1100.65 mn kg). Cotton grows mostly
in western and central India, silk in southern India, jute in eastern and wool
in northern India. Significant qualities of cotton, silk and wool fibers are
also imported by the spinning and knitting sectors. (Except for garments, all
data in this section was obtained from OTC 2004 and Texmin 2005.)
Indian Garment Industry 25
COTTON THE PRIME RAW MATERIAL
India produces about 5,000 crore square meters of fabric annually with per
capita availability of cloth being 36.2 square meters. As of now 60% of the
total produce is consumed within the country but the share of exports is
expected to increase substantially over the next few years. In value terms, it
is estimated that the apparel and textile market will be worth USD 87 billion
by year 2010 with exports worth USD 45 billion and local consumption of
USD 42 billion. The domestic market for clothing and home textiles is
estimated to be worth Rs 137,100 crore, of which pure cotton contributes
33% of the value share, various cotton blends make up 39% and the
remaining 28% value is realized from non-cottons. Of the 137,100 crore
clothing and home textiles domestic market, cotton and cotton blends
contribute approximately Rs 98,766 crore. Of this share of 100% cotton
products is 45,200 crore and that of cotton blends is Rs 53,560 crore. Men’s
shirts, kidswear, men’s trousers, salwar suits, men’s formal suits and jackets
record maximum usage of cotton and cotton blends. After cotton, pure silk,
synthetics and wool are mostly commonly used fabrics.
The Cotton market
As of 2007, the ten largest producers of cotton in the world are: China, India,
USA, Pakistan, Brazil, Uzbekistan, Turkey, Greece¸ Turkmenistan and
Syria. The five leading exporters of cotton are: USA, Uzbekistan, India,
Brazil and Burkia Faso. The largest non-producing importers are
Bangladesh, Indonesia, Thailand, Russia and Taiwan.
The demand for cotton is strongly influenced by comparative prices vis-à-vis
manmade fibers, also known as artificial and synthetic fibers. Artificial
Indian Garment Industry 26
fibers like viscose rayon and acetates are made from organic polymers
derived from natural raw materials, mainly cellulose. Synthetic fibers
including acrylics, polyamides and polyesters are generally derived from
petrochemicals and petroleum products.
India Demand and Supply situation for cotton
Opening Stock 47.50
Crop size 310.00
Total availability 364.00
Mill consumption 207.00
Small-mill consumption 23.00
Non-mill consumption 15.00
Total Consumption 245.00
Total Disappearance 310.00
Carry forward 54.00
Indian Garment Industry 27
S. no. Menswear Womenswear Kidswear
1. Aditya Birla Nuvo Aditya Birla Nuvo Lilliput
2. Raymond’s Arvind Mills Benetton Kids
3. Koutons ITC Wills Catmos
Brief Profile of Key Players Aditya Birla Nuvo
Aditya Birla Group is in the league of Fortune 500.
It is anchored by an extraordinary force of 100,000
employees, belonging to 25 different nationalities.
In India, the Group has been adjudged "The Best
Employer in India and among the top 20 in Asia" by the Hewitt-Economic
Times and Wall Street Journal Study 2007. The apparel business of Aditya
Birla Nuvo dominates the premium and popular segments of the Indian
lifestyle market with its companies, Madura Garments Lifestyle & Retail
and Peter England Fashions & Retail
Aditya Birla Nuvo Brands:
• Esprit • Peter England • Allen Solley • Van Heusen • Louis Philippe
Indian Garment Industry 28
A 100% subsidiary of Raymond Limited, Raymond
Apparel Ltd. (RAL) ranks amongst India's largest and
most respected apparel companies. RAL entered into
the ready-to-wear business with the introduction of
Park Avenue in 1986 catering to the men's formal wear market. Parx was
launched in 1998 to address the growing trend of smart casuals. In 2000,
Manzoni, a luxury lifestyle brand was launched offering a super-premium
formal range of men's shirts, suits, trousers, jackets, ties and leather
accessories. Raymond identified the vacuum for a high end, casual wear
brand and hence decided to acquire ColorPlus as a part of strategic
expansion plan for their ready-to-wear business. Notting Hill was launched
in 2007 to cater to the popular price segment. In addition to this, Raymond
Apparel has also ventured into the kidswear segment with its exclusive
• Raymond Finely Crafted Garments • Manzoni • Park Avenue • Park Avenue Woman • ColorPlus • ColorPlus Woman • Parx • Notting Hill • Zapp!
Indian Garment Industry 29
Koutons retail is the leading manufacture of
readymade and stylish fashion wear brand in the
country today. With more than 1365 outlets across 493 cities in India,
Koutons a wide range of apparels in men, women and children wear.
Koutons has positioned itself as a “Fashion and Quality at Affordable price”
for the middle to high segment.
Koutons got into female segment this is April 2008 by launching their brand
less femme. This brand caters to young women in the age group of 16-34
years and includes apparels like t shirt party wear etc. it also launched their
brands kids junior catering to young boys and girls in the age group 2-14
Koutons further plan to enter the footwear segment in October and add
men’s innerwear in its portfolio. Currently Koutons has four brands under it
umbrella Koutons men’s wear, les femme. Koutons Junior and Charlie
• Koutons Menswear • Charlie Outlaw • Les Femme • Koutons Junior
Indian Garment Industry 30
Arvind Mills was established in 1931. It was founded
by Kasturbhai Lalbhai, one of the leading families of
Ahmedabad. Arvind’s brand portfolio includes: Lee ,
wrangler, nautical, Jansport, Kipling, Tommy, Flying Machine, Excalibur,
Arrow, US Polo , Izod, Pierre Cardin , Palm beach ,Cherokee, Gant, Hart
Schaffner, Marx, Sanabelt. It manufactures denims, shirting, khakhis, knits,
and garments. The company has a turnover of approx $500 million and is a
part of over 100 year’s old Lalbhai group.
Arvind entered into exports of garments setting up shirts factories in
Bangalore 2001. This modest beginning has quickly grown to a capacity of
around 4.50 million shirts, annum and the list of customers includes dockers,
gap, next, Espirit, FCUK, Osh, Kosh and many others.
The lalbhai group subsidiary Arvind Mills said recently that it temporarily
suspending expansion plans for two apparel brands, Rider and Hero, which
the company had jointly developed with the US based branded lifestyle
apparel player VF Corporation. The two companies had signed the JV
agreement in 2006 establishing the VF Arvind Brands to design market and
distribute VF’s branded lifestyle apparel in India.
Arvind Mills’s Brands
• Flying Machine • Newport • Ruf & Tuf • Excalibur • Arrow • Lee
Indian Garment Industry 31
ITC’s lifestyle retailing business
division has established a
nationwide speciality retail presence through its Wills Lifestyle, a chain of
exclusive speciality stores. Wills Lifestyle, as a fashion destination, offers
Wills Classic work wear, wills lifestyle, as a fashion destination, offers Wills
Classic work wear, Wills clublife evening wear and fashion accessories.
Wills Signature designer wear.
ITC forayed into the youth segment with the launch of john players in
December 2002. The brand available pan India through a network of over
1300 multi brands outlets. The launch of Miss Player is currently available at
select exclusive stores, select John Players stores and multi brand outlets.
Wills lifestyle currently command retail space with 50 EBO’s of 2,500 sq ft
each and plans to add 50 additional EBO’s in next two years. John players
and miss players is available in 250 EBO’s and 1300 MBO’s with plan of
add 100 more EBO’s in next two years
Indian Garment Industry 32
Differentiation among key players
Aditya Birla Nuvo
Raymond Koutons Arvind Mills
Men’s, Women’s &
Men’s, & Womenswe
• Van Heusen
• Allen Solly
• Park Avenue
• Notting Hill
• Charlie Outlaw
• Les Femme
• John Players
• Miss Players
• Club Wills
Positioning Presence in all
segments High End Value for Money
Presence in all segments
Many International Players- Louis Philippe, Van Heusen etc.
All company hold brands
All company hold brands
All Company hold brands
Media Used for
Print, electronic, hoardings, In store
hoardings, In store,
electronic, hoardings, In
hoardings, In store
Quality Different quality in
different brands High Quality Medium Quality
Different quality in different brands
For Some Brands No No For Some
Indian Garment Industry 33
KEY ISSUES IN INDIAN GARMENT SECTOR
The Multi-Fiber Agreement (MFA) had been forced in India since 1962,
governing the textile trade between various countries. It was later abolished
in 2005. When the MFA was abolished, it was expected that tariff
distortions, which were prevalent earlier, would gradually disappear,
facilitating global trade of textile and apparel. The abolishment of the quotas
did fuel growth of the sector with textile exports growing from US$17
billion in 2005-06 to US$19.24 billion in 2006-07.
The readymade garments segment benefited the most with the abolishment
of the quotas. According to the Apparel Export Promotion Council (AEPC),
readymade garments export from India is expected to reach US$14.5 billion
by 2009-10. Presently, it accounts for 43 percent of total textile exports and
six percent of India’s total export.
Fluctuation Rupee Value
The subsequent spurt in exports did elude exporters in the segment as most
focused on short-term gains. But with the economy growing and
appreciation in the rupee value, there was a rather different tale to unfold.
With an appreciation in rupee value, the apparel and textile export industry
now needs more introspection to reduce the extent to the blow. Export
agreements, which were conducted in US dollars, faced the most severe
Indian Garment Industry 34
Though India enjoys the advantage of a host of low costs in textile and
apparel manufacturing, subsidies and supply of cheap labour currently faces
threat from its neighbouring competitors- Bangladesh, Vietnam and Sri
Lanka. These countries with minimal cost, under valued exchanged rates,
low taxes, subsidies and plentiful cheap labour could result in sail of the
industry to these locations.
As per a Confederation of Indian Textile Industry (CITI) study, total
employment generation from exports was at 25.80 lakh in 2004-05. The
CITI study points out that with appreciation of Rupee, the growth rate of
apparel and textile exports decreased from 16.6 percent to 9.2 percent in
2006-07; and this has already reduced employment from the apparel and
textile export trade by about 1.22 lakhs, and can further lead to an overall
loss of over six lakh jobs, unless serious remedial measures are undertaken
to prevent the crisis. Under present circumstances, it’s estimated that about
2.72 lakh jobs will be lost in direct employment in the textile and apparel
industry in 2007-08.
Lagging in Cost and Technology Spheres
Post MFA, exports splurged and substantial capital expenditures were made
to diverse and also re-inforce production capacity to meet the growing
domestic demand. For the short term this may be fine but mere increasing
the productivity was not a solution rather improving productivity and cost
efficiency ought to be the long term goal. In this segment, Indian Apparel
and Textiles companies face threat from low-cost Chinese Companies while
negotiating with tough global buyers.
Indian Garment Industry 35
It has also been observed that the textile and apparel sector witnessed more
investment in existing technology than on new technology. Although nano-
technology has helped in developing manmade fibres (and filament yarn),
the industry still lags behind it counterparts in the United States, china,
Europe and Taiwan. Import of new and advanced technology could certainly
compensate for the losses on account of exports due to declining dollar.
Existence of long and complex Supply Chains causing lengthening of
lead – time
The supply chain in India is highly fragmented mainly due to government
policies (SSI reservation) and lack of coordination between industry and
trade bodies. Existence of large number of intermediaries adds to the cost
but also lengthen the lead times. The countries who have significantly
consolidated their supply chain are globally competitive – Korea, China,
Indian Garment Industry 36
EXPORTS IN GARMENTS SECTOR
Value of Exports - READYMADE GARMENTS11
%age Share in India's RMG Exports
%age Change in India's RMG Exports
Rank in India's Exports of RMG Year 2007
Year 2005 Year 2006 Year 2007 Jan-07 Feb-07 Jan-08 Feb-08 2007 2008 2007 2008 Jan-Feb 2008 /Jan-Feb 2007
0 TOTAL 8078.05 8948.44 9218.84 826.81 831.21 925.37 951.71 1658.02 1877.08 100 100 13.21
1 USA 2678.30 2937.10 2815.24 263.66 278.57 279.67 281.39 542.24 561.06 32.7 29.89 3.47
2 UK 905.58 919.39 1106.62 78.21 93.68 97.86 107.13 171.89 204.99 10.37 10.92 19.26
3 Germany 615.15 670.92 766.35 63.35 57.45 79.50 92.48 120.81 171.98 7.29 9.16 42.36
4 France 582.75 683.42 668.81 69.39 67.03 74.14 71.66 136.42 145.79 8.23 7.77 6.87
5 UAE 438.57 513.17 625.65 38.63 35.12 56.53 55.71 73.75 112.24 4.45 5.98 52.19
6 Italy 357.85 437.75 422.72 53.40 46.29 49.10 48.58 99.68 97.68 6.01 5.2 -2.01
7 Netherlands 258.61 342.56 338.20 37.31 30.90 37.39 39.68 68.21 77.07 4.11 4.11 13
8 Spain 333.69 330.96 333.71 32.39 33.69 43.77 43.77 66.08 87.54 3.99 4.66 32.48
9 Canada 263.74 290.89 252.93 24.88 26.08 24.23 25.61 50.96 49.84 3.07 2.66 -2.2
10 Saudi Arabia 193.12 196.07 209.12 10.98 11.27 14.20 11.46 22.25 25.66 1.34 1.37 15.29
11 Denmark 162.17 191.02 197.92 25.21 21.73 23.27 25.04 46.94 48.31 2.83 2.57 2.93
12 Belgium 120.70 162.20 176.45 16.99 15.37 21.94 17.33 32.36 39.27 1.95 2.09 21.35
13 Japan 106.74 127.74 101.38 10.70 13.83 9.93 14.14 24.54 24.07 1.48 1.28 -1.89
14 Sweden 62.58 77.63 76.23 5.44 7.66 9.67 11.33 13.10 21.00 0.79 1.12 60.28
15 Russia 23.30 57.05 67.32 13.70 5.00 6.29 5.72 18.70 12.01 1.13 0.64 -35.75
16 Mexico 49.54 61.57 66.72 7.14 5.61 6.91 5.33 12.75 12.24 0.77 0.65 -3.98
17 South Africa 59.28 50.88 60.74 3.73 2.94 4.05 4.03 6.67 8.07 0.4 0.43 21.02
18 Ireland 63.18 46.60 56.23 4.62 4.80 3.60 4.86 9.42 8.46 0.57 0.45 -10.2
19 Singapore 44.28 50.69 52.66 3.63 4.19 2.81 3.15 7.82 5.96 0.47 0.32 -23.78
20 Switzerland 53.78 56.67 51.10 4.65 4.86 4.89 5.66 9.51 10.55 0.57 0.56 10.96
Apparel Export Promotion Council
Indian Garment Industry 37
EXPORT TO WORLD12 (VALUE IN US$ MILLION)
2002 2003 2004 2005 2006 Exporting Countries Textil
496 4084 413 5067 597 6296 696 7751
26 1313 21 1600 26 1981 2193 2675
China 20562 41302 26900 52061 33428 61856 41050 74163 48683 95388
India 6028 6037 6846 6625 7009 6632 8462 9212 9330 10192
Indonesia 2909 3875 2921 4052 2961 4285 3353 4959 3605 5699
Pakistan 4790 2228 5811 2710 6125 3026 7087 3604 7469 3907
171 2350 161 2513 149 2776 136 2874 154 3046
Reasons for India’s recent sluggish export performance in textiles and
• Slowdown in demand from some major importers.
• The depreciation of the US dollar, resulting in an appreciation of the
rupee vis-à-vis competitor countries that were partially or wholly pegged
to the US dollar.
• Labour laws and scale economics: Countries like China have historically
had high labour flexibility in their export oriented units. This has allowed
them to achieve large scale in terms of labour force employed in each
manufacturing facility and reap the benefit of scale economies and use
the latest advanced machinery from developed countries. India, in
Images Yearbook 2008
Indian Garment Industry 38
contrast, because of fragmentation of units and small scale (to avoid
labour laws applicable to employees above 100 and procedural biases and
rigidities), has purchased relatively less of such advanced machinery.
• Logistical delays and costs: though the national highways are improving,
this is not true of connectivity to all sources and destinations. The
turnaround time in major ports of India and movement of cargo between
ships and source or destination within India is still plagued by
monopolistic bureaucratic structures with little accountability and
incentives for efficient service delivery to the exporter and importer.
• High cost of power in India this is 1.5-2 times higher then in competing
Indian Garment Industry 39
ANALYSIS OF A DECADE PERFORMANCE
OF THE GARMENT INDUSTRY
The period of 1997 and 2007 was momentous for the garment industry, both
globally and domestically. South –east Asian currency crisis struck in 1998
and December 2004 marked the end of Agreement on Textile and clothing
(A.T.C) limiting exports of garments from India to U.S.A and E U, the two
main importers of garment world-wide.
As is this was not enough, the government clamped Excise Duty on woven
garment for the first time in its history. The move orchestrated a massive
protest in all sections of the industry from manufacturing to retail. For once,
disparate sections appealed to government to roll back the duty. But
government remained stubborn to its decision endangering export orders
painstakingly entered into mark the end of ATC. Its after effects hit the
industry hardest when the country lost substantial foreign exchange. The
following year only gave cosmetic relief to the industry after the change of
the government at the centre in the general election.
The new government, alive to the plight of the industry, made the excise
duty optional to CENVAT Credit with the object of lowering the cascading
influence of duty on the common man. Investment in the industry which had
dried up in the wake of excise duty enforcement, started flowing freely and
the industry came into its own by expanding capacity, merging and making
acquisitions (both domestic and overseas) to present overseas buyers a
picture of a resilient, expanding and competitive industry.
Meanwhile, the exchange rate of the Rupee vis-à-vis the US dollar had been
going through changes partly due to the economic boom in India and partly
for the slow-down in US economy triggered by upsurge in petroleum prices.
Indian Garment Industry 40
Smaller and newly emerging Asian countries, now attempting to claim a
large slice as possible of the global foreign exchange pie, quoted
aggressively to entice buyers. In turn, this had effect on unit prices quoted by
The table presented below shows the movement of knitted and garment
exports13, juxtaposed with their unit prices, movement in exchange rate and
the years in which the tumultuous events took place.
KNITTED GARMENT GMT EXPORTS
WOVEN GMT EXPORTS
REMARK UNIT VALUE
M Pcs Bn $ M Pcs Bn $ Knitted Woven
Dec 1995 43.66 1.16 623.5 3.32 32.01 2.66 5.32 Dec 1996 560.2 1.47 644.5 3.32 34.87 2.62 5.15 Dec 1997 632.4 1.60 669.0 3.26 36.52 2.53 4.87 Dec 1998 682.0 1.63 655.7 3.42 41.27
S.E Asian currency crisis
Dec 1999 758.6 1.88 646.0 3.44 43.05 2.48 5.33 Dec 2000 827.7 2.06 679.1 3.72 44.87 2.49 5.48 Dec 2001 855.0 2.13 728.4 3.55 47.14 2.49 4.87 Mar 2002 610.0 1.23 783.0 3.15 47.72 18 % excise
duty on woven garments (2001 Budget)
Mar 2003 983.0 2.37 855.0 3.26 48.56 16 % Excise Duty on Woven Garments (2002 Budget)
Mar 2004 1,113 2.66 711.0 3.54 45.86 2.39 4.98 Mar 2005 857 2.50 746.0 3.71 44.84 a)Excise
made optional to Cenvat b) Dec ’04 end of ATC
Mar 2006 1,148 3.18 1153.0 5.43 44.28 Mid= Year, 12 % Re appreciation
Mar 2007 1315 3.61 1070.0 5.26 45.29 2.75 4.48
Apparel Talk magazine
Indian Garment Industry 41
The above table shows garment exports – knitted and woven over a decade,
juxtaposed with changes in exchange rate versus US Dollar. The following
points stand out:
1. Until 19877, Knitted garment exports were lower than that of woven
garments; however, while knitted garments advanced by almost 50%
during this period, woven garments expanded by less than 10%.
2. After 1987, knitted garment export exceeded that of woven garments
and hardly ever looked back. Their rise was further aided by levying
of excise duty on woven garment for the first time in the history of the
industry. This led to a deceleration in the expansion of woven
garments until the duty was made optional on CENVAT, whereupon
the woven sector came into its own. But by then, knitted sector had far
outpaced the woven sector.
3. Between 1995 and 2003 ( i.e. in eight years ) exchange rate advanced
by almost 50%. During this period, knitted garment exports have more
than doubled, whereas woven garment exports increased by obly 33%.
Thereafter, the exchange rate steadily declined by about 12%.
4. Competition from Asian suppliers forced reduction in unit value (
dollar / piece ) for both knitted and woven garments. Unit prices for
knitted garments fell from 2.66 USD to 2.39 USD by 2004 i.e. by
about 10% in 10 years, before recovering to 2.75$ by 2007. Unit value
( US dollar / piece ) for woven garments, on the other hand, fluctuated
throughout the period, averaging 5.70$ per/piece during the period.
5. The improvement after 2005 could partly be attributed to the
restrictions placed on Chinese garments by both USA and Europe
which are expected to expire by 2009.
Indian Garment Industry 42
6. it is important to note that unit value realization for both knitted and
woven garments are inclusive of accessories like handkerchiefs,
gloves, socks, shawls, scarves etc which are basically low-value
items. Such constitute about 10% of our export value for both knitted
and woven separately. If due note is taken of the above, the unit value
would improve to 2.95 $ and 5.5$ for knitted garments and woven
7. The above performance is despite the fact that the industry is not
refunded state and corporation taxes together aggregating about 6% of
the FOB value, although all of India’s Asian competitors are not only
granted full refund of all taxes/duties, but also, in some case, granted
8. All the above points, specifically for exports, also apply to production
basically, production is scheduled against advanced sales, whether
domestic or export.
Indian Garment Industry 43
USA AND EU DOMINANCY
The World Trade Organization (WTO) stands for an orderly growth of trade.
It envisages that the means of growth should be uniform for all countries and
not skewed in favor of certain countries or group of countries.
An obvious way is reduction of tariff walls and removal of non tariff
barriers. Unfortunately, the developed countries especially the USA and EU,
Which are the founder-members of WTO have been breaching the very
fundamentals of WTO in an attempt to promote the trade of their own
products and acting as global policemen.
FTA skewed ideology: promote sale of local products
USA has signed Free Trade Agreements with neighboring Canada and
Mexico as also with Caribbean Basin countries and Sub-Sahara Africa in the
grab of improving the economy of these countries. The agreement makes it
mandatory for the supplying countries to use American yarn or American
Fabric for conversion into garments prior to exporting to USA in order that
such garments may enter USA import duty free; Alternatively, of course,
they can use local yarn or local fabric, but cannot import the same from third
countries in which case the garments thus manufactured will lose the benefit
of free import duty in USA. Basically the object of the agreement is to
promote the off take of American yarn/fabric, take advantage of low labor
cost and import the finished garments at a low price for the American
Indian Garment Industry 44
EU GSP Unfair
Europe also put in place Generalized System of Preference (GSP) whereby
certain countries were preferred over others. The current GSP scheme which
will run up to 2015 as three major arrangements:-
(a) The General arrangement
(b) The arrangement for least developed countries
(c) The GSP plus scheme
Under (a), products are divided into 2 groups viz sensitive and non sensitive.
Sensitive products are those products of EU which require higher and
broader protection from imports while the rest are non-sensitive. About 55%
of the products have been identified as being non-sensitive. Sc\such products
can enter EU duty free while sensitive products are allowed at 3.5% less
than MFN (most favored nation) rates. However, the most important point is
that the concessions apply only to those countries which (i) Protect labor
rights (ii) Contribute to environment protection and trafficking. This is
where policing by EU comes in. protection of labor rights is in accordance
with the labor laws of the supplying country but it is always facile for any
NGO to raise a dispute on non-observation of labor rights or on environment
in which case even pending orders or for goods-in-process can b cancelled
by the EU country and it would require intervention at government level to
remove such infraction.
Under (b), this is a special group carved out of less developed countries.
These least developed countries are officially recognized as such by the
United Nation. Duty concessions are double that of under (a) above. In this
case, the condition is that the raw material ie, yarn or fabric as the case may
be used for a garment should have been manufactured in the supplying
Indian Garment Industry 45
country or, if from another country should have undergone substantial
transformation in the supplying country. Repacking or labeling is not
considered to be a change in HS code. The catch here is that supplying
countries do not have their own manufacturing facilities for the raw material
in at least sufficient quantity and this blunts the scheme. Examples are
Bangladesh, Sri Lanka, Philippines and Vietnam.
Under ( c ), the duty concession is 100% but again, the qualifying factors
were protection of labor rights, sustained growth in environment and in
addition, good governance- all loosely worded and capable of being misused
to deny the concession.
Under the current GSP scheme, a graduation formula has also been
introduced whereby a beneficiary country would be denied the benefits
under the scheme, if imports into EU from such country in any product,
exceeds 15% pf total volume of imports of that product from all beneficiary
countries. This effectively leaves India out of GSP benefits, since the bar is
thus lowered by restricting it only to beneficiary countries.
Zero for Zero Tariff
Looking to opportunities in the vast Indian market, both EU and USA have
offered India Zero for Zero tariffs. Since labor costs in both USA & EU are
higher than in India and since freight will add further to the landed value in
India for their garments, the possibility of EU/USA garments swamping
India is remote. The only possibility is that garments manufactured by East
European countries of EU or by Turkey, could possibly compete with our
domestic industry. Although operating costs in East Europe or Turkey may
be low, freight to India and insurance costs will neutralize whatever
advantage they may have.
Indian Garment Industry 46
This can be sub divided into brand and non-brand. The branded retail sector
is not more than 10 % of the total. A retailer ( whether shop owner or mall)
has to keep a higher margin for branded garments than for unbranded to take
care of returns on his investments as well as discount on end of season sales
or out of fashion stocks and overheads.
The retail mark up is 50% for branded and 25% for non branded garments.
On this basis, the size of the retail market for garments can be estimated to
be around Rs. 4 to 5 trillion or around Rs. 500,000 crore. With malls coming
up all over Indian metros, retail trade in garments is getting better organized
than earlier. Attention is now shifting to ‘B’ class and ‘C’ class cities as well
as the rural sector. With the growth of the economy, thanks to economic
liberalization, the result of which is percolating to our farm lands as well as
spread of education in the rural population is fast picking up to the urban
level. Farm produce is being is better organized to reduce wastage and
increase the income of farmers, Rural indebtedness is being better bank
managed than the earlier system of dependence on money-lender sharks.
Better some villages, especially in Maharashtra, the rest can claim a standard
of life about equal, and in some villages, even better than their urban
cousins. In the last six months or so, inflation has been a bug-bear. But this
is due to two factors namely unseasonable weather and strident increase in
global oil prices.
Indian Garment Industry 47
INDIAN APPAREL SECTOR TRENDS
Salient feature of India Apparel Sector
• Maximum employment with minimum investment.
• High percentage of women employment –35 %
• 95% production in small-scale sector
• 3% share in global apparel exports
• Cluster based growth –concentrated primarily in 8 clusters, i.e Tirupur,
Ludhiana, Banglore, Delhi /Noida /Gurgaon, Mumbai, Kolkatta, Jaipur
• Contributes around 8% to India s overall exports and 48% to textile
Production in Apparel Sector
The apparel sector is expected to record a CAGR of nearly 15% in quantity
terms and 20 % in value terms in 11th plan period. By 2001-12, production is
expected to reach 19 bn pcs , amounting to rs 299300 crs, 32% of this
population is expected to be generated by the export sector. In value terms,
51 % of the population is expected to be contributed by exports. The accent
is on the value added growth –both for domestic and export market
India in recent years has been the focal point of continuous growth and
development making it one of the fastest growing economies of the world. It
is the 4th largest economy in terms of Purchasing Power Parity, after USA,
China & Japan, and is rated among the top 10 FDI destinations.
Indian Garment Industry 48
The Indian consumer is evolving and driving retail growth due to increased
consumption. Private consumption growth contributes to more than half of
the GDP growth and is growing in double digit figures. Several businesses
are reacting to this evolution positively, both through pull and push
Following a similar trend, the Indian textile and apparel industry is also
experiencing rapid changes and growth. Apparel today has the largest share
of the modern organized retail in India i.e. 20% of the current market of Rs.
56,000 crore and this is expected to grow at a constant rate of 20% over the
next 4 years.
These are few recent trends pertaining to the garment industry:
Indian consumers are converting from stitched apparel to ready-to-
wear causing a surge in discount retailing.
Factory outlets have become distinct and important shopping destinations
Retailers are increasingly accepting the widely agreed fact that consumers
love a bargain and always look forward to buying brands at low prices.
Factory outlets have become distinct shopping destinations with distinct
audiences. Apparel companies are focusing on this market to cash in on
consumers converting from stitched apparel to ready-to-wear, further
graduating to branded apparel. India is thus seeing a surge in discount
Indian Garment Industry 49
retailers offering year round discounts, ranging anywhere between 30% to
Consumers now desire branded products in all aspects of their life
Traditionally brands that offered formal wear are now extending into casual
wear, accessories, footwear etc. With most brands turning lifestyle brands,
they are opening larger Exclusive Brand Outlets (EBO’s) to showcase their
complete range of merchandise and give an international feel, The past few
months has seen brands opening up very large format stores in India.
Designers realize the huge opportunities in ready-to-wear market and
are introducing prêt lines
Another trend visible in the Indian designer wear market is corporatisation
i.e. strategic tie-ups with large corporate in related industries to provide the
necessary financial support and expertise in operational management. The
designer wear industry lacks the processes, systems, people and financial
resources to rapidly scale up their operations. The direct advantage of this
would accrue to the designers who would be able to concentrate on the
design and aesthetics rather than on business planning.
Genesis Colors Pvt Ltd., is the forerunner in the corporatisation of the Indian
designer industry. It is the parent company behind the labels Satya Paul,
Deepika Gehani, Tie Bar and Samsaara. These designers enjoy a wide
Indian Garment Industry 50
distribution network throughout India and abroad of standalone/franchisee
stores and premier fashion boutiques.
Indian companies see a huge opportunity in partnering with luxury
brands wishing to enter India
The Indian consumer desires to possess international luxury brands as an
inspirational product. Additionally, no Indian retail brand actually qualifies
to be categorized as a luxury brand. This readiness for luxury as an
organized market, has been recognized throughout the world and
international luxury brands are exploring possible avenues and tie-ups to
enter the Indian retail market.
Worldwide surge in demand for organic and eco-friendly products
Organic cotton has been able to achieve maximum popularity amongst all
eco-friendly fibers. Global retail sales of organic cotton products are
projected to grow to $2.6 billion by the end of 2008, reflecting a 40%
average annual growth rate. Hence, the demand for organic cotton fiber is
expected to grow to 100,000 metric tons in 2008, an average annual growth
rate of 47%.
Kids and youth are influenced by icons & characters and desire to
possess them in their everyday life
Indian Garment Industry 51
India has become an important market for character licensing specially in
Today's consumer is greatly influenced by media and he exhibits a
propensity to follow icons to the extent of bringing them into his everyday
life. This growing trend amongst consumers is being tapped by apparel
companies by taking up licensing of popular characters and icons to be used
in their merchandise. This is especially true for the kids and youth market
since they identify with these characters and icons more strongly. According
to Cartoon Network, the business of license merchandising of animated
characters is estimated at Rs. 360 crore in India.
Companies are exploring new' locations to retail in order to increase
visibility of their brand
Apparel retailing is geared to take on customers at places other than the
traditional locations like neighborhood markets, high streets and malls. With
increased need for convenience and visibility retailing, companies explore
newer locations like airports, metro stations, restaurants, cafés & even
Retailing at such outlets typically follows two formats - the first is when
space is sublet for retailing branded merchandise at airports, metro stations,
etc. The second kind is when cafés, restaurants, fast food chains sell
merchandise to promote their own brand through T-shirts, caps, bags, mugs,
etc. While brand retailing at airports/metro stations is growing at a fast pace,
Indian Garment Industry 52
brand building by cafés/restaurants through retailing of merchandise will
also be an important trend mostly targeted at kids and youth.
Textile companies are strengthening front and back end operations
through mergers and acquisitions
Companies are increasingly looking to acquire domestic and overseas
companies which complement the value chain. However, it is the foreign
acquisitions which have caught the attention of the industry and the world.
Indian companies are taking on larger companies, integrating the Indian
advantage of manpower & raw material with the acquired company's
strategic location, technology and/or well established distribution channels.
Indian Garment Industry 53
TECHNOLOGY AND INDIAN GARMENT
The Indian garment industry is characterized by
constant change. What is in vogue today will be
passé tomorrow. The size of India garment
industry is has also been expanding and it is
expected to drive exports worth US$ 25 billion
by 2010. In order to meet this growth, Indian
manufacturers would have to scale up their
manufacturing capacity five-fold, despite an expansion of 30 percent
planned by top players. The liberalization of world trade and abolition of the
quota regime have opened up new opportunities for Indian manufacturers.
The challenges for Indian garment manufacturers are multifold:
• Keeping abreast of the market trends
• Material usage patterns
• Knowledge of resource points
• Being in a position to deliver high quality goods in shorter lead times
at competitive rates.
The garment industry specializes in offering a plethora of products with
multipart specifications catering to diverse customer needs across markets
viz. culture, climate and seasonal variations. Customers and retailers are
forcing manufacturers to deliver higher quality at lower costs in short
delivery times. To survive in this cut-throat business, garment manufacturers
Indian Garment Industry 54
need to out think and out perform competition. They have to meet all of the
following quality standards:
• Dimensional stability
• Seam strength
• Abrasion resistance
• Seam slippage and other test descriptions.
Also, the regulatory concern for safeguarding the environment makes it
necessary for manufacturers to strictly conform to ecological requirements.
The moot point for Indian Players will be volume-driven efficiencies
combined with superior design capabilities, scalable and flexible
manufacturing processes and a well integrated supply chain.
Automation of the various processes from raw fabric to finished garment
(maintenance of inventory records, inventory planning, sales forecasting,
distribution and transportation management) and smooth integration with the
supply chain can be achieved in a cost-effective manner, using an efficient
IT solution like ERP.
In order to adopt to play on the world stage, garment manufacturers have to
adopt IT as a strategic option to scale up efficiencies and improve business
Indian Garment Industry 55
Technology plays a very vital role in following areas of Garment
• Season collection planning
• Garment style management
• Sales order management
• Material requirement planning
• Material procurement management
• Inventory management
• Production management
• Quality management
• Exports & quota management
Over the past few years Computer Aided
Designing (CAD) has also become a very
important part of both textile and garment
industries. CAD is industry specific design
system using computer as a tool. CAD is
used to design anything from an aircraft to
knitwear. Originally CAD was used in designing high precision machinery
solely it found its way in other industries also. In 1970's it made an entry in
the textile and apparel industry. Most companies abroad have now integrated
some form of CAD into their design and production process.
In fact, according to National Knitwear Association of US, of 228 Apparel
Indian Garment Industry 56
• 65% use CAD to create color ways
• 60% use CAD to create printed fabric design
• 48% use CAD to create merchandising presentation
• 41% use CAD to create Knitwear designs
Design choices and visual possibilities can be infinite if the designer is given
the time and freedom to be creative and to experiment using the computer.
Today in our country automation is not only used for substituting the labour,
it is also adopted for improving quality and producing quantity in lesser
time. However, a CAD system is only as good (or as bad) as the designer
working on it. Computer only speeds up the process of say repeat making,
color changing, motif manipulation etc. It is actually the CAM aspect of
CAD that will help reduce lead time.
Types of CAD Systems
Textile Design Systems
Woven textiles are used by designers and merchandisers for fabrics for home
furnishing and to men-women-children wear. Most fabrics whether yarn
dyes, plain weaves, jacquards or dobbies can be designed and infact are
invariably used abroad using a CAD system for textiles. Similarly
embroideries are also developed at CAD workstations.
Some systems specialize in knitwear production and final knitted design can
be viewed on screen with indication of all stitch formation. For instance a
CAD program will produce a pullover graph that will indicate information
Indian Garment Industry 57
on amount of yarn needed by color for each piece. Another example of the
new technology in the industries using a yarn scanner which is attached to
the computer scans a thousand meters of yarn and then simulates a knitted/
woven fabric on-screen. This simulation will show how the fabric will look
like if woven from that yarn.
The process involves use of computers in design, development and
manipulation of motif. The motif can then be resized, recoloured, rotated or
multiplied depending on the designer's goal. Textures and weave structures
can be indicated so that printout either on paper or actual fabric looks very
much the way the final product will look. The textile design system can
show color ways in an instant rather than taking hours needed for hand
painting. New systems are coming which have built-in software to match
swatch color to screen color to printer color automatically i.e. what you see
is what you get.
Illustrations/ Sketch Pad Systems
These are graphic programmes that allow the designer to use pen or stylus
on electronic pad or tablet thereby creating freehand images which are then
stored in the computer. The end product is no different from those sketches
made on paper with pencil. They have additional advantage of improvement
and manipulation. Different knit and weave simulations can be stored in a
library and imposed over these sketches to show texture and dimensions.
Indian Garment Industry 58
Texture Mapping: 3D Draping Software
This technology allows visualization of fabric on the body. Texture mapping
is a process by which fabric can be draped over a form in a realistic way.
The pattern of the cloth is contoured to match the form underneath it. The
designer starts with an image of a model wearing a garment. Each section of
the garment is outlined from seam line to seam line. Then a swatch of new
fabric created in textile design system is laid over the area and the computer
automatically fills in the area with new color or pattern. The result is the
original silhouette worn by original model in a new fabric.
The designs used for embroidery can be incorporated on the fabric for
making garment. For this special computerized embroidery machines are
used. Designers can create their embroidery designs or motifs straight on the
computer or can work with scanned images of existing designs. All they
need to do is assign color and stitch to different parts of the design. This data
is then fed into an embroidery machine with one or multiple heads for
Apparel Industry and Computers
Digitisers put original patterns into the computer for use and storage. It can
be done by defining the X, Y co-ordinates of series of selected points around
the pattern. These basic patterns can be manipulated with the help of a
computer, for example in case of trousers, darts can be moved, pleats can be
created or flair can be introduced. This way new design can be created on
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screen from pre-existing patterns. Today large scanners are also used to
input pattern shapes instead of tracing patterns on a digitizer.
After a sample size pattern has been put, it has to be graded up and down in
size. Certain points on the pattern are considered as "growth points" or
places at which the pattern has to be increased or decreased to accommodate
changing body size. At each growth point the operator indicates the grade
rule to the computer. The system will then automatically produce the pattern
shapes in all the pre-specified sizes. Say if we define pattern for size 30, it
can be easily graded for size 32/34/36 and so on.
Marker Making Systems
Computerized marker making systems help in laying the pattern part
together more economically than an operator could do with hands. This
ensures minimal wastage of fabric. On plain fabric this is relatively simple
but on striped fabric also automatic matching is done by the computer. The
layout is then directed to big plotters which are overlaid on the stacked
fabric prior to cutting.
Pattern generated by marker making systems can be directed to automated
cutting machines which are operated without the help of human hands.
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Marketing integration using Computer
Designer is in direct contact with the customer and also the manufacturer to
be aware of the latest trends and also needs and demands of the customer.
Internet and Information Explosion
NIFT, Calcutta is linked to Internet with TCP/IP account and the students
have continuous access to the sites of the top designers, trend forecasting
agencies, fashion houses and fabric suppliers. This has helped both the
institute and the students immensely keeping them updated with the latest
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Like other industries, garments sector also has its wish-list for consideration
in the recent union budget. The wish – list segregated into segments viz.
a. Policy issue
b. Issues pertaining to domestic industry
c. Issue pertaining to the export industry
d. Procedural issues
Removal of state and corporation Taxes on export of garments
Export of garments are burdened with taxes and duties levied by :
a) Central government
b) State government
c) Municipal corporation
Appreciation of the rupee has further lowered earnings of Indian exporters ,
where as those of our Asian competitors have either appreciated less or even
depreciated. As a result, prices of Indian garments have become
uncompetitive against Asian competitors.
Exporters are attempting to reduce the hardship of RUPEE appreciation by
quoting in other currencies but importers take advantage of dollar quotation
by our competitors and insist on dollar quotations. Recent increase in
drawback rates has to some extent but the major burden of the state and
corporation levies continues to hinder exports. These collectively work out
to 6 percent FOB. Further, introduction of vat was expected to reduce prices
Indian Garment Industry 62
but since textiles have not been included in vat , garments units are not able
to offset taxes and duties paid on inputs. Again, refund take a long time
while payments are immediate, thus affecting adversely the cash flow
positions of exporters and every budget brings with it fresh does of taxation
in one form or the other
So in the forthcoming budget, a provision should to be made to exempt
exports from all direct taxes (rather than pay and later refund)
In case of indirect tax (including state and corporation levies) a find to be set
up from out of the taxes paid by the industry to refund 6 percent FOB on all
exports against realization of the exports against realization of the proceeds
through normal banking channels. Since exports contribute only 25 percent
of production, there is no fear of an outgo exceeding collection by govt. and
Import Duty of Garment Machinery
Import duty on most garment machinery is 5 percent plus countervailing
Indigenous machinery manufactures do not manufacture garments
machinery of similar speeds and or stitches per minute and further, since
countervailing is levied with the sole objective of the protecting the domestic
industry, it is hoped that the budget proposals will remove countervailing
duty from all garments machinery entitled to concessional duty.
Immediate reforms in labour laws to help improve production and
productivity of garments are called for:
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These include: -
� Increase in working hours from 48 to 60 per week with suitable
provision for rest period
� Female workers to be employed in the entire second shift
� In view of the second nature of the garment industry, contract labors
be permitted on condition of a guaranteed employment 100 days in a
The sector did get some sops in the budget, these were:
SEZ- SEZ scheme is likely to continue, as per the assurance given by the
Prime Minister. Six mega clusters are proposed to be developed in power
looms, handlooms and handicrafts. Allocation of Rs.70 crore per cluster.
With an immediate provision of Rs 100 crore this year has been envisaged.
Textile Up gradation Fund (TUF) - Allocation for textiles up gradation
fund (TUF) has been increased from Rs. 911 crore to Rs 1090 crore. The
budget has also maintained the provision for Scheme for Integrated Textile
Parks (SITP) at Rs. 450 crore. However, the schemes would not provide
immediate support to textiles sector, which is need of the hour. Increases in
subsidy under the TUF scheme can hardly be considered a relief package
looking to the outstanding claims pending with the banks. There are already
Rs 600cr plus outstanding according to the banks
Reduction in Excise Duty - The excise duty has been reduced from 16% to
14% under 2008-09 budget but the concession would prove to be highly
elusive for apparel exporters as textile manufacturers, already struggling
Indian Garment Industry 64
with stiff margins, may not be able to pass on the benefit down the line to
Non Profit Corporations - The FM has proposed to establish a non profit
corporation with intention to garner Rs 15,000 crore as capital from
government, the public and private sector and bilateral and multilateral
sources for establishing training institutes including 300 additional ITI’s.
A noticeable thing in budget 2008-09 is its silence about how to arrest the
slump in employment intensive industries like textile, garments, leather and
handicrafts. Apparel exports promotion council estimates that if situation
remains unchanged, the job losses this year would be six lakh.
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MONETARY POLICY FOR THE YEAR
• Bank Rate and Repo Rate kept unchanged.
• High priority to price stability, well-anchored inflation expectations
and orderly conditions in financial markets while sustaining the
• Swift response on a continuous basis to evolving adverse international
and domestic developments through both conventional and
• Emphasis on credit quality and credit delivery while pursuing
• Scheduled banks required to maintain CRR of 8.25 per cent with
effect from the fortnight beginning May 24, 2008.
• GDP growth projection for 2008-09 in the range of 8.0- 8.5 per cent.
• Inflation to be brought down to around 5.5 per cent in 2008-09 with a
preference for bringing it close to 5.0 per cent as soon as possible.
Going forward, the resolve is to condition policy and perceptions for
inflation in the range of 4.0-4.5 per cent so that an inflation rate of
around 3.0 per cent becomes a medium-term objective.
• Deposits projected to increase by around 17.0 per cent or Rs.5,50,000
crore during 2008-09.
• Adjusted non-food credit projected to increase by around 20.0 per
cent during 2008-09.
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• Active demand management of liquidity through appropriate use of
the CRR stipulations and open market operations (OMO).
Impact of various monetary policy measures
Recent money shortage in market has forced RBI to make changes in its
policies so that the money supply in the market can be increased. Following
are the recent changes that RBI has done in the market. These changes have
had positive impact on every industry in the economy:
Bank rate is the rate at which central bank of the country lend funds to
national banks. A central bank adjusts the supply of currency within national
borders by adjusting the bank rate. When the central bank reduces the bank
rate, it increases the attractiveness for commercial banks to borrow, thus
increasing the money supply. When the central bank increases the bank rate,
it decreases the attractiveness for commercial banks to borrow, consequently
decreasing the money supply. Considering the current recession situation in
market, RBI is planning to reduce the bank rate. Thus, the interest rates in
market will decrease which will result in cheaper availability of funds for
industry which will again result in increasing the productivity for the
Cash Reserve Ratio
Cash Reserve Rat io (CRR) is portion (expressed as a percent) of depositors'
balances banks must have on hand as cash. This is a requirement determined
by the country's central bank, which in India is Reserve Bank of India. The
reserve ratio affects the money supply in a country. Cash reserve ratio
Indian Garment Industry 67
(CRR) of scheduled banks, which is 7.5 per cent at present, was cut by 100
basis points to 6.5 per cent with effect from the current reporting fortnight
that began on October 11, 2008. This measure will release additional
liquidity into the system of the order of Rs.40, 000 crore. Thus that would
result in increase of productivity in Industry.
Repo Rate is the discount rate at which a central bank repurchases
government securities from the commercial banks, depending on the level of
money supply it decides to maintain in the country's monetary system. To
temporarily expand the money supply, the central bank decreases repo rates
(so that banks can swap their holdings of government securities for cash), to
contract the money supply it increases the Repo rates. Recently RBI has
reduced Repo rate by one percentage point to 8 per cent, as part of its
ongoing efforts to ease the pressure in the credit market.
Statutory Liquidity Ratio
Statutory Liquidity Ratio (SLR) is a term used in the regulation of banking
in India. It is the amount which a bank has to maintain in the form of cash,
gold or approved securities. The quantum is specified as some percentage of
the total demand and time liabilities ( i.e. the liabilities of the bank which are
payable on demand anytime, and those liabilities which are accruing in one
months time due to maturity) of a bank. This percentage is fixed by the
Reserve Bank of India. The maximum and minimum limits for the SLR are
40% and 25% respectively.
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Open market operations
Open market operations are the means of implementing monetary policy by
which a central bank controls its national money supply by buying and
selling government securities, or other financial instruments. Monetary
targets, such as interest rates or exchange rates, are used to guide this
Indian Garment Industry 69
OVERVIEW OF FASHION INDUSTRY ADVERTISING IN 2007
• 32%15 growth in TV ad volumes of fashion industry