PROJECT REPORT

Batch 2009 - 2012

STRATEGICALLY ANALYSIS OF YARN & COTTON INDUSTRY IN INDIA.

Submitted in fulfillment of Year III of BBA From

PGRRCDE Osmania University, Hyderabad

SUBMITTED TO: Mr. Jenson Sebastian SUBMITTED BY:

Bhupendra Singh Verma

Mr./Ms._________________ (INDUSTRY GUIDE)

En. no.:_____________

Through

Declaration
I Bhupendra Singh Verma student of UEI Global Indore (Institute) hereby declare that the Project Report entitled Strategically analysis of yarn & cotton industry in India. submitted , is my original work and the dissertation has not formed the basis for the award of any degree, diploma, associate ship, fellowship or similar other titles. It has not been submitted to any other university or Institution for the award of any degree or diploma.

Place : Indore Date :

Signature of Student Name: Bhupendra Singh Verma En. No.:

Acknowledgement
I would like to take this opportunity as a platform to thank various individuals, without the support of whom, this project would not have been successful. I would like to express my heartfelt gratitude and thanks to

________________________(Industrial Guide) for his/her guidance and support throughout this study. I am thankful to my Institute for providing me with proper resources and fostering my research work. I would like to take this opportunity to thank all the respondents who trusted me and gave me their valuable insight. I also thank the Faculty Supervisors and Industrial supervisors under whose able guidance and kind cooperation, I was able to complete my study titled, To study the product characteristics, features, composition of yarn, fabric garments etc. I also thank the people from Pratibha syntax Ltd. who gave me proper knowledge about the company. My acknowledgement would not be complete without thanking Mr. Jenson Sebastian who gave me proper guidelines, knowledge and support for my summer training project. I have put in my best efforts to make this project as informative and understandable as possible. Every effort has been made to enhance the quality of work. However, I owe the sole responsibility of the shortcomings, if any, in the study

Name & Signature of Student

Date:

Preface
The Summer Internship Program forms an important component of education at UEI Global. It is an attempt to bridge the gap between the academic institution and the corporate world. It provides us an opportunity to apply the concepts learnt in real life situations. The summer internship helps us in exploring our skills and capabilities. This internship program makes a mark of hard work, sincerity, knowledge and ethics on the host organization. It would also be a great learning experience since it enables us to apply theory to practice and observe and learn the current trends in the market. It provides an opportunity for us to satisfy our inquisitiveness about corporate, provides exposure to technical skills, and helps us to acquire social skills by being in constant interaction with the professionals of other organizations. It helps us in developing a network, which will be useful in enhancing in career prospects. This will help to gain a deeper understanding of the work, culture, deadlines, pressures etc. of an organization. Thus, it helps to develop the qualities of a Manager by involving teamwork, goal orientation and managing interpersonal relationships and by creating awareness about strengths and weaknesses in the work environment.

Table Contents
PAGE

Chapter One Chapter Two Chapter Three

TEXTILE SECTOR IN INDIA NATIONAL ECONOMIC POLICIES COMPANY INTRODUCTION

7-31 32-44 45-57

Chapter Four

TEXTILE INDUSTRY REVIEW

58-62

Chapter Five Chapter Six

SWOT ANALYSIS TEXTILE INDUSTRY A BRIEF REPORT TEXTILE INDUSTRIES

OF

INDIAN

63-72

ON

INDIAN

73-96

Chapter Seven

OPPORTUNITIES

97-99

Chapter Eight

ANALYSIS AND INTERPRETATION 100-105 OF DATA

Chapter Nine

BIBLOGRAPHY

106-108

Chapter I INDIAN TEXTILE INDUSTRY

INDIAN TEXTILE INDUSTRY

The textile industry is the largest industry of modern India. It

accounts for over 20 percent of industrial production and is closely linked with the agricultural and rural economy. It is the single largest employer in the industrial sector employing about 38 million people. If employment in allied sectors like ginning, agriculture, pressing, cotton trade, jute, etc. are added then the total employment is estimated at 93 million. The net foreign exchange earnings in this sector are one of the highest and, together with carpet and handicrafts, account for over 37 percent of total export earnings at over US $ 10 billion. Textiles,1 alone, account for about 25 percent of Indias total forex earnings. Indias textile industry since its beginning continues to be predominantly cotton based with about 65 percent of fabric consumption in the country being accounted for by cotton. The industry is highly localised in Ahmedabad and Bombay in the western part of the country though other centers exist including Kanpur, Calcutta, Indore, Coimbatore, and Sholapur. The structure of the textile industry is extremely complex with the modern, sophisticated and highly mechanized mill sector on the one hand and the hand spinning and hand weaving (handloom) sector on the other. Between the two falls the small-scale power loom sector. The latter two are together known as the decentralized sector. Over the years, the government has granted a whole range of concessions to the non-mill sector as a result of which the share of the decentralized sector has increased considerably in

the total production. Of the two sub-sectors of the decentralized sector, the power loom sector has shown the faster rate of growth. In the production of fabrics the decentralized sector accounts for roughly 94 percent while the mill sector has a share of only 6 percent. Being an agro-based industry the production of raw material varies from year to year depending on weather and rainfall conditions. Accordingly the price fluctuates too.

INDIA'S TRADE IN TEXTILES AND ITS SHARE IN WORLD TRADE CAN BE CATEGORIZED AS FOLLOWS: INDIAS TRADE IN TEXTILES
Type India's Share in World Trade 22% 3.2% 2%

Yarn Fabrics Apparel

Made-ups 9%

Over-all

2.8%

Compound Annual Growth Rate (CAGR) of different segments

Type CAGR (1993-98)

Yarn Fabric Made-ups Garment

31.79% 9.04% 15.18% 6.795%

GLOBAL SCENARIO
The textile and clothing trade is governed by the Multi-Fibre Agreement (MFA) which came into force on January 1, 1974 replacing short-term and long-term arrangements of the 1960s which protected US textile producers from booming Japanese textiles exports. Later, it was extended to other developing countries like India, Korea, Hong Kong, etc. which had acquired a comparative advantage in textiles. Currently, India has bilateral arrangements under MFA with USA, Canada, Australia, countries of the European Commission, etc. Under MFA, foreign trade is subject to relatively high tariffs and export quotas restricting Indias penetration into these markets. India was interested in the early phasing out of these quotas in the Uruguay Round of Negotiations but this did not happen due to the reluctance of the developed countries like the US and EC to open up their textile markets to Third World imports because of high labour costs. With the removal of quotas, exports of textiles have now to cope with new challenges in the form of growing non-tariff / non-trade barriers such as growing regionalisation of trade between blocks of nations, child labour, anti-dumping duties, etc.

Nevertheless, it must be realised that the picture is not all rosy. It is now being admitted universally and even officially that the year 2005 AD is likely to present more of a challenge than opportunity. If the industry does not pay attention to the very vital needs of modernisation, quality control, technology upgradation, etc. it is likely to be left behind. Already, its

comparative advantage of cheap labour is being nullified by the use of outmoded machinery.

With the dismantling of the MFA, it becomes imperative for the textile industry to take on competitors like China, Pakistan, etc., which enjoy lower labour costs. In fact the seriousness of the situation becomes even more apparent when it is realised that the non-quota exports have not really risen dramatically over the past few years. The continued dominance of yarn in exports of cotton, synthetics, and blends, is another cause for worry while exports of fabrics is not growing. The lack of value added products in textile exports do not augur well for India in a non-MFA world.

Textile exports alone earn almost 25 percent of foreign exchange for India yet its share in global trade is dismal, having declined from 10.9 percent in 1955 to 3.23 percent in 1996. More significantly, the share of China in world trade in textiles, in 1994, was 13.24 percent, up from 4.36 percent in 1980. Hong Kong, too, improved its share from 7.06 percent to 12.65 percent over the same period. Growth rate, in US$ terms, of exports of textiles, including apparel, was over 17 percent between 1993-94 to 199596. It declined to 10.5 percent in 1996-97 and to 5 percent in 1997-98. Another disconcerting aspect that reflects the declining international competitiveness of Indian textile industry is the surge in imports in the last two years. Imports grew by 12 percent in dollar terms in 1997-98, against an average of 5.8 percent for all imports into India. Imports from China went up by 50 percent while those from Hong Kong jumped by 23 percent.

GLOBAL FACTORS INFLUENCING TEXTILE INDUSTRY

The history of the textile and clothing industry has been replete with the use of various bilateral quotas, protectionist policies, discriminatory tariffs, etc. by the developed world against the developing countries. The result was a highly distorted structure, which imposed hidden costs on the export sectors of the Third World. Despite the fact that GATT was established way back in 1947, the textile industry, till 1994, remained largely out of its liberalisation agreements. In fact, trade in this sector, until the Uruguay Round, evolved in the opposite direction. Consequently, since 1974 global trade in the textiles and clothing sector had been governed by the Multi-fibre agreement, which was the sequel to an increasingly pervasive quota regime that began with the Short-term arrangement on cotton products in 1962 and followed by the Long-Term arrangement. After the successful conclusion of the Uruguay Round in 1994, the MFA was replaced by the Agreement on Textiles and Clothing (ATC), which had the same MFA framework in the context of an agreed, ten year phasing out of all quotas by the year 2005. The section that follows takes a brief look at the history of these protectionist regimes as also a more detailed look at the MFA and the ATC.MultiFibre Agreement (MFA)On January 1st, 1974, the Arrangement Regarding the International Trade in Textiles, otherwise known as the MFA came into force. It superseded all existing arrangements that had been governing trade in cotton textiles since 1961.

The MFA sought to achieve the expansion of trade, the reduction of barriers to trade and the progressive liberalisation of world trade in textile products, while at the same time ensuring the orderly and equitable development of this trade and avoidance of disruptive effects in individual markets and on individual lines of production in both importing and exporting countries. Though it was supposed to be a short-term arrangement to enable the adjustment of the industry to a free trade regime, the MFA was extended in 1974, 1982, 1986, 1991, and 1992. Because of the quotas allotted, the MFA resulted in a regular shift of production from quota restricted countries to less restricted ones as soon as the quotas began to cause problems for the traders in importing countries. The first three extensions of the MFA, instead of liberalising the trade in textiles and clothing, further intensified restrictions on imports, specifically affecting the developing country exporters of the textile and clothing products. Increased usage of several MFA measures tended to further erode the trust which developing countries had originally placed in the MFA. The MFA set the terms and conditions for governing quantitative restrictions on textile and clothing exports of developing countries either through negotiations or bilateral agreements or on a unilateral basis. The bilateral agreements negotiated between importing and exporting countrys contained provisions relating to the products traded but they differed in the details. The restraints under the MFA were often negotiated, or unilaterally imposed at relatively short intervals, practically annually. The quotas could be either by function or fibreUnder the MFA, product coverage was extended to include textiles and clothing made of wool and man-made fibres (MMF), as well as cotton and blends thereof. With regard to applications of safeguard measures, import restrictions could be imposed

unilaterally in a situation of actual market disruption in the absence of a mutually agreed situation. However, in situations involving a real risk of market disruption only bilateral restraint agreements were possible. The Textile Surveillance Body (TSB) was set up to monitor disputes regarding actions taken in response to market disruptions. The MFA permitted certain flexibility in quota restrictions for the exporters so that they could adjust to changing market conditions, export demands and their own capabilities. The MFA also provided for higher quotas and liberal growth for developing countries whose exports were already restrained. The MFA asked the participants to refrain from restraining the trade of small suppliers under normal circumstances. In general, developed countries, under MFA, chose not to impose restrictions on imports from other developed countries. The TSB ensured compliance by all parties to the obligations of bilateral agreements or unilateral agreements. It called for notification of all restrictive measures. A Textiles Committee established as a management body consisting of all member countries was the final arbiter under the MFA and worked as a court of appeal for disputes that could not be resolved under TSB.

Unsatisfactory experience with several extension protocols of the MFA, retention clauses, such as good will, exceptional cases, and antisurge and other trade related factors led the developing countries to press for the inclusion of the textile issue in the agenda of the GATT Ministerial meeting.

The eventual outcome of prolonged negotiations was the Agreement on Textiles and Clothing. Agreement on Textiles and Clothing (ATC) The ATC calls for a progressive phasing out of all the MFA restrictions and other discriminatory measures in a period of 10 years. In contrast to the MFA, the ATC is applicable to all members of the WTO.

FOUR STEPS OVER 10 YEAR

Steps Percentage products brought GATT to of How fast remaining be quota should open under up, if 1994 rate was (including 6%

removal of quotas) Step 1 1st Jan 1995 31st Dec 1997 16 percent 6.96 percent

(minimum taking annually 1990 imports as base)

Step 2 1st Jan 1998 31st Dec 2002 Step 3 1st Jan 2002 31st Dec 2004 Step 4 1st Jan 2005 Full integration into GATT and final elimination of quotas , ATC terminates

17 percent

8.70 annually

percent

18 percent

11.05 annually

percent

49

percent No quotas left

(maximum)

TOP 10 EXPORTERS (TEXTILE)

Country 1990 Billion US$ Hong Kong China South Korea Germany Italy Taiwan USA France BelgiumLuxembourg Japan Total 10) World 104.00 100.00 155.00 100.00 6.54 5.88 (Top 74.36 6.29 5.65 71.5 7.01 6.75 110.62 4.52 4.35 71.37 7.99 7.10 6.04 14.00 9.80 6.13 5.03 7.21 % share 7.68 6.82 5.81 13.46 9.43 5.90 4.83 4.65 1997 Billion US$ 14.6 13.83 13.35 13.05 12.9 12.73 9.19 5.86 % share 9.42 8.92 8.61 8.42 8.32 8.21 5.93 5.64

TOP 10 EXPORTERS (APPAREL)

Country 1990 Billion US$ China Hong Kong Italy USA Germany Turkey 9.41 15.37 12.07 2.57 7.82 3.44 % share 9.14 14.92 11.72 2.49 7.59 3.34 1997 Billion US$ 31.8 23.11 14.85 8.68 7.29 6.7 % share 21.06 15.30 9.83 5.75 4.83 4.44

France UK South Korea Thailand

4.65 3.08 8.11 2.86

4.51 2.99 7.87 2.78 67.36 100.00

5.34 5.28 4.19 3.77 111.01 151.00

3.54 3.50 2.77 2.50 73.52 100.00

Total (top 10) 69.38 World 103.00

EU TOP TEN SUPPLIERS OF MFA CLOTHING: RANK PRICE (AGR 1994-96)

1995 1996 Rank Price Ranks and Average Ranks and Average Price Price CAGR 199496 Country Rank in Value Rank in
Volume

Avg. Price,

Rank in

Rank in Avg. Volume Price, Ecu/Kg

Ecu/Kg Value

China Turkey

2 1

1 2 3 7 6

9 2 6 3 5

1 2 3 4 5

1 2 3 6 7

8 6 5 3 4

3 7 9 4 2

Hong Kong 3 Tunisia Morocco 4 5

Poland India

6 7

8 5 4 10 9

2 7 10 4 8

6 7 8 9 10

8 5 4 10 9

1 9 10 2 7

8 10 5 1 6

Bangladesh 8 Romania Indonesia 9 10

POST-MFA / ATC SCENARIO

It is generally believed that quota phase-out can only be beneficial for the industry. In 1993, a study of seven countries found that the price of cotton yarn per kilo, was cheapest in India at US$ 2.79, compared to US$ 3.30 in Brazil, US$ 4.19 in Japan, and US$ 3.10 in Thailand. This was because overall labour and raw material costs are cheaper in India. However, it should be realised that the opposite can also happen. Removal of quotas may open new frontiers but will also close captive markets. The EU and the US will no longer be restrained in buying as much as they want from the cheapest possible sources. Some argue that the ending of quotas will result in cut-throat competition between developing countries. Coupled with this is erosion in the growth of markets in industrial countries. Apparent consumption of textile products, in real terms, remained stagnant during the decade 1985-95. Purchases become discretionary and fashiondriven. As a result, fashion cycles got shorter and order-cycles compressed. Retailers order requirements on short-order cycle term and demand rapid responses to in-season ordering. Hence, they are compelled to secure their supplies of top-up orders from those in close vicinity. There is, therefore, a propensity towards sourcing from low-cost countries in the neighbourhood as also a growth of offshore processing by manufacturers in developed countries. Regional integration reinforces this. Further exporters in India fear that freer imports could lead to dumping of low-cost fabrics from China and other Southeast Asian countries. Thus, the

industry needs restructuring on all fronts. Although the policy framework can be blamed partially for its ills, internal factors are equally important. Recent studies indicate that India is beginning to lose out to its rivals. In one survey of US textile and apparel imports, China and Hong Kong had higher market shares than India. In certain categories, other Asian low cost producers like Pakistan and Indonesia had higher market shares and had emerged as close competitors to India. Because many of these countries depend on imports, however, India can take advantage of home production. Further, formation of NAFTA means direct competition from the Latin American countries. The United States has farmed-out offshore processing work to enterprises in Mexico and the Caribbean Base Initiative countries. Similar relocation has taken place in Europe with manufacturers shifting base to Eastern Europe, which provides similar advantages of cheap labour and proximity. According to projections by TECS, EU imports of ready-made fabrics will double between 1994 and 2004, as a result of the elimination of quotas. US imports are expected to treble over the same period. According to another prediction, apparel output could more than double (i.e. expand by 241%) between 1995 and 2005, compared to an increase of only 114%, without the agreement on textiles and clothing. By increasing market access, the ATC will generate multiplier effects in the Indian economy, eventually feeding back into the textile industry itself. The rise in demand for exports could increase output and employment in the

textile industry. This in turn will stimulate the agricultural sector to meet the rising demand for cotton. As profits rise, so will wages, which will act as further stimulus. The export boom in the textile and clothing industry will also generate considerable foreign exchange. Given Indias high quota growth rates during the phase-out period, its competitive product niches and established links with retailers and importers in developed countries, it should experience vigorous growth in the future. The World Bank predicts a growth rate of 16% per annum in the coming decade. Ultimately, the extent that India will benefit from trade liberalization depends on its current cost competitiveness, its ability to increase productivity and upgrade quality. Implications on Indian Exports (Optimistic Scenario)

YARN
+ Garment exports of Bangladesh increase leading to increase in

consumption of Indian fabric and yarn + Exports of Far-East & ASEAN increase further + Rationalization in duties of MMF leading to increase in processing of fibers in India

FABRIC/MADE-UPS
+ Garmenting dereserved leading to entry of large textile players ensuring efficient sourcing and increase in the margins + Increase in investment for processing + Improvement in SAPTA trade

GARMENTS
+ Garmenting and Knitting de-reserved to allow the units to grow bigger to be able to service large orders and large clients + Labor laws in India become industry friendly + Garment parks come up in key regions giving a boost to exports + Successful Quota Phase-out without exports getting restricted by QRs

1994 Yarn Made-ups Fabric Garments Total 590 851 1214 3713 6368

1998 1780 1498 1716 4829 9823

2002 2333 2620 2512 6510 14035

2005* 2701 4527 3530 10794 21552

2010* 3131 11266 7100 21711 43208

IMPLICATIONS ON INDIAN EXPORTS (PESSIMISTIC SCENARIO) YARN

- Change works to the advantage for S. Korea/ASEAN/Far-East - Demand for packages increases - EEC other garment supply countries invest in back-end processes

FABRIC/MADE-UPS
- Environmental Clause impacts - Investment in processing does not happen Blends and synthetic fabrics dominate reducing advantage of Indian cotton

GARMENTS
- Social clause impact leading to ban on some categories, etc. - SSA is a reality impacting exports of garments from India to USA and EU - FTA becomes a reality - Other projectionist measures come up As opposed to the optimistic scenario, the pessimistic scenario shows a shortfall of nearly US $4000 mn of exports in year 2005 and the exports are not likely to be much higher than the present figures. It would also lead to development of textile and clothing industry in the other nations and India would lose out as a significant player in the industry. This would also stifle

the domestic textile industry which would be in a very weak position to compete with imports. (These are expected to become cheaper with import duty rationalization as per international treaties and cost competitiveness of overseas players). Some of the subsidies currently extended by the Indian government to promote exports which are sector specific (TUF, 80 HHC) or region specific (EPZS, EOUS) may also need to be withdrawn.

1994 Yarn Made-ups Fabric Garments Total 590 851 1214 3713 6368

1998 1780 1498 1716 4829 9823

2002 2003 2038 1931 5435 11408

2005* 2126 2427 2050 5939 12542

2010* 2022 3098 2154 6885 14159

CONCLUSIONS
To effectively tackle the situation India needs to invest in research and development to develop new products, reduce transaction costs, reduce per unit costs, and finally, improve its raw material base. India needs to move from the lower-end markets to middle level value-for-money markets and export high value-added products of international standard. technological advancement. The weakest links in the entire chain are the powerlooms and the processing houses. The latter especially are very important because they are responsible for the highest value addition in the manufacturing line. A powerloom co-operative structure could be evolved for pooling of common services and functions such as quality testing, marketing, short-term financing, etc. Further, because of the geographical proximity enjoyed, a cluster approach can be adopted. The government also needs to make policy changes like dereserving the small-scale sector so that it can achieve economies of scale and adopt a synergistic approach. Handlooms by their very nature can adopt a strategy of "niche marketing. In this respect, export promotion, common credit and marketing facilities and more significantly publicity are important areas for co-operation. Here too, a co-operative structure would be useful though government agencies should be involved because of their outreach. Newer and more innovative Thus the industry should diversify in design to ensure quality output and

forms of involvement are required where decentralisation should be a key element. India has made little attempt to forge partnerships in equity, technology and distribution in overseas markets. The newer nuances of global apparel trade demand joint control of brand positioning, distributing and quality assurance systems. The Indian textile industry has recognised the need for a cradle-to-grave approach when tackling environmental issues i.e. eco prescription should be applied right from the stage of cultivation to spinning to weaving to chemical processing to packaging. Here especially there is great scope for private -public partnerships. A great deal of work has been done by Indian trade and industry to comply with ecological and environmental regulations, and so Indian garments can adopt an appropriate label signifying a distinct quality. Efficiency and output of handloom and powerloom sectors also needs to be increased. The clothing sector needs the support of high quality and costeffective cloth processing facilities. Modernisation of mills is a must. Human resource is another area of focus. The workforce must be trained and oriented towards high productivity. The business environment of the future will be intensely competitive. Countries will want their own interests to be safeguarded. As tariffs tumble, non-tariff barriers will be adopted. New consumer demands and

expectations coupled with new techniques in the market will add a new dimension. E-commerce will unleash new possibilities. This will demand a new mindset to eliminate wastes, delays, and avoidable transaction costs. Effective entrepreneur-friendly institutional support will need to be extended by the Government, business and umbrella organisations.

Areas where German development co-operation can help are enumerated below.

INPUT AREAS
Policy framework is complex with inputs from many ministries. where German development co-operation can have an impact. The

following chart is not meant to be exhaustive but only to indicate areas

Chapter II NATIONAL ECONOMIC POLICIES

NATIONAL ECONOMIC POLICY Industrial Policy / Textile Policy

Planni ng

Financi Invest ng ment Promoti on

Export

Manpo wer

R&D

Infrast ructure Ports

Competi Credits tive positioni ng Evaluati ng domestic and foreign needs Export strategy Aid through multilateral agencies

Bilateral agreeme nts

Educatio Quality n control

Informat Export ion promoti technolo on gy

Training Producti Containe vity rs

Sector specific

Develop ment of support industrie s Machine ry / spares Syntheti c raw material s

Skills and develop ment

Standar disation

Airports

Export financin g

Welfare

ISO 9000

Roads

Literacy

Packagin Rail g

Languag R&D e Entrepre neur develop ment

Telecom

Ecology standard s Power Water Gas

POSSIBLE INDO-GERMAN CO-OPERATION IN TEXTILES AREAS OF CO-OPERATION

Provision of co-operative structures for quality testing, marketing, brand-building

Technological upgradation (egs. Effluent treatment plants, energy saving devices, and other machinery related directly to the production process like spreading, cutting, finishing, etc.)

Adoption of environment-friendly technology to pre-empt the adverse impact of non-tariff barriers. This includes environmental monitoring / testing equipment and services, combating air pollution (package scrubber, special air pollutant treatment for H2S, CS2), solid waste removal, wastewater disposal

Development of textile-specific software for India, Computer-Aided Textile Designing, aiding IT integration

Working out alternative techniques / frame conditions such that sanitary and phyto-sanitary measures are not a problem

Managerial training to encourage adoption of techniques like JIT, Quick Response Systems

Usage of EPS (Electronic Point of Sale) software

Promoting labels like RUGMARK (carpets) in textiles so that consumers are satisfied that child labour has not been employed, to counter negative publicity generated by the "Clean Clothes" movement, etc.

Promoting hand-made articles by improving quality of raw materials and introducing machinery where possible in the process so as to maintain standards of quality and design

Development of new products

Adoption and adaptation of state-of-the-art information technology in enterprise resource planning so as to pre-empt non-tariff barriers which curtail markets for the Indian textile industry

Helping firms build close relationships with customers

TRAINING CENTRES

SHORT-TERM CREDIT

Improvement of synthetic fibre-base to reap economies of scale, use of genetic engineering, bio-technology, and cellular biology in both natural and synthetic fibre-base

ENVORONMENTAL ASPECTS IN THE TEXTILE TRADE

There is always an environmental impact the textile production. The

impact starts with the use of pesticides during the cultivation of plants for the natural fibres, the erosion caused by the sheep farming or the emissions during the production of synthetic fibre. So there is the environmental effect in the process of production, where thousands of different chemicals are used to reach the final stage of textile products.

Awareness of environmental problems has increased considerably during recent years and the environment has become a major issue in the international textile trade. This is due to the environmental and health legistation and the environmental policies that is being executed through market demands. The end users in developed countries are highly sensitive about the issues like azo dyes and child labour in the textile production. The action by the developed countries in this matter was put as Non-Tariff Barriers for the exports from the developing countries like India.

ENVIRONMENTAL LEGIILLATION
Developed countries are reviewing the regulation of harmful substances in the textile products. The major issues are.

a) Ban on azo dyes b) Regulation of formaldehyde c) Regulation of Pentachlorophenol (PCP) d) Limit values for residues of pesticides e) Ban on allergic disperse dyes f) Regulation of the content of chromium. Most of the operative legislation is applicable to the importer who places the product on the developed country markets. The importer requires mostly legally binding guarantees. The requirements are often included in the LC.

The environmental developments in connection to the textile trade may be classified as:

(i) (ii)

Product oriented policy Process oriented policy

(iii) Waste management policy.

PRODUCT ORIENTED POLICY

Under this policy, the product is considered directly or indirectly responsible for any adverse environmental effects that occur in the entire industrial chain. So the product is thought to be the starting point for the reduction in the impact on environment. Under this, the Life Cycle Assessment (LCA) is the major criteria to evaluate the products impact on environment. In other ward, the environmental impact of a product is based on the pollution caused by the extraction of its raw material, by its primary & secondary manufacturing, by its consumption and maintenance and in its waste.

The product oriented policy focuses on there measures. 1) Regulating measures, which puts the legislation concerning the composition of products. 2) Facilitating measures, which by using the market mechanism reduces the environmental impact of a particular product. 3) Stimulating measures, which works through more awareness to the consumers.

PROCESS ORIENTED POLICY

This environmental policy aims at a particular industry (company). The policy has the sole purpose of reducing the environmental problems of production process in a specific company.

WASTE MANAGEMENT POLICY

The waste management policy aims at reducing the environmental problems caused by discarded products and packaging material, which have reached the waste phase.

Legislation on packaging has been implemented in Germany on the obligation for producers and importers to take back used packaging materials. In 1997, the European Directive concerning packaging and packaging waste has been implemented in the national legislation of its member states.

OTHER ENVIRONMENTAL ISSUES

1) Ban on Azo dyes. Now the developed countries are more concusses on the use of Azo dyes in the textiles production. Azo dyes are the colouring agents in the textile industry. In contact with the skin, Azo dyes may form carcinogenic substances (amines). Germany and Netherlands have banned all Azo dyes, which can split off any of the 22 listed carcinogenic amines.

The Netherlands, Austria and Germany are the only Member states that have already adopted national legislation banning the use of carcinogenic azocolourants.

The Netherlands adopted a Regulation banning the import and sale of products containing azo dyes, which entered into force in 1997. The ban covers bed linen, clothing and shoes. The regulation forms part of the Dutch Commodity Act. Germany banned the import and sale of textile dyed/printed with certain azo dyes, effective from April 1,1996. Austria adopted legislation banning the marketing and use of products containing azo dyes (trade and use of azo dyes as such is not prohibited in any EU country). The law entered into force in 1997. The Austrian legislation relies on the same analytical method to measure the content of azo dyes in products as the German and the Dutch provisions.

2. ECO Labels Eco labels ensures a company that produces a product is eco- friendly and so it gets a friendly response from the importers. Eco labels for textiles are widely recognized and is gaining much importance in the developed countries like EU and USA. The following Eco labels are important in the textile products.

a) Health Eco Labels b) Environmental Eco-labels c) Organic Eco labels d) Social labels The world wide recoginised Eco-label for textiles is OKO-TEX 100, which guarantees the consumer that the product will not harm the health during wearing. OKO-TEX 100 requires unit values/concentrations on PH, carcinogenic, azo dyes, formaldehyde, chlorinated phenols, pesticides, heavy metals and allergic dyes.

3. Environmental Management System The introduction of policies like environmental management system by the developed countries is important to the exporters in the developing countries like India. The ISO 14001 standard is the only standard for the environmental management system accepted worldwide. This system involves.

(i) (ii)

A complete overview of the environmental impact of the company can be obtained. The environmental impact of the company can be controlled.

(iii) Whenever possible, the environmental impact of the company can be diminished.

4. Waste water Management The biggest enviromental problem associated with the textile industry is the water pollution caused by the discharge of untreated effluents. Waste water arising from the washing and dyeing sections of production contains a substantial amount of organic and suspended pollution, such as dyes and caustic soda, which have a negative impact on environment. The growing concern on this issue by the developed countries requires an immediate action to manage it properly.

The trade of textile products is very much sensitive in respect of the environmental issues and so the importers may demand certain guarantees for product, for example some of the leading importers at EU market demand that all textile purchased have been tested according to OKO-TEX 100. So the growing concern regarding the environmental impact of the textile production should be taken care of much in advance, otherwise the exports of textile products to the traditional markets and developed countries will be hindered with more and more Non-Tariff barriers (ntbs).

Chapter III COMPANY INTRODUCTION

India's leading fibre- to- garment manufacturers, Pratibha has risen to become a top export house and a self-sufficient technological set up. Pratibha serves a roster of reputed international clients. Driven by a strong vision, the company has come a long way and boasts of a galloping growth curve. With quality being sharp focus, urge to grow intrinsic and societal and environmental concerns taking precedence over profit- Pratibha Syntex has won accolades both in India as well as at the international level.

If you look at any business a hotel, a glass manufacturer or a metal plant they all do the same thing as others like them. But what makes some succeed and others not?

The answer is simple the way they do what they do. The Pratibha Way has powered our company's success from the day we began. Today, it lives on in the way we work and the decisions we make. It is our 'reason for being' beyond just making money. It is our way of running a successful business. In the end, it's what brings us closer closer to the world we operate in and closer to each other.

The Pratibha Way is based on a set of principles: our mission, talents and values. They help us set our priorities and serve as a reference point when questions arise.

Our vision describes our higher purpose and is supported by our talents and values. Our talents define what we are good at and provide a framework for development. Our values are beliefs that shape our performance. They are the behaviors expected of us and are important for strengthening our talents and achieving our vision.

The Pratibha Way Our Way of Working

What makes us different?

If you look at any business a hotel, a glass manufacturer or a metal plant they all do the same thing as others like them. But what makes some succeed and others not?

The answer is simple the way they do what they do. The Pratibha Way is based on a set of principles: our mission, talents and values. They help us set our priorities and serve as a reference point when questions arise.

Our vision describes our higher purpose and is supported by our talents and values. Our talents define what we are good at and provide a framework for development. Our values are beliefs that shape our performance. They are the behaviors expected of us and are important for strengthening our talents and achieving our vision.

The Pratibha Way has powered our company's success from the day we began. Today, it lives on in the way we work and the decisions we make. It is our 'reason for being' beyond just making money. It is our way of running a successful business. In the end, it's what brings us closer closer to the world we operate in and closer to each other.

VISION Our 'reason for being' Talents What we're good at as a company VALUES Behaviors that shape our performance

OUR VISION
Pratibha's vision is to be a global leader in sustainable textile products and practices. Every company aims to be profitable. But to really make a difference, it must have a higher purpose .

Our vision expresses our purpose. It sets the standard that we , as a company and as individuals, aspire to live up to every day. While it carries some big ideas, our vision has down-to-earth implications for each of us. By using it to inform the decisions we make every day, our work and products can better contribute to making our world sustainable and successful. The following pages describe some of the ideas in our vision and the role talents play in achieving it. 5 We build business

A PRATIBHA TALENT

To lead meansthat we help createthe ability for othersto develop and progress.

Our vision

a global leader A quest to forge relationships across the value chain and a desire to be the global leader for sustainable textile products and practices has brought 22,000farmers under Pratibha's 'Vasudha'organic project working together with over 6000 employees at the yarn, fabricant garment facilities.

In appreciating the new age, new mindsets and newer challenges and opportunities. Pratibha has forged partnerships and built alliances at the national and the global levels with the like minded, heralding its emergence as a force that has truly gone beyond apparel.

Almost 40 people are engaged at any given point in time on research , design and development covering a wide spectrum which includes: cotton seed selection & development for producing fibres of greater luster, strength, maturity and uniformity, working on new fibres, creating functional and exotic blends, new yarn spinning systems and applications, fabric development in knitting and processing, textile design and garment design forecasting. Interaction between different teams across the entire value chain within the company and with various other agencies the world over has helped build a huge knowledge base that looks at the requirement of tomorrow holistically. This approach, finally culminating into beautifully crafted garments, provides greater satisfaction levels, than meeting design demands as asked by the customers. We build business

that matters

A PRATIBHA TALENT
Since Pratibha began, we have built businesses that helped sustain and nurture the world around us. Weve done this by cultivating natural resources, respecting their limitations and maintaining a long-term perspective. Ultimately, this business have made a deference by creating fundamental value the basis for all other value, whether nancial, environmental or societal.

OUR VISION
in sustainable Sustainable means the condition of being able to meet the needs of present generations without compromising those needs for future generations. Achieving a balance among extraction and renewal and environmental inputs and outputs, without further burdening the environment.

Complete waste water treatment and reclamation upto 85% has-been a cornerstone achievement of the company. Efforts are on to further improve this system and take recovery levels for industrial reuse to 95%. Pratibha has spent over US$ 3 million on treating dyeing and finishing ,humidification systems and toilets and campus accommodation. Pratibha has-been working on a zero discharge policy since the inception of the dyeing and finishing process in the year2000. Other key initiatives include

moving to in-house gas based power supply from furnace oil (a much cleaner fuel),earning the company Carbon Credits and Waste Heat Recovery Boiler in the power plant producing steam for air-conditioning for the garment division and for the dyeing machines.

OUR VISION ALWAYS LOOKING

A PRATIBHA TALENT
Pratibha is Indias leading vertically integrated textile industry. With our wide rage of products we were able to get closer to the customer by addressing their needs more specifically. This talent has enabled us to grow a successful textile business well beyond its starting point.

We focus on creating close partnerships to better meet customer needs. We look ahead to anticipate changes that will affect their businesses and cooperate with them to come up with fresh, new ideas. A healthy society needs healthy businesses. Our starting point is always looking for the commercial solution that will help our customers and the world move forward.

Making our textile production more environmentally sound meant phasing out old technologies. But social commerce is not just about being environmentally friendly. Here, it meant seeing the bigger picture by helping to establish new businesses and creating new jobs.

This talent reminds us that working in close collaboration with our communities is essential. They are as much a part of our business as the plants that operate in them.

Society' is made up of our customers, our partners and the communities and the places we operate in. Society includes our commercial interests and our social responsibilities in one thought. It's the reason why we see business performance and societal needs as inseparable and interdependent. Its the reason we've always made a conscious effort to balance the drive for-profit with the needs of the world around us.

commerce A PRATIBHA TALENT

CourageCooperation

OUR VALUES VALUES AREFUNDAMENTALBELIEFSTHAT SHAPEOUR BEHAVIOR

Values influence everything we doand say. A decision to run abusiness,the way we raise ourchildren, a choice to maintain acertain friendship are all driven bypersonal values.Values also shape performance.Doing a job well starts with knowingwhat is expected. That's whatPratibha's values are all about beliefs that guide us, not only to doour job successfully,but to 'go thatextra mile'.Each of our values defines the waywe act as individuals, as teams andas a company. And we shouldn'tforget that while each one isimportant, they are interdependentand are meant to achieve a balance.The following pages present eachof our values and a few thoughts onwhat they mean in practice.

OUR VALUES
Courage Facing challenges and taking measured risks despite uncertain outcomes Moral excellence comes about as a result of habit. We become just by doing just acts, temperate by doing temperate acts, brave by doing brave acts. With robust expansion strategy we believe in strategic investments a demonstration of where courage, in tandem with our other values, has helped us build rewarding partnerships. ? Respect Our values Acting with integrity and recognizing the inherent worth of all people, the value of the earth and the resources it provides. Earth in hands is a symbol of the genuine care and respect we have for people and the value we put on saving lives around the world. Saving resources through three way strategy of reduce-reuse-recycle is a strong demonstration of how we act on this value. 19 Cooperation Our values Working with others in an open and inclusive way Working in close partnership with others means we can get further than we ever could alone. This is why we cooperate with each other in order to make the most of the considerable resources that exist in the Pratibha community. Together with our customers, our partners and our

communities, we are always forging strong relationships to find the solutions that will make our world work better.

Determination Our values Defining a goal and staying the course Desire is the key to motivation, but it's determination and commitment to an unrelenting pursuit of our goal - commitment to excellence - that enables us to attain the success we seek. Determination makes us do more than we could ever imagine

? Seeing around corners and envisioning long-term opportunities Nature is most powerful. Every day its nature that reminds us that we have so much more to discover. By looking beyond where we are today, it's much more possible to shape a sustainable future

What do we do with this? These ideals have helped us to do great things in the past. As a focused textile company, they will help us accomplish even more in the future. All that is asked of each of us is to be conscious of them and live up to them every day. By doing so, we will be ready for the challenges and opportunities we meet.

Registered office Pratibha Syntex pvt. Ltd. 301, Acne Plaza, opp. Sangam Cinema, Andheri Kurla Road, Andheri (E) Mumbai-400059. India. Tel. 91-22-66921428, 28314850,28314853 Fax. 91-22-28361464 E-mail : info@pratibhasyntex.com Work Pratibha Syntex Pvt. Ltd. Plot No 4, IGC KHEDA-454774 Pithampur, Distt. DHAR (M.P.) India Tel. 91-7292-404362-3,404357 Fax 91-7292-256340-1 E-mail : info@pratibhasyntex.com mumbai@pratibhasyntex.com Indore Office Pratibha Syntex Pvt. Ltd. 301, Apollo Avenue, 30B, Old Palasia, Indore-1 (M.P.) INDIA Tel. 2562228-9 Fax 91-731-2562227 E-mail Delhi NCR Plot No 16, DLF Phase-2 , Near NHPC Chowk, Faridabad - 121003 INDIA Tel:+91 129 4107318 Email: delhi@pratibhasyntex.com :info@pratibhasyntex.com

Chapter IV TEXTILE RIVIEW

TEXTILE REVIEW
Indian textile industry is one of the largest in the world fetching about 27% of the foreign exchange from its exports and related products. It has witnessed a paradigm increase in the 'total industrial production' factor owing to the globalization, which, presently accounts to 14%. The contribution of textile industry towards the gross domestic product (GDP) of India is around 4% providing employment to over 35 million people. India is fast establishing itself as a global textile and apparel sourcing hub with its abundant multi-fibre raw material base, well-established production bases, design capability and skilled labor force. Yet, infrastructure bottlenecks like the transaction time at ports, inland transportation time, lack of initiative by textile manufacturers to go in for technological upgradation, fragmentation of the industry etc., have been limiting it's growth. However, given the nature and extent of the fragmentation and technology obsolescence in the decentralized sector, it calls for a focused action plan and programmes to accelerate and sustain the growth level of the different segments of the industry Textile Industry in India is the second largest employment generator after agriculture. It holds significant status in India as it provides one of the most fundamental necessities to the people. It was one of the earliest industries to come into existence in India and accounts for more than 30% of the total exports. In fact, it is the second largest in the world, second only to China. Textile Industry is an independent industry involved in the production of the basic raw materials to the final products, with huge value-addition at every stage of processing. It has vast potential for creation of employment opportunities in the agriculture, industrial, organized and decentralized

sectors for both rural and urban areas, particularly for women and the disadvantaged. It constitutes of the following segments: Readymade Garments, Cotton Textiles including Handlooms, Man-made Textiles, Silk Textiles, Woollen Textiles, Handicrafts, Made ups, Coir and Jute. Till the year 1985, development of textile sector in India took place in terms of general policies. In 1985, for the first time the importance of textile sector was recognized and a separate policy statement was announced with regard to development of textile sector. In the year 2000, National Textile Policy was announced. Its main objective was to provide cloth of acceptable quality at reasonable prices for the vast majority of the population of the country, to increasingly contribute to the provision of sustainable employment and the economic growth of the nation and to compete with confidence for an increasing share of the global market. The policy also aimed at achieving the target of textile and apparel exports of US $ 50 billion by 201 0 of which the share of garments will be US $ 25 billion.

STRUCTURE OF INDIAN TEXTILE INDUSTRY

India's textile industry is also significant in a global context, ranking second to China in the production of both cotton yarn and fabric and fifth in the production of synthetic fibers and yarns. Unlike other major textileproducing countries, India's textile industry comprises mostly of smallscale, non-integrated spinning, weaving, finishing and apparel enterprises.

COMPOSITE MILLS
Relatively large-scale mills that integrate spinning, weaving and sometimes, fabric finishing are common in other major textile-producing countries but in India, however, these types of mills now account for about only 3 per cent of output in the textile sector. About 276 composite mills are now operating in India, mostly owned by the public sector and many deemed financially "sick."

SPINNING
Spinning is the process of converting cotton or man made fiber into yarn to be used for weaving and knitting. Largely due to deregulation beginning in the mid-1980s, spinning has become the most consolidated and technically efficient sector in India's textile industry but the average plant size remains small with outdated technology, relative to other major producers. In 200203, India's spinning sector consisted of about 1,146 small-scale independent firms and 1, 599 larger scale independent units.

WEAVING AND KNITTING

Weaving and knitting converts cotton, man made or blended yarns into woven or knitted fabrics. India's weaving and knitting sector remains highly fragmented, small-scale and labor-intensive. This sector consists of about 3.9 million hand looms, 380,000 "power loom" enterprises that operate about 1.7 million hand looms and just 137,000 power looms in the various composite mills. "Power looms" are small firms with an average loom capacity of four to five owned by independent entrepreneurs or weavers and

modern shuttle less looms account for less than one percent of loom capacity.

FABRIC FINISHING
Fabric finishing (also referred to as processing), which includes dyeing, printing, and other cloth preparation prior to the manufacture of clothing, is also dominated by a large number of independent, small scale enterprises. Overall, about 2,300 processors are operating in India, including about 2,100 independent units and 200 units that are integrated with spinning, weaving or knitting units.

CLOTHING
Apparel is produced by about 77,000 small-scale units classified as domestic manufacturers, manufacturer exporters, and fabricators (subcontractors). This unique structure of the Indian textile industry is due to the legacy of tax, labor and other regulatory policies that have favored small-scale, labor-intensive enterprises, while discriminating against larger scale, more capital-intensive operations. The structure is also due to the historical orientation towards meeting the needs of India's predominately low-income domestic consumers, rather than the world market. Policy reforms, which began in the 1980s that continued into the 1990s, have led to significant gains in technical efficiency and international competitiveness, particularly in the spinning sector. However, broad scope remains for additional reforms that could enhance the efficiency and competitiveness of India's weaving, fabric finishing, and apparel sectors.

Chapter V SWOT ANALYSIS OF INDIAN INDUSTRY

SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY

Indian textile industry is as old as the word textile itself. Until the economic liberalization of Indian economy, this Industry was predominantly unorganized but the opening up of Indian economy post 1990s led to a stupendous growth of this industry. This industry holds a significant position by providing the most basic need to Indians. Starting from the procurement of raw materials to the final production stage of the actual textile, it works on an independent basis.

STRENGTHS
Huge textile production capacity Efficient multi-fiber raw material manufacturing capacity Large pool of skilled and cheap work force Entrepreneurial skills Huge export potential Large domestic market Very low import content Flexible textile manufacturing systems

WEAKNESSES
Increased global competition in the post 2005 trade regime under WTO Massive fragmentation Lack of trade pact memberships Import of cheap textiles from other Asian neighbours Technology obsolescence Poor supply chain management Huge unorganized and decentralized sector High production cost with respect to other Asian competitors Inadequate research and development Unfavorable labour laws Global logistic disadvantage Inappropriate energy supplies to rural and sub-urban areas

OPPORTUNITIES
Growth rate of domestic textile industry is 6-8% per annum Large, potential domestic and international market Product development and diversification to cater global needs Elimination development Shift towards branded readymade garment Increased disposable income and purchasing power of Indian customer Emerging Retail Industry and Malls provide huge opportunities for the Apparel, Handicraft and other segments of the industry Greater Investment and FDI opportunities available of quota restriction leads to greater market

THREATS
Competition from other developing countries, especially China Continuous quality improvement is need of the hour as there are different demand patterns all over the world

 Elimination of quota system will lead to fluctuations in export demand Threat for traditional market for power loom and handloom products and their product diversification Geographical Disadvantages International labor and environmental Laws To balance the demand and supply To balance between price and quality

SO WHAT ARE THE PROSPECTS AND CHALLENGES FOR THE TEXTILE INDUSTRY IN THE COMING YEARS?
Indian textile has become a tough industry; it is experiencing strong cyclicality, pervasive pressure across the value chain, overall reduction in price due to overcapacity and immense competition. Yet it is also an industry in emergence, with increasing reputation in global markets, emerging SME's, more foreign direct investments and tremendous strategic production advantage. Surviving, thriving, and being distinct in such an environment is a worthy challenge for any textile manufacturer and success of industry will totally be dependent on how they are handling this slow down. A closer look at the figure of the Textile Industry since the MFA was withdrawn (1 jan, 2005) and the projected growth till the end of the 11 possess within its wrap. The Indian Textile sector grew by more than 8% in the last two fiscal years and is projected to grow at 16% by 2012. Being the second largest employer of Indians after Agriculture, it currently employs 88 Million people and is expected to generate another 17 million jobs by 2012. The gross value is expected to rise from its present $9309.8 millions to a whopping $105 billion Industry. It is the third largest of textile to both USA and EU and exports grew by 24% in last fiscal year. They are likely to grow by 25% in the next 5 years increasing the
st th

Five Year Plan (2007 - 2012) presents the glorious prospect that the sector

Capabilities

2005-2006

2006-2007 (estimated)

By 2012(Projecte d)

Growth rate (over the 8.2% Above 8% 16% last fiscal year) Employment 88Million 105 Million Gross Value $9309.8 Million $115 Billion Export $17.85 Billion 19.24 Billion $55 Billion Rs. 64,4 7 8 Oores (Between 2004- RS.1,50,600 Investment 2 00 7) Crores Share in World Market 3% 7%

Sr.

Scheme

Status (continued/int roduced) for 2007-08

Changes in provision under 200708 Union budget Provision increased from Rs. 189 Crores to Rs 450 Crores Provision increased from Rs. 425 Crores toRs. 911 Crores. Handloom sectorwill also becovered in it. 100 -150 new clusters to betaken up Rs.321Crores fund for social security Schemes

1.

Continued. (26 Scheme for of the Integrated 30sanctioned Textile Park have been (SITP) approved) Continued. for Technology the 11 th Five Upgradation Year Fund Scheme Plan (2007 (TUFS) 2012 Cluster Approach (forthe Handloom sector) Continued. (120 cluster adopted, 273 yarn deposits opened)

2.

3.

APART FROM THE ABOVE, A SERIES OF PROGRESSIVE MEASURES HAVE BEEN PLANNED TO STRENGTHEN THE TEXTILE SECTOR IN INDIA:
Technology Mission on Cotton (TMC). Setting up of Apparel Training and Design Centers (ATDCs). 100 per cent Foreign Direct Investment (FDI) in the textile sector under automatic route. Setting up two design centres in Gujarat in collaboration with National Institute of Fashion Technology. Setting up a Handloom Plaza in Ahmedabad with an estimated investment of US$ 24.6 million. Revival plans of the mills run by National Textiles Corporation (NTC). Already, for the revival of 18 textile mills, US$ 2.21 million worth of machineries has been ordered for the upgradation and modernisation of these mills Setting up a handloom mall with an investment of US$ 24.6 million at Jehangir Mill in Ahmedabad.

The Government of India has also included new schemes in the Annual Plan for 2007-08 to provide a boost to the textile sector. These include schemes for Foreign Investment Promotion to attract foreign direct investment in

textiles, clothing and machinery; Brand Promotion on Public-Private Partnership (PPP) approach to develop global acceptability of Indian apparel brands; Trade Facilitation Centres for Indian image branding; Fashion Hubs for creation of permanent market place for the benefit of Indian fashion industry; Common Compliance Code to encourage acceptability among apparel buyers and Training Centres for Human Resource Development on Public Private Partnership (PPP) mode. It's not just the present that is shinning like a bright start but also the future, as the textile export market of India is expected to reach a high of $50 billion by 201 O. This will eventually make a profit by 300%. In order to attain this target Indian textile industry has already started improving their design skills, including a combination of various fibers. It is all set to meet international standards and is planning to invest $5 billion in machineries very soon. Most of the international brands like Marks & Spencer, JC penny, Gap have started procuring most of their fabrics from India. In fact, Walmart, who had procured textile worth $200 million last year, intends to procure $3 billion worth of textile this year. These schemes will be beneficial for the industry but still more needs to be done. Given the safeguards, it possesses the potential to give any major player in the world market a run for their money and announce its arrival into the world market in a big way.

CONCLUSION
The Indian textile industry has a significant presence in the economy as well as in the international textile economy. It enjoys certain favorable factors that contribute in retaining its leading position in national and international scenario that can be utilized to ensure further growth and development. To effectively tackle the critical situations, India needs to invest in research and development to develop new products, reduce per unit costs and finally improve its raw material base. It needs to move from the lower end markets to middle level value for money markets and export high value added products of international standard. Thus, the industry should diversify in design to ensure quality output and technological advancement.

Chapter VI REPORT ON INDIAN TEXTILE INDUSTRY

INDIAN TEXTILE INDUSTRY

India Textile Industry is one of the leading textile industries in the world. Though was predominantly unorganized industry even a few years back, but the scenario started changing after the economic liberalization of Indian economy in 1991. The opening up of economy gave the much-needed thrust to the Indian textile industry, which has now successfully become one of the largest in the world. India textile industry largely depends upon the textile manufacturing and export. It also plays a major role in the economy of the country. India earns about 27% of its total foreign exchange through textile exports. Further, the textile industry of India also contributes nearly 14% of the total industrial production of the country. It also contributes around 3% to the GDP of the country. India textile industry is also the largest in the country in terms of employment generation. It not only generates jobs in its own industry, but also opens up scopes for the other ancillary sectors. India textile industry currently generates employment to more than 35 million people. It is also estimated that, the industry will generate 12 million new jobs by the year 2016. Indian textile industry can be divided into several segments, some of which can be listed as below: Cotton Textiles Silk Textiles Woolen Textiles Readymade Garments Hand-crafted Textiles Jute and Coir

CURRENT SCENARIO
The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to the country's gross domestic product (GDP) and 17 per cent to the countrys export earnings. The industry provides direct employment to over 35 million people and is the second largest provider of employment after agriculture. The total cloth production increased by 10.2 per cent during September 2011 as compared to September 2009. The highest growth was observed in the powerloom sector (13.2 per cent), followed by hosiery sector (9.1 per cent). The total cloth production during April-September 2010 has increased by 2.1 per cent compared to the same period of the previous year. The total textile exports during April-July 2010 (provisional) were valued at US$ 7.58 billion as against US$ 7.21 billion during the corresponding period of the previous year, registering an increase of 5.20 per cent in rupee terms. The share of textile exports in total exports was 11.04 per cent during April-July 2011. Cotton textiles has registered a growth of 8.2 per cent during AprilSeptember 2010-11, while wool, silk and man-made fibre textiles have registered a growth of 2.2 per cent while textile products including wearing apparel have registered a growth of 3 per cent. 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. Textiles and apparel industry exports, valued at US$ 20.02 billion (INR 963.05 billion), contributed about 11.5 per cent to the countrys total exports in 200809.

EXPORT ITEM EXPORT VALUE (201011) US$ BILLION(INR BILLION) SHARE IN TOTAL TEXTILES EXPORTS (%)
Cotton textiles 4.54(218.08) 22.64 Manmade textiles 3.14 (150.88) 15.67 Silk textiles 0.64 (31.06) 3.23 Wool and woollen textiles 0.45(21.99) 2.28 RMG 9.81 (471.1) 48.92 Handicrafts(including carpets) 1.02(49.39) 5.13 Jute 0.28(13.75) 1.43 Coir and coir products 0.14(6.80) 0.71 The total textiles imports into India in 200809 were valued at US$ 3.33 billion (INR 160.93 billion).

IMPORT

ITEM IMPORT VALUE (201011)

US$ BILLION(INR BILLION) SHARE IN TOTAL TEXTILES IMPORTS (%)

Raw material 0.78(37.84) 23.51 Semi-raw material 0.75(36.14) 22.46 Yarn, fabrics 1.46 (70.49) 43.80 RMG 0.13(6.25) 3.88 Made-up textiles articles 0.21(10.21) 6.35

TECHNICAL TEXTILE SEGMENT

Technical textiles are an important part of the textile industry. The Working Group for the Eleventh Five Year Plan has estimated the market size of technical textiles to increase from US$ 5.29 billion in 2006-07 to US$ 10.6 billion in 2011-12, without any regulatory framework and to US$ 15.16 billion with regulatory framework. The Scheme for Growth and Development of Technical Textiles aims to promote indigenous manufacture of technical textile to leverage

global opportunities and cater to the domestic demand. Further, the government is set to launch US$ 44.21 million mission for promotion of technical textiles, while the Finance Ministry has cleared setting up of four new research centres for the industry, which include products like mosquito and fishing nets, shoe laces and medical gloves. The global technical industry is estimated at US$ 127 billion and its size in India is pegged at US$ 11 billion.

MAJOR PLAYERS IN TEXTILE INDUSTRY MAJOR PLAYERS AND THEIR TURNOVER COMPANY TURNOVER (201011)US$ BILLION (INR BILLION)
Business areas
Welspun India Ltd 1.19(57.4) Home textiles, bathrobes, terry towels Vardhman Group 0.7 Yarn, fabric, sewing threads, acrylic fibre Alok Industries Ltd 0.62(29.76) Home textiles, woven and knitted apparel fabric, garments and polyester yarn Raymond Ltd 0.54 Worsted suiting, tailored clothing, denim, shirting, woollen outerwear Arvind Mills Ltd 0.48(23.44) Spinning, weaving, processing and garment production (denims, shirting, khakis, knitwear) Bombay Dyeing & Manufacturing Company Ltd 0.27(13.16) Bed linen, towels, furnishings, fabricfor suits, shirts, dresses and saris in cotton and polyester blends Garden Silk Mills Ltd 0.27(13.31) Dyed and printed fabric Mafatlal Industries Ltd 0.03(1.27) Shirting, poplins, bottom wear fabrics, voiles Aditya Birla Nuvo, a diversified conglomerate of the Aditya Birla Group, comprising three divisions Madura Garments, Jayashree Textiles and Indian Rayon 3 (consolidated revenues for Aditya BirlaNuvo)Madura Garments lifestyle market (Louis Philippe, Van Heusen, Allen Solly, The Collective) Jayashree Textiles domestic linen and worsted yarn Indian Rayon viscose filament yarn ITC Lifestyle 0.62 (for total FMCG business) Lifestyle market Reliance Industries Ltd 28.85 (total group) Fabric, formal menswear

WELSPUN INDIA LTD

Welspun India Limited (WIL) is the Flagship company of Welspun Group with an enterprise value of U.S. $ 3 billion. WIL is ISO 9001:2000, 14001 and SA 8000 certified company. WIL is a composite textile mill producing Cotton Yarn, Terry Towels and Rugs for international market. Welspun India Ltd. is one of the largest Home Textiles producers in Asia and amongst the top 4 producers of Terry Towels in the world. WIL is located at village Morai in Valsad district, Gujarat State. WIL annual sales turnover for year 2010-2011 was Rs. 681.881 crores. They have presence over 50 Countries, over 24,000 employees & 100,000+ shareholders, Welspun is one of India's fastest growing conglomerates.

VARDHMAN GROUP
Vardhman Group was established in 1965 and is a leading textile conglomerate in India having a turnover of $700 mn. They have over 24 manufacturing facilities in five states across India, the Group business portfolio includes Yarn, Greige and Processed Fabric, Sewing Thread, Acrylic Fibre and Alloy Steel. Vardhman Group manufacturing facilities include over 8,00,000 spindles, 65 tons per day yarn and fibre dyeing, 900 shuttleless looms, 90 mn meters per annum processed fabric, 33 tons per day sewing thread, 18000 metric tons per annum acrylic fibre and 100,000 tons per annum special and alloy steel.

Products
Cotton Yarn Special Blended Yarn Organic Cotton Yarn Core Spun Yarn Fair Trade cotton Yarn Melanges Organic Fair Trade Cotton Yarn Gassed Mercerised Yarn

 Ellitwist Yarn Modal Yarn Vortex Yarn Tencel Yarn Slub Yarn Viscose Yarn Acrylic Yarn Hand Knitting Yarn Poly - Cotton Yarn Speciality Yarn Acrylic - Cotton Yarn

ALOK INDUSTRIES LTD

Alok Industries Ltd. is an India-based textile manufacturing company and was established in 1986. Alok Industries is a private textile manufacturing company and has manufacturing bases spread over 6 locations in Navi Mumbai in Vapi and Silvassa, situated in Maharashtra. Its business domain involves weaving, knitting, processing, home textiles and ready-made garments and its a diversified manufacturer of world-class home textiles, apparel fabrics, garments and polyester yarns. Its buyers include manufacturers, exporters, importers, retailers, and branded apparel manufacturers of the world. Further, it operates its embroidery business through its sister concern, Grabal Alok Impex Ltd. Today, Alok Industries is one of the largest private exporters of textiles in India. Its business operations are spread across all the continents. Moreover, the manufacturing lab has been certified for ISO 9001:2000 quality standards. Alok Industries became a public limited company in 1993 and their shares are listed in Bombay Stock Exchange and National Stock Exchange. They has posted a net turnover of Rs. 1824.68 crore for the year ended 31st March, and has registered profit after tax to the tune of Rs. 135.18 crore for the year ended 31st March. The company's total assets stand at Rs. 4795.95 crore.

Apparel Fabric (Woven) Apparel Fabric (Knitted) Garments

 Home Textiles Polyester Yarn Embroidered Fabric Retailing

RAYMOND LTD
Raymond was incorporated in 1925 and has over 60% market share in worsted suiting in India The company has a diverse product range of nearly 20,000 design and colours of suiting fabric. They export their products to over 55 countries including USA, Canada, Europe, Japan and the Middle East. Their suitings are available in India in over 400 towns through 3,000 retailers as well as over 500 exclusive retail shops. Raymond is among the largest integrated manufacturers of worsted fabrics in the world. Raymond Ltd. owns some of the most highly respected apparel brands in its portfolio like - Raymond, Manzoni, Park Avenue, ColorPlus, Parx, Park Avenue, Be:, Zapp! and Notting Hill and GAS. Raymond manufactures and markets brands like KamaSutra condoms and even surgical gloves. The Raymond Group also has an expansive retail presence.

Raymond's wide range of products and services are as follows: Total textile solutions. Fabrics (Worsted, Denim and Shirting). Apparels (Tailored Clothing, Jeanswear and Dress Shirts). Brands (Raymonds, Manzoni, Park Avenue, ColorPlus, Parx,Be:,Zapp!, Woolen Outerwear. Furnishings.

 Retail (The Raymond Shop and Brand Store). Engineering (Files, Cutting Wools, Hand Tools and Agri tools and Auto Components). Personal Care (Park Avenue and Kamasutra). Prophylactic (Kamasutra and Surgical Gloves). International Business. Corporate Wear

BOMBAY DYEING
Bombay Dyeing is one of the leading companies in the textile business. In fact,India has made a position in the world textile sector holding the hands of Bombay Dyeing. The textile products of the company are exported to different nations all across the world like the United States, European Union Countries, Australia and New Zealand.

Products of Bombay Dyeing: Bombay Dyeing by using advanced technology has brought about a change in the textile business. The entire production is divided into two broad streams, weaving and spinning and winding. The production level on a daily basis is over 300,000 meters of fabrics. Some of the important products of the company that have already become significant in both, domestic and export markets are: Cotton Sheeting Polyester Cotton Sheeting Poly Cotton Drills Shoe Lining and Duck Fabrics Satin Furnishings

 Yarn dyed fabrics Flannel Sheeting Dobby and Fine Count made-ups Downproof Shells and Comforters Towels, Table Tops and Napkins Bombay Dyeing at present is the largest exporter of sophisticated made-up items and also of products made of cotton and poly cotton. Bombay Dyeing has created a sizable market in the production of a wide range of fabrics and ready-mades. This includes both formal and casual wear. The ready-made collection of the Bombay Dyeing has been changing its production pattern with the evolving fashion trends. The consumer section of Bombay Dyeing comprise of bed linen, towels, furnishings, suiting and shirting fabrics, and cotton and polyester blended dresses and saris.

Technology used in Bombay Dyeing: The technology applied in the production process in Bombay Dyeing is of international standards. Regarding the weaving facilities, the technology used is from one of the most technologically advanced company of the world, Sulzer. The automations used in weaving, spinning and winding by Bombay Dyeing are like Sulzer Projectile Machines, Sulzer Airjet Machines, Schlafhorst Autocore Rotors, Auto Corner Winding Spindles and Schweiter CA 11 Spindles.

GOVERNMENT INITIATIVES AND REGULATORY FRAMEWORK GOVERNMENT INITIATIVES

Investment under the Technology Upgradation Fund Schemes (TUFS) has been increasing steadily. During the year 2010-11, 1896 applications have been sanctioned at a project cost of US$ 5.23 billion. The cumulative progress as on December 31, 2009, includes 27,477 applications sanctioned, which has triggered investment of US$ 45.5 billion and amount sanctioned under TUFS is US$ 18.9 billion of which US$ 16.4 billion has been disbursed so far till the end of April, 2011. The Ministry of Textile has sanctioned a total of US$ 133 million under TUFS during September 2010. Moreover, in May 2011, the Ministry of Textiles informed a parliamentary panel that it proposes to allocate US$ 785.2 million for the modernisation of the textile industry. The Scheme for Integrated Textile Park (SITP) was approved in July 2005 to facilitate setting up of textiles parks with world class infrastructure facilities. 40 textiles park projects have been sanctioned under the SITP, out of which 25 textile parks are already in operation. Under the SITP, about US$ 763.7 million has been invested into the scheme and generated employment for 15,000 textiles workers.

Further, 100 per cent FDI is allowed in the textile sector under the automatic route. In the Union Budget 2010-11 presented in February 2010, the Finance Minister made the following announcements to benefit the textile industry: The central plan outlay for the industry has been enhanced to US$ 1.03 billion. Of this US$ 521.4 million is for TUFS, US$ 76 million for SITP, US$ 80.2 million for handlooms, US$ 69.3 million for handicrafts and US$ 98.4 million for sericulture. Allocation for textiles and jute industry is US$ 713.4 million. The total allocation for village and small enterprises sector which include handicrafts and handlooms is US$ 210.3 million. US$ 31.5 million has been provided for development of mega clusters in handlooms, handicrafts and powerloom sectors. Customs duty at 4 per cent for import of readymade garments for retail sales has been withdrawn. The micro small medium enterprises in textiles sector have been given full CENVAT credit on capital goods in one installment in the year of receipt of such goods and the facility of payment of excise duty in quarterly basis. The Minister of Textiles launched the Knitwear Technology Mission being setup at Tirupur, Tamil Nadu, as part of Plan Scheme of the Ministry. The Mission is aimed at upgrading the technology and skill levels in the knitwear segment of the textile industry, to bring in more export competitiveness.

Other government initiatives Scheme for Integrated Textile Parks, 2005 The scheme was introduced to neutralise the weakness of fragmentation in the various subsegments of the textiles value chain and the unavailability of quality infrastructure. The Eleventh Five Year Plan (20072012) outlay for the textiles and apparel sector has been fixed at US$ 2.91 billion (INR 140 billion), which is almost four times the outlay fixed during the Tenth Plan US$ 0.74 billion (INR 35.8 billion).

POLICY AND REGULATORY FRAMEWORK

The Ministry of Textiles is responsible for policy formulation, planning, development, export promotion and trade regulation in the textile sector. This includes all natural and manmade cellulosic fibre used to make textiles, clothing and handicrafts. National Textile Policy, 2000 - the policy was introduced for the overall development of the textiles industry. The key areas of focus include Technological upgrades Enhancement of productivity Quality consciousness Strengthening of raw material base Product diversification Increase in exports and innovative marketing strategies Financing arrangements Increasing employment opportunities Integrated human resource development

Technology Mission on Cotton (TMC), 2000 -the scheme was introduced to address concerns around cotton production and processing sectors and to place the cotton economy on a sound footing. It was initially

to be phased out at the end of the Tenth Five Year Plan (2002 07). However, the schemes Mini Mission iii and iv has been further extended into the Eleventh Plan for two years to accomplish targets.

The objectives of this programme include

Improving the yield and quality of jute fibre Strengthening existing infrastructure for the development and supply of quality seeds Improving the quality of fibre through better methods of retting and extraction technologies Increasing the supply of quality raw material to the jute industry at reasonable prices and developing efficient market linkages for raw jute. Modernising, upgrading technology, improving productivity, diversifying and developing human resource for the jute industry Developing and commercializing innovative technology for the diversified use of jute and allied fibre

DEVELOPMENT OF MEGA CLUSTER SCHEMES

Comprehensive Powerloom Cluster Development Scheme (CPCDS) To assist entrepreneurs to set up world-class units with modern infrastructure, latest technology and adequate training and human resource development (HRD) inputs along with appropriate market linkages. Comprehensive Handloom Cluster Development Scheme (CHCDS) Formulated to address the challenges faced by weavers within the cooperative sector and outside, due to poor infrastructure in some clusters. Comprehensive Handicrafts Cluster Development Scheme (CHCDS) The textile industry segments eligible to avail concessional loans for technology upgrade

Requirements include Spinning, cotton ginning and pressing Silk reeling and twisting Wool scouring and combing Synthetic filament yarn texturising, crimping and twisting

 Manufacturing of viscose filament yarn (VFY) or viscose staple fibre (VSF) Weaving or knitting including non-wovens and technical textiles Garments, made-up manufacturing Processing of fibre, yarn, fabric, garments and made-ups Jute

Chapter IIV OPPORTUNTIES

INVESTMENTS AND OPPORTUNTIES Investment

The textiles industry has attracted foreign direct investment (FDI) worth US$ 861.47 million between April 2000 and September 2011. NSL Textiles has set up a textile processing facility at Chandolu near Guntur, Andhra Pradesh with an investment of US$ 64.23 million. TT Ltd, an integrated textile and knitwear manufacturing and exporter, plans to invest US$ 33.46 million to enhance its yarn making capacity and retail venture. Textiles Company Alok Industries will be investing US$ 193.46 million over the next two years to increase capacity across its product portfolio. The amount would be spread equally for the two-year period with an investment of US$ 96.73 million being made each year.

OPPORTUNITIES
The potential size of the Indian textiles industry is expected to reach US$ 110 billion by 2012. Private sector participation in silk production The Central Silk Board has set a target of 26,000 tonnes of raw silk production by 201112. It has also proposed to enlarge the area under mulberry silkworm food plants to 0.25 million hectares, which is expected to produce an additional 6,400 MT of mulberry raw silk and increase employment. To achieve these targets, alliances with the private sector, especially major agrobased industries in both pre-cocoon and post-cocoon segments, is being encouraged. Technical textiles The textiles industry complements the growth of several industries and institutions such as the defence forces, railways and government hospitals, which are the key institutional buyers of technical textiles. The packtech segment constitutes 38 per cent of the total technical textiles production in India (2010-11). This industry includes the production of flexible packaging material for industrial, agricultural and consumer goods. Among the other segments, protech, oekotech, sportech and geotech have significant growth potential. Retail sector With consumerism and disposable income on the incline, the retail sector has witnessed rapid growth in the past decade. Several international

retailers are also focussing on India due to its emergence as a potential sourcing destination. Centres of Excellence (CoE) for research and technical training The Government of India has proposed the establishment of several CoEs for training the workforce in the textiles sector. Four CoEs have been identified for four thrust segments of technical textiles geotech, meditech, protect and agrotech. These CoEs, with national and international accreditation, are aimed at creating facilities for testing and evaluation and developing resource centres and facilities for training.

Chapter IIIV ANALYSIS AND INTERPRETATION OF DATA

DISTRIBUTION OF TEXTILE SECTORS IN INDIAN MARKET:

PROBLEMS FACED BY INDIAN TEXTILE INDUSTRIES ACCORDING TO TIMES OF INDIA REPORT ON JULY 05, 2007:

Chapter IX BIBLIOGRAPHY

BIBLIOGRAPHY
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Industry -II", Express Textiles, July Sivakumar, S., 2010, "Indian Textile Industry and its share in

GDP", Textile Review, April, Vol.5, Issue 4, Pg.39-41. Gordon,S. and Hsieh,Y.L., "Cotton: Science and Technology",

Woodland Publication, Manchester Indian Textile Industry-Dream of Every Mankind, Igmatex News

Magazine, 2009, August. Rai, I., 2002,"Textile Industry Problems and Prospects in the 21 Century", Books Treasure Publication, Jodhpur Sharma, S.K. and Giri, S., 2005 "Strategic Management Practices
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in Indian Textile Companies," Journal of Textile Association, MarchApril, VoI.6S, No.6, Pg.261-264 www.ibef.org

www.bharattextile.com www.texprocil.com www.economywatch.com www.marketresearch.com www.pd.cpim.org www.ezinearticles.com www.indialine.com www.fibre2fashion.com