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INTRODUCTION

The textile industry in India traditionally, after agriculture, is the only industry that
has generated huge employment for both skilled and unskilled labour in textiles. The
textile industry continues to be the second largest employment generating sector in
India. It offers direct employment to over 35 million in the country. The share of textiles
in total exports was 11.04% during AprilJuly 2010, as per the Ministry of Textiles.
During 2009-2010, Indian textiles industry was pegged at US$55 billion, 64% of which
services domestic demand. In 2010, there were 2,500 textile weaving factories and
4,135 textile finishing factories in all of India. According to AT Kearneys Retail
Apparel Index, India is ranked as the fourth most promising market for apparel retailers
in 2009.

India is first in global jute production and shares 63% of global textile and garment
market. India is 2nd in global textile manufacturing and also 2nd in silk and cotton
production. 100% FDI is allowed via automatic route in textile sector. Rieter,
Trutzschler, Soktas, Zambiati, Bilsar, Monti, CMT, E-land, Nisshinbo, Marks &
Spencer, Zara, Promod, Benetton, Levis are the some of foreign textile companies
invested or working in India.

India is a traditional textile -producing country with textiles in general, and cotton in
particular, being major industries for the country. India is among the worlds top
producers of yarns and fabrics, and the export quality of its products is ever increasing.
Textile Industry is one of the largest and oldest industries in India. Textile Industry in
India is a self-reliant and independent industry and has great diversification and
versatility.

The textile industry can be broadly classified into two categories, the organized mill
sector and the unorganized decentralized sector.

The organized sector of the textile industry represents the mills. It could be a spinning
mill or a composite mill. Composite mill is one where the spinning, weaving and
processing facilities are carried out under one roof.

The decentralized sector is engaged mainly in the weaving activity, which makes it
heavily dependent on the organized sector for their yarn requirements. This
decentralized sector is comprised of the three major segments viz., power loom,

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handloom and hosiery. In addition to the above, there are readymade garments, khadi as
well as carpet manufacturing units in the decentralized sector.

The Indian Textile Industry has an overwhelming presence in the economic life of the
country. It is the second largest textile industry in the world after China. Apart from
providing one of the basic necessities of life i.e. cloth, the textile industry contributes
about 14% to the country's industrial output and about 17% to export earnings. After
agriculture this industry provides employment to maximum number of people in India
employing 35 million people. Besides, another 50 million people are engaged in allied
activities.

India is the largest producer of Jute, the 2nd largest producer of Silk, the 3rd largest
producer of Cotton and Cellulosic Fiber / Yarn and 5th largest producer of Synthetic
Fibers/Yarn.

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


employment in industrial sector, and has 16 % share in the countrys export. The
Industry contributes around 25% share in the world trade of cotton yarn. India is the
largest exporter of yarn in the international market and has a share of 25% in world
cotton yarn export market. India contributes for 12% of the worlds production of
textile fibers and yarn. Indian textile industry is second largest after China, in terms of
spindleage, and has share of 23% of the worlds spindle capacity. India has around 6%
of global rotor capacity. The country has the highest loom capacity, including
handlooms, and has a share of 61% in world loomage. The Apparel Industry is one of
largest foreign revenue contributor and holds 12% of the countrys total export.

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HISTORY

The archaeological surveys and studies have found that the people of Harrapan
civilization knew weaving and the spinning of cotton four thousand years ago.
Reference to weaving and spinning materials is found in the Vedic Literature. There
was textile trade in India during the early centuries. A block printed and resist-dyed
fabrics, whose origin is from Gujarat is found in tombs of Fostat, Egypt. This proves
that Indian export of cotton textiles to the Egypt or the Nile Civilization in medieval
times were to a large extent. Large quantity of north Indian silk were traded through
the silk route in China to the western countries. The Indian silk were often exchanged
with the western countries for their spices in the barter system. During the late 17th and
18th century there were large export of the Indian cotton to the western countries to
meet the need of the European industries during industrial revolution. Consequently,
there was development of nationalist movement like the famous Swadeshi
movement which was headed by the Aurobindo Ghosh.

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OVERVIEW OF INDIAN TEXTILE INDUSTRY

The Indian textile industry is as diverse and complex as country itself and it
combines with equal equanimity this immense diversity into a cohesive whole.
Endowed with largest loomage in the world; the second highest spindleage, next only to
China; a strong multi-fiber raw material base; a vast pool of skilled workers; flexible
production systems; a dynamic entrepreneurship together with vibrant design creativity,
have all contributed to creating a vibrant textile industry that has long been the mainstay
of the Indian economy.

The Indian textile industry is an enormous complex entity. There is organized sector,
decentralized sector and down the line weavers, the artisans as well as the farmers. The
spectrum of technology is wide spread right from handmade to semi-mechanical,
mechanical and highly sophisticated information based technology and micro-processor
based technology.
The fundamental strength of this industry flows from its strong production base
of wide range of fibers / yarns from natural fibers

The growth pattern of the Indian textile industry in the last decade has been
considerably more than the previous decades, primarily on account of liberalisation of
trade and economic policies initiated by the Govt. in the 1990s. Fiscal duty structure of
the textile industry has also influenced to a great extent the growth and the structure of
the industry. Historically the fiscal policies concerning textile industry have always
considered small is beautiful and consequence is reflected in structural anomalies and
concentration of downstream segments of the industry in the decentralised sector and
decimation of the organised sector. During current year an attempt has been made
to effect the correction in the anomalous duty structure by providing level playing
field to all segments of the industry.

The rationalisation of the fiscal duty structure would strengthen the organised sector
particularly the composite sector which has intrinsic strength in terms of economies of
scale, higher productivity, superior technology, integrated working, skilled workforce
and has the capability to produce the superior quality goods. In the competitive
globalised scenario the resurrection of composite sector is of utmost importance if
India has to emerge as a major player in the global textile market. Concentrated,
coordinated and focused approach for integration and modernisation is the need of the
hour

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TEXTILE VALUE CHAIN

The textile value chain extends from raw material, i.e., fibers to finished
products, i.e., clothing and made-ups, with spinning, weaving, knitting and processing
coming in between as intermediate processes. The structural pyramid of Indian
textile industry is inverse in terms of strength. Fiber manufacturing and spinning
processes is strong while weaving and processing are relatively weak segments.
However, in the recent past, there has been intensive activity in terms of technological
upgradation of entire value chain of the textile activity. About US $ 9.50 bn of
investment has taken place in this industry for capacity expansion and modernization
during the last about five years. A sort of silent revolution has been taking place, which
thus manifested itself in increase in production during the current year.
Though the Indian textile industry uses all kind of fibers / yarn, it continues to
be predominantly cotton based. The consumption of cotton fiber vis--vis other fibers /
yarn in India is 62 : 38, while the global consumption of fibers / yarn is 40 : 60 in
favour of non-cotton fibers / yarn. However, in India also the consumption of man-
made fiber / yarn is increasing very fast and expected to reach the world level in near
future.
As already stated Indian textile industry is predominantly cotton based. India is
the third largest producer of cotton following China and USA. During 2005-06(cotton
year Oct. Sept.) the production is estimated to be 244 lakh bales. The quality of cotton
has also improved considerably over a period of time. The improvement in quantity and
quality of cotton has been contributed to a great extent by the Cotton Technology
Mission (TMC) which was launched by Govt. during 1999. Till Nov.2006, under Mini
Mission III of TMC 219 projects for activation of market yard, improvement of market
yard and new market yards with project cost of Rs. 42953.84 lakh have been
sanctioned. Out of this, 122 projects have been completed.
Further under the mission IV, 821 projects of modernisation of ginning and pressing
factories with project cost of Rs. 1,10,834.67 have been sanctioned and out of this 381
projects have been completed till 30-11-06.

Other major fibers / yarns used by the textile industry are man-made fibers
/yarns. The man-made fibers/ yarns industry, particularly the polyester segment, has
achieved significant growth during the last two decades. The installed capacity
increased from 223 mn. kg in 80-81 to 2565 mn. kg. in June 2006. The production of

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this industry increased from 188 mn. kg during the year 80-81 to 2147 mn. kg (Prov)
during the year 2005-2006, out of which 1703 mn. kgs is contributed by polyester
segment alone. The sharp increase in production of polyester fiber and yarn has made
India emerge as the 5th largest producer of man-made fiber/filament yarn in the world.

Other fibers used by the textile industry are wool, silk and jute. Wool is the only
fiber the production of which is deficient in the country. We produce about 52 mn. kgs
of raw wool out of which only 5 mn. kg. is of average apparel grade and remaining 40
mn. kg. is of carpet grade wool and other coarse wool. The worsted woollen sector,
therefore, entirely depends on import of raw wool for meeting its raw material
requirements. Even the export oriented carpet industry depends on New Zealand wool
for blending to obtain the desired lustre in the carpets.
India is second largest producer of silk with annual production in the range of 15-16
mn.kg. However, India has the unique distinction of being endowed by nature with the
all four varieties of silk, viz., mulberry, tusar, eri and muga.
Another fiber is jute, we are the largest producer of the jute in the World. The
environmental considerations assuming importance have created new opportunities for
jute which is bio-degradable, renewable and eco-friendly. What has happened over the
years is that it has been traditionally associated with low value addition and utilization
in terms of sacking and packing material. However, recently efforts are being made to
diversify this sector into newer areas particularly geo-textiles. Textile industry has also
started using jute in blends with other fiber for apparel usage.

The growth in the production of textile fibers has facilitated the growth of the
spinning sector. Industrial delicensing and liberalization policies coupled with freedom
from unfair competition from unorganized sector accelerated the process of setting up
of spinning units in the organized sector after 1990s. As on 31/03/2006 1570 spinning
units are functioning in the organised sector. In the late 90s, SSI spinning units have
also sprung up mostly in and around Coimbatore. As on 31/03/2006 there were 1173
such units. Taking spindleage in organised and small
scale sector, about 37.51 mn. spindles and 5.20 lakh rotors are functioning in the
country as on 31/03/2006. The significant feature of the spinning industry is that about
92 percent of the yarn is produced in the organised sector, while only 8 percent is
produced in the small scale sector. Technology-wise also spinning industry is
reasonably modernized particularly by taking advantage of Textile Moderniation Fund

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Scheme (TMFS) which was in vogue during VII Plan. The spinning industry is also the
largest beneficiary under Technology Upgradation Fund Scheme (TUFS). The projects
worth Rs. 15032 crore have been sanctioned under the scheme during 2005-06. Many
compact yarn spinning units are also coming up under TUFS.

Consequent upon the growth in spinning capacity, the production of cotton,


blended and 100% non cotton yarn has also gradually increased and during the year
2005-06 it was provisionally estimated at 2521, 588, 349 mn. kg respectively. India,
today is one of the largest producer / exporter of cotton yarn.
Weaving activity, in which India was lagging behind for a very long period has
also taken a quantum jump as far as quality is concerned during the recent period. In the
last 2-3 years, more than 20,000 shuttleless looms have been installed. Further by
taking advantage of 20% capital subsidy scheme under TUFS, weaving and weaving
preparatory activities are being upgraded by the powerloom sector.
At the time of independence, mill sector was producing 75 percent of the total
cloth production. However, subsequently restrictions were imposed in the installation of
weaving capacity of the mill sector. Therefore, the weaving capacity of the organised
mill sector stagnated for a number of years. Even after the removal of the restrictions in
1985, the capacity of the organised mill sector, which had by then lost its competitive
edge, has been consistently declining. Thus, between 1985 and 2006, the weaving
capacity has declined from 2.10 lakh to 0.92 lakh looms a decline of 50 percent.
However, there is discernible, though hazy, trend of revival of composite mills.
Composite segment is the second largest beneficiary under TUFS. Projects worth Rs.
3873.69 crore till 31.03.2006, have been sanctioned under the scheme. It is expected
that as TMFS launched during the VII Plan has modernized the spinning industry
enabling the country to become the largest exporter of cotton yarn, the TUFS will
strengthen the technology of the weaving sector.

The powerloom sector has been expanding steadily. The number of powerlooms
have increased from 15.99 lakh in 1998-99 to 19.38 lakh by the end of year 2006.
Further, the technology level of powerloom sector, which used to be very low, has
started improving. The Governments efforts are in progress to formulate the schemes
to accelerate the modernization process of powerloom sector. Cluster Development
programmes in the identified clusters of powerloom have also been

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initiated by the Government organizations. The powerloom associations are also
activating themselves to create the awareness about the need for alround development
of the powerloom sector enabling it to face successfully the challenges of globalised
economy.

Indian hand woven fabric occupies a place of eminence in preserving the


country's heritage and culture. It has a long tradition of excellence in its craftsmanship.
The handloom industry has an advantage of flexibility of small production quantities,
openness to innovations, low investment, labour intensive and adaptability to market
requirements etc., is trying to innovate and produce high level products
There is tremendous potential for knit products, global demand for which is
growing at a faster pace than for woven textiles. Increased use of knitted fabrics for
fashion wear and household articles has opened up new vistas for this sector. The
knitted segment has been de-reserved from March 2005. Production by this sector
touched 10418 million sq. mtr during 2005-06. With the removal of restriction on
investment due to de-reservation of this sector, investment is likely to go up.
The processing stage is undoubtedly the most significant process in the value
chain of various textile products contributing the essential user requirements of easy
maintenance, colour fastness and also aesthetic value addition in terms of colours,
motifs and designs. The value addition at this stage of production is maximum, often
manifold; what with bio-finishes, various surface finishes such as peach finish, sand
finish, raised finish, or brush fabrics; coated, impregnated fabrics, water repellent, fire
retardant and anti bacterial finish etc. In India also many high-tech processing units
have been set up in the recent past and many units are at implementation stage under
TUFS. The Government has approved additional 10% capital subsidy for specified
processing machinery under TUFS w.e.f. 20/04/2005.

Clothing industry is a phenomena of this century more specifically the 1970s


onwards owing its growth to the potential in apparel exports. Since a modest beginning
in the 70s it has grown into a gigantic industry spread over the country. The growth
rate of clothing industry has almost doubled over the last 8 years and the knitted
segment has grown faster than woven garments. The estimated production of this
industry is about 8000 mn. pieces with market value of US$ 28 bn. We still pin our
hopes on this sector to drive the textile industry and trade and tuned it as engine of
growth. Inspite of several problems faced by clothing segment, this sector has shown

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dynamism and achieved rapid growth during the last two decades. This sector has the
potential to achieve tremendous growth particularly in the global trade by broad basing
its market and product mix to meet the challenges of trading blocks created in its major
markets, i.e., US and EU. To provide the industry with world class infra structure
facilities for setting up textile units. Scheme for Integrated Textile Parks (SITP) was
launched. The National Institute of Fashion Technology (NIFT) has been set up to
provide a leadership role in sensitizing the industry to the concept of value addition by
inducting trained professionals to manage the industry. ATDCs run by AEPC, TRAs
and Powerloom Service Centres are also contributing by catering the need of human
resource development.

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EXPORT OF TEXTILES & APPAREL

A steady inflow of foreign exchange is one of the dominant features of the


economic contribution of the textile trade. Successive government policies have
consistently encouraged measures to exploit our comparative advantages to increase
exports. The exclusivity of our handlooms; the uniqueness of silk; the flare of our
fashion designers; the delicacy of our carpets; and the cost competitiveness of our
powerloom cotton fabrics have kept up a steady interest in Indian textiles and made the
task comparatively easy for an export increased considerably from US$ 5 bn. to US$ 17
bn. in 2005-06. The textile exports also contribute to about 16 percent of the Indias
total exports. In the global textile trade also our share has increased from 1.85 percent
in 1985 to 3.04 percent in 2004. However, it is still lower than our share of 11 percent
in 1951. Further, our exports have grown at an average of 12 percent per annum in
dollar terms during 2002-03 to 2005-06.

The National Textile Policy (N. Tx. P.) 2000 has envisaged textile exports at
US $ 50 bn. with the share of garments at US $ 25 bn. by 2010. The Government has
initiated appropriate schemes to provide the necessary thrust for achieving the export
targets of US $ 50 bn. by 2010. The world trade is expected to increase at the rate of 8
percent. By 2010 it will be about US$ 660 bn. Accordingly, the US$ 50 bn. target
would mean global share of 7 percent as against 3.13 percent currently. The World
Bank has estimated that Indian clothing industry would benefit from abolition of quota
as its quota levels are always fully utilized. The recent measures taken by the

Government in the form of TMC, TUFS, Cluster development plan, SITP are also
bound to reflect in strengthening the fundamentals of the textile industry enabling it to
market its products aggressively in the global market.

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SWOT ANALYSIS

STRENGTHS OF THE TEXTILE INDUSTRY

The following are few strengths of the Indian Textile Industry:

An Independent and self-reliant industry;


Large and potential domestic and international market;
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;
Availability of large varieties of cotton fiber and has a fast growing synthetic fiber
industry;
Promising export potential.

Weaknesses of the Textile Industry:

The following are the few drawbacks of the textile industry, which it has to overcome.

The Industry is a highly fragmented Industry.


It is highly dependent on Cotton.
There is lower productivity in various segments.
There is a declining in Mill Segment.
Lack of Technological Development that affect the productivity and other activities
in whole value chain.
Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and
transportation Time.

Threats of textile industry

Competition from other developing countries, especially China.


Continuous Quality Improvement is need of the hour as there are different demand
patterns all over the world.
Elimination of Quota system will lead to fluctuations in Export Demand.

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Threat for Traditional Market for Power loom 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

Opportunities:
Growth rate of Domestic Textile Industry is 6-8% perannum.
Large, Potential Domestic and International Market.
Product development and Diversification to cater globalneeds.
Elimination of Quota Restriction leads to greater MarketDevelopment.
Market is gradually shifting towards BrandedReadymade Garment.
Increased Disposable Income and Purchasing Power of Indian Customer opens New
Market Development.
Emerging Retail Industry and Malls provide hugeopportunities for the Apparel,
Handicraft and othersegments of the industry.
Greater Investment and FDI opportunities are available

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PRODUCTION

India is the second largest producer of fiber in the world and the major fiber produced
is cotton. Other fibers produced in India include silk, jute, wool, and man-made fibers. 60%
of the Indian textile Industry is cotton based. The strong domestic demand and the revival of
the Economic markets by 2009 has led to huge growth of the Indian textile industry. In
December 2010, the domestic cotton price was up by 50% as compared to the December
2009 prices. The causes behind high cotton price are due to the floods in Pakistan and China .
India projected a high production of textile (325 lakh bales for 2010 -11). There has been
increase in India's share of global textile trading to seven percent in five years. The rising
prices are the major concern of the domestic producers of the country.

Man Made Fibers: This includes manufacturing of clothes using fiber or filament
synthetic yarns. It is produced in the large power loom factories. They account for the
largest sector of the textile production in India.This sector has a share of 62% of the
India's total production and provides employment to about 4.8 million people.
The Cotton Sector: It is the second most developed sector in the Indian Textile industries.
It provides employment to huge amount of people but its productions and employment is
seasonal depending upon the seasonal nature of the production.
The Handloom Sector: It is well developed and is mainly dependent on the SHGs for their
funds. Its market share is 13%. of the total cloth produced in India.
The Woolen Sector: India is the 7th largest producer.
of the wool in the world. India also produces 1.8% of the world's total wool.
The Jute Sector: The jute or the golden fiber in India is mainly produced in the Eastern
states of India like Assam and West Bengal. India is the largest producer of jute in the
world.
The Sericulture and Silk Sector: India is the 2nd largest producer of silk in the world.
India produces 18% of the world's total silk. Mulberry, Eri, Tasar, and Muga are the main
types of silk produced in the country. It is a labor-intensive sector.

COTTON TEXTILE

In the early years, the cotton textile industry was concentrated in the cotton growing belt of
Maharashtra and Gujarat. Availability of raw materials, market, transport, labour, moist

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climate and other factors which contributed to localisation. In the early twentieth century, this
industry played a huge role in Bombay's economy but soon declined after Independence.
While spinning continues to be centralised in Maharashtra, Gujarat and Tamil Nadu, weaving
is highly decentralised. As of 30 September 2013, there are 1962 cotton textile mills in India.
Out of which about 80% are in the private sector and the rest in the public and cooperative
sector. Apart from these, there are several thousand small factories with four to ten looms.

India exports yarn to Japan, United States, United Kingdom, Russia, France, Nepal,
Singapore, Sri Lanka and other countries. India has the second largest installed capacity of
spindles in the world, with 43.13 million spindles (30 March 2011) after China. Although
India has a large share in world trade of cotton yarn, its trade in garments is only 4% of the
world's total. This is due to the incompetency of local spinning and weaving mills to process
yarn . There exist some large factories, but most of the production is fragmented in small
units, which cater to the local market. This mismatch is a major drawback for the industry. As
a result, many of the spinners export yarn while apparel/garment manufacturers have to
import fabric. Power supply is erratic and machinery is outdated that needs to be upgraded.
Other problems include low output of labour and stiff competition with the synthetic fiber
industry

JUTE TEXTILE

India is the largest producer of raw jute and jute goods and the second largest exporter after
Bangladesh. There were about 80 jute mills in India in 2010-11, most of which are located in
West Bengal, mainly along the banks of the Hooghly River, in a narrow belt (98 km long and
3 km wide). Factors responsible for their location in the Hooghly basin are: inexpensive
water transport, good network of railways, roadways and waterways to facilitate movement
of raw material to mills, abundant water supply, cheap labour from neighbouring states.

In 2010-2011 the jute industry was supporting 0.37 million workers directly and another
400,000 small and marginal farmers who were engaged in the cultivation of jute.Challenges
faced by the industry include stiff competition in the international market from synthetic
substitutes and from other countries such as Bangladesh, Brazil, Philippines, Egypt and
Thailand. However, the internal demand has been on the rise due to Government policy of
mandatory use of jute packaging. To stimulate demand, the products need to be diversified.

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In 2005, the National Jute Policywas formulated with the objective of improving quality,
increasing productivity an enhancing the yield of the crop.

TEXTILE SECTORS IN INDIA

THE MAN-MADE FIBER / YARN AND POWERLOOM SECTOR: This part of


industry includes fiber and filament yarn manufacturing units. The Power looms sector is
decentralized and plays a vital role in Indian Textiles Industry. It produces large variety of
cloths to fulfill different needs of the market. It is the largest manufacturer of fabric and
produces a wide variety of cloth. The sector contributes around 62% of the total cloth
production in the country and provides ample employment opportunities to 4.86 million
people.

THE COTTON SECTOR: Cotton is one of the major sources of employment and
contributes in export in promising manner. This sector provides huge employment
opportunities to around 50 million people related activities like Cultivation, Trade, and
Processing. Indias Cotton sector is second largest producer of cotton products in the world.

THE HANDLOOM SECTOR: The handloom sector plays a very important role in the
countrys economy. It is the second largest sector in terms of employment, next only to
agriculture. This sector accounts for about 13% of the total cloth produced in the country
(excluding wool, silk and Khadi).

THE WOOLEN SECTOR: The Woolen Textile sector is an Organized and Decentralized
Sector. The major part of the industry is rural based. India is the 7th largest producer of wool,
and has 1.8% share in total world production. The share of apparel grade is 5%, carpet grade
is 85%, and coarse grade is 10% of the total production of raw wool. The Industry is highly
dependent on import of raw wool material, due to inadequate production.

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THE JUTE SECTOR: Jute Sector plays very important role in Indian Textile Industry. Jute
is called Golden fiber and after cotton it is the cheapest fiber available. Indian Jute Industry is
the largest producer of raw jute and jute products in the world. India is the second largest
exporter of jute goods in world.

THE SERICULTURE AND SILK SECTOR: The Silk industry has a unique position in
India, and plays important role in Textile Industry and Export. India is the 2nd largest
producer of silk in world and contributes 18% of the total world raw silk production. In India
Silk is available with varieties such as, Mulberry, Eri, Tasar, and Muga. Sericulture plays
vital role in cottage industry in the country. It is the most labor-intensive sector that combines
both Agriculture and Industry.

THE HANDICRAFT SECTOR: The Indian handicrafts industry is highly labor intensive,
cottage based and decentralized industry. It plays a significant & important role in the
countrys economy. It provides employment to a vast segment of craft persons in rural &
semi urban areas and generates substantial foreign exchange for the country, while preserving
its cultural heritage.

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TEXTILE ORGANIZATIONS

The following are some governmental, semi-governmental, private bodies and


associations, which are working for the smooth running of the commerce of
textile in India.

The Ministry of Textiles:

A Secretary who is assisted in the discharge of his duties by four Joint Secretaries and the
Development Commissioners for Handlooms and Handicrafts, Textile Commissioner and
Jute Commissioner heads this. The following are the principal functional areas of the
Ministry:

Textile Policy & Coordination


Man-made Fiber/ Filament Yarn Industry
Cotton Textile Industry
Jute Industry
Silk and Silk Textile Industry
Wool & Woollen Industry
Decentralised Powerloom Sector
Export Promotion
Planning & Economic Analysis
Integrated Finance Matters
Information Technology

Advisory Bodies:
All India Handlooms Board
All India Handicrafts Board
All India Power looms Board
Advisory Committee under Handlooms Reservation of Articles for Production
Co-ordination Council of Textiles Research Association

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Cotton Advisory Board
Jute Advisory Board
Development Council for Textiles Industry

Export Promotion Councils:


Apparel Export Promotion Council, New Delhi
Carpet Export Promotion Council, New Delhi
Cotton Textiles Export Promotion Council, Mumbai
Export Promotion Council for Handicrafts, New Delhi
Handloom Export Promotion Council, Chennai
Indian Silk Export Promotion Council, Mumbai
Power loom Development & Export Promotion Council, Mumbai
Synthetic & Rayon Textiles Export Promotion Council, Mumba
Wool & Woolen Export Promotion Council, New Delhi

Autonomous Bodies:
Central Wool Development Board, Jodhpur
National Institute of Fashion Technology, New Delhi
National Centre for Jute Diversification
Statutory Bodies:

Central Silk Board, Bangalore


Jute Manufactures Development Council, Kolkata
Textiles Committee, Mumbai

Textiles Research Associations:

Ahmedabad Textiles Industrys Research Association


Bombay Textiles Research Association, Mumbai
Indian Jute Industries Research association, Kolkata
Man-made Textiles Research Association, Surat
Synthetic and art silk Mills Research Association, Mumbai
Wool Research Association, Thane

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Northern India Textiles Research Association, Ghaziabad
South India Textiles Research Association, Coimbatore

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PUBLIC SECTOR UNDERTAKINGS

National Textile Corporation Ltd. (NTC): This is the single largest Textile Central Public
Sector Enterprise under Ministry of Textile managing 52 textile mills through its 9
subsidiary companies spread all over India. The Headquarters of the holding company is
at New Delhi.
British India Corporation Ltd. (BIC): It has 2 woolen mills, one in Kanpur (U.P) and the
other in Dhariwal (Punjab).
Cotton Corporation of India Ltd. (CCI): This profit-making Public Sector Undertaking
under the Ministry of Textiles, situated in Mumbai is engaged in commercial trading of
cotton.
Jute Corporation of India Ltd. (JCI): The JCI functions as the official agency in
implementing Govt. policy of providing minimum support to the jute growers and to
serve as a stabilizing agency in the raw jute sector. It has a large number of procurement
centres in the following major jute growing states of the country: West Bengal, Bihar,
Assam, Meghalaya, Tripura, Orissa, and Andhra Pradesh.
National Jute Manufacturers Corporation (NJMC): This is the apex body for the
management of all nationalized jute mills. It is situated in Kolkata and is a wholly owned
undertaking of the Government. The NJMC is involved in the activities of modernization
and renovation of jute mills under it.
Birds Jute Exports Ltd. (BJEL): This is the only subsidiary Corporation of the National
Jute Manufactures Corporation (NJMC) Ltd. And it is a pioneer in processing for Jute,
Jute Cotton / Viscose blended fabrics used as decoratives and furnishing.
Handicrafts and Handlooms Export Corporation (HHEC): This is a government company
under the administrative control of Ministry of Textiles. It has its registered office at New
Delhi. The HHEC has been set up with the objectives of export promotion and trade
development of handicrafts and handloom products. The corporation is also presently
engaged in the development and introduction of jute products for home use in
international markets. Major crafts products of Corporation are garments, jewellery, jute
and leather products.
Central Cottage Industries Corporation (CCIC): The Corporation operates through its 5
showrooms situated in Delhi, Kolkata, Mumbai, Bangalore, and Chennai and has
franchisee outlets at Jaipur and Gurgaon.

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National Handloom Development Corporation (NHDC): The main objective of the
corporation are to ensure easy availability of raw materials and inputs used in handloom
sector like yarn, dyes and chemicals and other inputs and to encourage production and
marketing of handlooms by opening of marketing outlets. The NHDC has set up
marketing complexes at Jaipur, Kochi, Calcutta, Quilon, Hyderabad, Ahmedabad and
Kanpur where variety of handloom products of different state / regions are made available
under one roof.

Indian Textile Policy 2000:

For the growth and development of the Indian Textile Industry and to make it more vibrant,
the Government of India passed the National Textile Policy in 2000, which had the following
objectives:

to produce and provide good quality cloth in affordable price to fulfill different needs
of customers;
to increase the share of India in Global Textile Market;
to increase the contribution for employment and economic growth of country.

National Jute Policy-2005:

The objectives of the policy are to:

Enable millions of jute farmers to produce better quality jute fiber for value added
diversified jute products and enable them to enhance per hectare yield of raw jute
substantially;
Facilitate the Jute Sector to attain and sustain a pre-eminent global standing in the
manufacture and export of jute products;
Enable the jute industry to build world class state-of-the-art manufacturing capabilities in
conformity with environmental standards, and, for this purpose, to encourage Foreign
Direct Investment, as well as research and development in the sector;
Sustain and strengthen the traditional knowledge, skills, and capabilities of our weavers
and craftspeople engaged in the manufacture of traditional as well as innovative jute
products;

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Expand productive employment by enabling the growth of the industry;
Make Information Technology (IT), an integral part of the entire value chain of jute and
the production of jute goods, and thereby facilitate the industry to achieve international
standards in terms of quality, design, and marketing
Increase the quantity of exports of jute and jute products by achieving a CAGR of 15%
per annum;
Involve and ensure the active co-operation and partnership of State Governments,
Financial Institutions, Entrepreneurs, and Farmers Organizations in the fulfillment of
these objectives.

Initiatives taken during 2007-2008:

Foreign Investment Promotion Scheme to attract foreign direct investment in textiles,


clothing and machinery. In the background of high potential of the textile sector, the
scheme aims at attracting investments through market studies of source countries and
potential investors; restructuring institutional arrangement for smooth FDI flow and
developing targeted strategy.
Brand Promotion Scheme, which is based on Public-Private Partnershipapproach, to
develop globally acceptable Indian apparel brands. The scheme is meant for
promotional programmes in the selected
targeted markets of the world. The scheme envisages publicity material through
electronic and print media campaigns; arranging India focus shows and exhibitions;
capacity building through training of entrepreneurs in export measures etc.
Textilpolis is to act as trade facilitation Center for Indian image branding, Research
and Development. The scheme is for setting up exhibition and seller interaction center
and common data resource center which inter-alia includes export infrastructure and
marketing infrastructure like global procurement center, international merchandise
center, single window center for regulatory services, center for brand administration,
and fashion development.

22
Fashion Hub is for providing an interface among stakeholders in textile industry such
as exporters, importers and buyers, by creating a permanent market place for the
Indian fashion industry.
Common Code of Conduct or Compliance Code is for acceptability by majority of
apparel buyers. In the present international merchandise with a multilateral restraint
free and highly competitive milieu, non-tariff barriers like environmental and social
standards have assumed commercial significance towards base minimal as well as
high end products in major markets of EU, USA etc. The Scheme is for development,
codification and awareness of such social and environmental compliance code by the
manufacturing units in the country so as to widen and deepen the international market
share.
Emphasis on Human Resource Deve lopment involves setting up of Training Centers
in Public Private Partnership (PPP) mode. The Scheme is aimed at bridging the gap
between training needs of textile industry with that of existing infrastructure of
training institutes. The scheme is for setting up new centers, upgrading the existing
centers, development of course design & materials, standardization of curriculum,
development of trainers pool etc.

Initiatives taken in the Budget 2008-2009:

The following were the major initiatives taken during the Budget of 2008-09:

Allocation towards the Scheme for Integrated Textile Parks (SITP) maintained at Rs
450 crore.
Allocation for the Technology Upgradation Fund (TUF) raised from Rs 911 crore to
Rs 1,090 crore.
Allocation for the development of the handloom sector increased to Rs 340 crore.
Setting-up six mega clusters proposed. The mega clusters include Varanasi and
Sibsagar for handlooms, Bhiwandi and Erode for powerlooms and Narsaspur and
Moradabad for handicrafts. An initial allocation of Rs 100 crore is proposed.
National Calamity Contingent Duty (NCCD) of 1 per cent on polyester filament yarn
abolished.
Handloom sector:

23
250 clusters being developed and 443 yarn banks established under the cluster approach
to the development of the handloom sector;
Over 17 lakh families of weavers to be covered under the health insurance scheme;
Allocation being increased to Rs.340 crore in 2008-09;
Infrastructure and production being scaled up by taking up six centres for development as
megaclusters.

Tax Incentives

General Central Value Added Tax (CENVAT) rate on all goods reduced from 16% to
14%.
Central Excise provides full exemption from Central Excise duty to goods
manufactured by small-scale units i.e. units whose aggregate value of clearances did
not exceed Rs.4 crore in the preceding financial year. The exemption is available for
clearances up to Rs.1.5 crore in a financial year subject if the prescribed conditions
are fulfilled.
Coir Boards income has also been exempted from income tax.
National calamity contingent duty (NCCD) of 1% removed on Polyester Filament
Yarn.

Market Size:

A leading sector in the Indian economy, textiles contributes 14 per cent to industrial
production, 4 per cent to the GDP and around 17 per cent to the total export earnings. It is, in
fact, the largest foreign exchange earning sector in the country.

India is the world's 2nd largest cotton producing country, after China. BT cotton was a major
factor contributing to higher rate of production, from 15.8 million bales in 2001-02 to 31
million bales in 2007-08.

India accounts for:

61 per cent of the global loomage


22 per cent of the global spindleage
12 per cent of the world's production of textile fibers and yarn.
25 per cent share in the total world trade of cotton yarn.

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The textile industry size has expanded from US$ 37 billion in 2004-05 to US$ 49 billion in
2006-07, the domestic market increased from US$ 23 billion to US$ 30 billion, and exports
increased from around US$ 14 billion to US$ 19 billion.

India's textiles and apparels industry is estimated to be worth US$49 billion where 39
per cent is accounted by the exports market. The total exports in 2006-07 were US$ 19.62
billion. Currently India has a 3.5-4 per cent share in world export of textiles and 3 per cent in
clothing exports.The cloth production during 2006-07 was 53,389 mn. sq. mtr. The
sectorwise compound annual growth rate during the last five years works out to 6.20%.The
non-woven and technical textile produced by India is approximately US$ 8 billion, which
amounts to six to eight per cent of world production.

The handloom sector, which is the second largest sector in terms of employment
accounts for about 13% of the total cloth, produced in the country (excluding wool, silk and
Khadi).The production of handicrafts during the period 2002-07 has increased from Rs.19,
564.52 crores to Rs.38659.45 crores. The exports during the period increased from
Rs.10933.67 crores in the year 2002-03 to Rs 20,963 crores at the end of the year 2006-07
registering a cumulative growth 91.74 %, and an annual average growth rate of around 17.72
%.

During 2006-07, total production of jute goods stood at 1356.3 thousand M.T. whereas
domestic consumption and export were at 1216.2 thousand M.T and 242.8 thousand M.T.
respectively.

During 2007-08 (April- October), total production of jute goods stood at 1024.1
thousand M.T which is higher by 17.8 % compared to production during the corresponding
period of last year. The volume and value of export of jute goods during 2006-07 (April-
October), was recorded at 126.7 thousand M.T valued at Rs.697.33 crore, as against 117.8
thousand M.T valued at Rs.622.94 crores during the corresponding period of last year.The
market size of the Indian Textile Industry is expected to reach US$110 billion by 2012 and
the domestic market is expected to reach US $ 60 billion by 2012.

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TEXTILE EXPORTS AND IMPORTS

The Indian Textile Industry is one of the largest industry that provides high exports and
foreign revenue.

Textiles exports, which were growing at a moderate pace till 2004-05, registered a sharp
growth of 21.77 per cent in 2005-06 to touch US$ 17 billion from US4 14 billion in 2004-05,
due to the scrapping of quotas. The growth has continued with total exports increasing to
US$ 19.62 billion in 2006-07. Currently India has a 3.5-4 per cent share in world export of
textiles and 3 per cent in clothing exports.

While Europe continues to be India's major export market with 22 per cent share in textiles
and 43 per cent in apparel, the US is the single largest buyer of Indian textiles and apparel
with 10 per cent and 32.6 per cent share respectively. Other significant countries in the export
list include the UAE, Saudi Arabia, Canada, Bangladesh, China, Turkey and Japan.

Readymade garments (RMG) are the largest export segment, accounting for 45 per cent of
total textile exports and 8.2 per cent of India's total exports. This segment has benefitted
significantly with the termination of the Multi-Fiber Arrangement (MFA) in January 2005.
Readymade garments exports from India are expected to touch US$ 14.5 billion by 2009-10
with a cumulative annual growth of 18 to 20 per cent, according to Apparel Export
Promotion Council.

Another segment in which India has excelled in the export market is carpets. Exports
of carpets have increased from US$ 654.32 million in 2004-05 to US$ 930.69 million in
2006-07, showing a growth rate of 42.23 per cent. During April-October 2007, carpet
exports totalled US$ 404.74 million. This makes India the world leader in carpet exports
with 36 per cent of the global market share.

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Textile Exports from April-March 2006-07 to April-March 2007-08 (Itemwise)

(Value in Rs Crore)

Item April- April- March'08 % Variation

March'07 [P]

Cotton Textiles 25197.20 26161.94 3.83

Manmade Textiles 10863.39 12624.29 16.21

Silk 3196.89 2581.09 -19.26

Wool 1919.36 1800.62 -6.19

Ready Made 37506.16 35745.39 -4.69

Garments

Total Textiles 78683.00 78913.33 0.29

Handicrafts 6181.00 5557.73 -10.08

Jute 1178.39 1299.86 10.31

Coir & Coir 660.25 639.72 -3.11

Manufactures

Grand Total 86702.64 86410.64 -0.34

Textile Exports

Total Exports 571779.29 640172.15 11.96

% Textile Exports 15.16 13.50

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Textile Imports from April-March 2006-07 to April-March 2007-08 (Itemwise)

(Value in Rs Crore)

Item April- April- March'08 % Variation

March'07 (Provisional)

Raw Material 2683.25 2992.87 11.54

Semi-Raw 2952.45 3021.00 2.32

Material

Yarn & Fabrics 6563.98 6535.49 -0.43

Readymade 333.92 454.37 36.07

Garments (Woven

& Knit)

Made-up Textiles 322.67 413.96 28.29

Articles

Total Textiles 12856.27 13417.69 4.37

imports

Overall Imports 840506.31 964849.76 14.79

% of Textile 1.53 1.39

Imports

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MAJOR TEXTILE PLAYERS

Following are some major players in the field of Indian Textile Industry.

Arvind Mills: Arvind Mills is one of the major and fully vertically integrated composite
mills player in India. It has large production in denim, shirting and knitted garments. It is
now adding value by manufacturing denim apparel. Its sales are around US$ 300 million.

Raymonds: Raymonds has the large, diversified integrated business model, which is spread
across the value chain from yarn to retail. It is specialized in Diversified woolen textiles. It
already supplies to some US retailers.

Reliance Textiles: Reliance Textiles is one of the major Textile Companies that is in the
business of fully integrated manmade fiber. It has capacity of more than 6 million tones per
year. It has joint venture partners like, DuPont, Stone & Webster, Sinco (Italy) etc.

Vardhaman Spinning: Vardhman deals in spinning, weaving and processing segment of


the industry. It is an approved supplier to global retailers like GaP, Target and Tommy
Hilfiger. Its sales are little over US$ 120 millions

The following are some of the other major textile companies:

Bombay Dyeing Ltd. (Composite and fully integrated)


Welspun India (Manufactures terry towels)
Oswal Knit India (Woolen Wear)
Mafatlal Textiles (Fully integrated Composite Mill)
LNJ Bhilwara Group (Diversified and vertically integrated denim producer with spinning and
weaving capacity)
Alok Textiles (Cotton and Man-made Fiber Textiles)

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BSL Ltd. (Textiles)
Century Textiles (Composite mill, cotton & Man-made)
Morarjee Mills (Fully integrated Composite Mill)
Hanil Era Textiles (Yarn, Cotton & Man-made Fiber)
Filaments India Ltd. (Manmade Textiles)

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COLLABORATIONS AND ACQUISITIONS

There has been increased collaboration between Indian and foreign textile companies in the
past few years. Such collaborations include Armani, Arvind Brands, Barbara, Benetton, De
Witte Lietaer, Esprit, Gokaldas, Jockey, Levi Strauss, Marzotto, Rajasthan Spinning &
Weaving Mills, Raymond, Vardhman Group, Vincenzo Zucchi, and Welspun.

In order to gain global acceptance several Indian companies are investing overseas and also
acquiring International brands. For example, in the Home Textile market, Welspun industry
has purchased "Christys", a UK Towel Brand; GHCL has acquired "Dan River" and
"Rosebys", Creative Garments has purchased "Portico" brand to facilitate entry into the US
and EU markets; Alok Industries has purchased "Hamsard", a UK based retail chain

Local Brands:

The introduction of domestic brands by the leading extile and apparel firms is another
interesting feature of the Indian textile market. Prior to 2000, there were around 5-6 brands in
India, prominent amongst them being Zodiac, Monte -Carlo, Raymond, Bombay Dyeing.

Some of the brands built in recent years are "Pantaloon", "Killer" Jeans, "Easios", "Tibre",
"Colour Plus", ''Trigger" etc. Many of these brands have now reached a stage where they can
look towards gaining a regional, if not a global presence.

Localization of the Industry:

Northern India: Jaipur, Jodhpur (Rajasthan), Ludhiana (Punjab), Delhi, Kanpur (U.P.)

Western India: Solapur (Maharashtra)

Southern India: Bangalore (Karnataka), Coimbatore, Erode, Salem and Tiruchirapalli (Tamil
Nadu)

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Opportunities in the Indian Textile Industry:

The textile industry is undergoing a major reorientation towards non-clothing applications of


textiles, known as technical textiles like thermal protection and blood-absorbing materials;
seatbelts; adhesive tape, and multiple other specialized products and applications. These
technical textiles are an emerging industry with a potential to reach a size of US $ 127 billion
by 2010 and hold a great promise for Indian textiles industry.

Indian textile industry phase-out of the quota regime of the multi-fiber arrangement (MFA) is
upbeat with new investment flowing and various initiatives taken by the government. A
Vision 2010 for textiles formulated by the government to capitalize on the upbeat mood aims
to increase India's share in world's textile trade to 8% by 2010 and to achieve export value of
US $ 50 billion by 2010 Vision 2010 for textiles envisages growth in Indian textile economy
from the current US $ 37 billion to $ 85 billion by 2010 and modernization and consolidation
for creating a globally competitive textile industry.

High growth is expected in the domestic market as well as exports. The growth of the
Industry is expected in the following areas:

Cotton
Jute
Ready garment
Silk textile
Handloom
Textiles export
Wool and Woolen textiles
Handicrafts

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GREAT BOMBAY TEXTILE STRIKE

The Great Bombay textile strike was a textile strike called on 18 January 1982 by the mill
workers of Bombay under trade union leader Dutta Samant. The purpose of the strike was to
obtain bonus and increase in wages. Nearly 250,000 workers and more than 50 textile mills
went on strike in Bombay.

History Of Mills In Mumbai

Built in 1887, Swadeshi was Bombay's first textile mill, the first of the factories that spread
over many part of the island city in the next decades. Rastriya Mill Mazdoor Sangh was the
officially recognized union of the Mills. By 1982, a new militant union leader by the name o f
Datta Samant had arrived on the scene. Earlier he had got major wage increases for workers
of Premier Automobiles and a section of the Mill workers were hoping for the same. The
major difference between Premier Automobiles and the Mills was that the former was a very
profitable company and the mills were all sick units. Later that year Datta Samant led the
textile strike, over 240,000 people worked in Girangaon.

Protest

In late 1981, Dutta Samant was chosen by a large group of Bombay mill workers to lead them
in a precarious conflict between the Bombay Millowners Association and the unions, thus
rejecting the INTUC-affiliated Rashtriya Mill Mazdoor Sangh which had represented the mill
workers for decades. Samant planned a massive strike forcing the entire industry of the city to
be shut down for over a year. It was estimated that nearly 25,000 workers went on strike and
more than 50 textile mills were shut in Bombay permanently. Samant demanded that, along
with wage hikes, the government scrap the Bombay Industrial Act of 1947 and that the
RMMS would not longer be the only official union of the city industry. While fighting for
greater pay and better conditions for the workers, Samant and his allies also sought to
capitalize and establish their power on the trade union scene in Mumbai. Although Samant
had links with the Congress and Maharashtra politician Abdul Rehman Antulay, Prime
Minister Indira Gandhi considered him a serious political threat. Samant's control of the mill

33
workers made the Congress leaders fear that his influence would spread to the port and dock
workers and make him the most powerful union leader in India's commercial capital. Thus
the government took a firm stance of rejecting Samant's demands and refusing to budge
despite the severe economic losses suffered by the city and the industry. As the strike
progressed through the months, Samant's militancy in the face of government obstinacy led to
the failure of any attempts at negotiation. Disunity and dissatisfaction over the strike soon
became apparent, and many textile mill owners began moving their plants outside the city.
After a prolonged and destabilizing confrontation, the strike collapsed with no concessions
having been obtained for the workers. The closure of textile mills across the city left tens of
thousands of mill workers unemployed and, in the succeeding years, most of the industry
moved away from Bombay after decades of being plagued by rising costs and union
militancy. It is one reason why some industry in India settled in Gujarat Although Samant
remained popular with a large block of union activists, his clout and control over Bombay
trade unions disappeared

Consenques

The majority of the over 80 mills in Central Mumbai closed during and after the strike,
leaving more than 150,000 workers unemployed. Textile industry in Mumbai has largely
disappeared, reducing labour migration after the strikes.

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ANALYSIS REPORT

The Indian textile sector had all the tailwinds the businesses needed, over the last
two to three years, to grow and become more profitable. Right from higher export
demand to lower cotton prices to falling interest rates to favourable exchange
rates, the companies had everything going in their favour. The industry employs
about 40 million workers directly and 60 million indirectly. India's overall textile
exports during financial year 2015-16 stood at US$ 40 billion.
As per the Ministry of Textiles, the Indian textile industry contributed about 14%
to industrial production, 4% to the countrys GDP and 13% to the country's export
earnings in 2016.
According to the Ministry of Textiles, the domestic textile and apparel industry in
India is estimated to reach US$ 223 bn by 2021 from US$ 108 bn in 2015. Total
cloth production in India is expected to grow to 112 bn square metres by FY17
from 64 bn square metres in FY15.
India enjoys a significant lead in terms of labour cost per hour over developed
countries like US and newly industrialised economies like Hong Kong, Taiwan,
South Korea and China.
As per data from National Bureau of Statistics, due to steep wage inflation, the
average monthly wage cost in China stood at US$ 230 per month in 2013 as
against US$ 80 per month in India. Also, India is rich in traditional workers adept
at value-adding tasks, which could give Indian companies significant margin
advantage. However, India's inflexible labor laws have been a hindrance to
investments in this segment. Unlike in home textiles, garment capacities are
highly fragmented and leading Indian textile companies have been slow to ramp
up their apparel capacities, despite strong order flows from overseas buyers who
are trying to diversify out of China.
The textile industry aims to double its workforce over the next 3 years. As a
thumb rule, for every Rs 1 lac invested in the industry, an average of 7 additional
jobs is created.
Even at GST rate of 12%, the textile sector is likely to be negatively impacted.
The cotton value chain is likely to be the worst affected as it is currently attracting
zero central excise duty.

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KEY POINTS OF TEXTILE INDUSTRIES

Supply
Despite some pick-up in demand from both global and domestic markets, most new
capacities in the apparel and home textile segments are not operating at full capacities.
Demand
High for premium and branded products due to increasing per capita disposable
income.
Barriers to entry
Superior technology, skilled and unskilled labour, distribution network, access to
global customers
Bargaining power of suppliers
Because of over supply in the unorganised market like that of denim, suppliers have
little bargaining power. However, premium products and branded players continue to
garner higher margins.
Bargaining power of customers
Domestic customers - Low for premium and branded product segments. Global
customers- High due to presence of alternate low cost sourcing destinations.
Competition
High. Very fragmented industry. Competition from other low cost producing nations is
likely to intensify.

FINANCIAL YEAR 2016

Textile exports did remarkably well in an otherwise dull exports scenario in


FY16. A weaker rupee and firm overseas demand helped the sector add US$ 40
bn to overall exports of US$ 310 bn, second only to engineering goods.
Readymade garments, which accounts for nearly half of all textile exports at US$
14.9 bn, grew 15.5%.
Relatively lower cost of cotton helped the margins of export dependant textile
industry in FY16. However, since these trends are temporary in nature, pressure
on margins could increase the debt levels for players in the sector.

36
PROSPECTS

The Trans-Pacific-Partnership (TPP) a duty free trade agreement between 12


nations may impact the Indian textile and garment export sector negatively and
put Indian textile exports of around US$ 40 bn at risk over the medium term.
The TPP member nations led by the US account for 40% of world trade and the
deal gives them duty free access to each other, and makes imports from other
countries
The key nations out of the 12 countries which India exports textile and apparels
to are US, Japan and Canada. The value of India's textile and apparel exports to
these three countries stood at over US$ 12 bn in FY16 which is likely to reduce
due to the TPP. US is a key destination for textile and apparel exports, and US
import duties range between 15% to 50%, depending upon woven or knit textile,
or type of raw material used, which can lead to loss of export sales for India,
especially detrimental to companies which are exporting majorly to the US.
Companies with superior geographic diversification are better placed.
Exclusion of India's clothing products from US GSP benefits is yet another
source of comparative disadvantage for the sector.
If this was not enough, to comply with its commitments to WTO, India will soon
have to phase out its export incentives latest by 2018. India has already achieved
a per capita GNP of US$ 1,000 at 1990 prices. India's global export share in
textile and clothing has already crossed 3.25% threshold required by WTO to be
termed as export competitive with obligation to phase out export subsidies.
The adverse impact of demonetisation on disposable incomes and hence
consumer spending will result in poor demand for apparels in second half of
FY17.
The resulting inventory accumulation with the retailers will, in turn, cause
deferment of purchases from apparel and home-textile manufacturers (focused
on domestic market) in the near term, besides resulting in stretched payments.
This, in turn, will affect the cash flow of the textile industry and is likely to drive
a constraint in the demand or the entire textile value-chain.
While textile retailers are facing the immediate impact, the impact on apparel
manufacturers and other intermediaries in the value chain is expected to be felt
with a lag of a few quarters. The overall impact on the sector, however, is

37
expected to be limited as one-third of the Indian textile industry is estimated to
be export focused (directly or indirectly).
Also, as the demand reverts back to a steady state over the next few months with
expected improvement in liquidity, this impact will be neutralised.

38
ROLE OF TEXTILE INDUSTRY IN INDIAN GDP

Role of Textile Industry in India GDP has been quite beneficial in the economic life of the
country. The worldwide trade of textiles and clothing has boosted up the GDP of India to a
great extent as this sector has brought in a huge amount of revenue in the country.

In the past one year, there has been a massive upsurge in the textile industry of India. The
industry size has expanded from USD 37 billion in 2004-05 to USD 49 billion in 2006-07.
During this era, the local market witnessed a growth of USD 7 billion, that is, from USD 23
billion to USD 30 billion. The export market increased from USD 14 billion to USD 19
billion in the same period.

The textile industry is one of the leading sectors in the Indian economy as it contributes
nearly 14 percent to the total industrial production. The textile industry in India is claimed to
be the biggest revenue earners in terms of foreign exchange among all other industrial sectors
in India. This industry provides direct employment to around 35 million people, which has
made it one of the most advantageous industrial sectors in the country.

Some of the important benefits offered by the Indian textile industry are as follows:
India covers 61 percent of the international textile market
India covers 22 percent of the global market
India is known to be the third largest manufacturer of cotton across the globe
India claims to be the second largest manufacturer as well as provider of cotton yarn and
textiles in the world
India holds around 25 percent share in the cotton yarn industry across the globe
India contributes to around 12 percent of the world's production of cotton yarn and
textiles

The Role of Textile Industry in India GDP had been undergoing a moderate increase till
the year 2004 to 2005. But ever since, 2005-06, Indian textiles industry has been
witnessing a robust growth and reached almost USD 17 billion during the same period
from USD 14 billion in 2004-05. At present, Indian textile industry holds 3.5 to 4 percent
share in the total textile production across the globe and 3 percent share in the export
production of clothing. The growth in textile production is predicted to touch USD 19.62
billion during 2006-07. USA is known to be the largest purchaser of Indian textiles.

39
Following are the statistics calculated as per the contribution of the sectors in Textile
industry in India GDP:

India holds 22 percent share in the textile market in Europe and 43 percent share in the
apparel market of the country. USA holds 10 percent and 32.6 percent shares in Indian
textiles and apparel.
Few other global countries apart from USA and Europe, where India has a marked
presence include UAE, Saudi Arabia, Canada, Bangladesh, China, Turkey and Japan
Readymade garments accounts for 45 percent share holding in the total textile exports and
8.2 percent in export production of India.
Export production of carpets has witnessed a major growth of 42.23 percent, which
apparently stands at USD 654.32 million during 2004-05 to USD 930.69 million in the
year 2006-07. India holds 36 percent share in the global textile market as has been
estimated during April-October 2007.
The technical textiles market in India is assumed to touch USD 10.63 billion by 2007-08
from USD 5.09 billion during 2005-06, which is approximately double. It is also assumed
to touch USD 19.76 billion by the year 2014-15.
By 2010, India is expected to double its share in the international technical textile market
The entire sector of technical textiles is estimated to reach USD 29 billion during 2005-
2010.

The Role of Textile Industry in India GDP also includes a hike in the investment flow
both in the domestic market and the export production of textiles. The investment range
in the Indian textile industry has increased from USD 2.94 billion to USD 7.85 billion
within three years, from 2004 to 2007. It has been assumed that by the year 2012, the
investment ratio in textile industry is most likely to touch USD 38.14 billion .

40
COMPARISON OF THREE COMPANIES

Raymond
Raymond was incorporated in 1925. It is one of the Indias leading textile units with strengths
in textile manufacture and marketing. As a pioneer of modern day franchising, the Company
has the largest network of over 550 exclusive retail shops spread across the country and
overseas. The Raymond Shop, which is the retail face for Raymond has now become
synonymous with premium retailing housing a wide range of premium suiting fabrics, mens
wear and accessories, from top-of-the-line brands like Raymond, Park Avenue, Manzoni,
Parx, ColorPlus and Notting Hill. The Company was incorporated on 10 th September, 1925 at
Mumbai. It manufactures woolen and worsted and hosiery yarns, knitting wool. The company
has a diverse product range of nearly 20,000 design and colours of suiting fabric. They export
their products to over 55 countries including USA, Canada, Europe, Japan and the Middle
East. (A Brief Report Textile Industry In India, January, 2010) .

On the manufacturing side, with a capacity of 31 million meters in wool & wool-blended
fabrics, Raymond Limited commands over 60% market share in worsted suiting in India and
ranks amongst the first three fully integrated manufacturers of worsted suiting in the world.
We are perhaps the only company in the world to have a diverse product range of nearly
20,000 design and colours of suiting fabric to suit every age, occasion and style. We export
our products to over 55 countries including USA, Canada, Europe, Japan and the Middle
East. Trust, Excellence, Quality, these are some of the abiding values that have been
associated with Raymond Limited over the years. Today, we have the distinction of being the
worlds largest integrated producers of worsted suiting fabrics.

41
RAYMOND LTD.

Current share price-656.60 (as per 23 march, 2017)

The above graph depicts prices of Raymond Co. on the Bombay Stock Exchange for the
period ranging from 2014 to 2016. The prices of the share were traded in the range of 200 to
600. Since 2014 the prices have seen a constant growth and are at its peak of 656 right now.

Arvind Mills

Arvind Mills started its journey in 1931. Arvind Brands, a subsidiary of Arvind Mills, is an
important player in the Indian branded apparel industry. With an array of international brands
like Lee, Arrow, Tommy Hilfiger, Wrangler and domestic brands like Newport, Flying
Machine, Ruf n Tuf and Excalibur, the company was present in most of the segments of the
market. But the company was facing severe competition from major brands like Louis
Philippe, Park Avenue and small brands like Trigger and Blackberrys. Also, with several
MNC brands poised to enter the Indian market, the company was under pressure. The case
discusses the various brands of Arvind Brands and its competitors and outlines in detail, the
efforts made by the company to organize its brands.

42
ARVIND MILLS

CURRENT MARKET PRICE-381rs(as per 23 march 2017)

The above graph depicts prices of Arvind mill. on the Bombay Stock Exchange for the
period ranging from 2014 to 2016. The prices of the share were traded in the range of 80 to
450. Since 2014 the prices have seen a constant growth and are at its peak of 485 right now.

Bombay Dyeing

Bombay Dyeing also play vital role in Indian textile industry. In fact, India has made a
position in the world textile sector holding the hands of Bombay Dyeing. The textile products
of the company are exported to different nations all across the world like the United States,
European Union Countries, Australia and New

Zealand. It is the largest exporter of sophisticated made-up items and also of product of
cotton and poly cotton. Bombay Dyeing has created a sizable market in the production of a
wide range of fabrics and ready-mades. This includes both formal and casual wear. The
ready-made collection of the Bombay Dyeing has been changing its production pattern with
the evolving fashion trends. The consumer section of Bombay Dyeing comprise of bed linen,
towels, furnishings, suiting and shirting fabrics, and cotton and polyester blended dresses and
saris.

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BOMBAY DYEING

Current market price-80rs(as per 23 march 2017)

The above graph depicts prices of Bombay Dyeing the Bombay Stock Exchange for the
period ranging from 2014 to 2016. The prices of the share were traded in the range of 100 to
145 Since 2014 the prices have seen a constant decrease and are at its low of 75 right now.

PROBLEM FOCUS

The Indian Textile Industry has an overwhelming presence in the economic life of the
country. It is the second largest textile industry in the world after China. Apart from
providing one of the basic necessities of life i.e. cloth, the textile industry contributes about
14% to the countrys industrial output and about 17% to export earnings. After agriculture
this industry provides employment to maximum number of people in India employing 35
million people. Besides, another 50 million people are engaged in allied activities. The
Textile Industry came out of Quota Regime of Import Restrictions under the Multi Fiber
Arrangement (MFA). This development came on 1st January 2005 under the World Trade
Organization (WTO) Agreement on Textiles & Clothing. From the last one decade the export
performance of textile products are steadily growing and the export income also highly
satisfactory to Indian economy, the selected three textile industries overall financial
performance is not growing well and smooth such net profit growth, capital efficiency,
liquidity and long term solvency positions. Hence the aim of the study is to analyze and
comparison of the financial performance of three leading textile companies in India .

44
Profitability Ratios
Gross Profit Ratio:

Table 1

Gross Profit Ratio

Company

Years Arvind Raymond Bombay Dyeing

2006 9% 17% 7%

2007 7% 22% 12%

2008 1% 11% 6%

2009 5% 15% 10%

2010 2% 8% 5%

Average 3% 9% 4%

Table 1 shows that the average gross profit of Raymond (9%) is three times more than
Arvind Mills (3%) and even double then the Bombay dying (4%)

Net Profit Ratio:


Table 2

Net Profit Ratio

Company

Years Arvind Raymond Bombay Dyeing

2006 8% 9% 6%
2007 7% 15% 7%

2008 1% 5% 2%

2009 5% 19% 14%

2010 2% 2% 1%

Average 3% 2% 0%

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Table 2 shows the Net Profit ratio of selected units. It shows that the percentage of net
profit is declining in each year. The average of net profit ratio of Arvind Mills (3%) is
higher than the Raymond and Bombay Dyeing.

Operating Profit Ratio:


Table 3

Operating Profit Ratio

Company

Years Arvind Raymond Bombay Dyeing

2006 26% 15% 6%

2007 16% 11% 14%

2008 10% 7% 7%

2009 10% 9% 5%

2010 13% 9% 17%

Average 15% 10% 10%

The operating profit ratio is the relationship between cost of good sold and operating
expenses. After calculating average of operating ratio of selected units, it shows that the
Arvind Mills Operating ration is higher but Raymond and Bombay Dyeing average Operating
ratio is almost equal.

Testing of financial position


Current Ratio:
Table 4

Current Ratio

Company

Years Arvind Raymond Bombay Dyeing

2006 2.1 1.7 4.6

2007 2.1 1.6 1.6

2008 2 1.8 1.4

2009 2 1.5 2.4

2010 2 1.5 2.6

Average 2.04 1.62 2.52

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Current ratio is the study of Current Assets and Current Liability. Table 4 shows that Arvind
Mills and Bombay Dyeing has adequate current assets (2.04:1), it is more than the standard

Net Working Capital Ratio:

Table 5

Net Workin Capital Ratio

Company

Years Arvind Raymond Bombay Dyeing

2006 451.5 245.7 316.9

2007 448.9 211.5 174.2

2008 478.5 276.3 125.9

2009 483 230.2 460.3

2010 453.1 196.1 487.8

Average 463 231.96 313.02

Working capital is the current assets over current liabilities. Arvind Mills working capital
ration is the highest ratio then the Raymond and Bombay dyeing. Bombay dyeing is on
second position.

Earning Per Share (EPS) Ratio:

Table 11

Earning Per Share Ratio

Company

Years Arvind Raymond Bombay Dyeing

2006 5.89 19.92 15.89

2007 1.06 32.79 9.31

2008 1.14 19.92 4.32

2009 2.26 44.05 50.4

2010 2.21 4.3 4.77

Average 1.608 6.576 3.222

47
EPS measures the overall profit generated for each share in existence over a particular
period. Table 11 shows that the EPS ratio in the year 2006 of Arvind mill, year 2007 of
Raymond and year 2006 of Bombay Dyeing was highest. When we compare the average
EPS, Raymond is in better position.

48
CASE STUDY OF THE TEXTILE INDUSTRY IN TIRUPUR

INTRODUCTION

As Our Car bounced along the narrow pot-holed road to Tirupur, a sign Welcome to Banian
City greeted us. Banian is the local name for the white vests used mostly by men in India.
This sign described what was

in store for us in Tirupur. There does not seem to be any activity in the town that is not
directly or indirectly connected with the manufacture and sale of banians and T-shirts.

The whole world appeared to have discovered Tirupur in the early nineties. The success story
of Tirupur, the new boom town, had spread all over. Suddenly many international agencies
began to take notice of this little town in the state of Tamil Nadu in the south of India.

We had decided to conduct an Industrial Ecology study in Tirupur. The purpose of the study
was to see how to apply the concepts of Industrial Ecology in a developing country, where
the pattern of industrialization was vastly different from that of a developed country.

As we first drove into the town, we wondered what made this place such a success story. The
narrow streets were crowded and hardly well laid. There were open drains running along the
sides of the roads, carrying filthy, colored water. An assortment of vehicles, trucks, hand
carts and bullock carts with their assorted loads of cargo, clogged the streets. Smoldering
garbage was dumped on both sides of the road and the stench was hardly bearable. Through
one such narrow street we approached our first point of call, which was the Tirupur
Exporters Association (TEA). The moment we entered the building of TEA, we started to
notice the efficiency which makes Tirupur successful. Professional, well-trained staff mans
the plush office. The building itself has all the facilities that an exporter would require,
including a well-equipped conference room.

49
The Study in Tirupur

The study was carried out in the year 1996. All the data and estimates pertain to the year
1995. Tirupur, chosen as a sample town, represented a typical industry pattern in developing
countries with many small and micro enterprises involved in an industrial activity.

A lot of attention has been given to the industrial symbiosis model in Kalundborg (Denmark),
where a few disparate large units have worked out an effective system to optimize the use of
their material and energy resources (as described in Chapter 1). The industrial pattern in
Tirupur is very unlike Kalundborg. Tirupur has a large number of small and medium units
engaged in similar activities, a pattern much more representative of a developing country.

Preparing a Framework

When Tirupur was chosen, no specific format was available for carrying out the study. The
object was to explore how to apply the concepts of Industrial Ecology in a developing
country. Our idea was that we needed to start looking at possibilities for building linkages
between different industries as was done in Kalundborg or as was being experimented in
some parts of North America. When the study began, we realized that this was much more
difficult than we had imagined. Unlike the half-a-dozen industries in Kalundborg, Tirupur
had nearly 4000! Even to start looking for partners who would be interested in forming
linkages to share their wastes was a major task. Secondly, the scales of operation of most of
the units were extremely small. Hence for any individual unit to make major investments in
any recycling systems would not prove economical. Thirdly, the industries tend to be
extremely secretive about their operations, as they do not wish that any information about
their business should reach enforcement authorities of the Government. We faced a great deal
of difficulty collecting any information other than from published sources. The only details
available pertained to value of sales and were available with the Export Promotion Council.
As a next step, we tried to meet the major industrial units and the heads of the different
industries associations in the town, to understand what they perceived as their problems.

Other than listing out hundreds of problems with the bureaucracy and making out a case for
greater support from the Government, there did not appear to be any perceived problem. Oh,
yes, there is also a lot of harassment from the Pollution

50
Control Board, which is needlessly making us spend millions, was the constant refrain. In any
case this problem also appeared to have been solved, by the industries becoming members of
the Common Effluent Treatment Plant Scheme.

At the end of the first month of the study, we were still struggling to collect useful data. The
figures of water consumption and production, which were collected by us from different
sources, also appeared to vary greatly.

We then decided that we should get a good idea of the activities of the town and we chose to
make a rough assessment of the materials flowing through it, at least to understand what was
happening in the area. As a first step, a fact file on the town was prepared.

History of Tirupur

The textile boom in Tirupur is recent. Tirupur used to be a center for cotton trading a few
decades ago. Over the years a few small units were established to manufacture banians. It
was said that the water in Tirupur was of such good quality that the banians made here were
the whitest of them all. The fact that the town was located so close to Coimbatore, which was
an established textile manufacturing and trading center, ensured that adequate skills were
available. This business grew steadily. It was only in the early 1980s that some enterprising
businessman got the idea that the same facilities could be used to manufacture colored T-
shirts, which had become a rage all over the world.

Tirupur and its Industry

Tirupur is a relatively small town in the Coimbatore district of Tamil Nadu. It has a
resident population of around 300,000. An additional 200,000 people come in from nearby
towns to work in Tirupurs booming textile industry. The rainfall in the area is low and
erratic. The groundwater in most parts of the town is now polluted through years of effluent
discharge by the textile industry.

The entire towns economic activity is centered on the manufacture of cotton knitwear: for
use as banians (mostly sold in the Indian market), and for use as T-shirts (mostly exported).

51
Value (US $ million) Weight (Tonnes)

Exports 685.71 71,600

Domestic 142.85 50,000

Total 828.56 121,600

In 1995, the annual value of production in Tirupur was estimated at US$ 828 million of
which goods worth US$ 686 million were exported, mostly to the USA and Europe. This
corresponds to an annual production of 121,600 tonnes of fabric (in the form of T-shirts for
export and undershirts, which are mainly sold in the domestic market). The average price of a
T-shirt at the factory gate is around US$ 2. The annual estimated output of the town is given

Activity Number of Units

Knitting 650

Bleaching 400

Dyeing 300

Steam Calendering 150

Finishing 2,000

Printing 300

Miscellaneous 200

Total 4,000

There are an estimated 4,000 small and medium units in the town which specialize in
different aspects of the production process such as knitting, bleaching, dyeing, calendering,
finishing and printing. Table 5.2 gives the estimated numbers of the units involved in these
activities. Accurate figures are not available as many of these units are very small or in the
cottage sector and are not registered with any statutory authorities. There are very few
integrated manufacturing units in Tirupur, with all the activities under one roof. The absence

52
of many large integrated units is partly due to the current government policy and the
regulatory framework, which encourages the small-scale sector.

Tirupur is a job working center and not a brand exporter. This means that most of the
exporters take up job work for brand marketers in developed countries and do not sell their
own brands. This also means that the buyer in Europe or the USA can easily change his
source of supply. Hence, the contact that the exporter has with the buyer is the most
important business asset. This makes the exporter, who may have no manufacturing facility,
the key player in the industry. Often, the exporter will buy the yarn and have the material
processed by any of the jobbers in the town. The exporter may also have processing facilities.

Government Policy and the Regulatory Framework

Till a few years ago, the large industry in India was governed by an elaborate licensing
procedure. The government has always encouraged the small-scale sector, which has never
needed more than a formal registration. Incentives like low interest loans and concessions in
production and sales taxes are available to the small industry. The criterion for qualifying as a
small-scale industry traditionally has been the total investment in plant and machinery and
not the total production value.

India has a complex bureaucratic system and the industry is answerable to a number of
Government agencies. This includes having to file periodic statements with different
agencies. The small units fall outside the ambit of many government agencies. For instance,
if a unit employs less than a specified number of persons, it falls outside the purview of the
Factories Inspectorate, which specifies elaborate safety standards.

It is probably because of these considerations, that the small (but very prosperous) units stay
small. Growth of a unit takes the form of a new firm being established. For example, if a
garment manufacturer wants to increase production, he would establish a new firm and hire
people accordingly. The value of equipment bought in the new firm would be small enough
for qualification as a small-scale industry.

In the recent years, the Government of India has laid down elaborate standards for industrial
effluents. In India, the responsibility for management of the environment is divided between
the central and the state governments. The Central Pollution Control Board and the Ministry

53
of Environment of the central government make policy, set standards and monitor their
implementation at a national level.

The State Pollution Control Boards, which operate administratively under the state
governments, are entrusted with the job of implementing the standards laid down. These
boards carry out the regular monitoring of industries in India. These state agencies have wide
powers to penalize offenders, including ordering the closure of manufacturing units.

The regulatory authorities have been active in implementing the standards, and in the recent
past the law courts have been very active in giving priority to environment-related cases.
Some of the High Courts in the states have a special Green Bench to deal exclusively with
these matters.

Industry and Production Processes

There are six production processes involved in the manufacture of knitted garments:

Knitting: Knitting is the first step, in which, the fabric is made from yarn. The output is in
the form of a hose.

Scouring: The knitted fabrics are scoured in a bleaching or dyeing unit by boiling with
caustic soda in open tanks. The fabric is then washed in freshwater.

Bleaching: Figure 5.2 gives the process chart of the bleaching operation. Bleaching is done
manually, or mechanically in a winch.

Dyeing: Figure 5.2 gives the details of the dyeing process.

Calendering: After bleaching/dyeing, the fabric is passed through steam heated rollers in the
steam calendering machines.

Finishing: After calendering, the fabric is ready to be made into garments in the finishing
units. These units use electrically operated stitching machines and electric irons. Some of the
processes like embroidery require sophisticated computer controlled machines.

54
CONCLUSION

Indian textile industry is an independent and self-reliant industry. It has large and
potential domestic and international market. But the industry is highly fragmented industry
depend on cotton. Lake of technological development, the growth of industry becomes
decline. Even labor laws are not favorable.

The study has analyzed the short term and profitability position of leading textile
companies in India, some of the important ratios were used to measure the financial
performance of three selected companies. Based on the above analysis the overall
performance of Arvind Mills is one of the major and fully vertically integrated composite
mills player in India. It has large production in denim, shirting and knitted garments. It is now
adding value by manufacturing denim apparel. The result of financial analysis also shows that
Arvind Mills is comparatively good with the other two companies. Its financial position is
found to be highly satisfactory level in net profit growth on the profitability level, short term
liquidity position, efficiency level, solvency capacity and investment analysis basis. The other
two selected two companies performance were not satisfactory positions. Hence these
companies will have to strengthen its shareholders funds and working capital to compete and
enhancing its current performances in growing textile in global business environment.

This is an attempt identify and study the movement of key financial parameters and their
relationship with profitability of textile industry. It is an attempt to and the study whether the
key identified parameters move in a synchronous way going up and coming down with basic
profitability parameters. All three comparably profit-making companies have been taken as
the sample for study for the period of 2006 to 2010. The data have been taken from the
figures supplied by prowess database. On the basis of this data a trend parameter is calculated
for the year 2011. So, on the base of the analysis, the broad conclusion is that the parameters
are consistent within a wide horizon and with the growth that companies have achieved, the
parameters have also responded in a synchronous manner.

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BIBILOGRAPHY

www.moneycontol.com

www.textileindustries.com

www.raymond.com

www.bombaydyeing.com

www.arvindmill.com

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