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Indian Textile Industry:
A Growth Perspective
Mr. Sachit JainVardhman Group
Singapore, March, 2010
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Indian Textile Industry: Growth Drivers
o Global Opportunities
o Domestic Policy Frame-Work
o Manufacturing competitiveness
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Growing world trade in textile and clothing offerssignificant opportunities for Indian T&C exports
152
158
310
157
198
355
203
277
480
250
362
612
280
440
720
0
200
400
600
800
1000
1200
1400
1600
1995 2000 2005 2008 2012
World Trade in Textiles and Cothing(USD bn)
Total
Clothing
Textile
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World Trade in Textile and Clothing
With removal of quantitative restrictions especially after 2002, Indiastextile and clothing exports grew at a higher rate during 2002-2007in tandem with growth in world trade in T&C.
Indias T&C exports growth was lower than China, which registered
23% growth in T&C exports during 2002-2007. China exported $171bn T&C products against $22 bn from India
It indicates missed opportunities as well as scope for future growth
Textile Clothing T&C
1995-2002
World 0.2% 4% 2%
India 4% 5% 4%
2002 -2007
World 9% 11% 10%
India 11% 11% 11%
*CAGR
Comparative growth rate in World Trade in T&C(%)*
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0Growing importance of cotton in world trade intextile and clothing is visible in USA T&C imports
USA: Textile and Clothing Imports( USD bn)
5552
40
24
13
15
20
3237
38
0
10000
20000
30000
40000
50000
60000
1990 1995 2000 2005 2008
Cotton products
Non cotton
products
48
56 58 59
0
10
20
30
40
50
60
1990 2000 2005 2008
USA T&C imports: Percentage share of cotton products
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0The Industry Structurally has a Significant
Potential to Grow
Growing Internationaldemand ,
Large domestic market
Presence in all parts of valuechain
Large numbers of producers
Availability of Raw Materialsand Workforce
Well developed textile machinery industry
Context forFirm Strategy
and Rivalry
Factor(Input)
Conditions
DemandConditions
Related &Supportingindustries
Attributes of Indias Textile Industry whichprovides structural advantage to grow -
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0India share in world installed capacity of spindlesand shuttle-less looms
39
104
212
0
50
100
150
200
250
India China World
Spindles Installed capacity ( mn nos.)
50
370
970
0
200
400
600
800
1000
India China World
Shuttle-less looms installed capacity(in 000 nos.)
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Breaking from the past legacy
Fragmented Industry Structure
Low Level Of Technology
Sub-scale Of Operations
Because of past policy distortion, the
profitability and investments remained
subdued in the past
Fi l P li F k F f t d d t
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0Fiscal Policy Framework : From fragmented duty
structure to unified approach
Fabric1993-94
(Rs./sqm) Exemption2003 2004/2006
Limit(if any) B.E.D. S.E.D. B.E.D.
1 FABRIC(WOVEN )
Cotton Fabric Optional Duty 2(optional) 10
a) Does not
exceeds Rs.100.20
Man Made/
Blended Fabric Optional Duty 2(optional)10
FABRIC
(KNITTED)
Cotton Optional Duty 2(optional)8
Blended & MMF Optional Duty 2(optional) 10
2 FABRIC PROCESSING
B.E.D.
A.1
Hand
Processing(With
out aid of
Power/steam)
0 0
e.) Exceeds
Rs.10020% A.2
Hand
Processing (with
specified 12
power
processes for
100% cotton
fabric)
0 5 5
2
A.3
Hand
Processing (with
specified 12
power
processes for
Blended and
100% non cotton
fabric)
0 8
a.)Does not
exceeds Rs.40
per sqm. 0.50+5%
A.4
Hand
processing(with
specified 7
powerprocesses for
man made
fabric)
0 8
CProcessed fabric
-woven 12 10
D Processed fabric
knitted-Cotton Optional 2(optional)
8
E
Processed
Fabric Knitted-
MMF Optional 2(optional)10
3
4
4% on a
cotton fabric
and 8% on
blended and
non cotton
fabric for all
categories
Cotton/Blended/Manmade
fabric processed with out aid
of power is exempted from
duty
India: Trends in Effective Rate of Excise Duty on Fabric and Fabric Processing
c.) Exceeds
Rs.100 per
sqm
20%
Grey fabric exempted from
duty
Blended and man made
fabric, whose value per sqm
b.) Exceeds
Rs.40 but does
not exceeds
Rs.100
2.50+ 20% of
the value
exceeding
Rs.40 per
sqm.
d.) Exceeds
Rs.40 but does
not exceeds
Rs.100
2.50+ 20% of
the value
exceeding
Rs.40 per
sqm.
c.) Exceeds
Rs.25 but does
not exceeds
Rs.40 0.50+5%
Particulars2002
1
Cotton fabric
whose value
per sqm.
b.) Exceeds
Rs.10 but does
not exceeds
Rs.25 0.50
B.E.D.
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0Domestic policy frame work-Recent initiatives
Restoration of level playing fieldOrganised vs. unorganized sector
Small vs. large units
Unequal fiscal treatment has been abandoned
Duty rationalization
Technology upgradation fund(TUF)
Reduction in import duty on most of textile machinery
Capital subsidy for fabric processing
Development of SEZ and apparel parks are put on fast track.
Fiscal policy reforms refurbish the investmentoutlook of the industry
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Textile industry committed efforts to harness thefundamental strengths are visible in growing investments
0
2
4
6
8
10
12
14
16
1999-
2000
2000-
2001
2001-
2002
2002-
2003
2003-
2004
2004-
2005
2005-
2006
2006-
2007
2007-
2008
2008-
2009
Investment approved under TUF
( USD 40 bn)
About equal amount of investment is projectedin next 10 years
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Scope for future growth lies in fundamental strengths ofthe Indian Textile Industry
Well integrated production base
Wide range of Cotton / Spun yarn
Strong base for Cotton , PSF and PFY
Wide range of Cotton and Synthetic fabric
Growing domestic market for high quality textiles
Growing demand for Technical Textiles / Performance Fibres
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Indias share in cotton production in the world isgrowing( mn tons)
17
19
26
2 24 5
23 21%
16%
12%12%
0
5
10
15
20
25
30
1993/94 2000/01 2005/06 2008/09
0%
5%
10%
15%
20%
25%World
India
% share of India in
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0The principle cause for higher cottonproduction is growing productivity( kg/ha)
Productivity per hectare( kg/ha)
278
524
610
724761
554
478
286
0
100200
300
400
500
600
700
800
1993/94 2000/01 2005/06 2008/09
World
India
100
52
100
46
100
66
100
69
0
20
40
60
80
100
1993/94 2000/01 2005/06 2008/09
India recorded higher growth rate in productivity
World
India
I i tt d ti it
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0Increasing cotton productivity :
Village adoption programo The cotton yield in Punjab declined to very low level 300 kg/ha in 1999
leading to drop in cotton cultivation
o Best yield award to cotton growers started in 2001
o Village adoption program for increasing cotton productivity by improving
cultivation practices and quality seed started in 2003
o Cotton productivity grew to 700 kg/ha in Punjab
o The model is all set to be replicated in rest of cotton producing States in
India, which will give sustainable increase in productivity and cotton crop
0
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0India: Foreign trade trends in cotton
India: Import and export of cotton fiber( mn tons)
0.0
0.2
0.4
0.6
0.8
1.0
1993/94 2000/01 2005/06 2008/09
Import
Export
The Indian cotton isattractive to foreign
Buyers due to its
peculiar
characteristics
Cotton constitutesa major part of
imported cotton for
manufacturing
Higher counts
0
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2 0 0 82 0 2 0
A rea und er co ttoncu ltivat ion - m n ha m n h ec ta re
1 0 1 0
P ro d u c tiv ity kg /h a
5 6 0 7 5 0
P ro d u c tio n m n to n s5 .6 7 .5
C o n su m p tio n m n to n s4 6 .2
C o tto n su rp lu s m n to n s1 .6 1 .3
C O T T O N E C O N O M Y O F IN D IA O U T L O O K 2 0 20
0Cotton fiber place in Indian textile value chain will
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10Cotton fiber place in Indian textile value chain will
remain important
PRODUCTION OF SPUN YARN (IN '000 TONNES)
1510
1894
2267 2272
2948
4500
395
646 585677
2800
107196 248
366 378
800
207
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1990 1995 2000 2005 2008 2020
YEAR
COTTON
BLENDED
100% N.C.
0
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67752395TOTAL
3917PPFY
11130NFY
13644VFY
35001336PFY
93PPSF
32091ASF
695223VSF
1965651PSF
20202009
India: MMF consumption projections( mn kg)
10
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INDIA: TEXTILE FIBER CONSUMPTION
OUTLOOK 2020
42.7
6.56.7
0
2
4
6
8
2009 2020
Fiber consumption outlook-2020( mn tons)
Cotton
MMF
60
49
40
51
010
20
30
40
50
60
Cotton MMF
Composition of fiber consumption(% share)
2009
2020
10Size of Indian Textile Industry-Exports
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10Size of Indian Textile Industry-Exports
Textile and Clothing exports(USD bn)
13.50 14.0517.50 19.10
21.50 22.0018.36 19.27
21.6424.30
40.00
60.00
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-
2011
2011-
2012
2012-
2013
2014-
2015
2019-
2020
-15
-10
-5
0
5
10
15
T&C exports growth rate
10
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3.5
1310
30
0
5
10
15
20
25
30
INDIA CHINA WORLD USA
Scope for growth in domestic market:
Per capita fiber consumption(Kg)
10
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35
22
60
37
90
60
0
20
40
60
80
100
120
140
160
2008-09 2014-15 2019-2020
PROJECTED SIZE OF INDIAN TEXTILE INDUSTRY( USD BN)
Exports
Domestic
010SWOT analysis of Indian Textile Industry:
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1SWOT analysis of Indian Textile Industry:
Strengths
Independent & Self-Reliant industry.
Availability of Low Cost and Skilled Manpower
Availability of large varieties of cotton fiber and has a fast
growing synthetic fiber industry.
India has great advantage in Spinning Sector and has a
presence in complete textile value chain.
010SWOT analysis of Indian Textile Industry:
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1SWOT analysis of Indian Textile Industry:Weaknesses
The fabric and garmenting sector need modernization,which is under process
Infrastructural Bottlenecks and Efficiency such as,Transaction Time at Ports and transportation Time.
Unfavorable labor Laws.
Lack of Trade Membership, which restrict to tap otherpotential market.
Economies of Scale- average spinning mill-14000 spindles
Higher Indirect Taxes, Power and Interest Rates.
010SWOT analysis of Indian Textile Industry:
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1SWOT analysis of Indian Textile Industry:Opportunities
Growth rate of domestic Textile Industry is 6-8% per annum.
Large potential in International Market.
Product development and diversification to cater global needs.
Elimination of Quota Restrictions leads to greater Market Access.
Market is gradually shifting towards Branded Readymade Garments.
Emerging Retail Industry and Malls provide huge opportunities for
the Apparel, Handicraft and other segments of the industry.
Greater Investment and FDI opportunities are available. Large scope for technical textile linked with growing industrialization,
large infrastructure projects in stream
010SWOT analysis of Indian Textile Industry:
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1SWOT analysis of Indian Textile Industry:Threats( Concerns)
Competition from other developing countries, especially
China in domestic market also will lead to consolidation
Elimination of Quota system has led to fluctuations in
Export Demand.
Rising prices of inputs-raw material
Formation of trading blocks
010
Vibrant Private Sector
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1 Vibrant Private Sector
Vardhman Group Bombay Rayon Nahar Alok Arvind mills Ahima Shanmugvel JCT Madura Welspun Surya Laxmi Group Trident Ramlinga Group Gokaldas exports
Lakshmi Group Orient Craft LNJ Group Bombay Rayon Fashions Chola Group Raymond Raja Palayam
Super spinning Centaury GTN group
2010
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Thank You