CHAPTER – I

1.1 INTRODUCTION

Indian sub continent is the second largest manufacturer of garments after

China the global leader in garment production. India is known for its high quality

garments for men and most of the garment manufacturers are in the Small and

Medium scale industry. RMGs (RMG) are garments ready for wearing1. Wearing

garments is one of basic needs for every human being. The popularity of RMG is

increasing day by day. RMG such as cotton shirts, terry cotton shirts, pants, pajamas,

petticoats, blouses, shalwar, kurta, children’s wear and school uniforms, have been

finding more and more acceptance in the indigenous markets and have carved out a

niche in the global markets and earned reputation for its low cost, durability, quality

and gorgeousness.

Today’s changing consumer preferences – buying branded apparel and fashion

accessories, major boom in retail industry, shopping at department and discount

stores, shopping malls, rising disposable incomes, government policy and the like,

1. Ramesh Bhojuani, Small, Medium and Large Scale Industries Vol. II, SSI Hand Book,

pp. 186 -192.

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focused on fast-track growth of textile and RMG and ambitious goals - have created

several investment opportunities in India.

RMG are made for a wide range of events and usage. It is, therefore,

necessary to suit the very purpose. The purposefulness of the RMG is achieved by

selection of proper fabrics and refitting design and stitching.

The main fabrics used for RMG are: cotton, silk, wool, synthetic, blended and

other types. Fabrics serve as the raw materials for the RMG industry. Economy

durability and fashion orientations are the main consideration for selection of raw

material for a particular type of RMG. Various non-traditional fabrics are also used

for RMG. Leather, nylon and other synthetic fabrics are a few to name. The

associated consumable stores include, stitching threads, buttons and various insert,

like collar bones, embroidery materials, and the like. Stitching threads are mainly

non-metallic or metallic ones and so is the case with button. Colour matching or

contrast of components, used in a RMG, require a great deal of scientific synthesis,

for a suitable garment design. Experience and imagination is combined together for

creation of latest fashion garments. Experimentation and modeling tactics are used

for evolving designs while suitable equipments and quality raw materials translate

the designs into actual garments for use. The bulk-purchase dictates their own quality

standards to be maintained by the manufacturers.

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RMG have a wide ranging use within and out of our country. The RMG are

manufactured in industries in standard sizes for instant use. The RMG are used by

ladies and gents, boys and girls as inner wears or outer garments. Different fabrics

are used to manufacture RMG which are suitable for specific seasons and occasions,

institutions and industries.

RMG are used because these are fashionable, suitable for a particular occasion

or event, season or climate and most of all economically suitable for all sorts of

people. Various types of RMG are used by various sections of people and hence

these are available in a wide variety.

People of certain tastes use RMG of specific type depending on needs but

there is a habit to share the tastes of other sects of people. However, RMG today

cater to the requirements of people of almost all walks of life.

1.2 STATEMENT OF THE PROBLEM

RMG are manufactured by different producers such as large scale industries,

small-scale industries. The type of materials used for manufacture of RMG varies

differently depending upon copy right and capacity of the producer. A RMG

consumer is not deeply concerned in analyzing the quality of the products marketed.

Hence, the RMG are purchased depending upon his needs, the potentiality,

personality and the like.

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Costly RMG are also marketed with good materials and in attractive designs

to satisfy the needs of consumers belonging to the different types such as infants,

children, adolescents, elderly people, office goers and the like.

To meet the high rising demands in the domestic market as well as

international market, production pace should be accelerated at a higher speed. But,

the production units face high amount of risk and problems in procuring materials,

availability of skilled labour and traditional ways of production. Problems like

scarcity, delay in delivery, poor quality and high cost, transportation problems, price

fluctuations are faced in acquiring raw materials. Problems like lack of modern

machinery with latest and advanced technologies, labour absenteeism, and lack of

skilled employees are rampant in this sector.

These are some of the problems existing in almost all the sections in

production units of RMG. For this Study, the manufacturing units are classified on

the basis of the nature of products - branded and unbranded products. The units are

named into two groups namely Branded Units (BU) and Unbranded Units (UBU).

All the aspects related to the problems are discussed at the BU and UBU level.

1.3 SCOPE OF THE STUDY:

The present study focuses on the problems and issues faced by small scale

RMG manufacturers in Madurai District. Micro (Tiny) enterprises (having an

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investment of upto Rs.25 lakhs in plant and machinery) and Medium enterprises

(having an investment of more than Rs.5 crores in plant and machinery) are not

covered by this study.

1.4 OBJECTIVES OF THE STUDY

The following are the objectives of the present study:

1. To trace the origin, growth and development of RMG in India and Tamil Nadu

2. To understand the process of manufacture and the changing role of RMG

manufacturing units in Madurai District

3. To study the profile of the study area and the institutional assistance rendered

by various agencies to uplift RMG Industry.

4. To study the general profile of RMG manufacturing units in the study area and

to identify the problems in it.

5. To examine the association between the profile units and the various problems

of RMG manufacturing units in the study area and

6. To make suitable suggestions and recommendations.

1.5 REVIEW OF LITERATURE

The review of previous studies related to various aspects is discussed as under:

 6

Shahid Allam (2011)2, in his published thesis titled ‘Marketing Strategies of

RMG Industry in India’ emphasized the leadership role of garments sector in India as

this sector is the second employment providing sector after agriculture and is

concerned to small scale industries sector. He stressed the important role played by

RMG industry as it is concerned with one of the basic needs of every citizen and

focused the contribution of the RMG sector in the sphere of production, earning of

foreign exchange and the significant investment in the Indian economy.

In a paper presented by Marello3 in a Workshop titled ‘Improving Labour

Productivity in Egypt’s RMG Sector’ organized by the Trade Related Assistance

Centre (TRAC) on April 5, 2009, he identified: high labour turnover that averaged

20-25%; high absenteeism averaging 10-20%; untrained work force, untrained

middle management as the causes of low efficiency of workers in RMG units in

Egypt. He suggested improving labour productivity through capacity building such

as: Technical Education and Vocational Training (TEVT), Enterprise Training

Partnership (ETP), Production Engineering; Govt. support; Niche Approach;

addressing cultural challenges to overcome such problem.

2. Shahid Alam, “Marketing Strategies of RMG Industry of India” Ph.D. Thesis, Aligarh Muslim
University, 2011

3. www.amcham-egypt.org
 7

In a thesis titled ‘Problems of Nepalese RMG in the international market’

submitted by Dasharath Prajapati4 the researcher identified topography, lack of raw

materials and skilled and efficient manpower for designing, cutting, pattern making

and stitching garments, traditional way of manufacturing garments, absence of

diversification of markets (90% exported to US only), dependence of every required

materials such as fabrics, threads, zippers, buttons, and labels from another countries,

the failure to meet the standard in quality as compared to other countries, as the

problems in the RMG sector in Nepal.

Pakistan enjoys an advantageous position in the manufacture of RMG having

the essential raw materials in abundance as well as cheap labour5 The industry has,

however, not been able to acquire an important place in the world. Main problems

impeding the growth of this industry are summarised as under: For those who

manufacture garments on orders, frequent price fluctuations create a serious problem.

Poor training to the workers and the careless attitude of workers affect the quality of

the final product. The assets such as sewing machines and raw materials available in

the industry could not be accepted as a security to avail of loans.

4. www.scribd.com

5.www.findarticles.com
 8

Reddy,6 in his article titled “Global Competitiveness of Indian Textiles –

Perspectives on Environmental Compliances” highlighted the status of the

environment related issues in the Indian textile industry, the global demand, the

complaints, level of the industry as well as the various steps and actions needed to be

taken to remain competitive in the global market.

Amit Garg and Rahul Shah7 in their report on “E-Commerce: Emerging

Trends and Impact on Business” explained the emerging trends on the apparel

business due to impact of e-commerce on (Business to Business) B2B as well

(Business to Consumers) B2C business models.

Suresh8, in his book titled “Textile Industries in India” stated that the

opportunities for export of textiles and RMG are going to be more in the forthcoming

6. Reddy R.C.M, “Global competitiveness of Indian Textiles- Perspectives on environmental

compliances”, Textile Committee Report, October, 2001, p. 99

7. Amith Garg and Rahul Shah, “E-commerce: Emerging Trends and impact on business”, Clothes

Line Report, November 2000, p. 66

8. Suresh C, “Textile Industry in India”, The Textile Ministry, Government of India, New Delhi,

February, 2004, p. 14
 9

years for India’s economic development and highlighted the potential and emerging

markets for Indian garments globally.

Devaraj9 in his article entitled “A Study on Costing and Pricing of Knitted

garments at Tiruppur”, stated the reasons for the cost variations in knit wear garments

and identified the profit margin kept by large number of units as around 10

percentage and job orders of knitting, processing and calendaring are done on credit.

Lakshman10 in his Article titled, “Garment as the lead Industry the way ahead”

stated that the global apparel industries were undergoing a rapid transformation with

respect to the demands of buyers and the strategies adopted by suppliers to meet

these demands. The study pointed out the significant gap that lies between the exact

requirements of buyers and the capabilities of local suppliers and suggested measures

to be adopted to bridge those gaps.

9. Devaraj, “A Study on Costing and Pricing of Knitted garments at Tiruppur”, Economic and

Political Weekly, February 27, 2002, p. 17

10. Lakshman W.D, “Garment as the lead Industry the way ahead” , Prawada, May-June issue,

1996, p. 59
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Rajesh Bheda11 in his Article titled, “Productivity through Quality: The

Experience of Apparel Industry” has explained about the measurement of

productivity and also the supply chain management and product development. He

highlighted the low productivity and suggested that it could be improved by

strengthening the quality system.

Gopal Joshi12 in his study stated that “for improving productivity through high

value addition and high quality the garment industry can be pursued through a

combination of various measures. Investment in new technology and equipment,

upgradation of skills among the workers, improvements in production organization

and process carrying out productivity campaigns and emphasis on quality

improvement, improvement in job quality etc.”

11. Rajesh Bheda, “Productivity through quality - the experience of Apparel Industry”, The Indian

Textile Journal, June 2003, p.73

12. Gopal Joshi, “Garment Industry of India in South India Rags or Riches?” (ILO), New Delhi,

2002, p. 20
 11

Rahul Chaudhry13 in his article on “Indian garment industry: What is the real

competitive edge?” observed that the Indian garment industry has long been harping

on the low cost advantage which in the real sense is not so low when the productivity

norms are applied. He also observed that there must be a shift from cost advantage to

competitive advantage to face the global competitions.

Samar Verma (2002)14 in his study on “Export competitiveness of Indian

textile and garment industry” observed that “perhaps the most draconian of all

government policy that has scuttled the growth of garment industry is reservation of

garment manufacture for small scale industry and also impeded technology

upgradation of garment manufacturing units. As a result the garment units could

neither attain optional economics of scale nor produce international quality

garments.”

13. Rahul Chaudhry, “Indian garment industry - What is the real competitive edge?”, Clothesline,

September 2003, p. 76

14. Samar Verma, “Export competitiveness of Indian textile and garment industry,” Working Paper

No. 94, Indian council for international and Economic relations (ICRIER), 2002, p. 27
 12

Dinesh Pant and Devendra Prdhan15 in their study on Nepal garment industry

pointed out that the competitiveness of the garment industry in Nepal is constrained

due to transportation cost and low productivity. They recommended formulation of a

national strategy with a focus on high value products and market diversification,

development of backward linkage industries, completion of dry port projects,

utilizations of WTO provisions for least developed countries, improvements for

enhancing productivity and upgradation of technology and progress.

Malliswaran16 in his study titled “A study on the garment industry with special

reference to Tiruppur” stated that the garment industry is the potential industry which

generates the employment opportunities in all related sectors. He recommended that

the government should take steps to improve the basic infrastructure facilities like

water, transport, warehouses, effluent disposals etc., to enhance the quality of the

garments. The readymades should be allowed to be imported at subsidized rate. The

existing export promotion incentives to be continued, modernize the existing units,

extending financial support by the Government through the financial institutions at

15. Dinesh Pant and Devendra Prdhan, “Garment Industry in South Asia Rags or riches?”, (ILO) ,

New Delhi, p. 246

16. Malliswaran, “A study on the garment industry with special reference to Tiruppur” Ph.D. Thesis,

Bharathiar University, Coimbatore (2002)

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concessional rate of interest and skilled workers are to be motivated by monetary and

non-monetary incentives to increase productivity.

In an article titled “Garment Productivity Centre Endeavoring for Prosperity

of Pakistan Garment Industry”17 it was stated that there are three main factors

contributing to low productivity in RMG Industry. First is old technology second is

poor management practices and untrained man power and the third is lack of working

capital.

Narin Duth Buthoo18 in his article on “Africa hit hard as Global textile

markets opens” quoted a study by WTO which reveals that India and China will

garner about 80 per cent of the world market and the remaining 20 per cent have to

be shared by the rest of the world.

17. “Garment Productivity Centre Endeavoring for Prosperity of Pakistan Garment Industry”

Economic Review (Pakistan), January 2005, pp. 14-60

18. Narin Duth Buthoo, “Africa hit hard as Global textile markets opens”, Apparel Fortnightly,

January 2005, p. 38
 14

Chandran Shah and Mohan Singh19 in their study observed that “presently the

Indian hosiery and RMG products are moving export to USA and European

economic countries. Exporters are now realizing that it may not be easy for the

increased export to these countries because of tough competition from other countries

like Taiwan, Hong Kong and China.

Gorkhia20 revealed that closer contacts by participating in international trade

fairs/exhibitions will expose Indian garments to buyers in those countries. A two-way

relationship between Indian exporters and foreign designers will give us an advance

look at future fashion to our advantages. Arranging Indian exhibition in overseas

market will open the doors for Indian garments.

Manisha, Awasthi and Anitha Singh21 in their article suggested that the Indian

garment industry can perform well globally if the quality assurance systems are

implemented strictly. Quality has to be designed and built into products and just

19. Chandran Shah and Mohan Singh, Hosiery Exports, Clothesline, April 1991, p. 11

20. Gorkhia R, Structural Adjustments for Future Garment-II, Export Textiles, August 28, 2003, p.8

21. Manisha, Awasthi and Anitha Singh, “Global Competitiveness on Highest Product Quality”,

The Textile Magazine, March 2003, p. 42

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“inspected” qualities in reality, the ability to exceed customers’ expectation while

maintaining a cost competitive market position.

Sathyamoorthy and Soundharya Preetha22 have stated that the knitwear

industry in Tiruppur has started working on some long term projects as collective

efforts to cater to niche market in the international arena.

Panthaki23, in his article explained why Chinese quality, service and delivery

are of better standard than those of the Indian. He also elaborately focused on the size

of the industry, garment production and entry of China into WTO, comparative

advantage of Chinese garment sector and assistance for development of garment

sector.

Venkatachalam24, in his Article “Problems faced by Tirupur Garment

Industries” suggested clear-cut policies on raw materials, in the interest of indigenous

industries, should be planned, chalked out and discussed well in advance.

22. Sathya Moorthy and Soundharya Preetha, ”Tiruppur Knit Wear Gearing For New Region”,

Survey of Indian Industry, Special Issue, The Hindu, 2003, p. 360

23. Panthaki M.K., “Lesson for Indian from China”, Apparell Industry, April 2003, p. 58

24. Venkatachalam S., “A Study on Problems faced by Tirupur Garment Industries,”

www.fibre2fashion.com
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Prohibiting/banning the export of raw material is to be invariably considered in detail

and enforced. The government should concentrate on removing the capacity

constraints on infrastructure. All out efforts must be made to encourage vertical set-

ups required for the industry. With regard to labour, an atmosphere may be created

for the employer to feel comfortable and secure in order to serve the nation by

running his industry smoothly and successfully.

Ritu Narang25 in his Article “A Study on Branded Men's Wear” highlights a

brief account of the RMG industry which is one of India’s largest foreign exchange

earners. Garment manufacturing is one of the most fragmented sectors of the Indian

textile industry. The garment industry comprises manufacturers of RMG for either

the domestic or export markets or, in certain cases, both. The constituents of this

segment are very diverse in terms of their size, production facility, the type of apparel

manufactured, the quality of output, fabric requirement, price sensitivity etc. This is

an industry with no visibility of data in an organized sense. So, the figures quoted are

more of industry estimates rather than of any organized research.

25. Ritu Narang, (2006) “A Study On Branded Men's Wear,” Indian Journal of Marketing, vol.

xxxvi. November 2006.

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In a report by RNCOS26 “Booming Women’s Apparel Market in India” the

diverse, opportunities and challenges critical to the growth of women’s apparel

industry in India and a detailed overview on the Indian consumers and their

preferences along with various channels existing in the Indian markets were

discussed.

Gupta27, in his Article titled “Prospects and Challenges in the Indian Textile

Industry” has identified that the Indian Textile Industry had been plagued by

obsolescence, labour problems, raw material vagaries and lack of modernization

including that of spindles. The post fabric stage processing technology has also been

lagging but is now coming up fast with infusion of textile processing technology. SSI

firms perform the majority of weaving and processing operations. The level of

weaving technology is of lower order and knitting units do not possess the capacity to

perform dyeing, processing and finishing to international standards.

The report on Women Wear Market Forecast to 201028 provides extensive

research and rational analysis on the women apparel market in India. It underlines

various factors responsible for the growth of women apparel market in India and

26. Booming Women Apparel Market in India – January, 2008.

27. R.K. Gupta, Prospects and Challenges, Indian Textile Industry, 2009

28. Women Wear Market Forecast to 2010 - Market Research Report, 2008
 18

helps to explore the opportunities associated with it. The research gives an insight

into the changing market dynamics and identifies the potential segments in the

overall women apparel market.

An article on “GMCCI plea to scrap entry tax on garments”29 observed that

the introduction of entry tax on RMG has come as a shock to the industry. The

readymade industry has been going through tough times and it will find it difficult to

absorb the additional burden of an entry tax pegged at two per cent.

Ramanathan30, Deputy Director of Textiles Committee, Madurai observed

that “the RMG manufacturers need to develop a global perspective to profit from the

potential that would emerge with the setting in of the WTO regime. Despite the

presence of more than 700 RMG units in and around Madurai, a global popularity

has not been gained like Tirupur and Karur, he observed. In his opinion, this was

mainly because the manufacturers lacked self-belief and refused to think beyond the

local market, satisfying themselves with despatching the garments to Karnataka and

Kerala. He opined that the manufacturers need to become aware of the design along

with cost and quality with timely delivery, to seize and establish them in the global

market.”

29. Business Line, October 2002

30. Ramanathan, (2004) “Think global, garment manufactures told” Business Line, August 11, 2004
 19

Sharma31, was of the view that to compete effectively with any other supply of

industry, modernization of machinery and equipment is required.

Ashok Chandra Prasanth32 reported that the garment industry is characterised

by the high level of uncertainties with fast changing fashion trends, consumer

preference, quality and tight delivery schedules. The major constraints of Indian

garment industry are low productivity and low technology development that are

increasing.

A study conducted by KSA Technopark in 200133, identified the weaknesses

and the major cause for the non growth of the Indian RMG industry in the current

environment globally. They are: “Limited linkages between supply chain; Limited

efforts to value addition; Inadequate support for human resource development, Poor

resource productivity; Poor “on time” performance; Low innovation in terms of

design and style; System not in place.”

31. Sharma P.C. (1993), “Cost Optimization in processing of cotton Knitt goods in Indian Textile

Industry”, knitt India 100, International Conference.

32. Ashok Chandra Prasanth, Indians competitiveness in export garments in the MFA-Phase out and

post-MFA phase out periods, Vocational Paper No:10, Indian Institute of Foreign Trade, 1994.

33. KSA technopark “Status Report on Indian Clothing Industry”, Clothesline, August 2001, New

Delhi.
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In a survey conducted by Bobbin in ASEAN countries34, the factors affecting

productivity in RMG manufacturing units were identified. They are: “Level of

technology; Product style, price point and product value; Training of workforce and

management; Motivation level of workforce and management; Labour turnover and

absenteeism.

Ramanathan35, observed that “the textile industry has tremendous potential to

tap the international market in the post World Trade Organization (WTO) regime if it

managed to overcome competition from China. Indian manufacturers should rise up

to the occasion and qualify themselves to face international competition. To ensure

this, they should be aware of the ground realities. Whereas China's contribution to the

American demand for RMG accounted for 22 per cent, India's share was a mere 3 per

cent. Madurai accounted for 700 RMG manufacturing units and they all were keen to

tap the local market. China on the other hand had invested hugely on machinery and

could respond to bulk orders at short notice. He said that a team of experts from

NIFT visited Madurai undertook a study which suggested how the Madurai units

34. Bobbin, “Quality and productivity improvement in Indian Apparel Industry in ASEAN

countries”, August 2001

35. THE HINDU dated August 9, 2004

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could organize themselves to improve their performance. The manufacturers should

form clusters among themselves to equip themselves and face global competition.

Senthil kumar and Sivakumar,36 observed that “India's garment industry is

prominent in the country's economy as well as globally. The Government and

industry advocates should continue to push the industry to grow in new directions, to

remain technologically advanced and to make production even more economically

viable. By doing so, the industry will be able to adapt to global changes and to take

on whatever challenges it faces and competitors that may come its way.

Rajesh, 37 in his book “Managing Productivity in the Apparel Industry” stated

that “the Indian garment industry would need to improve its performance on

productivity, lead time, technology upgradation and creating an efficient domestic

apparel retail sector to be able to compete successfully in the global market place.”

36. Senthil kumar M and S. Sivakumar, “An Overview of Indian Textile Industry In 2006, The

Indian Textile Journal, 2007 Issue”.

37. Rajesh, “Managing productivity in the apparel industry” CSB Publishers, p. 40, (2004)
 22

Juan Carlos Hiba38 while explaining the improving working conditions and

productivity in the garment industry, pointed out the rules for the successful

involvement of workers such as: “Provide more information about your enterprise;

Create condition for participation; Let the workers assess the workplace and express

their ideas; Implement a small change; Monitor and review the progress.”

Shanmugasundari,39 in her study examined the consumer preference in RMG

in Madurai city and analysed the factors influencing, the consumer behaviour in

RMG. Her priority on RMG was based on the specific aspect of comfort, easy to

wear, etc. She welcomed RMG that clung gracefully to the body causing the lead

inconvenience.

Abbas,40 in his Study titled “A study on consumer brand preference for

readymade shirt in the Madurai city” denoted the importance of branding, brand

preference, measuring of brand, loyalty and purchasing power. He inferred that the

brand “S Kumar” shirt is preferred by most of the respondents.

38. Juan Carlos Hiba, “Improving Working Conditions and Productivity in The Garment Industry”,

p. 22.

39. S.Shanmugasundari (1993), The Consumer Preference in Readymade Garments in Madurai City.

40. Abbas S. (2002), “A study on consumer brand preference towards readymade shirt in the

Madurai city”.
 23

Parimalam, Kamalamma, Ganguli41 in their findings “Ergonomic

interventions to improve work environment in garment manufacturing units in

Madurai city” opined that the work environment in the garment manufacturing units

is unhealthy and unsafe for the workers, resulting in several health problems.

Analysis of garment manufacturing units using a combination of techniques revealed

that the congested work area, improper ventilation, dust, unergonomic workstations,

excessive noise and non-use of personal protective equipment were the major

constraints faced by the workers in these units. In the study, interventions to improve

the work environment, safety aspects and work methods have been suggested which

could be adopted on a wider scale.

Nagar,42 has classified problems in RMG industry as: “Obsolescence due to

old and outdated conventional, machinery used in manufacturing operations; Lack of

trained workers for sophisticated readymade goods and non availability of proper

feedback on overseas information on the preference and behaviour of the consumers.

41. Parimalam P, Kamalamma N, Ganguli AK.(2006) “ Ergonomic interventions to improve work

environment in garment manufacturing units in Madurai city” Indian Journal of occupation

and environmental medicine, August 2006, vol. 10 Issue 2

42. Nagar G.N (1985), “Exports prospects of knitted goods”, XXIXth IFKT Congress, New Delhi,

India.
 24

Somu,43 in his study on Performance of hosiery garments and export units in

Tiruppur recommended a permanent trade fair centre, common brand development,

quality enhancement, setting more training centres, adequate working capital finance

and motivation of employees.

Madiwanan,44 in his study on Problems and perspective of export home

furnishing fabrics emphasized the need for getting direct export order, entrepreneur

development, brand of home furnishing fabrics, electricity subsidy and control over

the production cost.

Venkatesh,45 suggested in his study titled ‘Needs and problems on shipment

finance’ that the government should come out by offering more financial schemes

and concession to increase the knitted garment export and also permit foreign direct

investment in this sector which can take the Indian knitted garment to the global

market.

43. Somu A. (2005), “Performance of hosiery garments and export units in Tiruppur”.

44. Madiwanan S. (2006), “A study on problems and perspectives of export home furnishing
fabrics”.

45. Venkatesh J. (2008), “Needs and problems on shipment finance”

 25

Sathya Priya46, in her study titled “Export performance in the garment industry

in Tiruppur” discloses that there is need for the exporters to study the changes, adapt

themselves, sustain and succeed. She stressed the need for government support by its

policy and programmes.

Syed Mahmood Mohideen Razwi,47 in his study “A study of consumer

behaviour towards RMG in Chennai city”, expressed the influence of consumers

purchase of RMG based on a variety of brands, location of showroom, presentation

of garments, quality, price, design, fashion, etc.

Sharma,48 undertook a survey on “Export marketing problem - A Case Study

of Problems and Potential of Indian RMG Industries”. He evaluated the problems

faced by the garment industry in production, marketing, finance and personnel of the

sample units. He found that the marketing and production aspects were more

important than others.

46. Sathya Priya (2007) “Export performance in the garment industry in Tiruppur”.

47. Syed Mahmood Mohideen Razwi (2007), “A study of consumer behaviour towards RMG in

Chennai city”.

48. Sharma P.K (1989) “Export marketing problem.. A Case Study of Problems and Potential of

Indian RMG Industries”.

 26

An important challenge confronting Indian garment manufacturers is the need

to devise strategies once the quota on garment exports is abolished in 2005. With

garments accounting for nearly 50 per cent of overall textile exports, the threat from

lower-cost producing nations is real.49

Dhanraj,50 in his study on “Problems of productions and marketing of cotton

fabrics with reference to Coimbatore District” observed that the high labour turnover,

shortage of labour, non-availability of technical labour and absence of regular power

supply cause hindrance to the production activity.

Bhattacharya and Hossain (2006)51 reported that the complex nature of

documentation, the lengthy time taken in releasing and clearing goods from ports,

and corruption among customs personnel were the major hurdles in operating a

business in Bangladesh. The study further showed that a lack of automated customs

49. Business line dated December 1, 2003

50. S. Dhanraj (2007) “Problems of productions and marketing of cotton fabrics with reference to

Coimbatore District”.

51. Bhattacharya, D. and S. S. Hossain (2006). “An evaluation of the need and cost of selected trade

facilitation measures in Bangladesh: Implications for the WTO negotiations on trade

facilitation”, ARTNET Working Paper Series, No. 9, Trade and Investment Division, ESCAP,

Bangkok.
 27

procedures was a major impediment for the business community in the context of

trading across borders.

A global survey on “Removing barriers to SME access to international

markets” by OECD/APEC identified a range of barriers that were detrimental to

access by SMEs to international markets. Based on the survey results, Lester and

Terry52 (2008) summarized four barriers as the most serious impediments to SMEs’

access to international markets: (a) a shortage of working capital for financing

exports; (b) identifying foreign business opportunities; (c) limited information related

to locating/analysing markets; and (d) inability to contact potential overseas

customers. These findings complement those of Duval (2007) which suggested that

the focus of the multilateral trade facilitation agenda would ultimately need to be

broadened to address the need of developing countries in Asia and the Pacific.

52. Duval, Y. (2007). “Trade facilitation beyond the Doha Round of Negotiations”, in Trade

Facilitation beyond the Multilateral Trade Negotiations: Regional Practices, Customs Valuation

and Other Emerging Issues – A Study by the Asia-Pacific Research and Training Network on

Trade, ST/ESCAP/2466. United Nations, New York.

 28

According to Jana, Prabir53 Functional garments have higher functional

properties and lesser aesthetic properties. They can be workwear, active sportswear,

medical wear, personal protective garments, and smart garments.

Watkins et al.,54 (2011) say that the garment industry has focused on speeding

up, through the use of CAD systems, empirical pattern construction methods which

developed through custom and practice. This subjective approach has significant

limitations. When applied to stretch pattern design it is particularly inappropriate for

today’s technology.

Arpita Khare55 (2011) noticed that the current business dynamics have led to

the adoption of technology for various business strategies. The inter-play of factors

like globalisation, technology, outsourcing, supplier collaborations and customer

relationships are fuelling the drive towards efficiencies. In this light, the paper makes

53. Jana, Prabir Dec-2011, Assembling technologies for functional garments—An overview , IJFTR

Vol.36(4) [December 2011], ISSN, India , pp. 380-387

54 . Watkins, Penelope Designing with stretch fabrics, Dec-2011 Publisher: NISCAIR-CSIR, India,

Page(s): 366-379, ISSN: 0975-1025 (Online); 0971-0426 (Print) Source: IJFTR Vol.36(4)

December 2011.

55. Arpita Khare (2011) “Technology as a driver for competitiveness to Indian RMG supply chains”

Int. J. Logistics Systems and Management, Vol. 8, No. 1, 2011

 29

an attempt to identify the driving factors for adopting technology for making supply

chains competitive. It explores the adoption of Information Technology (IT) in Indian

clothing retail supply chains, the information accessibility prevalent in the Indian

supply chains. Primary research was conducted on the various readymade

clothing/garment retailers and the IT use levels were identified in the supply chain.

Rose Otieno,56 (2000) in his study pointed out that the RMG Manufacturing

Units in Kenya are still market production oriented, and may face severe competition

from inward-bound competitors who are marketing oriented. This exploratory study

contextualized the role of size charts in the marketing strategy of clothing firms.

1.6 OPERATIONAL DEFINITION OF CONCEPTS:

1.6.1 Textiles:

A broad classification of any material that can be worked into fabric yarns,

including woven knitted fabric.

1.6.2 Readymade Garments:

RMG are ready to use dresses.

56. Rose Otieno, (2000) "Development of a conceptual framework of the role of sizing in marketing

strategy within clothing firms: Indications from in-depth interviews with manufacturers",

Journal of Fashion Marketing and Management, Vol. 4 Issue: 4, pp.337 – 350

 30

1.6.3 Apparel:

An inclusive term for clothing or garments and includes all category of

clothing from intimate apparel to outer wear for men, women and children.

1.6.4 Brand57:

Brand is a name, term, symbol or design or a combination of them which is

intended to identify the goods or sources of one seller or a group of sellers and to

differentiate them from those of competitors.

1.6.5 Outsourcing:

An act of giving subcontract, for the completion of a task in a cost effective

manner is called as outsourcing.

1.6.6 Small Scale Enterprise58:

According to the provisions of Micro, Small and Medium Enterprises

Development (MSMED) Act, 2006, manufacturing enterprises are defined in terms

of investment in plant and machinery. According to this Act, an undertaking in which

57. Gini Stephens frings, (2006) Fashion from concept to consumer, Seventh Edition Pearson

Education, Incorporation

58. Vijayshree, P.T & Alagammai, M (2010), Entrepreneurship and Small Business

management, Margham publications.

 31

the investment in plant and machinery is more than Rs.25 lakhs but does not exceed

Rs.5 crore rupees is classified as a small scale enterprise.

1.6.7 Shift:

As per the Government norms eight hours of duty for an employee is

considered as a shift.

1.6.8 Hourly basis:

Workers do the job for a specified period of hours in a day. They are paid on

the basis of the hours they have worked in the factory.

1.6.9 Infrastructure:

Facilities such as energy, transport services, communications, banking, man

power, science and technology, marketing facilities and social overheads.

1.6.10 Jobbers/stitching units:

Such units that normally undertake job work for manufacturers on piece rate

basis are provided with samples and fabrics cut in designed shapes for carrying out

stitching work.

1.6.11 Processing units:

The units undertake the job of bleaching, dyeing, printing and calendaring of

garment units.
 32

1.6.12 CAD59:

Computer Aided Design CAD): software that assist with pattern

development and market making.

1.7 PILOT STUDY:

To initiate the work a pilot study was carried out by the researcher by

collecting data from 25 RMG manufacturers of Madurai district using an interview

schedule. This had helped the researcher to work out the strategies to identify the

important areas to be covered for the collection of data relating to the study. Based on

this, refinement of interview schedule was made for further collection of data.

1.8 AREA OF STUDY:

This study covers the whole 13 blocks of Madurai District, which consists of

Madurai East, Madurai West, Melur, Alanganallur, Tirupparangundram,

Tirumangalam, Kalligudi, Kottampatti, Vadipatti, Usilampatti, Chellampatti,

Sedapaddi and T. Kallupatti blocks.

59. Ruth E.Glock, Grace.I.Kunz (2005), Apparel Manufacturing Product analysis, Fourth edition,

Pearson Education, Incorporation.

 33

1.9 SAMPLING

Both primary and secondary data were used for this research work. Primary

data was obtained from the RMG manufacturers Interaction was made with the

officials of Textiles Committee, District Industries Centre (DIC), Maditssia, SIMA,

Textile Park, etc. and the reports, journals and other necessary data was utilized.

With the help of a detailed interview schedule, the researcher interacted with

the RMG manufacturers and collected necessary data to go ahead with his research

work.

The DIC, Textiles Committee and Maditssia have particulars about RMG

manufacturing units in Madurai District. Out of the total of 700 RMG manufacturing

units in Madurai District, a sample of 398 units, who have responded, was studied for

the purpose of this research.

1.10 FRAMEWORK OF ANALYSIS

The collected data had been processed with the help of appropriate statistical

tools. The statistical tools were selected on the basis of the objectives of the study

and also the nature of data included for the analysis. The details of statistical tools

and their relevance of application are summarized below:

 34

1.10.1 Exploratory Factor Analysis

Exploratory Factor Analysis identifies common dimensions of factors from

the observed variables that link together the seemingly unrelated variables and

provide insight into the underlying structure of the data. Varimax rotation is one of

the most popular methods used in the study to simplify the factor structure by

maximizing the variance of a column of the pattern matrix. The common factors

themselves are expressed as linear combinations of the observed variables. (Nalini,

200660).

Factor model

Factor Score = Wii X1 + Wr2 X2 + …. + Wik Xk

Whereas

Fi – Estimate of ith factor

Wi – Weight or factor score co-efficient

Xi – Variables included

K – No. of variables included

In the study, exploratory factor analysis has been applied to identify the

important problems in Garment units.

60. Nalini Prava Tripathy (2006), “A Service Quality Model for Customers in Public Sector Banks”,

The ICFAI Journal of Bank Management, 5(2), May, pp. 77-82.

 35

1.10.2 Confirmatory Factor Analysis (CFA)

The confirmatory factor analysis have been used to analyze the reliability and

validity of the variables included in each factor. The convergent-validity of the factor

was assessed by three measures: item reliability, construct (composite) reliability and

average variance extracted (AVE) (Fornell and Sarcker, 198161). Items validity was

evaluated by the size of the standardized factor loading of the variables on their

corresponding factors. The loading should be at least 0.60 and ideally at 0.7 or above

(Chin, 199862). Composite reliability was assessed on the basis of internal

consistency. It is similar to Cronbach alpha. The minimum acceptable level of

composite reliability is 0.50 (Gerbing and Anderson, 198063). The convergent

validity was assessed with the help of AVE which is at least 0.50 (Fornell and

Lancher, 1981).

61. Fornell, C and Larcher, D.F, (1981), “Structural Equation Models with Observable Variables and

Measurement Error”, Journal of Electronic Commerce Research, 18(3), pp.39-50.

62. Chin, W.W (1998), “Issues and Opinion on Structural Equation Modeling”, MIS Quarterly,

22(1), pp.7-16.

63. Gerbing D.W and Anderson, G.C (1988), “An updated Paradigm for scale development

incorporating undimensionality and Job assessment”, Journal of Marketing Research,

25(May), pp.186-192.
 36

In the present study, the CFsA have been used to analyze the validity and

reliability of variables included in various aspects included in the problem, strengths,

weaknesses, opportunities and threats to the Garment units.

1.10.3 Two Group Discriminant Analysis

Discriminant analysis is a technique for analysis of data when the dependent

variable is categorical and the independent are interval in nature. When the

dependent variable has two categories, the technique is known as two-group

discriminant analysis. When three or more categories are involved, the technique is

referred to as multiple discriminant analysis (Malhotra, 2003)64. The discriminant

analysis model involves linear combinations of the following form:

Z = b0 + b1X1 + b2X2 + …. + bnXn

Whereas

Z = Discriminant score

bn = Discriminant co-efficient on weight

X = Discriminant variables

b0 = Constant

64. Naresh K. Malhotra (2003), Marketing Research: An Applied Orientation, Pearson Education

Private Ltd., India, pp.559-570.

 37

The Wilks Lambda was calculated as a multi variant measure of group

difference over discriminating variables. (Shajahan, 2005)65. The relative

discriminating power of the variables was calculated by

Ij = Kj (Xj1- Xj2)

Whereas

Ij = The important value of the jth variable

Kj = Unstandardized discriminant co-efficient for the jth variable

Xjk = Mean of the jth variable for the Kth group

The relative importance of a variable Rj is given by

Ij
Rj = n

∑I
i =1
j

In the study, two group discriminant analyses was used to find out important

discriminant factors among the branded and unbranded units regarding various

aspects related to problems and SWOT of the Governments units.

1.10.4 Multiple Regression Analysis

When a variable is dependent on more than one independent variables, one

analysis will not reveal the relationship. For this purpose, the multiple regression

analysis was administered. The cause and effect relationship between dependent and

65. Shajahan, S., (2005) “A study on the level of customers satisfaction on various modes of banking

services in India”, The ICFAI Journal of Bank Management, 4(1), February, pp.79-84.
 38

independent variables is carried out by the multiple regression analysis (Klans et al.,

2002)66. The general form of the regression model is:

Y = a + b1X1 + b2X2 + … + bnXn + e

Whereas

Y – Dependent variable

X1, X2, …Xn – Independent Variables

b1, b2, ... bn – Regression co-efficient of independent variables

a – Constant and

e – error term

In the present study, the impact of various dynamics influencing on creativity

among the professionals and the impact of various components of creativity on the

various outcomes of creativity among the professionals have been examined

individually and also for pooled data.

1.10.5 Oneway Analysis of Variance

Analysis of variance is used for examining the differences in the mean value

of the dependent variable associated with the effect of the controlled independent

variables, after taking into account the influence of the uncontrolled independent

variables. One way analysis of variance involves only one dependent variable or a

66. Klans, Wertenbroach and Bernd Skiera (2002), “Measuring consumers’ Williyness to pay at the
point of purchase”, Journal of Marketing Research, 39(2), pp.228-241.
 39

single factor. The null hypothesis may be tested by the F statistics based on the ratio

between these two estimates.

SS x /(c - 1) MS x
F= =
SS error /(N - c) MS error

c
Whereas SS x = ∑ n (Y j - Y) 2
j=1

c n
Whereas SS error = ∑ ∑ (Y j - Y) 2
j=1 j=1

Yi – Individual observation

Yj – Mean for category (j)

Y – Mean over the whole sample, or grand mean

Yij – ith observation in the jth category

C – Number of independent variables or groups

N – Total sample size (nxc)

The ‘F’ statistics follows the F distribution, with (c-1) and (N-c) degree of

freedom. (Mahalingam and Arun, 2011)67.

In the present study, the association between the background of the marketing

units and the problems in the units has been examined with the help of icant

67. Mahalingam, S. and P.Arun (2011), “A study on consumer behaviour on purchase pattern of food

products in Salem in TN”, Global Management Review, 5(2), February, pp.41-52.

 40

difference among the four group of professionals have been examined in the context

of various dynamics influencing the one-way.analysis of variance .

1.10.6 ‘t’ Statistics

It is one of the hypotheses tests used to fund out the significant difference

between two groups of garment units regarding various aspects related to the

problems, SWOT in the garment units. The ‘t’ statistics (Milner, 2000)68 is computed

by

x1 - x 2
t= with degree of freedom of n 1 + n 2 - 2
(n -1 1)σs + (n - 2 1)σs 22
2
1 1
1
× +
n1 + n 2 − 2 n1 n 2

Whereas t – ‘t’ statistics

x1 – Mean of the first group of unit

x2 – Mean of the second group of unit

σs12 – Variance in the first group of unit

σs 22 – Variance in the second group of unit

n1 – Number of samples in first group

n2 – Number of samples in second group.

68. Laina, M. Milner, (2000), “Sex-Role Portrayals and the Gender of Nations”, Journal of

Advertising, 29(1), Spring, pp.67-79.

 41

1.11 PERIOD OF THE STUDY

The study covers a period of 10 years from 1997 to 2006.

1.12 LIMITATIONS OF THE STUDY

• The data required for the study were gathered from the perspective of the

manufacturing units only. The problems such as from workers’ point of

view or the suppliers’ point of view are out of the purview of the present

study.

• To observe the trend the researcher had selected only ten years as period of

study, expecting that it would reflect the true changes in business.

• Most of the manufacturers are illiterate and hence were reluctant to handle

the problems in the right perspective. This personal bias might have

prevented them from freely airing out their considered views in this regard.

1.13 CHAPTER SCHEME:

This study has been organized into six chapters:

Chapter I:

This chapter deals with the introduction and design of the study where the

researcher has explained the Objectives, Statement of the Problem, Review of

Literature, Sampling, Framework and Tools used for Analysis, Operational

Definition of Concept, Limitation of the Study and Chapter Classification.

 42

Chapter II:

This chapter deals with on overview of textile garment industry in India,

Tamil Nadu and Tirupur, the hub of RMG in Tamil Nadu.

Chapter III:

The general profile of Madurai District, the process of manufacture of RMG

and the changing role of RMG manufacturing units are covered in this chapter. The

institutional assistance provided by various institutions in the study area is also

discussed in this chapter.

Chapter IV:

The background and profile of the RMG manufacturing units in the study area

and the problems encountered by them are analysed in this chapter.

Chapter V:

The association between the profile of RMG manufacturing units and the view

on various problems faced by the RMG manufacturing units are analyzed in this

chapter.

Chapter VI:

The findings of the study and the suggestions form part of the final chapter.