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Indian Garment Industry INDIAN GARMENT INDUSTRY Made by: Puneet Khurana Manika Pahwa Arushi Bansal Rachit Dhingra Akanksha Sharma

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  • Indian Garment Industry


    Made by:

    Puneet Khurana Manika Pahwa Arushi Bansal

    Rachit Dhingra Akanksha Sharma




    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.




    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



    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

    References Annexure




    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.




    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).




    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

    medieval periods.

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

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



    had begun exports of Indian silks and several other cotton fabrics to other

    economies. These included the famous fine Muslin cloth of Bengal, Orissa and

    Bihar. Painted and printed cottons or chintz was widely practiced between India,

    Java, China and the Philippines, long before the arrival of the Europeans.

    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

    4.2 4.75.9









    2003>2002 2005>2004 2007>2006


    % A






    Volume Value

    Figure 11


    1 Images Yearbook 2008

    2 Images Yearbook 2008



    Indian Apparel Market Growth


    4,422 4,6104,808 5,034












    2002 2003 2004 2005 2006 2007 2008









    n U




    Figure 23

    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



    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












    Figure 34

    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



    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.




    Apparel industry has been broadly classified into three segments:

    1. Men

    2. Women

    3. Kids

    Market Share of Major Apparel Segments

    Total Size: Rs 122,400 Crore




    Kids' Apparel +Uniforms

    Mens' Apparel

    Womens' Apparel

    Figure 45

    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



    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.


    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


    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



    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%



    Unisex Apparel




    Growth Rate

    Volume Value


    Figure 59

    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



    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.


































    0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%







    % Market Share

    Menswear Womenswear Unisex Apparel Kidswear Uniforms

    Figure 610

    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



    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.




    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.




    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

    products produced.

    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



    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.



    Cotton (Farms)

    Jute/Wool/ Silk


    Polymers (Petrochemic

    al Plants)





    Garments & Accessories

    Other Textile Products

    Distribution Channel (Export & Domestic Markets)

    Man-Made: Filament Extrusion Process

    Composite Mills (spinning, weaving,



    Weaving (mid-size)

    Power looms



    Knitting Grey






  • 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


    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

    Imports 6.50

    Total availability 364.00


    Mill consumption 207.00

    Small-mill consumption 23.00

    Non-mill consumption 15.00

    Total Consumption 245.00

    Exports 65.00

    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

    brand Zapp!

    Raymond Brands

    • 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 Brands:

    • Koutons Menswear • Charlie Outlaw • Les Femme • Koutons Junior

  • Indian Garment Industry 30

    Arvind Mills

    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

    Wills Lifestyle

    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

    Store Name

    Aditya Birla Nuvo

    Raymond Koutons Arvind Mills

    ITC Wills

    Product Range

    Men’s, Women’s &


    Men’s &


    Family Store

    Men’s, Women’s

    & Kidswear

    Men’s, & Womenswe



    • Esprit

    • Peter-England

    • Van Heusen

    • Allen Solly

    • Louis-Philippe

    • Park Avenue

    • ColorPlus

    • Parx

    • Notting Hill

    • Zapp!

    • Koutons

    • Charlie Outlaw

    • Les Femme

    • Koutons-Junior

    • Lee

    • Wrangler

    • Nautica

    • Jansport

    • Kipling

    • Tommy

    • John Players

    • Miss Players

    • Club Wills

    Positioning Presence in all

    segments High End Value for Money

    Presence in all segments

    High End

    Tie Ups

    Many International Players- Louis Philippe, Van Heusen etc.

    All company hold brands

    All company hold brands

    Many International

    Players- Wrangler,

    Nautica, etc.

    All Company hold brands

    Media Used for


    Print, electronic, hoardings, In store

    Print, electronic,

    hoardings, In store,

    Hoardings, print,



    electronic, hoardings, In


    Print, electronic,

    hoardings, In store

    Quality Different quality in

    different brands High Quality Medium Quality

    Different quality in different brands

    High Quality

    Loyalty Program

    For Some Brands No No For Some

    Brands Yes

  • Indian Garment Industry 33


    Post-MFA Scenario

    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,

    Mexico, Turkey.

  • Indian Garment Industry 36



    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

    Destination Country

    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


    2002 2003 2004 2005 2006 Exporting Countries Textil

    es Apparel










    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

    clothing include:

    • 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



    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.






    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

    2.39 5.22

    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)

    2.02 4.02

    Mar 2003 983.0 2.37 855.0 3.26 48.56 16 % Excise Duty on Woven Garments (2002 Budget)

    2.41 3.81

    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

    2.92 4.97

    Mar 2006 1,148 3.18 1153.0 5.43 44.28 Mid= Year, 12 % Re appreciation

    2.77 4.71

    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

    garments respectively

    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

    export rebates.

    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


    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


    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

    and Indore

    • 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:

    Trend 1

    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


    Trend 2

    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.

    Trend 3

    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.

    Trend 4

    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.

    Trend 5

    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%.

    Trend 6

    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.

    Trend 7

    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

    beauty salons.

    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.

    Trend 8

    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



    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


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    • 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.

    Knitted Fabrics

    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

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    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.

    Printed Fabrics

    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.

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    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.

    Embroidery Systems

    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

    Digitising Systems

    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.

    Grading Systems

    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.

    Cutting Operations

    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

    Policy 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

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    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.

    Labour Reforms

    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

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    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.

  • Indian Garment Industry 65



    • 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

    growth momentum,

    • Swift response on a continuous basis to evolving adverse international

    and domestic developments through both conventional and

    unconventional measures.

    • Emphasis on credit quality and credit delivery while pursuing

    financial inclusion.

    • 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.


    RBI Website

  • Indian Garment Industry 66

    • 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

    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

    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



    • 32%15 growth in TV ad volumes of fashion industry