Indian Textile Industry Growth Drivers

Indian Textile Industry October 2006

Contents Market Overview Government regulations & policy Business opportunities and Advantage India

Indian Textile industry - important from perspective of overall economy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Ministry of Textiles Annual Report, Industry Research

India has a strong base in raw materials ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Ministry of Textiles Annual Report, Industry Research Abundant availability of raw material is one of the key advantages of the Indian textile industry

Industry fragmented and dominated by small scale units ,[object Object],[object Object],[object Object],Spinning Weaving Processing & manufacturing Source: Compendium of Textile Statistics, 2004 Large independent units 53% Small independent units 39% Composite mills 8% 100% = 2922 mills 100% = 5.83 million units Handloom sector 67% Powerloom 31% Organised sector 2% ,[object Object],[object Object]

Manufacturing units present at all levels of value chain Raw materials Cotton, wool, silk, jute Petrochemicals Fibres and yarn Man-made fibre/ filament yarn* ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Garments Home textiles Production unit Spinning mills Weaving/ knitting units - handlooms, powerlooms, hosiery units Hand processing units, independent power processing units, units attached to mills Garments & home textile producers Composite Mills *Includes viscose staple fibre, polyester staple fibre, acrylic staple fibre, viscose filament yarn, nylon filament yarn, polyester filament yarn Source: Industry Research

Industry experiencing high growth ,[object Object],[object Object],[object Object],1996 2000 2006 Cotton yarn Blended yarn 100% non cotton yarn Yarn production million tonnes 2.4 3.1 3.4 75% 17% 8% 72% 20% 8% 73% 17% 10% CAGR 3.2% 3.6% 3.8% 6.0% 1996 2000 2005 Cotton cloth Blended cloth 100% non cotton cloth Cloth production billion sq. mtrs 31.5 38.6 45.0 60% 13% 27% 49% 15% 36% 46% 13% 41% CAGR 0.9% 4.1% 4.6% 8.9% Source: Compendium of Textile Statistics

Exports are dominated by readymade garments ,[object Object],[object Object],Readymade garments Cotton yarn, fabric & made-ups Manmade staple fibres, yarn, fabric & made-ups Silk & woolen textiles, cotton raw, incl waste 51% 35% 10% 4% 52% 34% 9% 5% 55% 25% 13% 7% 100% = INR 654 bn 100% = INR 390 bn 100% = INR 199 bn Year 1994-95 Year 1999-00 Year 2005-06 Textile exports Source: Ministry of Textiles

Dismantling of quotas has resulted in higher growth in large markets ,[object Object],[object Object],2004 1st 9 months of 2005 2008* 2004 1st 9 months of 2005 2008* Share in US textile and clothing market Share in EU textile and clothing market Source: WTO study on gainers and losers post quota abolishment *Forecasts

Going forward, exports as well as domestic market to drive growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],2005 2010* *Forecasts Market size estimates USD bn Domestic market Exports 25 12 37 35 30 65 Source: Research commissioned by Confederation of Indian Textile Industry

Industry has witnessed a change in regulations Pre 1985 Emphasis on small scale sector ,[object Object],[object Object],[object Object],[object Object],Emphasis on increasing scale Post 1985 ,[object Object],[object Object],[object Object],[object Object],Measures aimed at improving competitiveness of industry to face a post quota regime *Latest definition: Investment in plant & machinery of INR 10 million for most industries, INR 50 million for specified industries like hosiery, hand tools, drugs & pharmaceuticals, sports goods and stationery items

Several government initiatives targeted to attract investments Technology Upgradation Fund Scheme Policy related to foreign investment Upgrading infrastructure ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Ministry of Textiles, Industry Research

India has a cost advantage vis-à-vis competing countries ,[object Object],Cost competitiveness Yarn: USD per kg of yarn Fabric: USD per yard of fabric Open-ended yarn & fabric Ring yarn & fabric Textured yarn & fabric Yarn Woven fabric Knitted fabric South Korea China Brazil India

There are several other industry specific advantages arising out of the unique nature of the industry in India ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Business opportunities exist for foreign players Investing in India Sourcing from India Export to India ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Many foreign players have also entered India ,[object Object],[object Object],Buying and liaison offices ,[object Object],[object Object],Brand licensing/ franchising Manufacturing/ manufacturing cum retailing ,[object Object],[object Object],[object Object],[object Object],[object Object],Source: News articles Illustrative, not exhaustive

Key players in India ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Illustrative, not exhaustive ,[object Object],[object Object],[object Object],[object Object],Source: Capitaline, Company websites

Key players in India ,[object Object],[object Object],Illustrative, not exhaustive Source: Capitaline, Company websites ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry. The Foundation’s primary objective is to build positive economic perceptions of India globally India Brand Equity Foundation c/o Confederation of Indian Industry 249-F Sector 18, Udyog Vihar Phase IV Gurgaon 122015, Haryana, INDIA Tel +91 124 401 4087, 4060 - 67 Fax +91 124 401 3873 Email ajay.khanna@ciionline.org Web www.ibef.org

Disclaimer ,[object Object],[object Object],[object Object],[object Object],[object Object],ICRA Management Consulting Services Limited

Indian Textile Industry Growth Drivers

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