Significance and Future Prospects of Textile Exports in Indian Economy

Significance and Future Prospects of
Textile Exports in Indian Economy

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Vol. 2, No. 1, 2012
ISSN 1839-6518 82800201201203
www.irj.iars.info Page 2

Significance and Future
Prospects of Textile
Exports in Indian
Economy

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Vol. 2, No. 1, 2012
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ABSTRACT
Textile exports forms a significant role in Indian economy in terms of generating employment
and earning foreign exchange. Developing economies like India have made transformational
changes in Industry in technological ways through various innovative measures from low
technology level to a producer of high technology products. The Indian textile industry is also
highly diversified and is gradually moving to branded segments. The role of Government in the
Industry cannot be underestimated and has given impetus to the Industry especially after
removal of quota system MFA in year 2004. The research paper intends to understand the
significant role of textile Industry, its share in total exports and future prospects.
Index Terms Textile Exports, Textile Industry, Textile Board, Textile policy, MFA, Global
Textile
INTRODUCTION
The significance of the textile industry is due to its contribution in the industrial production,
employment, and also earns foreign exchange by way of exports. Though, India is recognized for
textile goods from ancient times but the modern Industry emerged in India in the early nineteenth
century when the first textile mill was established at Fort Gloster near Calcutta in 1818.
However, the first cotton mill of Bombay was established in 1854 by a Parsi cotton merchant
then engaged in overseas and internal trade. For a number of years since independence, Indian
mills had to import cotton from Pakistan and other countries. Currently, it contributes about 14
per cent to industrial production, 4 per cent to the gross domestic product (GDP), and 17 per cent
to the country's export earnings. It provides direct employment to over 35 million people. The
sector is the second largest provider of employment after agriculture. Thus, the growth and all
round development of this industry has a direct bearing on the improvement of the economy of
the nation.
Textile industries have captured the entire world in a unique way. This is because it offers the
great variety of fabric which is to be used on daily basis being it in different varieties. Garment
manufacturing is the prominent one. Apart from it there are business fabrics, fashion material,
shoes fabric etc. India is moving higher on the different levels of industrialization and in regard
to the textile industry, which is now a pioneer industry here, actually started getting established
between 1970 and 1992, more around 1992 which was the start of liberalization. Ample of
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measures were taken by the government to protect the interest of the cotton farmers and labor
force but they actually made the industry stand isolated and somehow hampered its prosperity.
India is standing on the second position for the textile industries containing around nine million
hectares of cotton coverage. For fiber, it comes on the third position for production and sixth
position for production of yarn filament which is simply remarkable. All over, it covers approx
one-fourth of the world trade in terms of production of cotton yarn.
It captures around twenty percent of the total industrial development and production. Certainly
earlier textile industries were experiencing few shortcomings due to which there was a stagnant
growth. As a solution to this problem, government modified some rules and regulations after
which we can now witness the change in situation very clearly. One of the modifications was
into the technical sector which required huge investments for change in machinery and its
renovation both.
STRUCTURE OF INDIAS TEXTILE INDUSTRY
The textile sector in India is one of the largest in the world. The Indian textile industry can be
divided into three segments:
1. Cotton Textiles
2. Synthetic Textiles
3. Other like Wool, Jute, Silk etc.
Importance of Textile Industry in India
Textile industry in India occupies an important place in the economy. The Key Indicators of this
importance are as shown below:
Contributes 4% to the Gross Domestic Product & accounts for 17% of total Exports.
Is the largest employment provider after Agriculture ( More than 82 million people
direct/indirect)
Market size of the Textile industry (exports & domestic) is about US$ 105 billion at
present.
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SWOT Analysis of Indian Textile Industry
Strength Weakness
Abundant Raw Material availability
Availability of Low Cost and Skilled
Manpower
Strong Entrepreneurship base
India is one of the largest exporters of
Yarn in international market
The Apparel Industry is one of largest
contributor to foreign exchange
Growing Economy and Potential
Domestic and International Market.
Industry has large and diversified
segments that provide wide variety of
products.
Indian Textile Industry is an Independent
& Self-Reliant industry.
Lack of Technological Development
Industry is highly dependent on Cotton
which depends on crop
Higher Indirect Taxes, Power and Interest
Rates
Infrastructural Bottlenecks
Transaction Time at Ports and
transportation Time
Indian Textile Industry is highly
Fragmented
Rigid Govt. Labor Policy
There is Decline in Mill Segment.
Level of operation is small and thus
unable to get Economies of Scale.

Opportunities Threats
Large, Potential Domestic and
International Market
Emerging Retail Industry and Malls
provide huge opportunities
Increased Disposable Income and
Purchasing Power of Indian Customer
Elimination of Quota Restriction leads to
greater Market Development
Research & Product development
Product development and Diversification
to cater global needs
Market is gradually shifting towards
Branded Readymade Garment.
Greater Investment and FDI opportunities
are available.
International labor and Environmental
Laws
Continuous Quality Improvement is need
of the hour
Dumping of foreign goods in domestic
markets
Competition from other developing
countries, especially China
Threat for Traditional Market for Power
loom and Handloom Products and forcing
them for product diversification.
Low-cost imported fabrics
Rupee Appreciation
Elimination of Quota system will lead to
fluctuations in Export Demand

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Objectives of Research
To understand the significance of textile Industry in Indian economy.
To understand the problems and threats of Indian textile Industry.
To understand the role of Indian Govt. in textile Industry.
To review the scenario of textile industry at Global level.
Research Methodology
The research is both exploratory and descriptive in nature. The data has been collected from
reliable secondary sources. Reference from various Journals, News as well as website pertaining
to textile Industry has been taken in order to ensure complete reliability.
Limitations of research
The study is limited to Clothing & Textile Sector.
The study carried out comprises secondary data from 2001 to 2012.
Literature Review
Misra (1993) noted that the unorganized segment of Indias textile sector comprises handlooms,
power looms, small power-processors and traditional hand processors in addition to the
numerous small-scale garment firms in the woven as well as hosiery subsectors. Power looms
either operate on an independent basis or serve a master-weaver system, in which they just
process the orders from the master-weaver providing the raw materials and charges based on the
quantity of cloth produced. They acquire loans from non-bank sources, while handlooms in rural
areas rely on no institutional sources such as village moneylenders, unlike the organized weaving
mills, at a higher rate of interest and from undeclared, untaxed and often illegal income.
A study by Nordas (2004) suggested that China and India could capture 29% and 9%,
respectively, of the EU markets and 50% and 15%, respectively, of the US market. However,
the simulations of Anantha Krishnan and Jain-Chandra (2005) of the effects of MFA quota
elimination using an applied general equilibrium model of the Global Trade Analysis Project
(GTAP Version 6), and taking into account the current safeguard restrictions of Chinas exports
to US and EU, are not optimistic for India. While Indias exports will grow, with the expiration
of safeguards on Chinese exports in 2008, growth will decline. Largely because of adverse terms
of trade change (i.e. falling export prices due to competition) the welfare effect of the expiration
of MFA is negative for India, with the welfare loss being smaller, with safeguards on China in
place.

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Indian Textile Industry-Market Size and Growth
India earns about 27 per cent of its total foreign exchange through textile exports. The
textile industry contributes nearly 14 per cent of the total industrial production of the
country. Fabric production rose to 60,996 million sq meters in FY 2011 from 52,665
million sq meters in FY 2007. Production of raw cotton grew to 32.5 million bales in
FY11 from 28 million bales in FY07, while production of man-made fibre rose to 1,281
million kgs in FY11 from 1,139 million kgs in FY07. Production of yarn grew to 6,233
million kgs in FY11 from 5,183 million kgs in FY07. India has the potential to increase
its textile and apparel share in the world trade from the current level of 4.5 per cent to 8
per cent and reach US$ 80 billion by 2020. Exports of textile grew to US$ 26.8 billion in
FY10 from US$ 17.6 billion in FY06. India's textile trade is dominated by exports with a
CAGR of 6.3 per cent during the same period. Foreign direct investment (FDI) inflows in
textiles (including dyed, printed) from April 2000 to January 2012 stood at Rs 5,036.27
crore (US$ 897.79 million).
Source - Adapted from- http://www.ibef.org/industry/textiles.aspx
Textiles and Clothing
It is well known that as quotas under the Muti-Fiber Arrangement (MFA) were being
phased out from 1995, China took advantage of the elimination of quota markets in the
USA and the EU markets and rapidly increased its share in the two markets. After the
MFA was completely phased out (in fact, in anticipation of it) on January 1, 2006,
Chinese exports in both markets increased rapidly leading to what is in effect, a return
to the bad old bilateral quotas of MFA! India did not, and in fact could not, take full
advantage of the gradual phase-out because of domestic constraints, including in
particular, the reservation of garments for production by small scale enterprises (the
reservation was lifted only three years ago) and restriction on textile imports. In the
post MFA scenario, given appropriate policy changes, India could do better and indeed
gain global market shares, although perhaps not as much as China.
Source Adapted from Srinivasan, T.N. (2006) China, India and the World Economy
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Indian Textile Industry:

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Indian Textile Industry: Changing Profile
The Indian textile industry has embarked on an ambitious program of modernization and
technological up gradation in recent years to transform the textile sector from a state of low
technology level to a producer of high technology products. Technological up gradation in India
has resulted in: -
A shift from commodity based trading to high value added fashion garments.
Vertical integration and horizontal consolidation of production process leading to
lowering of manufacturing costs.
Improved productivity gains
Efficient supply chain management
Development of Economies of scale.
Role of Govt. (Indian) and Apparel Export Promotion Council (AEPC) in
textile exports
The Government's role in the textile industry has become more reformists in nature. Initially,
policies were drawn to provide employment with a clear focus on promoting the small-scale
industry. The scenario changed after 1995, with policies being designed to encourage
investments in installing modern weaving machinery as well as gradually eliminating the pro-
decentralized sector policy focus. The removal of the SSI reservation for woven apparel in 2000
and knitted apparel in 2005 were significant decisions in promoting setting up of large-scale
firms. Government schemes such as Apparel Parks for Exports (APE) and the Textile Centers
Infrastructure Development Scheme (TCIDS) now provide incentives for establishing
manufacturing units in apparel export zones.
The government of India has launched a number of crucial schemes like:
100% FDI is allowed through the automatic route.
In 1999, Technology Up gradation Fund Scheme (TUFS) was launched to assist
upgrading the textiles industry. TUFS provides for reimbursing 5% interest on the
loans/finance raised from designated financial institutions for bench marked projects of
modernization. IDBI, SIDBI, IFCI have been designed as nodal agencies for large and
medium small scale industry and jute industry respectively. They have co-opted 148
leading commercial banks/cooperative banks and financial institutions like State Finance
Corporations and State Industrial Development Corporation etc. The Scheme has been
given further extension till 2011-12. A total of 18773 applications at a project cost of
US$ 24.91 billion have been sanctioned under TUFS up to March 31, 2008.
De-reservation of readymade garments from the small-scale industries sector in 2000.
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40 textile parks are being established under the Scheme for Integrated Textile Parks
(SITP) which will bring in investment worth US$ 4.38 billion.
Textile Centre Infrastructure Development Scheme (TCIDS) is a part of the drive to
improve infrastructure facilities at potential textile growth centers and therefore, aims at
removing bottlenecks in exports so as to achieve the target of US$ 50 billion by 2010 as
envisaged in the National Textile Policy, 2000.
To provide the industry with world-class infrastructure facilities for setting up their textile units,
Government has launched the Scheme for Integrated Textile Parks (SITP) by merging the
Scheme for Apparel Parks for Exports (APE) and Textile Centre Infrastructure Development
Scheme (TCIDS). This scheme is based on Public-Private Partnership (PPP) and envisages
engaging of a professional agency for project execution. The Ministry of Textiles (MOT) would
implement the Scheme through Special Purpose Vehicles (SPVs).
The year 2000 was also marked by initiatives of setting up apparel parks; 2002 and 2003 saw a
gradual reduction in excise duties for most types of fabrics while 2004 offered the CENVAT
system on an optional basis. The Union Budget of 2005-2006 announced competitive
progressive policies, whose salient features included:
Reduction in corporate tax rate from 35% to 30% with 10% surcharge
Reduction in depreciation rate on plant and machinery from 25% to 15%
Inclusion of polyester texturisers under the optimal CENVAT rate of 8%
To meet the challenges of the post-MFA setup, the Government of India initiated a reforms
process which aimed at promoting large capital investments, pruning cumbersome procedures
associated with the tax regime, etc. The Textile Vision 2010 was born as a result of interaction
between the government and the industry which envisages around 12% annual growth in the
textile industry from US$ 36 billion now to US$ 85 billion by 2010. Additionally, Vision 2010
also proposed the creation of an additional 12 million jobs through this initiative.
Data Analysis
Textiles, handlooms and handicrafts made-in-India are exported to over 100 countries. In fact,
USA has become the largest buyer of Indian textiles and apparels. Readymade garments
(RMG) made-in-India form almost 41% of total Indian textile exports. RMG exports were worth
US$ 9.06 billion in 2007-08. During April 2008-February 2009, RMG exports reached a figure
of US$ 8.59 billion, an increase of 4.86 per cent over the corresponding period of 2007-08.
Also, apparel has grown into the second largest retail category in the country. Interestingly, the
local apparel retailing industry is reportedly around US$ 2.7 billion and despite recession it is
likely to grow at 5-7% in 2009-10.
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Table 1: Textile Export from India (US $ million)
1990-91 2000-01 2009-10 2010-11 2010-11 (Apr-Sept) 2011-12(Apr-Sept)
Textile Fabrics & Manufactures (Excl Carpets
handmade)
3807
Cotton Yarn, Fabrics, Made ups etc 1170 3509 3685 5506 2642 3238
Readymade Garments of all textile materials 2236 5577 10707 11196 5095 6579
Coir Yarn and Manufactures 27 48 160 152 74 97
Source DGCI&S Kolkata
Interpretation Table 1 shows that the export of readymade garments has increased from
$2236 Million US Dollars in 1990-91 to $11196 Million US Dollars in 2010-11 which is a
significant growth. Whereas the exports of cotton, yarn has gone up from $1170 Million US
Dollars in 1990-91 to $5506 Million US Dollars 2010-11.
Trading partners
Leading trading partners of India are Malaysia, Australia, Kazakhstan, USA, South Africa,
Romania, Argentina, Egypt, Germany, Finland, and Turkey.
Table 2: Textile Exports - Top 10 countries
(April-September 2009-10 and April-September 2010-11)

Sl. No.

Country
Crore US $ Million % Share
April-
September
2009-10
% Share
April-
September
2010-11 [P]
April-
September
2009-10
April-
September
2010-11 [P]

%
Growth
April-
September
2009-10
April-
September
2010-11 [P]

%
Growth

1

U S A

9315.54

10318.92

10.77

1916.79

2242.33

16.98

18.95

19.89

2

UAE

4206.50

4039.88

-3.96

866.97

878.07

1.28

8.57

7.79

3

U K

3957.05

3422.78

-13.50

814.15

744.28

-8.58

8.05

6.60

4

Germany

3618.04

3067.69

-15.21

743.99

666.57

-10.41

7.35

5.91

5

Bangladesh

976.44

1966.92

101.44

201.11

428.07

112.85

1.99

3.80

6

France

1910.15

1558.49

-18.41

392.88

338.71

-13.79

3.88

3.00

7

Italy

1508.13

1473.51

-2.30

310.95

319.88

2.87

3.07

2.84

8

Spain

1590.79

1468.65

-7.68

327.42

319.18

-2.52

3.24

2.83

9

China P RP

896.37

1438.12

60.44

184.74

313.15

69.51

1.83

2.78

10

Turkey

911.28

1272.73

39.66

187.77

277.72

47.90

1.86

2.46

Total
(Top ten)

28890.29

30027.69

3.94

5946.77

6527.96

9.77

58.79

57.89

Others

20239.70

21852.24

7.97

4169.01

4747.62

13.88

41.21

42.11

Total Textiles

49129.99

51879.93

5.60

10115.78

11275.58

11.47

Source: DGCI&S, Kolkata
Interpretation The major trading partners of Indias textile exports are USA, UAE and UK
forming around 35% of total textile exports in 2010-11.

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Table 3: Share and Percentage Growth of Textile Goods
Percentage Share Percentage Change
2009-10 2010-11
2010-11
(Apr-Sept)
2011-12
(Apr-Sept)
2009-10 2010-11
2010-11
(Apr-Sept)
2011-12
(Apr-Sept)
Total Textiles 8.7 9.6 8.7 -1.2 17.1 ---- 27.0
Cotton Yarn, Fabrics, Made ups etc 2.1 2.2 2.5 2.2 -10.5 49.4 66.7 22.6
Readymade Garments 6.0 4.5 4.8 4.4 -2.1 4.6 -5.5 29.1
Source DGCI&S Kolkata
Interpretation The share of readymade garments in Indias textile comprises of 4.5% in 2010-
11 which is approximately 50% of Indias total textile exports.
Table 4: Share and Percentage Growth of Textile Goods (US $ million)
2009 2010
World India India share World India India share
Textile Yarn, fabrics, made-up articles 217575 9111 4.2 258841 12833 5.0
Woven Cotton Fabrics 24048 875 3.6 28364 1050 3.7
Woven fabrics of man made fibre 31638 1909 6.0 36220 1987 5.5
Woven fabrics other than of cotton or man made fibres 8907 396 4.4 9907 518 5.2
Source-United Nations 2009 International trade statistics year book, UN-2010
Table 5: Textiles Export during 2007-08 to 2011-12 (Till Dec.11) (Item-wise)
(Eleventh Five Year Plan Period - 2007-2012) Value Rs Crores

S N

Item

2007-08

2008-09

2009-10

2010-11 [P]
April-
Dec'10
(P )

April- Dec'11 ( P
)

%
variation
A. Cotton Textiles 27599.81 21795.40 27016.21 38038.19 28634.74 36372.99 27.02
% Share 30.97 22.63 25.48 31.16 32.69 32.49
1 Cotton Raw Incl. Waste 8,865.39 2865.86 9537.08 12981.04 9241.24 12649.65 36.88
2
Cotton Yarn, Fabrics &
Madeups
18,734.42 18929.54 17479.13 25057.15 19393.50 23723.33 22.33
B. Manmade Textiles 12785.02 15090.76 18783.13 21125.13 14832.31 20155.40 35.89
% Share 14.35 15.67 17.71 17.31 16.93 18.01
1 Manmade Staple Fibers 1,121.72 1172.01 1690.68 1998.11 1403.67 1863.72 32.77

2

Manmade Yarn, Fabrics
& Madeups
11,663.30 13918.75 17092.45 19127.02 13428.64 18291.68

36.21
C. Silk Textiles 2646.75 3107.78 2819.46 2708.02 1991.23 1731.81 -13.03
% Share 2.97 3.23 2.66 2.22 2.27 1.55
1
Natural Silk Yarn,
Fabrics & Madeups
1,540.93 1664.82 1411.12 1578.40 1188.76 728.45 -38.72
2 RMG of Silk 1,093.67 1437.73 1383.42 1095.10 772.54 971.32 25.73
3 Silk Waste 12.15 5.23 24.92 34.52 29.93 32.04 7.05
D.
Wool & Woolen
Textiles
1783.13 2199.49 2224.14 1955.31 1403.73 1952.13 39.07
% Share 2.00 2.28 2.10 1.60 1.60 1.74
1
Wool Yarn, Fabrics &
Madeups
373.58 456.52 424.94 478.04 335.42 541.39 61.41
2 RMG Wool 1,409.55 1742.97 1799.20 1477.27 1068.31 1410.74 32.05
E. Ready Made Garments 36497.79 47112.77 47608.39 48355.57 33158.14 43983.50 32.65
% Share 40.95 48.92 44.89 39.62 37.86 39.29

1

RMG of Cotton

30,335.79

38522.72

38070.33

37687.51

25637.26

32720.07

27.63
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including Accessories
2 RMG Manmade Fiber 3,912.26 4721.94 5745.29 6489.07 4572.00 7042.85 54.04
3
RMG of Other Textile
Material
2,249.74 3868.11 3792.77 4178.99 2948.88 4220.58 43.12
Total Textiles (A - E) 81312.50 89306.20 98451.33 112182.22 80020.15 104195.83 30.21
% Share 91.24 92.73 92.84 91.91 91.36 93.09
F. Handicrafts 5844.12 4949.23 4548.91 5445.45 4316.63 3605.65 -16.47
% Share 6.56 5.14 4.29 4.46 4.93 3.22
1
Carpets (Excluding silk)
Handmade
3,725.80 3506.37 3441.74 4444.96 3568.48 2931.54 -17.85
2
Handicrafts (Excluding
Handmade Carpets)
2,046.21 1384.19 1066.58 984.65 734.53 655.89 -10.71
3 Silk Carpets 72.11 58.67 40.59 15.84 13.62 18.22 33.82
G. Jute 1319.36 1375.78 1033.09 2076.34 1597.69 1633.45 2.24
% Share 1.48 1.43 0.97 1.70 1.82 1.46
1 Floor Covering of Jute 317.56 251.63 281.07 336.93 265.75 189.20 -28.81
2 Other Jute Manufactures 322.22 491.64 300.19 505.58 369.04 570.06 54.47
3 Jute Yarn 215.14 216.92 144.20 533.90 430.60 202.29 -53.02
4 Jute Hessian 464.44 415.59 307.63 699.93 532.30 671.91 26.23

H.
Coir & Coir
Manufactures
644.87 680.70 759.66 689.18 498.98 727.82 45.86
% Share 0.72 0.71 0.72 0.56 0.57 0.65
I. Handloom Products 0.00 0.00 1252.81 1662.89 1,151.58 1,771.47 53.83
% Share 0.00 1.16 1.36 1.31 1.58

Grand Total Textiles
Exports

89120.85

96311.91

106045.80

122056.08

87585.04

111934.22

27.80
Total Exports 6,55,863.52 840755.06 845533.64 1148169.56 780023.16 1034316.48 32.60
% Textile Exports 13.59 11.46 12.54 10.63 11.23 10.82

% Growth of Textiles
over previous year
8.07 10.11 15.10
P - Provisional
Source- Foreign Trade Statistics of India (Principal Commodities & Countries) DGCI&S,
Kolkata
Global Scenario of Textile Industry at a Glance
Indias share in global exports is only 4% compared to China 13.75% percent. In addition to
China, other developing countries are emerging as serious competitive threats to India. Looking
at export shares, the countries like Korea, Taiwan, Mexico and Turkey are ahead of India as
shown in Fig-1. The reason for this development is the fact that India lags behind these countries
in technology, quality of products and also lags behind in terms of investment levels and supply
chain management practices. If India were competitive in some key segments it could serve as a
basis for building a modern industry, but there is no evidence of such signs, except to some
extent in the spinning industry. Thus, a structural change is the need of the hour in order to be
competitive in textile Industry with rest of the world.
In this emerging scenario, wide spread application of technology is required not only to upgrade
and innovate the quality of products but also to reduce overhead costs. The developed countries
are focusing on niche products like protective clothing, clothing for medical use by developing
competitiveness in novel "nanotechnology" coatings, greater adoption of Product Life-cycle
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Management (PLM) Systems, in order to deliver new "fast fashion" paradigms, while at the same
time remaining steadfastly committed to lower production costs.
The textile industry in the developed countries is also restructuring itself in a manner so as to
take advantage of product innovation. Some of the products, now being developed are jackets
that cool the wearers down, warm them up, and send out soothing vibrations, textiles with
healing and caring properties and protection from harmful radiation. Intelligent Textiles, Smart
Clothing are receiving unprecedented attention and are in the realm of possibilities.
Immense opportunities are also being seen in the entire gamut of Technical Textiles given the
range and diversity of raw material, processes, products and applications that they encompass.
"Technical textiles" have been breaking new grounds due to their cost effectiveness, durability,
versatility, user friendliness, and eco-properties. In fact, it is estimated that around 40% of all
textiles made in Germany are now covered under the field of "Technical Textiles".
While the developed countries are seeking to upgrade their presence in the textiles and clothing
sector by moving in to the field of technical textiles, the developing countries are equally
concerned about the need to adapt themselves to the changing requirements of the consumers and
move up the value added supply chain by adopting innovative technologies and redefining the
product mix.
A noteworthy feature of these emerging trends in international trade is that the developed
countries even though exiting from direct manufacturing, continue to dominate it by controlling
the retail end of the supply chain. The cost and price structure globally is being characterized by
higher potential for profit from innovation, marketing, and retailing rather than production,
assembly, finishing and packaging. Multiple store retailers are already selling 70% of the
clothing in Western Europe and 85% in the US.
The developing countries on the other hand, are becoming manufacturing hubs for textile
products, and are increasingly getting themselves integrated with the global market place and
offering capabilities not only in production capacities, but also in product development and
efficient Supply Chain management.
With the removal of the Quota system, in the year 2005, the textile and clothing industry is
undergoing structural changes worldwide with production lines further shifting distinctly towards
low cost producing countries with flexible production systems, to match the growing retail
power.
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Figure 1: Global Share of textile Industry

Emergence of Local Brands
Indian Market Another interesting feature of the Indian Market is the emergence of local brands.
All the leading textile and apparel firms have introduced domestic brands and are increasingly
positioning themselves within the various segments in the domestic market. Prior to 2000, there
were around 5-6 brands in India, prominent amongst them being Zodiac, Monte-Carlo,
Raymond, Bombay Dyeing.
The market size of branded wear has since expanded on account of the continued increase in
purchasing power, rapid increase in the consuming class, coupled with reduction in import
tariffs. The competition has thus intensified in the Indian market with all the major producers of
textiles and clothing products in India now working towards building local brands.
Some of the brands built in recent years are "Pantaloon", "Killer" Jeans, "Easios", "Tibre",
"Colour Plus", ''Trigger" etc. Many of these brands have now reached a stage where they can
look towards gaining a regional, if not a global presence.
In order to gain global acceptance several Indian companies are investing overseas and acquiring
International brands. For example, in the Home Textile market, Welspun industry has purchased
"Christys", a UK Towel Brand; GHCL has acquired "Dan River" and "Rosebys", Creative
Garments has purchased "Portico" brand to facilitate entry into the US and EU markets; Alok
Industries has purchased "Hamsard", a UK based retail chain.
Recommendations
Indian economy has to make serious efforts to strengthen the textile Industry for flourishing both
in domestic and international markets.
Vol. 2, No. 1, 2012
ISSN 1839-6518 82800201201203
India needs to invest in R&D to reduce per unit costs, transaction costs and to develop
new products.
The Government needs to revisit the existing incentive to textile machinery
manufacturers and consult the industry leaders for further improvement.
The Government needs to take a planned policy decision to shut down non-performing
and non-competitive manufacturing units.
Setting up of Training facilities all across India
Brand India and Market exploration and promotion of textile sector.
FDI in textiles need to be encouraged in a big way.
Setting up of design centers to encourage design and product development
Creation of new management institutes for textiles and apparel and favorable climate for
large scale investment.
Setting up of overseas acquisition projects in thrust markets like USA and EU.
Infrastructure development and measures for improving productivity and efficiency.
Conclusion
A great deal of work has been done by Indian trade and industry and has achieved significant
role in terms of GDP, exports, employment and generation of foreign exchange. Role of
government has been supportive to textile and clothing Industry whereas post MFA has not been
good in comparison to china. The share of readymade garments has been about 4% for which
efforts are to be made. Role of Govt. Could be in setting up better infrastructure facilities, R&D
centers for Europeans, Americans and so on. Indian Govt. and industry need to pay collective
efforts for training centers, technology up gradation, reducing the taxes and duties. Industry need
to improve its raw material base and export high value-added products of international standard.
Innovative ways for transforming and modernization of Industry is the need of the hour and
public-private partnership can add value to the sector.
References
1. Bhatia, S. (1997) Indian Garments Industry in the Post MFA Period, Occasional Paper
No. 7, Indian Institute of Foreign Trade, New Delhi
2. Confederation of Indian Industry (1999), Indias Textile industryChallenges for the
Millennium AheadBuilding Competitiveness to Survive and Thrive, April
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ISSN 1839-6518 82800201201203
3. EXIM Bank (1995), Indian Garment Exports; Implications of the MFA Phase-out,
Occasional Paper No 34
4. Gokhle, C., Vijaya Katti (1995), Globalizing Indian Textiles- Threats and Opportunities,
Tecoya Publication
5. Khanna, S. R. (1991), International Trade in Textiles, Sage Publications, New Delhi.
6. Misra, S., 1993. Indias Textile Sector: A Policy Analysis. Sage Publishers, New Delhi.
7. Nordas, Hilegunn Kyvik (2004) The Global Textile and Clothing Industry post the
Agreement on Textiles and Clothing, Discussion Paper 15, Geneva, World Trade
Organization.
8. Ramaswamy, K. V. & Gereffi, Gary (1998), Indias Apparel Sector in the Global
Economy, Catching Up or Falling Behind, Economic and Political Weekly, 17 January.
9. Report of the Expert Committee on Textile Policy (1999), Ministry of Textiles,
Government of India, August.
10. Tendulkar, S. D. (2000), Indian Export and Economic Growth Performance in Asian
Perspective, Working Paper No. 54, ICRIER, December.
11. Uchikawa (1998), Indian textile industry- State Policy, Liberalization and Growth,
Manohar Publishers and Distributors, New Delhi
12. Verma, S. (2000) Restructuring the Indian Textile Industry, in Sinha, A. K., S. K.
Sasikumar ed., Restructuring of the Textile Sector in India, Vikas Publishing House Pvt.
Ltd., New Delhi.
13. World Bank (1999), India: Cotton and Textile Industries, Reforming to Compete, Vol. I
& II: Annexes, Rural Development Sector Unit, South Asia region, January
14. Yang, Y. and Chuanshui, Z. (1998), Chinas Textile and Clothing Exports in a Changing
World Economy, The Developing Economies, XXXVI-I: 3-23, March 1998
15. Adapted from http://www.aepcindia.com
16. Adapted from http://www.economywatch.com/business-and-economy/textile-Industry.html
17. Adapted from http://www.ibef.org/industry/textiles.aspx <Accessed on 2nd June 2012>
18. Adapted from http://www.in.kpmg.com
19. Adapted from http://www.Indianbusiness.nic.in/India-profile/textile.htm
20. Adapted from http://www.texprocil.com/annreport/profile-texprocil.doc
21. Adapted from Srinivasan, T.N. (2006) China, India and the World Economy
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