– Amit Gugnani, Sr VP, Fashion – Textile & Apparel, Technopak
India has emerged as one of the leading players in global textile and apparel industry. Owing to its key strengths like availability of raw material, large and cheaper labour force and policies being implemented by the Government to support the sector, there is huge potential for growth in the sector.
The Indian textile and apparel industry was estimated to be worth Rs 6,25,930 crore in 2015 and is projected to grow at a CAGR of 9 per cent to reach Rs 9,35,123 crore, by 2020. Of the total market size domestic consumption accounts for approximately 60 per cent and exports accounts for the rest approximately 40 per cent. The domestic market is expected to show higher CAGR of 10 per cent in comparison to exports, which is expected to grow at CAGR of 6 per cent over next five years.
India’s total domestic market stands at Rs 4,16,000 crore currently and will swell to Rs 6,69,972 growing at a CAGR of 10 per cent by 2020.
India stands next to China in terms of global textile and apparel trade. India accounted for 9.9 per cent of fibre trade, 9.1 per cent of made ups trade and 7.7 per cent of yarn trade in 2015. However, India’s share in global apparel trade is only 3.4 per cent and it ranks after China, Bangladesh and Turkey. India envisions itself to account for 8-9 per cent of the total global trade by 2020, however in lieu of present scenario; it is expected to capture a share of only 5-6 per cent by 2020.
In order to achieve the higher share in global trade India needs to address the key challenges faced by the industry.
Some of these challenges include high labour and power costs in comparison to countries like Bangladesh, Vietnam, Ethiopia, etc.; significant share on unorganised market and longer lead time; low quality of infrastructure, large unskilled labour force; lack of product diversification and development especially in the synthetic value chain, lack of focus on value addition especially garment manufacturing, etc.
Similarly, the major challenges India’s domestic T&A industry faces are unorganised markets with fluctuating seasonal demands, fragmented supply chain, relative lower penetration of branded and good quality apparel, non-uniform tax structures across states, etc. These issues are required to be streamlined in order to achieve sustainable growth within domestic sector.
To counteract these challenges, the Government has implemented schemes for Skill Development (ISDS), infrastructure creation (SITP) and technology upgradation (TUFs) and more recently the special package to boost garments trade.
With perspective of capturing market shifting from China, resulting from increasing labour cost in China, liberating labour laws, relaxing FDI policies and ‘Make in India’ concept will provide thrust to the industry. India finds itself in a position where it can use its vertical integrated supply chain to fullfil large orders as well as its ability to cater to larger product base. In order to strengthen India’s stand in global trade it is of paramount importance that exports should shift from lower value chain products to value added products. This would lead to India capturing a share proportionate to its potential and ultimately result in higher and sustainable growth in longer run.
The policies being implemented by the Government shall play a crucial role in enabling the Indian textiles and apparel industry. The basic focus should be on generation of employment and bringing in investments in the sector. By introducing flexibility in labour laws, taking step towards making industry more organised and competitive and with focus on skilling, technological advancements, taking steps towards developing new categories the government can ensure a sustainable development of the industry.