TS001-Competitiveness of Indian Textile Industry


Competitiveness of Indian Textile Industry
Shantanu Chaudhari
Department of Textile Technology
Veermata Jijabai Technological Institute, Mumbai,India
Abstract
Indian Textile is one of the oldest running industry in India. Its more like a tradition instead of being a mere Industry for Indian People. Fashion is not just wearing a fabric in India. Indian people like to represent their culture in their wear.
On the similar basis a study has been attempted to understand position of Indian Textile in world industry. Being one of the largest producers of cotton, Indian textile has a great influence over the world textile market. India is also a big importer of wool. Manny Indian suiting companies have their presence at international level. Similarly, Indian textile Industry is a big producer of man-made fibers like polyester, Polypropylene, Nylon etc.
All though India Textile is big but lacks at some points which prevent it from being a global leader in the same. Traditional and conventional practices in Indian textile industry has negative impact on environment, production and eventually leads to less profit.    
Keywords—Indian textile, Fashion, Natural fibers, Man-Made fibers    formatting, style, styling, insert

Overview of Indian Textile
Textile industry is biggest employment giving Industry after agriculture industry in India. Is started to compete at international level after liberalization of Indian economy took place in year 1991. This allowed 100% FDI (Foreign Direct Investment) in India. Trutzschler, Rieter, Saurer, ATE etc. are some of the international machinery manufactures in India. India also has the presence of international brands like Zara, Marks & Spencer, Victoria Secrets etc. in it.
In the financial year 2018-19 domestic Indian Textile market was estimated to be at US$ 100 billion and is expected to reach at US$ 141 billion by the year 2021 and at US$220 billion by 2025. This sector has showed a growth at a CAGR of 7% since 2007 and is expected to a grow at a CAGR of 12%.

Source-Ministry of Textile

Indian Textile Import
From financial year 2005-06, Indian textile Import has increased at a CAGR of 8%. A import of US$ 7 billion was recorded in the year 2017.

Source-Ministry of Textile

Even thought spending so much amount of money on import, India is not in top 10 textile importing countries.
Top textile importing countries are:
1-European Union, 2. USA, 3. China, 4. Vietnam, 5. Bangladesh, 6. Japan, 7. Hong Kong, China, 8. Indonesia, 9. Mexico, 10. Turkey.

Indian Textile Export
From financial year 2005-06 the export of Indian Textile is growing at the rate of CAGR 7%. By the year 2025 it is expected that the total export of the Indian textile to reach about US$ 80 billion by a CAGR of 10%. In this total export apparel has the largest share of 47%.

Source-Ministry of Textile


Government of India Textile Policies:

Make in India Investment Cell:
To promote investment in India and in textile sector Government of India set up an investment facilitation cell in the textile commissioner office(a subordinate of ministry of textile) in Mumbai in line with India invest cell of department of industrial policy and promotion, Government of India.
The objective of this cell is to guide, assist and to provide hand-hold support to the potential investor/entrepreneurs in textile industry. 

Technology Upgradation Fund Scheme:
To modernize and to increase competitiveness in textile segment GoI started this scheme in April 1999. Because of this scheme a textile firm could take loan at lower interest rate for technical upgradation. This scheme was set to expire on March 2007 but because of demand from this industry, government extended this scheme for another 5 years, i.e. until FY12. Some of the incentives provided under this scheme included:
Interest reimbursement at the rate of 5% of the normal interest rate charged by the lending agency or rupee term loan
5% coverage on exchange fluctuation (interest and repayment) on foreign currency loan from the base rate.
Credit-linked capital subsidy of 15% for SSI textile and jute sector
Capital subsidy for the power loom sector at 20% of credit-linked.
Interest reimbursement at the rate of 5% plus 10% capital subsidy for specified processing machinery.

National Jute Policy 2005
Objectives of this policy are:

  • To assist farmers to produce good quality of jute fiber and to increase it’s per hectare yield sustainably.
  • To promote jute sector at national and international level.
  • Build sate of the art facility for jute processing
  • To integrate IT sector in jute.
  • Increase export of jute by a CAGR of 15%.

National Textile Policy 2000

  • To replace the textile policy of 1985 which was old and non-productive, Government of India decided to start National textile Policy (NTP) in the year 2000. Key features of this policy are:
  • Reduce the ratio between cotton to non-cotton fibers in line with international trends
  • Encourage full fiber flexibility between cotton and man-made fibers
  • Encourage modernization of the spinning sector
  • Liberalization and encouragement on export of cotton yarn.
  • Integrate IT Sector in Textile Industry.

Major Players in Indian Textile Industry:

Some of the key important players in Indian Textile Industry are:

Arvind Mills
This Company was started by Lalabhai brothers in the year 1897 with a share capital of INR 2,525,000. It was started in an aim to produce high quality of fabric in India.
It has other bands like arrow, USPA, Flying machine, The Arvind store etc. It also has diversified other segments like Shirting, Advance Materials, Denim, Dye, Chemicals etc.

Welspun Group
Welspun India Ltd. Is a fully integrated textile Manufacturer and is one of the top 3 players in home textile in world. It includes well-known brands of hygrocotton, Spaces etc. They are well known to produce soft towels outside Turkey. Their towels collection is compared to Turkish Towels.

Raymond Group
Raymond Ltd was founded in the year 1925. It is headquartered in Mumbai, India. This group produces a wide range of products including fabrics, garment, designer wear, denim etc. It is among the most trusted fabric brands in India. Raymond opened retail shops across India and overseas as well.
It contributes for about 60% of suiting share in India and is one the top 3 worsted players in the world.
It Exports its products in about 55 countries.

Vardhaman Textile
Based in Ludhiana, Punjab, India Vardhman Group is a textile group which was established in 1965 by Lala Rattan Chand Oswal. The group is produces Yarn, Greige and Processed Fabric, Sewing Thread, Acrylic fiber and Alloy steel.

Bombay Dyeing
Bombay Dyeing and Manufacturing Company is one of the top textile companies in India. It was founded in the year 1879. It is flagship company of Wadia Group. It is offering wide range of products including Bed Linen, Furnishings, Towels.

Karnataka Silk Industry Corporation Ltd
KSIC was especially formed to promote the cultural heritage of Mysore that is silk. KSIC is known for producing good quality silk which gets sold all across India. It is manufacturing quality silk admired all over India. Its product range includes Silk Dhoti, Men’s Tie, Salwar Kameez, Silk Sarees, Kurta etc.

Grasim Industries Ltd (Aditya Birla)
Grasim Industries Ltd was founded in the year 1948 in Mumbai. This company is the subsidiary of Aditya Birla Group. It is known to produce Viscose Staple Fiber. It is exporting its products to various countries.

Some of the key foreign investors in India are:

  • Rieter
  • Trutzschler
  • Saurer
  • ATE
  • Marks & Spencer
  • Zara
  • Levis
  • Forever 21

Challenges in Indian Textile Industry:
Challenges faces by Indian Textile Industry are:

Lack of Infrastructure
Because of poor transport infrastructure in India transportation cost is high in India. This results in increasing prices due to problems like delay in transportation due to accidents, traffic jams etc.

High Capital Cost
India has one of the highest costs of capital, which directly affects India’s cost of production which affects country’s competitiveness in the global market. While China, Vietnam, and Turkey, offer capital at a rate of 5 to 7% in India current lending rate in is between 11 to 12.5% which results in the high-power costs. This further pushes India back.

Labors Cost
The labor cost in India is high. As compared to India; Bangladesh, China and Vietnam have low labor cost. This Results in higher production cost in India compared to its competitors.

Lower Efficiency
Productivity levels in apparel segment in India are relatively low compared to countries like Turkey, China and Bangladesh. This is due to most of our textile sectors is unorganized.  
GST (Goods and Service Tax)
Due to GST has distortions is formed in the Textile and Apparel sector in India. In India man-made fiber yarn is taxed at 18%, while the fabric is taxed at 5%. This affects the businesses which buy these yarns and produce fabrics from it affecting their sustainability due to this imbalance.
Because of Implementation of GST both local and international market sale has dropped.

Lack of Fiber Neutrality
Despite being the second largest textile exporter in the world, India lags far behind in manmade fibers category. The main reasons for this are due to limited availability of manmade fibers at competitive prices. The differential tax treatment in textile value chain is present in India. Pakistan, Sri Lanka, China, Thailand and Indonesia who follow fiber neutral policy are much more aligned to the global apparel consumption patterns because of this neutrality.

Limited FTA
Duty-free access to all the major textile markets of the US and the EU is enjoyed by countries like Bangladesh, Cambodia, Pakistan, Turkey, etc. India does not have FTA advantages to major markets making because of which Indian products are much more expensive compared to that of its competitors. Government of India new Foreign Investment Policies are working on this problem.

Conclusion:
All though Indian Textile industry is one the largest textile industry in world and second most employment giving in India, it is highly unorganized. Implementing standards like for e.g. 100% wool mark or bedsheet dimension standards is very difficult in this case. This is due to traditional and conventional practices implemented in this sector. These are also not environment friendly and not sustainable in nature.
To make India a global leader in Textile we need to organize this sector properly without destroying it’s traditional fashion.

References:

  • Ministry of Textile, Government of India
  • "A brief history of Textile Industry in India, March 2012".
  • moneycontrol.com
  • medium.com
  • “Ranking Sustainable Cotton Market in India” by Shantanu Chaudhari and Anshul Matani. October 2019.
  • comtrade.un.org
  • Inside View “Annual Report on Indian Textile and apparel Industry” by Wazir Advisors Publication, January 2019.
  • arvind.com
  • welspun.com
  • raymond.in
  • vardhman.com
  • ksicsilk.com
  • bombaydyeing.com
  • grasim.com

Post a Comment

34 Comments

  1. Wonderful article. Systematically highlighted to progress of Indian Textile Industry.

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  2. Great Content

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  3. Amazing research

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  4. Market research is great

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  5. Pradnya panchariyaJanuary 28, 2020 at 1:48 AM

    Great work

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  6. Simply Amazing

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  7. This comment has been removed by the author.

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  8. What do you think about the current condition of Indian textile industry, your stats and research is based on the past reports so what about the future of textile, and what role has textile industry to play in Indian economy?

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  9. This was so informative, keep it up!!

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  10. Everything was nice.

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  11. ��������

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