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AMITY INTERNATIONAL BUSINESS SCHOOL
Topic:-
INDIAN TEXTILE INDUSTRY
Submitted to: Submitted by:
Mr. L. Raghvan Mitesh Kumar Bizoara C-49
Sumeet Rattan C-62
Abhinav Gupta C-72
Table of Contents
EXECUTIVE SUMMARY 2
Market Highlights And Best Prospects 3
Market Profile 3
INDUSTRY OVERVIEW 4
Textile Industry 4
Status of the Textile Machinery Industry 5
Indian Textile Industry 5
Latest news in textile sector 6
Swot Analysis Of Indian Textile Industry 8
IMPORTS & EXPORTS 11
Import Policy 11
Trends in Domestic Consumption 11
Exports To The Major Markets 12
Export to U.S. 13
Export to EU 13
IMPLICATIONS ON INDIAN EXPORTS (OPTIMISTIC SCENARIO) 14
IMPLICATIONS ON INDIAN EXPORTS (PESSIMISTIC SCENARIO) 15
AGREEMENT ON TEXTILE & CLOTHING 16
Impact on World 17
MULTIFIBRE ARRANGEMENT (MFA) 1974-1994 18
Measures That Are Taken Post Mfa Scenario. 18
The new Textile Policy 2000 (NTxP-2000) 18
DEPB issues 18
Technology Up gradation Fund Scheme: 18
Liberalization of FDI Policy: 19
Export Promotion Capital Goods (EPCG) Scheme: 19
Advance Licensing Scheme: 19
Duty Exemption Pass Book (DEPB) Scheme: 19
Duty Drawback Scheme: 19
Targets Achieved By The Textile Industry Post Mfa 20
EFFECT OF FOREIGN TRADE POLICY IN TEXTILE INDUSTRY 21
RECOMMENDATIONS 25
References: 25
ANNEXTURE 26
EXECUTIVE SUMMARY
For India to become a major player in world trade, an all encompassing, and
comprehensive view needs to be taken for the overall development of the countrys foreign
trade. While increase in exports is of vital importance, a facilitation import is also required
to stimulate the economy. Coherence and consistency among trade and other economic
policies is important for maximizing the contribution of such policies to development.
Trade is not an end in itself, but a means to economic growth and national development.
The primary purpose is not the mere earning of foreign exchange, but the stimulation of
greater economic activity. The Foreign Trade Policy takes an integrated view of the overall
development of Indias foreign trade. The foreign trade policy sets the core objectives,
identifies key strategies and also addresses, spells out focus initiatives, outline export
incentives and also addresses issues concerning institutional support.
Indias textile sector is the countrys second largest industry, after agriculture. It provides
direct employment to about 35 million people. It is also Indias largest foreign export
earner, accounting for 35 per cent of the gross export earnings in trade.
Trade restrictions had hitherto kept the textile industry from soaring to the heights it is
capable of. But all that changed from January 1, 2005. Quota-based restrictions for textile
exports to the United States and European nations were lifted on January 1. The Indian
textile industry now has the opportunity to realize its full potential and the sector is already
eyeing an export target of $50 billion by 2010.
But with quotas having been removed and globalization in full swing, the market is now
exposed to global competition. Indian manufacturers and exporters now have to compete
with the global players and also face emerging tariff and non-tariff barriers. Yet with its
speed of operation, skill, quality of products and low-cost labour, the industry is gearing up
to reap rich rewards in the new era.
For the past two years, the market has been in a recession. As a result, market players have
become very cost conscious and price sensitive. However, the future looks bright used
textile machinery. This market segment is likely to grow faster than the broader market.
The major factors that are likely to produce growth for this sector include:
1. A worldwide increase in demand for Indian textiles and garments.
2. The lowering of customs duties on imported textile machinery.
3. Reduced government restrictions on the import of the used capital goods.
4. The reduced cost of the used equipment which makes textile manufacturing operations
more viable.
Market Highlights and Best Prospects
Market Profile
The Indian textile industry is the second largest in the world--second only to China. Indian
textiles also account for 38 percent of the countrys total exports and is, therefore, a very
important industry. To sustain this growth, it is imperatives that the textile industry
produce goods of high quality at reasonable prices. This means that the industry must
continuously modernize its machinery. Therefore, the textile machinery industry sector has
an integral role to play in the growth of Indias textile exports.
Industry analysts note that textile prices are increasingly competitive worldwide as more
and more developing countries enter the global textile trade. To maintain, if not increase,
its global market share, the Indian textile industry must procure modern, low-cost, textile
machinery so that it can produce high quality textiles and garments for export at
competitive prices. It is in this context that the market for used textile machinery is viewed
as very promising. Used textile machinery permits India to incorporate new technology at
low cost.
Here are a few important facts about Indias textile:
1. There are approximately 1200 medium to large scale textile mills in India. Twenty
percent of these mills are located in Coimbatore (Tamilnadu).
2. India has 34 million cotton textile spindles for manufacturing cotton yarn. Cotton yarns
account for 70 percent of Indias textile exports. (China has 40 million cotton
spindles.)
3. Of the Indian textile yarn exports, almost 80 percent come from coarser yarns (counts
below 40s). Consequently, there is a need to upgrade the technology.
4. For the past two years, there has been a significant slow-down in the cotton spinning
segment, mainly due to the spiraling price of cotton.
5. The domestic knitting industry is characterized by small scale units which lack adequate
facilities for dyeing, processing and finishing.
The industry is concentrated in Tirupur (Tamilnadu) and Ludhiana (Punjab). Tirupur
produces 60 percent of the countrys total knitwear exports. Knitted garments account for
almost 32 percent of all exported garments. The major players include Nahar Spinning,
Arun Processors and Jersey India.
INDUSTRY OVERVIEW
Textile Industry
The textile industry occupies a unique place in our country. One of the earliest to come
into existence in India, it accounts for 14% of the total Industrial production, contributes to
nearly 30% of the total exports and is the second largest employment generator after
agriculture.
Textile Industry is providing one of the most basic needs of people and the holds
importance; maintaining sustained growth for improving quality of life. It has a unique
position as a self-reliant industry, from the production of raw materials to the delivery of
finished products, with substantial value-addition at each stage of processing; it is a major
contribution to the countrys economy.
Its vast potential for creation of employment opportunities in the agricultural, industrial,
organised and decentralised sectors & rural and urban areas, particularly for women and
the disadvantaged is noteworthy.
Although the development of textile sector was earlier taking place in terms of general
policies, in recognition of the importance of this sector, for the first time a separate Policy
Statement was made in 1985 in regard to development of textile sector. The textile policy
of 2000 aims at achieving the target of textile and apparel exports of US $ 50 billion by
2010 of which the share of garments will be US $ 25 billion. The main markets for Indian
textiles and apparels are USA, UAE, UK, Germany, France, Italy, Russia, Canada,
Bangladesh and Japan.
The main objective of the textile policy 2000 is 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.
Developing countries with both textile and clothing capacity may be able to prosper in the
new competitive environment after the textile quota regime of quantitative import
restrictions under the multi-fibre arrangement (MFA) came to an end on 1st January, 2005
under the World Trade Organisation (WTO) Agreement on Textiles and Clothing.
As a result, the textile industry in developed countries will face intensified competition in
both their export and domestic markets. However, the migration of textile capacity will be
influenced by objective competitive factors and will be hampered by the presence of
distorting domestic measures and weak domestic infrastructure in several developing and
least developed countries.
The elimination of quota restriction will open the way for the most competitive developing
countries to develop stronger clusters of textile expertise, enabling them to handle all
stages of the production chain from growing natural fibres to producing finished clothing,
The OECD paper says that while low wages can still give developing countries a
competitive edge in world markets, time factors now play a far more crucial role in
determining international competitiveness. Countries that aspire to maintain an export-led
strategy in textiles and clothing need to complement their cluster of expertise in
manufacturing by developing their expertise in the higher value-added service segments of
the supply chain such as design, sourcing or retail distribution. To pursue these avenues,
national suppliers need to place greater emphasis on education and training of
services-related skills and to encourage the establishment of joint structures where
domestic suppliers can share market knowledge and offer more integrated solutions to
prospective buyers.
The textile industry is undergoing a major reorientation towards non-clothing applications
of textiles, known as technical textiles, which are growing roughly at twice rate of textiles
for clothing applications and now account for more than half of total textile production.
The processes involved in producing technical textiles require expensive equipments and
skilled workers and are, for the moment, concentrated in developed countries. Technical
