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Indian weaving industry on the growth path

Jun 26, 2021
Indian weaving industry on the growth path

The textile industry plays a crucial role in Indian economy. It contributes to 7% of industrial output in terms of value, 2% of the GDP and 12% of country's export earnings. Next to agriculture, it is the second largest employment generating industry in India, employing approximately 45 million people directly. There are around 1,600 spinning mills, 4 lakh weaving units, 50,000 knitting units, 5,000 processing units and 71,000 garmenting and made-ups units in India. Majority of the production happens in decentralised sector in various clusters across India some of which are vertically integrated.

India has the largest installed base of weaving in the world with approximately 5 million looms. The capacities are growing owing to adequate supply of raw material and manpower. The Indian weaving industry is globally known for its handmade fabrics thriving its cultural heritage.

Overview of the Indian weaving industry
India accounts for 64% of the globally installed capacity of looms with approximately 2.3 million handlooms, 2.52 million power looms, and 0.13 million shuttleless looms. Almost 95% of the fabric production happens in the decentralised sector comprising of power looms and handlooms. There are 4 lakh weaving mill in India with Maharashtra having the highest share (37%) followed by Tamil Nadu (22 %) and UP (15%). This sector provides direct employment to about 9 million people with powerloom sector contributing 4.8 million, handloom sector 4.1 million and shuttleless looms sector 0.1 million jobs.

Figure 1: Loom types share in India


Table 1: State-wise weaving capacity in India

State

No. of Weaving Mills

No. of Looms

Maharashtra

             149,649

        896,600

Tamil Nadu

               89,493

        475,600

Uttar Pradesh

               59,047

        529,200

Gujarat

               35,012

    1,734,100

Karnataka

               18,569

          52,800

Andhra Pradesh

               12,637

        108,100

Madhya Pradesh

                  8,360

        420,300

West Bengal

                  3,516

        410,700

Haryana

                  1,602

          14,400

Punjab

                  1,171

        112,200

Kerala

                  1,030

        106,000

Rajasthan

                     957

        160,100

Others

               18,957

          12,900

Total

400,000

    5,033,000

Source:  Office of Textile Commissioner & Wazir Research

There are more than 50 weaving clusters in India. Some of the major ones are Ludhiana (Punjab), Panipat (Haryana), Delhi NCR, Meerut (UP), Varanasi (UP), Indore (MP), Jaipur (Rajasthan), Bhilwara (Rajasthan), Banswara (Rajasthan), Ahmedabad (Gujarat), Surat (Gujarat), Tarapur (Maharashtra), Bhiwandi (Maharashtra), Bengaluru (Karnataka), Pallipalayam (Tamil Nadu), Erode (Tamil Nadu) and Madurai (Tamil Nadu).

Woven fabric demand supply scenario in India
With an annual production of 54.55 billion sq. m. woven fabrics in 2019-20, India stood among the world leaders in woven fabric manufacturing. India’s demand of woven fabric has grown at 3% CAGR from 46.68 billion square meters in FY15 to 53.41 billion square meters in FY20. In FY21, because of COVID-19 pandemic, the demand shrunk by 30%. However, the demand is expected to revive and grow after FY22 at the same pace. The production of woven fabrics has grown at a CAGR of 2.8% from 47.54 billion square meters in FY15 to 54.55 billion square meters in FY20. The production shrunk by about 30% in FY21 owing to COVID-19 pandemic.

Woven fabric exports from India have declined at 1.7% CAGR from 2.53 billion square meters FY15 to 2.32 billion square meters in FY20. During FY21, the exports shrunk by 25% as compared to last year. The export market is majorly catered by the mill sector. The imports of woven fabric have grown at a CAGR of 2.3% from 1.06 billion square meters FY15 to 1.18 billion square meters in FY20, but with a very low base value. During FY21, the imports declined by above 50% in comparison to last year.

Table 2: Year wise domestic demand & supply scenario of woven fabrics (values in billion sq m)

Year

Domestic Demand

Production

Export

Import

FY15

46.07

                  47.54

          2.53

              1.06

FY16

45.68

                  46.96

          2.28

              1.00

FY17

44.73

                  45.95

2.12          

              0.90

FY18

 47.86

                  48.82

          2.13

              1.16

FY19

48.93

                  49.83

          2.17

              1.27

FY20

53.41

                    54.55

          2.32

              1.18

FY21

37.01

38.19

1.77

0.59

CAGR 2015-20

3.0%

2.8%

-1.7%

2.3%

Source: Office of Textile Commissioner, DGCIS & Wazir Analysis

 

The decentralised sector accounts for approximately 95% of the total woven fabric production in India, of which power loom sector has 80% share and hand loom sector has 15% share. This sector is majorly involved in meeting the domestic demand and contributes to very little exports. However, the mill sector majorly focuses on exports. Woven fabric production from decentralised sector has grown at a CAGR of 3.1% during FY15 to FY20. However, the production of mill sector has declined at 3.1% CAGR during FY15 to FY20.

In FY20, Tamil Nadu was the largest market of woven fabrics having 20% share followed by Karnataka and Delhi NCR with 15% and 12% share, respectively.

Table 4: State-wise woven fabric domestic demand & their demand share

States

Domestic Demand (Bn sq m)

Share

Tamil Nadu

10.7

20%

Karnataka

8

15%

Delhi NCR

6.4

12%

Maharashtra

6.4

12%

Punjab

5.3

10%

West Bengal

3.2

6%

Madhya Pradesh

3.2

6%

Gujarat

2.7

5%

Rajasthan

2.2

4%

Rest of India

5.3

10%

Total

53.4

100%

Source: Office of Textile Commissioner & Wazir Research

Year

Mill Sector

Decentralized Sector

Total

FY15

           2.49

        45.05

        47.54

FY16

           2.32

        44.65

        46.96

FY17

           2.26

        43.69

        45.95

FY18

           2.16

        46.66

        48.82

FY19

           2.08

        47.75

        49.83

FY20

           2.13

        52.43

        54.55

CAGR 2015-20

-3.1%

3.1%

2.8%







Global & India’s fabric demand
The global and India’s fabric demand share is listed in Table 5. The demand of cotton-based fabric in India is approximately 45% which is 17% higher than the global demand. Manmade fibre (MMF) based fabric demand has an edge in the global market with around 65% market share. In India, MMF based fabric has approximately 45% market share which 20% lesser than global market demand. Filament based fabric has 42% share in global market whereas that in India has 26% market share. The production of cotton-based fabric has a share of approximately 60% which is 15% higher than the market demand. The brand’s demand for MMF based fabric has grown owing to its innovative applications and possible product developments.

Fabric Types

Global Demand Share

India's Demand Share

Cotton & Blends

28%

45%

Filament Based

42%

26%

100% Polyester

7%

8%

Polyester Cotton Blends

4%

5%

Polyester Viscose Blends

3%

5%

Others (PolyWool, PolySilk, etc.)

15%

12%

Table 5: Fabric demand share - Global & India

Gaps in Indian weaving industry
Some of the gaps in Indian weaving industry are:

  • Conventional technology: Indian weaving industry majorly comprises of conventional handlooms and powerlooms. As per Ministry of Textiles annual report FY20, it is estimated that more than 75% of the shuttle looms are obsolete and outdated with a vintage of more than 15 years and have virtually no process or quality control devices / attachments. This yields lower productivity and poor fabric quality.
  • Absence of economies of scale: In India, the average looms per shed are 15 to 30 which is majorly present into decentralised sector. However, the global manufacturing leader viz. China has 300 to 400 looms per shed and focuses on large scale of production. Absence of economies of scale leads to high cost of manufacturing, low manufacturing competitiveness, low potential for product development, etc.
  • Lack of factory compliance for export: Global brands and retailers seeks a fully compliant factory which can supply ethically manufactured products. Indian weaving sector lags in this aspect as most of the decentralised weaving units in India are not socially and environmentally compliant to attract large global brands and retailers. These units do not have energy conservation measures, HR policies, etc. Many of them also do not possess quality, and health & safety compliance.
  • Poor skill level: Indian weaving industry needs to develop the skill level of the manpower by focusing on training and skill development. The skill level is not up to the mark as compared to the competing nations like China, Indonesia, Vietnam, etc. especially for the synthetic woven fabric production.
  • Lack of product development and diversification: Weavers in India have restricted themselves towards limited products (mainly cotton and cotton blends) which are traditional. Global fashion industry is extremely dynamic with diverse need for several end use applications, for which Indian weavers are not geared up.
  • Lack of integration (actual or virtual): India is perhaps the only large fabric producer which is majorly into greige fabric exports. Most of the decentralized weaving units are standalone ones with no processing capabilities. As a result, they do job work basis and/or work on a ‘per pick cost’ basis. As such, weaving in India has rendered as a low value-added activity with very less margins.
  • Ways to overcome the gaps
    The gaps in Indian weaving industry can be tackled by the following ways:

  • Manufacturing Excellence: Focus on manufacturing excellence can help the companies to counter the input cost inflation, improve overall performance and setting a growth driven goal. The approach to achieve manufacturing excellence is explain Figure 2. Manufacturing excellence is but a disciplined and scientific way of doing things. The technology level, management, manpower skill level, gaps and challenges vary from one company to other. Hence, the interventions to achieve manufacturing excellence also need to be customized.
  • Economies of Scale: Economies of scale (refer Figure 3) are cost advantages derived from the organised production and large scale of operation. This facilitates lower production cost at lesser lead time delivery. Global textile leaders like China, Indonesia, Vietnam, etc. already opted the economies of scale concept which India yet to implement. Operating with a 20-something loom shed we can never compete with Chinese counterpart that boasts of 400+ loom size sheds. Figure 3: Advantages of Economies of Scale
  • Forward integration & technical tie-ups: Indian weaving units need to forward integration either by investing in establishing processing capacities or by entering into a dedicated relationship with a processing unit so as to sell finished fabric in the market instead of depending on job work.
  • Focus on manmade fibre-based fabrics: Global demand of MMF fabric is much more than cotton based. International brands and retailers are looking for innovative products based on MMF. Indian weavers need to have their own product development set-ups to develop new products instead of replicating someone else’s products. Focus on innovation will help to establish their position in the market and command better prices.
  • Investing in right technology: Technology level in India is conventional and obsolete which requires upgradation and automation. While upgrading the technology level, company should invest into the right technology suitable as per the product mix such as based on fabric types, GSM, product mix, etc. Cotton based fabrics are preferably produced on airjet looms whereas synthetic fabrics are produced on waterjet looms. However, nowadays airjet looms are also able to produce synthetic fabrics. Rapier looms are suitable for producing heavy GSM and wider width fabrics.
  • Way forward for the Indian weaving industry
    The Indian weaving industry is growing slowly but steadily despite several constraints. The sector has immense potential and growth opportunity owing to the strong determination of the entrepreneurs engaged in the industry. With adequate raw material supply, large domestic demand, workforce availability and substantial ecosystem, the industry can become a prominent supplier of good quality fabric in the world.

    However, the industry needs to develop a robust model and infrastructure to flourish its growth over the time. Investing into the right technology, expanding the capacity, and building a strong quality management system may improve the global positioning of the Indian weaving industry and make it more competitive in the long run.


    About the author:
    Sanjay Arora is the Business Director of Wazir Advisors Pvt Ltd. He is a Certified Internal Auditor QMS – ISO 9001-2000 with 24 years of experience in business consulting, operational excellence, government advisory services, customer relationship management, production planning, process improvement, and project management across the textile industry. Sanjay Arora has worked with the premier textile and polyester manufacturing industry in India at various levels. He can be reached on email: