IndustrySecond largest market in the worldExports last year US$ 14 Bn Domestic market is US$ 28 BnConsists of

20% of industrial production 9% of excise collection 18% of employment in industrial sector

Structure

Growth DriversCompetitive AdvantageChanging consumer behaviorIncreasing purchasing powerNew product developmentReduced import duties

Value ChainTextile Value Chain

SWOT ANALYSIS

STRENGTHSABUNDANT RAW MATERIAL AVAILIBILITYAllows the industry to reduce costs and lead timesIndia is one of the largest producers of natural

and man made fibresLOW COST SKILLED LABOURProvides a competitive advantage for the industryHourly wage comparisonIndia – 0.69England – 14.24 Italy – 15Japan – 26Spain - 8

GROWING DOMESTIC MARKETLow per capita consumption of textiles so lots of scopefor growth.Global average-6.8U.S – 20Japan – 12 India – 2.8

It is extremely sensitive to fashion trends and fads

Cases :Arvind mills: increasing its cotton shirting production from 27

million meters to 34 million meters, thus making excellent use of abundant raw materials.

Madura garments: small cities are also getting fashion conscious so MADURA GARMENTS have started setting up exclusive retail outlets in second rung cities like thanjavur and trichy

WEAKNESSFRAGMENTED INDUSTRYReduces the ability to expand as few sectors influence thewhole industry.In fabric, large section of the industry is in the power loomAnd handloom sector.Power loom sector- 63%Handloom sector -19%Mill sector -14%Hosiery sector- 11%HISTORICAL REGULATIONSAbsence of a viable exit option for industry players. Certain sectors are reserved for SSI’s like garmenting and

knitting.

LOWER COST COMPETITIVENESSLabor force have a low productivityInterest rates and tax rates are highLabor problemsTECHNOLOGY OBSOLOSENCEInvestments in modern technology is lowDegree of modernization World – 30.2%India – 4%Europe – 77%Pakistan – 70%America - 60%

Case:Abhishek industry whose major business comes from exports has tied up with foreign firms like Gruppo Zambiati and Nautika to share their technology and R&D information

OPPORTUNITIES

Global textile industry is likely to grow from US$ 309 billion to US$ 856 billion by 2014

Market share of India now is only 4% , so huge scope of expansion is present

Indian companies need to increase focus on new products

Increase usage of CAD and Trends forecasting to improve efficiency

Case: Welspun India has ties with 12 of the top 20 retailers in the world namely Wal-Mart,JC Penny, Target thereby exploiting the opportunities

THREATSINCREASED COMPETITIONIncrease in competition due to entry of lower pricedimports , who have a better brand name.

ECOLOGICAL AND SOCIAL AWARENESS

Issues such as polluting dyes, child labor, unhealthyWorking conditions are in the firing line of the industry.

Standards like SA 8000 are being implemented in theindustry, resulting in increased pressure on the

industry.

Porter’s five force model

Threat from new entrants (low)Retailing not allowed for foreign players

Huge investments in infrastructure is required

Availability of skilled labors and technical know-how is low

Availability of substitutes (high)Unorganized retailing

E-retailing

Catalogue sales

Bargaining power of buyers (moderate)Individually, customers have very little

bargaining power within the organized retail stores

Lots of various shopping formats available to shop from

Lots of brand choices available for similar qualities with different price

Bargaining power of suppliers (low)Being bulk purchases done by organized

retailer’s suppliers have very little bargaining power in organized retailing.

Many retailers are doing backward integration and coming out with private labels, thus decreasing dependence on traditional suppliers.

Competitive rivalry (moderate)Very few national level players Growth rate Presence of regional and local players High competition between the national

brands and retailer’s own