Lecture 1 indian textile industry
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The Indian textile industry occupies an important position in the Indian economy, contributing 14% of industrial production and employing over 35 million people. The industry encompasses traditional handloom and mill sectors as well as decentralized powerloom and knitting sectors. Cotton accounts for 70% of total textile production. While the industry has strengths like abundant raw materials and low labor costs, it faces weaknesses such as fragmentation and technology obsolescence. Opportunities for growth include new product development and faster design capabilities to better compete globally in the post-WTO regime.
Lecture 1 indian textile industry
- 1. INDIAN TEXTILE INDUSTRY : PRESENT STATUS AND GROWTH PROSPECTS STATUS 2005-06 OCCUPIES UNIQUE POSITION IN INDIAN ECONOMY 14% OF INDUSTRIAL PRODUCTION 16% OF TOTAL EXPORTS SINGLE LARGEST EMPLOYER IN THE INDUSTRIAL SECTOR 35 MILLION EMPLOYMENT 93 MILLION INCLUDING EMPLOYMENT IN AGRICULTURE, GINNING, PRESSING, COTTON TRADE, JUTE SECOND LARGEST EMPLOYMENT AFTER AGRICULTURE
- 2. STRUCTURE OF INDIAN TEXTILE INDUSRY TWO EXTREMES KHADI : HANDSPUN , HAND WOVEN FABRIC 2. HIGHLY CAPITAL INTENSIVE MODERN SOPHISTICATED ORGANIZED MILL SECTOR IN BETWEEN DECENTRALIZED POWERLOOM, KNITTNG AND GARMENT SECTORS PRODUCTS DIVERSIFIED MANUFACTURE OF TRADITIONAL ITEMS MANUFACTURE OF FASHION ITEMS FOR SOPHISTICATED NATIONAL AND INTERNATIONAL MAKETS
- 3. INDIAN TEXTILE INDUSTRY- BROAD DIVISION NATURAL FIBRES: COTTON, WOOL, SILK, JUTE ETC MAN MADE, SYNTHETIC FIBRES AND BLENDS OUT OF TOTAL TEXTILE PRODUCTION COTTON 70% MAN MADE AND SYNTHETIC 20% WOOL, SILK, JUTE ETC 10%
- 4. Decentralized Sector TEXTILE INDUSTRY IN INDIA NATURAL FIBRES / FABRICS MAN-MADE FIBRES / FABRICS Organized Sector (Mills) Spinning Composites Handloom Powerloom Khadi WOLL JUTE S ILK COTTON RAYON Cellulose / viscose BLENDED ( Synthetic + Natural) SYNTHETIC (Nylon, PET, PAN)
- 5. NATURAL FIBRES COTTON COTTON TEXTILES PRODUCED IN ORGANIZED SECTOR SPINNING MILLS : YARN PRODUCTION COMPOSITE MILLS : YARN, GREY AND PROCESSED FABRIC PRODUCTION DECENTRALIZED SECTOR POWERLOOM, HANDLOOM, KHAD I AND HOSIERY PRODUCTION
- 6. ORGANIZED MILL SECTOR 1561 SPINNING MILLS 281 COMPOSITE MILLS SPINNING CAPACITY 11 MILLION SPINDLES IN 1951 34.10 MILLION SPINDLES IN 2005-06 39,5000 ROTORS (2005-06) YARN PRODUCTION 3411 MILLION Kg (2005-06) SPINNING CAPACITY UTILIZATION 80-87% WEAVING CAPACITY 2.1 LAKH LOOMS IN 1951 0.86 LAKH LOOMS IN MARCH 2005 0.80 LAKH LOOMS IN SEPT. 2005 REASON : RISE OF POWERLOOM SECTOR PRESENT SHARE OF MILL SECTOR 4% IN THE TOTAL CLOTH PRODUCTION IN THE COUNTRY
- 7. CLOTH PRODUCTION ORGANIZED SECTOR 1714 Mn. Sq. m IN 1999- 2000 1503 Mn. Sq. m IN 2004- 05, PROJECTED AT 1493 Mn.Sq m IN 2005-06. AS ON 30.09.2005 TOTAL CLOTH PRODUCTION IN ORGANIZED, POWERLOOM, HANDLOOM, KHADI, WOOL, SILK SECTOR 47330 Mn Sq. m IN 2005-06 PER CAPITA CLOTH AVAILABILITY 32.63 Sq m (2005-06) TEXTILE EXPORTS US$ 13 billion DOMESTIC MARKET US$ 25 billion
- 8. POWERLOOM SECTOR (2005-06) 19.23 LAKH POWERLOOMS 4.30 LAKH UNITS 63% TOTAL CLOTH PRODUCTION (29627 Mn Sq. m) 36692 AUTOMATIC LOOMS 23809 SHUTTLELESS LOOMS 4-5 LAKH DOBBY LOOMS 2 LAKH SEMI-AUTOMATIC LOOMS 80% INDIGENOUS GARMENTERS SOURCE FABRIC FROM POWERLOOM SECTOR. EMLOYMENT 2.9 MILLION JOBS DIRECTLY 1.9 MILLION JOBS INDIRECTLY
- 9. DEENTRALIZED SECTOR HANDLOOM PRODUCTION OF NAURAL FIBRE FABRICS, COTTON, WOOL AND SILK SYNTHETIC AND BLENDED FABRICS APPROXIMATELY 3.9 MILLION HANDLOOMS CLOTH PRODUCTION 500 Mn Sq m 14% OF TOTAL CLOTH PRODUCTION LABOUR INTENSIVE PROVIDE SUPPLEMENTARY EARNING TO AGRO RURAL STRATA OF SOCIETY
- 10. Indian Cotton industry 2006 Hindustan Times June 25, 2006 Modernization 201 market yards Target 250 678 ginning and pressing units, Target 1000 Record cotton production 244 lakh bales of 170 kg. each Record cotton yield 467 kg/Hectare Yield in Gujrat and Punjab 728 kg/Hectare Gehri-Buttar village in in Bhatinda, Punjab 873 kg
- 11. Indian Cotton industry 2006 Hindustan Times June 25, 2006 Textile Turnaround New investment 83 crores/day Jobs 83000 per month Rs 76000 crores export earning
- 12. SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY POST WTO REGIME The global textile industry is likely to grow from USD 309 bn to USD 856 bn. India has a huge opportunity to capitalize on a much larger portion of this growth. STRENGTH Indian textile industry has several key strengths a. Abundant raw material b. Low cost skilled labour c. Presence across value chain d. Growing domestic market
- 13. India is one of the largest producer of natural and manmade fibres
- 14. Low cost of skilled labour
- 15. Growing domestic market Very low per capita consumption of textiles indicating significant potential for growth
- 16. Weaknesses However there are several weaknesses as well Fragmented industry Lower productivity and cost competitiveness Technological obsolescence
- 17. Fragmented industry large section of industry is in the powerloom and handloom sectors. Global buyers prefer to source their requirements from two or three vendors Indian garmenters find it difficult to fulfill the capacity requirements
- 19. Historical regulations Though relaxed continue to be an impediment to global competiveness Pre-2000 garmenting was reserved for SSI sector which has resulted most units being set up with small capacities. Knitted garments continue to be reserved for SSI sector
- 20. The Indian industry lacks adequate economies of scale and is therefore unable to compete with China. Costs like indirect taxes, power and interest rates are relatively higher. Technology obsolescence Technology upgradation fund scheme (TUFS) Initiated 1999- 2004 Extended to 2007
- 21. Large portion of the processing capacity is obsolete While state of art integrated textile mills exist, majority of the capacity lies currently with the powerloom sector. This has also resulted in low value addition in the industry Indias current share is barely 3% while China controls 15% Post 2005 it is expected that China will capture 43% of global textile trade
- 23. OPPUTUNITIES
- 24. New product development Needs additional focus in order to move up the value chain and capture greater global market share Indian companies need to increase focus on product development Newer specialized fabrics- Smart fabrics, specialized treatments etc.
- 25. Faster turnaround time for design samples Investing in design centres and sampling labs Increased use of CAD to develop designing capabilities in the organization and developing greater options Investing in trend forecasting to enable growth of the industry in India.
- 26. Threats Industry needs to keep in mind several threats Competitive in domestic market Ecological and social awareness Regional alliances
- 27. Competition in domestic market By competition by offering lower prices and better quality Competition is not likely to remain in export market, the industry is likely to face competition for cheaper imports as well. This is likely to affect domestic industry
- 28. Ecological and social awareness is likely to result in increase pressure on the industry to follow international labour and environmental laws. Standard like SA 8000 have now started being implemented extensively in the industry. This has resulted in increased pressure on companies to limit sourcing from countries/companies known to have such practices The Indian industry needs to prepare for the fall out of such issues by improving its working practices
- 29. In conclusion This opportunity for the textile industry could potentially be the next big wave for the Indian economy Various stake holders within the textile industry should work towards developing a competitive advantage and projecting it to the global market