Textile vision 2020 – From Dream to Reality! Doubling India?s textile trade share

Can India take its share of 4.5% in global textile trade to 9-10% by 2020? An ITJ Exclusive explores the dreams and realities.

India is No. 2 in the global textile trade, next only to China. But the country?s share is a measly 4.5 per cent against the 45 per cent of China?s. 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.

India dreams of capturing 8-9 per cent of the total global trade by 2020, however looking at the present scenario, it may capture a share of only 5-6 per cent by 2020. Is this only a dream or a reality? Or does the industry lack the fire to achieve this impossible dream?

A knowledge paper from Wazir Advisors reveals that the total textile and apparel exports of India stood at $40 billion in 2015. Apparel is the largest exported category in India?s exports with a dominant share of 43 per cent. It is followed by the exports of others category, which includes home textile products, made-ups and handicrafts. Others category contributed a share of 25 per cent in the total textile and apparel exports of India. Fibre/filament category has registered the highest growth in India?s export of textile and apparel with a CAGR of 13 per cent however their exports have fallen down since 2011-12.

The report states: ?EU and USA are the largest markets for Indian textile and apparel exports with shares of 19 per cent and 18 per cent respectively. The other major export markets for India are UAE, China and Bangladesh which have a share of 9 per cent, 8 per cent and 5 per cent respectively. India has a large textile manufacturing set-up and is among the very few countries with production facilities across each level of the manufacturing value chain, from fibre to finished product (garments, home textiles and technical textiles).?

The domestic apparel market of India is worth $59 billion (2015) and it has registered a robust CAGR of 10 per cent since 2005 despite global uncertainties and slack demand. Indian domestic market has performed better than the largest consumption regions like US, EU and Japan, where depressed economic conditions led to lower demand growth.

?Indian textile industry has a distinct competitive advantage in terms of availability of all types of raw materials, skilled man power and sustained domestic demand. Increased penetration of organised retail and rising income levels are big positives for the apparel sector. The government schemes like SITP and TUFs have gone a long way in attracting investments in creating new capacities and technology upgradation. The seventh pay commission and one rank one pension (OROP) for the armed forces is also likely to help in increasing the textile consumption in the country. The technical textiles investments are also on rise due to awareness and Government support in infrastructure development,? says GV Aras, Director, A.T.E. Enterprises Pvt Ltd, Mumbai.

He adds, ?Traditionally the spinning sector being organised has been fairly modernised and India enjoys over 25 per cent share of the yarn exports. However some key sectors like weaving and processing have remained weaker for long time till such time Government encouraged investments by giving special incentives.

The garment sector too has for long remained reserved for small scale thus seriously affecting the competitiveness of the apparel segment. Moreover there are textile centers spread across the country specialised in a single process resulting in the goods travelling long distance for value addition thus resulting in loss in efficiency and increasing the logistic cost. Need of the day is to have large integrated units or integrated textile parks which can make production more efficient.?

The present Government is supportive in formulating policies in support of the industry such as 100 per cent FDI (automatic route), allocation of nearly Rs 2,600 crore in the budget for integrated textile parks and Rs 6,000 crore package for the growth of apparel sector. ?Make in India? campaign also has made a positive impact on the sector. Measures are also taken by the government in expediting the cargo clearance under import and export. Government is also encouraging skill development through various initiatives under which 75 apparel training centers have already been established.

Amit Gugnani, Sr VP, Fashion ? Textile & Apparel, Technopak, thinks, ?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.?

He adds, 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.?

He further adds: ?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.?

RK Dalmia, Chairman, Texprocil, thinks that the Indian textile and clothing industry is very old and plays a very important part in the Indian economy. He says, ?Except China, no other nation can match the size, spread, depth and competitiveness of the Indian textile and clothing industry. Liberalisation also has given the much-needed push to the textile industry, which has now successfully become one of the largest in the world. It has a complete value chain from the production of raw materials to the manufacture of finished goods.?

He avers, ?There is a need for the government to improve the enabling environment for manufacturing by: Refunding state levies incurred in manufacturing and tax rebates on surcharges and duties paid on electricity need to be extended to the value chain; labour reform package extended to garment sector should also be extended to the value chain; improving productivity of sector through training, skill building and managerial capabilities and through retention of work force; tax rebate on creating new employment to be extended to the value chain; need to expedite negotiations on FTAs with EU, Canada and Australia. Also look at bilateral negotiations with China and Turkey; and Availability of raw material at prices which are on par with international prices.?

Paresh Thumar, Technical Director, Zoom Group of Textiles & Industries, Surat, says, ?The Indian market for textiles, clothing and agricultural products will expand dramatically, but India?s ability to export will depend on its real capacity to keep pace with rising international standards with price, quality, productivity and timely delivery. The global market for textiles will expand dramatically among manufacturing sectors, the single largest employment potential is in textile industry. More percentage of these jobs are in the SSI sector. The textile sector serves as the field for entrepreneurship to flourish, as an entry point for new entrepreneurs who can start small and then grow.?

?India will be much more integrated with the global economy and will be a major player in terms of trade, technology and investment. Environmental issues will remain a serious concern,? adds Thumar.

Jagadeesh H of Amith Garment Services, thinks that the Indian textile industry especially apparel segment is poised for good growth during this decade and can achieve by 2020 new heights. It can be a leading exporter of cotton & synthetic garments in the world.

Jagadeesh H adds, ?Taking advantage of organised factories, good communication skills, better infrastructure and skilled labour, India can do better in garment manufacturing and marketing. The demand for apparel import from developed countries keep on growing. Overall economy boost, growing capacity expansions are more and more. Young entrepreneur entering market dream can be reality. Portion of growth can go to countries like Ethiopia, Jordan & other African countries due to cheap labour, electricity and tax-free scenario. However growth in textile/garment exports can be a reality by 2020.?

?If the status of technical textiles and their products over the globe is reviewed, it discloses the fact that economic growth, structural changes and employment requirements in different regions of the globe drive the growth of technical textiles. Let us consider our own country. How many in our country and even how many engaged within textiles know the word technical textiles including at government level up to 1990. It was only after 1992, that our country shifted the economy and structural policy by adopting globalisation that technical textiles became a buzz word within a period of 2/3 years in our country,? says Siddharth Kusumgar, MD, Kusumgar Corporates Pvt Ltd.

Yogesh Kusumgar of Kusumgar Corporates Pvt Ltd, says ?Over the decades, new materials in the form of fibers, polymeric materials, processing chemicals, finishing chemicals have been developed not only for improved performance, but also to ensure overcoming environmental concerns. Few examples are inkjet printing, hot melt coating, 3-d woven and knitted fabric technology have been developed and commercialised. Serious attempts have been made to develop ZED as an obligation to protect environment. E-textiles offer altogether a new promise and opportunity to re-revolutionise the scope of technical textiles.?

He has also suggested that ?the present government has envisioned to develop infrastructure and has also adopted a policy of ?Make in India?. We have plan for bullet train. We have plan to manufacture aircraft in India. We have plan to build ships in India. If we want to achieve our vision for sustainable use of bullet train, aircrafts and ship building (water transport), we will have to ensure the growth of textile composites which enable reduction in weight with added functional properties such as: high strength to weight ratio, impact resistance function, electrical function, sound and vibration insulation etc.?

Seshadri Ramkumar, Professor of Technical Textiles, Texas Tech University, USA thinks that for nearly a decade there has been tremendous outreach by the Government to all sectors within the textile industry to promote the nascent nonwoven and technical textile industry. Although the predictions by this scribe in a 2009 report titled, ?Indian Rising: Opportunities in Nonwovens and Technical Textiles?, and Government point to a double digit growth, it is indeed hard as of today to feel a tangible growth in this sector. The need of the hour is to help the industry with the realisation of workable projects in the technical textile arena.

Ramkumar adds, ?So far efforts have concentrated on theoretical knowledge dissemination and promoting investments in the downstream sectors such as technical fabrics production, nonwoven rollgood manufacturing, investments in downstream processing such as needlepunching, spunlacing, etc. In order to see employment generation and revenue streams in this sector, it is extremely important to develop and grow the converting sector of the technical textile industry. There is an urgent need to create a one-stop knowledge house for the converting side of the technical textile industry.? He further states: ?The nascent technical textiles sector should focus on products that will be absorbed by consumers such as wipes and institutional buyers such as filtration products, automotive products, to name a few. As downstream projects in the technical textiles sector need huge investments, practically it may not suit small and medium scale investors. Government of India should consider the development of the upstream sector, i.e. converting sector as a priority to take the textile industry to the next level. From jobs perspective, it is this side of the technical textile sector, which can provide good opportunities. Information on marketing these high-valued technical textile products both within and outside Indian borders has to be made available to the prospective investors in the field.?

Sanjay K Jain, Managing Director, T T Limited, thinks that Indian textile industry is at a very important threshold from where it can move to a higher orbit of growth. It is well poised to create a much stronger footprint across the globe and more importantly meet the country?s inclusive growth objective by providing employment to the rural women. China-which controls 35 per cent of the global textile trade-is in the process of vacating space due to its high cost structure and no one is better placed than India to capture the opportunity we missed in the past.

Jain says, ?Indian textile industry is a story of misses and promises. Since the last two decades, India has been threatening all to become a textile super power however China, Bangladesh and Vietnam overtook us and occupied the space vacated by the developed world. We [no doubt] have 12 per cent export share, 4 per cent GDP share and employ 45 million people, but still much below our potential.?

He concludes: ?the industry should be part of any Policy Making Body as who knows the industry better than those practicing it. Further policy needs to be based on realities and needs rather than lobbying.

The industry needs a stable framework to work within with checks and balances built upfront for different scenarios leaving little room for abrupt changes which harms the general interest.?

An industry SWOT analyis

STRENGTHS

• Raw material base: India?s cotton crop is the third largest in the world. Indian textile industry produces and handles all types of fibres.
• Labour: Cheap labour and strong entrepreneurial skills have always been the strength of the Indian apparel and textile industry.
• Flexibility: The small size of manufacturing, which is predominant in the apparel industry, allows for greater flexibility to service smaller and specialised orders.
• Domestic market: Natural demand drivers including rising income levels, increasing urbanisation and growth of the purchasing population drive domestic demand.

WEAKNESSES

• More dependence on cotton: Due to over specialisation in cotton, the bulk of the international market is missed out, synthetic products in India are expensive and fabric required for items like swimsuit, sky-wear and industrial apparel is relatively unavailable.
• Spinning sector: Spinning sector lacks modernisation and there is a need of introducing new technology. Fabric processing: Processing is the weakest link in the Indian textile value chain, adversely affecting its ability to compete in exports.
• Poor infrastructure: High power costs and long export lead times are eroding India?s export competitiveness across the textile chain.
• Low labour productivity: Productivity levels for manufacturing various apparel items are far lower in India in comparison with its competitors.

OPPORTUNITIES

• Growing industry: World textile trade would continue to grow at a rate of 3-4%.
• Market access through bilateral negotiation: The trade is growing between regional trade blocs due to bilateral agreements between participating countries.
• Integration of IT: Supply chain management and IT has a crucial role in apparel manufacturing. Availability of EDI (Electronic Data Interchange), makes communication fast, easy, transparent and reduces duplication.
• Opportunity in high value items: India has the opportunity to increase its UVR?s (Unit Value Realisation) through moving up the value chain by producing value added products and by producing more and more technologically superior products.

THREATS

• Phasing out of quotas: India will have to open its protected domestic market for foreign players thus domestic market will suffer. Since last 2 years, Indian textile industry has been going through good growth phase. So it is the right time for textile industry to upgrade and invest in the machinery for advanced technology to compete globally in terms of quality and capacity.

India: An important destination for emerging technologies – Dr PR Roy, Chairman, Diagonal Consulting (India)

Current data and statistics reveal a very interesting fact that India is going to be a very important destination for the flow of emerging technologies. Though uncertain for a short period, Indian cotton through its breakthrough in the development of BT varieties once more showing the promise of leadership in the field of cotton textiles and apparel. MMF at the same time, due to the global uncertainty in natural fibres, would continue to take care of population growth, enhanced per capita consumption and varied consumer and fashion needs.

Introduction of GST might push growth in MMF somewhat faster. Recent Government policies would tend to enhance growth in Garments & Technical Textiles. Modern spinning, weaving and processing should continue to get equal impetus as India is very strong in traditional textiles. A Key area like effluent treatments calls for a special and definitive support.

However, the primary needs in both these fields are to produce the right products at the right price and with adequate service. Policy alone may not play the role in enhanced growth, productivity to play a major role. The export growth as projected by the Government experts appear to be somewhat unrealistic as our recent performance is not up to the mark.

The trade between China and India may start undergoing a reversal.

India may turn out to be a major multi-fibre destination for T&A both for domestic and international markets.

New investments to overhaul textile sector – RS Jalan, Managing Director, GHCL

The Indian textile industry is getting the much-needed revamp recently and we strongly hope that it should overhaul the target of becoming $650 billion industry by 2024-25. Reports suggest that the sector is set to attract investments worth $120 billion by 2024-25, which is also going to create approximately 35 million jobs in the process. Exports are also expected to be increasing and are predicted to reach a landmark figure of $300 billion by 2024-25 as sources suggest. Over here, we should make a note that attracting investments to realise such a dream of this size calls for some steps at our end like ready availability of developed land with adequate infrastructure, skilled manpower and easy connectivity to ports, along with creation of new mega textile parks, lowering the cost of production and logistics, encouraging new entrants through start-ups, as well as FDI. With the extensive use of technology and evolving spending habits of consumers globally, the textiles industry is growing rapidly. Since the sector is a labour-intensive one, hence, the global textile market is primarily dominated by countries like India, China and Pakistan which feature amongst the key suppliers.

The Indian textile industry is known in international market for its wide variety and exquisite designs in home textiles and furnishing fabrics. According to reports, the industry realised export earnings worth $41.4 billion in 2014-15, which is a growth of around 5.4 per cent. The manufacturing players in India are spending big time on innovation to enhance quality related features in their products.

In order to continue flourishing, we need to facilitate rapid growth and modernisation of the existing firms.