SWOT ANALYSIS OF THE INDIAN GARMENT INDUSTRYPRESENTED BY:AKRITI DIXITALANKRITI SONKARDEEPALI CHOUDHARYDEVENDRA GUPTAKOMAL KATYALMANISH PANWAR

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INDIAN GARMENT INDUSTRYThe garments industry in India is one of the best in the world. An extremely well organized sector, garment manufacturers, exporters, suppliers, stockists and wholesalers are the gateway to an extremely enterprising clothing and apparel industry in India. There are numerous garments exporters, garments manufacturers, readymade garments exporters etc. both in the small scale as well as large scale.The Indianapparel industryalso has a vast existence in the economic life of the country.

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It plays a critical role in the economic development of the country with its contribution to industrial output, export earnings of the country and the generation of employment.The Indian apparel industry has seen remarkable changes in the past few years and it is also one of the India's largest foreign exchange earners. Embroidery being the traditional art form of the country has contributed hugely for apparel industry. Indian embroidery market stands out as being extraordinary in the international markets.

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Country wise garment production *

GARMENT INDUSTRY KEY FACTSThe apparel industry is one of the largest foreign exchange earners, accounting for nearly 16% of the country's total exports.It has been estimated that India has approximately 30,000 readymade garment manufacturing units and around three million people are working in the industry.Indian garment Industry is one of the largest and oldest industry in India.Indian garment Industry is highly fragmented industry; at the same time it is an independent and self-reliant industry that has shown sustainable growth over the years.

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Handloom sector 14 %Hosiery sector 19%Mill sector 4 %Powerloom 63%*

Industry has direct and strong linkage with rural and agriculture sector, therefore it is estimated that, one of every six households in country is directly or indirectly dependent on this industry.India is evolved as a major contributor in worlds cotton sector. India is the worlds third-largest producer of cotton and second-largest producer of cotton yarns and textiles.Large and potential domestic & international market, large pool of skilled and cheap labor, well-established industry, promising export potential etc. are few strengths of Indian Textile Industry.Highly Fragmented, High dependence on cotton sector, Lower productivity, Unfavorable Labor Laws are few drawbacks of the industry from which it has to overcome.

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Labour cost comparisons*

India has around 6% of global rotor capacity.The country has the highest loom capacity, including handlooms, and has share of 61% in world loomage.Including garments, 30% of India's export comes from this sector.Indian garment Industry is one of the largest industry that provides high exports and foreign revenue.Exports of readymade garments registered a 6.4% increase in dollar terms and an 11.6% increase in rupee terms during the period April-December 1999-2000, despite a sluggish growth in income both at home and abroad. Indian Garment export growth during April-June 1998 for woolen ready made garments was a phenomenal 150%, for ready made garments made of silk it was 58%, and for other ready made garments it was 39%, in dollar terms.

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Degree of modernization in the Garment industry% of total shuttleless looms used in total loom capacity*

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Strengths: attributes of the person or company that are helpful to achieving the objective(s).Weaknesses: attributes of the person or company that are harmful to achieving the objective(s).Opportunities:externalconditions that are helpful to achieving the objective(s).Threats:externalconditions which could do damage to the objective(s).

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USE OF SWOT ANALYSISThe usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include:non-profit organizations, governmental units, and individuals. SWOT analysis may also be used in pre-crisis planning and preventivecrisis management. SWOT analysis may also be used in creating a recommendation during aviability study.*

STRENGTHSIndian Garment Industryis an Independent & Self-Reliant industry.Abundant Raw Material availability that helps industry to control costs and reduces the lead-time across the operation.Availability of Low Cost and Skilled Manpower provides competitive advantage to industry.India is one of the largest exporters of Yarn in international market and contributes around 25% share of the global trade in Cotton Yarn.TheApparel Industryis one of largest foreign revenue contributor and holds 12% of the countrys total export.Industry has large and diversified segments that provide wide variety of products.

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Increasing disposable incomes of the people.Brand conscious customers.Availability of cheap finance.Growing domestic market.Increase in number of malls.Growing Economy and Potential Domestic and International Market.Industry has Manufacturing Flexibility that helps to increase the productivity.

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WEAKNESSESIndian Garment Industry is highly Fragmented Industry. Predominance of unorganised sector.Industry is highly dependent on Cotton.Lower Productivity in various segments.Lack of Technological Development that affect the productivity and other activities in whole value chain.

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Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and transportation Time.Unfavorable labor Laws. Effect of historical government polices.Lack of Trade Membership, which restrict to tap other potential market.Lacking to generate Economies of Scale.Higher Indirect Taxes, Power and Interest Rates.

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OPPORTUNITIESIncreasing demand for the luxury brands from the middle class. Research and new product development can help the companies to move across the value chain.Increase use of CAD to develop designing capabilities.Indian companies need to focus on Product Development.Large, Potential Domestic and International Market.Product development and Diversification to cater global needs.

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Elimination of Quota Restriction leads to greater Market Development.Market is gradually shifting towards Branded Readymade Garment.Increased Disposable Income and Purchasing Power of Indian Customer opens New Market Development.Emerging Retail Industry and Malls provide huge opportunities for the Apparel, Handicraft and other segments of the industry.Greater Investment and FDI (Foreign Direct Investment) opportunities are available.

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THREATSIncreased competition in the domestic markets.Cheaper importsChanging governments policy on FDI.Need to improve the working condition of the people who are involved in this profession Competition from other developing countries, especially China. Tackle Chinese aggression over the international market. Continuous Quality Improvement is need of the hour as there are different demand patterns all over the world.

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Elimination of Quota system will lead to fluctuations in Export Demand.Threat for Traditional Market for Powerloom and Handloom Products and forcing them for product diversification.Geographical Disadvantages.International labor and Environmental Laws.To balance the demand and supply.To make balance between price and quality.

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STRATERGY FORMULATIONSWOT ANALYSISStrengths, Weaknesses, Opportunities and Threats (SWOT) analysis is astrategy development tool that matches internal organizational strengths and weaknesses with external opportunities and threats.Strengths and weaknesses are factors that are within your controlOpportunities and threats are those issues that you cannot control. *

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COMPARISON OF THE INDIAN AND CHINESE TEXTILE INDUSTYIndia ranks among the top target countries for any company sourcing textiles and apparel. Indeed, apart from China, no other country can match the size, spread, depth, and competitiveness of the Indian textile and apparel industry. Moreover, the global elimination of quotas at the end of 2004 has greatly enhanced the opportunities for sourcing from India.India: a growing source India supplies over US$13 bn worth of textiles and apparel to the worlds markets. And exports are growing rapidly as more and more buyers around the world turn to India as an alternative to China.Growing international competitiveness The reasons for Indias success are not hard to find. Apart from China, no other country can match the size, depth, spread and competitiveness of the Indian textile and apparel industry. India has a complete supply chain from a vast raw material supply to high quality finished products. Labour costs are among the lowest in the world. Indian firms offer experience, entrepreneurship and design skills which Chinese firms find hard to match.

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China has been more successful than India for attracting foreign buyers:Chinese suppliers are good salespeople.China has set up factories to make about every kind of product, whereas Indias industry does not have the same breadth of offer. This one-stop sourcing is a huge benefit for buyers trying to optimize their time and find everything they need on one trade show.

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Advantages of India over ChinaIndian exporters, having been very exposed to Western buyers/culture/business for a very long time, are much more understanding of Western business assumptions: they take their responsibilities more seriously than Chinese exporters. They understand that they are responsible for quality issues, even when a consignment has been inspected by the buyer. They understand that delivery on schedule is critically important, and understand that they need to compensate if a consignment has problems, or is late. This is not generally true of Chinese exporters.They truly understand long term relationships, and are not so focused on the profitability of each consignment. More so than Chinese exporters, they focus on the long term.*

There is a greater widespread understanding of their customers customers: What is acceptable to consumers in different countries in terms of packaging, quality, hidden manufacturing defects, safety issues (lead in paint/trace metals in children toys),Indians, overall, are more creative than Chinese factories. New designs/items are created and plugged into their potential markets. Creativity is real, in India, and they are not looking to copy, but to create something newWith all major international banks having branches in India, and very professional Indian banks, international trade is much more efficient than in China. Buying without L.C.s or a 30% deposit, is much more prevalent in India today, than in China.

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Global averageIndiachinaDeveloped countriesGrowing per capita garment consumption*

FUTURE PROSPECTSGarment industry is looking on achieving an export target of $25 billion by 2010-2011, an Apparel Export Promotion Council (AEPC) officially said.The industry would need an additional 1.5 million people.An investment of Rs. 35,000 crores in terms of related infrastructure.APEC plans to set up 55 training centres, besides the 22 training centres it has at present in the country.Recently AEPC and TCS tie up to meet the IT need of the industry. *

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