New Paradigms for Textiles Industry

New Paradigms for

Textiles Industry

Knowledge Partner

Table of Contents

Foreword ................................................................................................................................................. 1

1. Executive Summary ......................................................................................................................... 2

2. Overview of Indian Textile Industry ................................................................................................ 4

a. Industry structure ....................................................................................................................... 4

b. Domestic Consumption ............................................................................................................... 5

c. External Trade ............................................................................................................................. 6

d. Key challenges ............................................................................................................................. 8

3. Change Drivers .............................................................................................................................. 10

a. Indian ........................................................................................................................................ 10

i. Urbanization .......................................................................................................................... 10

ii. Younger, working age population ......................................................................................... 10

iii. Increasing internet penetration ............................................................................................ 12

iv. Growth of Organized retail ................................................................................................... 12

b. Global ........................................................................................................................................ 14

4. Growth Imperatives ...................................................................................................................... 16

a. Government support policies ................................................................................................... 16

b. Enhancing manufacturing competitiveness .............................................................................. 18

i. Skill upgradation ................................................................................................................... 18

ii. Technology upgradation ....................................................................................................... 18

iii. Partnerships .......................................................................................................................... 18

c. Realizing domestic market potential ........................................................................................ 19

About CII ............................................................................................................................................... 21

About Wazir Advisors ............................................................................................................................ 22

List of Figures

Figure 1: Value Chain & Capacities ............................................................................................ 4

Figure 2:Historical Growth of Indian Domestic Textile & Apparel Market ................................ 5

Figure 3: Projected Growth of Indian Textile & Apparel Domestic Consumption .................... 6

Figure 4: Indian Textile & Apparel Exports ................................................................................ 6

Figure 5: Historical Share of Largest Exporters (2010) in Global Exports .................................. 7

Figure 6: Indian Textile & Apparel Imports ................................................................................ 7

Figure 7: Urban Population in India (Mn) ................................................................................ 10

Figure 8: Age-wise Segmentation (Mn) ................................................................................... 11

Figure 9: Working Women in Indian Organized Sector (%) ..................................................... 11

Figure 10: Number of Internet Users in India (million) ........................................................... 12

Figure 11: Size of Organized Retail & Organized Retail (India) ................................................ 12

Figure 12: Growth Rate Comparisons in % (India) ................................................................... 13

Figure 13: Global Trade of Textiles & Apparel (US$ Bn) .......................................................... 14

Figure 14: Shift of Textile Production over last 10 years ......................................................... 14

Figure 15: Growth of Top Textile & Apparel Exporter Countries over last 5 years

(Having Export Value > US $ 5 bn) ........................................................................................... 15

Figure 16: Size of Indian Apparel Market (Rs. 000’ Crores) ..................................................... 19

Foreword

Textile and Apparel manufacturing industry in India today is witnessing a sea change amid

several impacting factors –

manufacturers are continuously on their feet because of fluctuations in raw m

and currency; they are also facing the manpower challenge in terms of cost, skill and

availability. Not to mention that the demand which fell sharply during global slowdown is

yet to pick up fully in international markets. Even back home the

apprehensive as inflation remained record high for long in a slowing down economy.

When we started having deliberations on this Conference; there were myriad of themes to

choose from, but finally we decided to focus on options which

challenges rather than deliberating on the challenges only. Hence, the Theme of “New

Paradigms for Textile industry

The coverage of this Conference has applicability on the

chain. In order to shed light on them briefly and explain the role each of them have in

leading the industry on a path of sustainable growth, we have prepared this report. It

provides an overall direction where the indu

biggest challenges it faces.

Given the fact that external and economic changes are much beyond the control of any

industry sector per se, we have to look internally, utilizing the resources in hand and adapt

to changes in most efficient manner. This is the intent of the Conference and this knowledge

paper.

The idea is not only to discuss and debate on the topics which are most relevant in today’s

context; but also identify what needs to be done, whose action i

the catalyst for the required changes.

CII has been actively engaged with the Textiles sector addressing their key issues relating to

policy matter and developing a roadmap to leverage the growth potential of this sector.

TEXCON 2012 – Conference on New Paradigms for Textiles Industry is another step forward

in this direction.

We look forward to have your inputs during, and even after, the Conference.

D L Sharma

Conference Chairman, TEXCON 2012 &

Director

Vardhman Textiles Ltd.

1


– domestic as well as global. On one hand where the

manufacturers are continuously on their feet because of fluctuations in raw m



yet to pick up fully in international markets. Even back home the consumer has remained



choose from, but finally we decided to focus on options which are a solution to the


Paradigms for Textile industry - Policy, competitiveness and domestic market” was chosen.

The coverage of this Conference has applicability on the entire clothing manufacturing value



provides an overall direction where the industry needs to head in order to confront the



changes in most efficient manner. This is the intent of the Conference and this knowledge


context; but also identify what needs to be done, whose action is required and who will be

the catalyst for the required changes.



Conference on New Paradigms for Textiles Industry is another step forward


Conference Chairman, TEXCON 2012 &

Prashant Agarwal

Joint Managing Director

Wazir Advisors

(Knowledge Partner)


domestic as well as global. On one hand where the

manufacturers are continuously on their feet because of fluctuations in raw material prices



consumer has remained



are a solution to the


Policy, competitiveness and domestic market” was chosen.

entire clothing manufacturing value



stry needs to head in order to confront the



changes in most efficient manner. This is the intent of the Conference and this knowledge


s required and who will be



Conference on New Paradigms for Textiles Industry is another step forward


Prashant Agarwal

Joint Managing Director

Wazir Advisors

(Knowledge Partner)

2

1. Executive Summary

Indian Textile and Apparel industry is the second largest manufacturer in the world with an

estimated export value of ~ US$ 34 billion and domestic consumption of ~ US$ 57 billion.

The sector contributes to about 6% of the US$ 1.7 trillion Indian economy. It also provides

employment to ~35 million persons directly & ~55 million persons indirectly.

India is among the very few countries which have a presence across the entire supply chain,

from natural and synthetic fibers right up to finished goods manufacturing. It has presence

in organized mill sector as well as decentralized sectors like handloom, powerloom, silk, etc.

The total Indian consumption of textiles and apparel is estimated at ~US$ 57 billion (apparel

retail contributes ~ US$ 40 billion, technical textiles contributes ~ US$ 13 billion and home

textiles contributes ~ US$ 4 billion).

It is expected to reach ~US $ 100 billion by 2016 growing at a compounded annual rate of

12%. Along with this, the exports have grown from US$ 19 billion to US$ 34 billion in past 6

years at a CAGR of 12%.

However, the industry has not performed to its full potential. It faces several challenges in

aspects of production, marketing, and support infrastructure. The technology used in

manufacturing of textile and apparel in India considerably lags behind that of developed

nations and this is mainly due to lack of value addition, low productivity, low pace of

modernization, economies of scale and high fragmentation. The industry also suffers due to

general infrastructure related issues which lead to higher transaction costs, unreliability in

transit times, etc. along with focus on limited markets, weak brand positioning of India and

overdependence on cotton.

Currently we are witnessing a high growth in domestic consumption which is being fueled

by several factors including rising disposable income of the consumers, growth in organized

retail, increasing brand awareness, rapid urbanization and increase in working age

population.

The current global trend has been increase in raw material costs as well as manufacturing

costs, mainly manpower. In order to remain competitive in this challenging scenario it is

important for Indian industry to focus on new paradigms for growth including Government

support, driving manufacturing competitiveness and tapping the domestic market

opportunity.

3

With the objective of accelerating growth in investments and exports; Government of India

has launched several schemes, a few of them are:

• Technology Upgradation Fund Scheme (TUFS)

• Scheme for Integrated Textile Parks

• Development of Mega Cluster

• Integrated Skill Development Scheme (ISDS)

• Technology Mission on Technical Textiles (TMTT)

• A manufacturer can focus on a large number of business parameters in order to

improve the manufacturing competitiveness. However, the most critical

parameters having significant impacts are:

• Skill Upgradation

• Technology Upgradation

• Partnerships

There is a huge potential in the apparel market and there are many factors contributing to

the boom in this sector. To name a few, increased consumerism with a capacity to spend on

luxury items and increased spending power in the hands of Indians.

Along with this, the retail sector in India is growing at a phenomenal pace. According to the

Global Retail Development Index 2012, India ranks fifth among the top 30 emerging markets

for retail. International brands have begun to mull over the various possibilities of entering

in India. The recent announcement by the Indian government with Foreign Direct

Investment (FDI) in retail, especially allowing 100% FDI in single brands and also thinking of

opening up the sector for multi-brand FDI has created positive sentiments in the retail

sector.

4

2. Overview of Indian Textile Industry

Indian textile industry is the second largest manufacturer in the world today, second only to

China. India is among the very few countries which have a presence of complete supply

chain, from natural and synthetic fibers right up to finished goods manufacturing. The

industry holds vital importance in Indian economy too. With an estimated domestic

consumption of ~ US$ 57 billion and an export value of ~ US$ 34 billion; it contributes to

about 6% of the US$ 1.7 trillion Indian economy. The share in total exports also stands at a

significant 11% of the total Indian exports and 5% of the global trade in textiles and clothing.

The industry holds importance from the employment point of view as well. It is estimated

that ~35 million people are directly employed in this sector, whereas an additional ~55

million are employed indirectly. Apart from the employment potential, the large number of

skilled and unskilled activities in the industry makes the sector extremely important from

the perspective of inclusive growth.

a. Industry structure

The key feature of Indian textiles industry is good availability of raw material along with the

presence of complete manufacturing value chain which exists in an organized mill sector as

well as decentralized sectors like handloom, powerloom, silk, etc.

Figure 1: Value Chain & Capacities

Source: Ministry of Textiles

5

However, it can be observed that downstream capacities are not proportional to ensure

captive use of raw material and semi-processed goods. This indicates that a lot of goods are

being exported in semi-finished form from India resulting in loss of value addition and

additional employment opportunity.

Maximum capacity of Indian textile industry is with small scale sector which has lower

productivity and efficiencies but provides flexibility in executing smaller order sizes which is

unique to India.

b. Domestic Consumption

The total Indian consumption of textiles and apparel is estimated at ~US$ 57 billion, out of

which apparel retail contributes to ~ US$ 40 billion, technical textiles contributes ~ US$ 13

billion and home textiles contributes ~ US$ 4 billion. The market has grown at a yearly

growth rate of 13% over last 5 years.

Figure 2: Historical Growth of Indian Domestic Textile & Apparel Market

The domestic consumption has been fueled by several factors like growing consumer

prosperity and awareness, increasing availability of product variations, catching up with

international trends, growth of organized retail, etc.

On the basis of these factors, it is estimated that the Indian domestic consumption will

become ~US $ 100 billion by 2016 growing at an overall annual rate of 12%.

25 2731

3540

23

3

4

4

89

10

11

13

3539

44

5057

2007 2008 2009 2010 2011

Technical Textiles Home Textiles Apparel

Source: Wazir Advisors

+ 13 %

6

Figure 3: Projected Growth of Indian Textile & Apparel Domestic Consumption

c. External Trade

Indian textile and clothing exports have come a long way in last decade or so, tripling the

exports value in this duration. Indian textile & apparel as an export category has

outperformed several large textile producers of past including Germany, Italy, USA, Turkey,

etc.

Figure 4: Indian Textile & Apparel Exports

The reasons for high growth of textile and apparel exports from India is country’s strong raw

material base, design and skill heritage, manufacturing capacities that are flexible for small

orders, manpower cost competitiveness and government’s incentive schemes for export

promotion.

40

814

6

13

26

57

113

2011 2016Technical Textiles Home Textiles Apparel

+ 8%

+ 15%

1922 21 22

27

34

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Source: Wazir Advisors

+ 12 %

+ 12 %

Source: Exim Databank of Ministry of Commerce

7

Figure 5: Historical Share of Largest Exporters (2010) in Global Exports

India also imports textile and apparel goods to the tune of US$ 4 billion, which comprises

mainly of products like high end woolen / worsted fabrics, coated and performance fabrics,

other technical textile and specialty products, fine cotton yarn dyed fabrics, premium and

super premium garment categories, etc. The main reason of imports is unavailability of

these products. In recent years even some inexpensive commodity articles like raw silk,

other fibers, basic fabrics and garments have also made in-roads from suppliers like China.

Figure 6: Indian Textile & Apparel Imports

52% 55%51%

43%

23%24% 29%

38%

9%7% 7% 5%

8% 5% 5% 5%

6% 6% 4% 4%

3% 3% 3% 4%

1995 2000 2005 2010

India

USA

Germany

Italy

China & HK

Others

3 34

34

2006-07 2007-08 2008-09 2009-10 2010-11

Values in US$ Bn

Source: UN Comtrade

Source: Exim Databank of Ministry of Commerce

+ 7 %

d. Key challenges

Indian textile and apparel industry suffers several challenges in aspects of

marketing, and support infrastructure. Due to its inherent nature several challenges are

short-term but cyclical, which have a global nature and may not be avoided like raw material

price changes, currency fluctuation, etc. However, certain ch

manufacturing industry as illustrated below:

The Indian product basket consists majorly of basic pro

exports is in form of semi-processed goods. The production technology also lags behind t

of developed countries and since the industry is led by small

have fiscal resources for continuous upgradation or expansions. As a result

able to generate economies of scale nor are the higher rates of produ

Other concerns related to manufacturing include weak supply chain linkages, lack of

indigenous research and development and inadequate worker training.

may be cheap but they have a much lower productivity as compare

countries.

In terms of export markets, Indian exports are very muc

buyer diversification has made Indian exporters prone to the demand variation in these,

limited markets. As seen during recent demand

European countries, the industry clusters have suffered quite adversely. Even recognition of

India as a brand in global textile and apparel markets is non

The industry also suffers due to general infrastructure

transaction costs, unreliability in transit times, etc. The interest rates along with other input

costs like power are also not comparable to countries like China, Bangladesh, Turkey, etc.

Manufacturing

• Lack of value addition

• Low productivity

• Low pace of modernization

• Lack of Economies of scale

•High fragmentation

Marketing

• Limited markets

• Sluggish demand in traditional markets

• Higher growth of competitors

• weak brand positioning of India

8

Key challenges

Indian textile and apparel industry suffers several challenges in aspects of


term but cyclical, which have a global nature and may not be avoided like raw material

price changes, currency fluctuation, etc. However, certain challenges are unique to Indian

manufacturing industry as illustrated below:

The Indian product basket consists majorly of basic product categories and a large chun

processed goods. The production technology also lags behind t

and since the industry is led by small-scale industries, which do not

have fiscal resources for continuous upgradation or expansions. As a result

able to generate economies of scale nor are the higher rates of produ


indigenous research and development and inadequate worker training. Labor force in India

may be cheap but they have a much lower productivity as compared to the competing

In terms of export markets, Indian exports are very much focused on few countries.


limited markets. As seen during recent demand slowdown in the US


India as a brand in global textile and apparel markets is non-existent.

The industry also suffers due to general infrastructure related issues which lead to higher



Marketing

Limited markets

Sluggish demand in traditional markets

Higher growth of competitors

weak brand positioning of India

Support Infrastructure

• Infrastructure issues

• High transaction costs

• High interest rates

Indian textile and apparel industry suffers several challenges in aspects of production,


term but cyclical, which have a global nature and may not be avoided like raw material

allenges are unique to Indian

duct categories and a large chunk of

processed goods. The production technology also lags behind that

scale industries, which do not

have fiscal resources for continuous upgradation or expansions. As a result, they are not

able to generate economies of scale nor are the higher rates of productivity achievable.


Labor force in India

d to the competing

h focused on few countries. Lack of


the US and then some


related issues which lead to higher



Others

• Low FDI

• Overdependence on cotton

9

Although the industry is open to FDI, such investments generally require large capital

outlays and a more developed textile infrastructure than India has to offer. This is the

reason why even after having huge domestic market potential, FDI in this sector is quite

miniscule.

Another challenge for the sector is biasness towards cotton related product manufacturing.

The global fiber demand is more of the synthetics whereas Indian manufacturing is more

geared up for manufacturing and processing cotton based products. This has led to loss of

trade possibility in some of the large traded commodities.

10

3. Change Drivers

a. Indian

i. Urbanization

In pre-industrial times, India had a slow growth in urbanization vis-a-vis other countries. But

today, India is one of the fastest urbanizing societies. As per National Council for Applied

Economic Research (NCAER), by 2030, 70% of new employment in India will be created in

cities, 91 Mn urban households will be middle class, up from 22 Mn today and 68 cities will

have a population of over 1 Mn, up from ~50 today.

Figure 7: Urban Population in India (Mn)

Indian urban population will be more than the combined population of US, UK and Germany

in the coming years and some of the Indian metro regions would be bigger than certain

countries.

This increase in urbanization will possibly lead to greater awareness among the people

regarding fashion and brand. As a result of brand consciousness, India is witnessing a change

in lifestyle resulting in increased demand for western wear clothing & home furnishing and

hence increasing per capita consumption of branded apparel.

ii. Younger, working age population

About 50% of the Indian population is below the 25 years mark. In the next 2-3 decades, this

section will move towards the middle-age/working age population category which has a

higher propensity to consume. India will be adding ~ 14 Mn people per year to its labor

pool. Going forward, as this young population enters the Indian workforce there will be

increased demand for work wear including formal clothing as well. As Indian consumer

matures, there will be a greater shift in tastes & preferences in favor of more & more

branded items.

320 365470

590

29% 30% 35% 37%

0%

20%

40%

60%

80%

0

200

400

600

800

2005 2010 2020 (P) 2030 (P)

Urban Pop. Urban Pop. as % of total

2.7%

2.4%

Increased participation of women in workforce has led to their financial independence.

there is an increase in their propensity to spend on apparel, accessories, home furnishing & personal

care. There is a direct increase in spending on corpor

other forms of apparel has increased as well which includes casual wear and party wear.

Figure

There is increased demand for

Fab India, W and Biba. Women are following fast changing fashion which results in higher no. of

purchases of fashion items.

353

209

181

142

13883

2005

0-14

1019

17.6

2000

11

Figure 8: Age-wise Segmentation (Mn)

Increased participation of women in workforce has led to their financial independence.


care. There is a direct increase in spending on corporate clothing for women. Also, their spending on


Figure 9: Working Women in Indian Organized Sector (%)

There is increased demand for readymade Indian ethnic wear with the entry of large retailers like

Women are following fast changing fashion which results in higher no. of

365 363

221 238

196 210

162 194160

21396

129

2005 2010 2020 (P)

15-24 25-34 35-44 45-59 60+

120013471.6%

1.2%

17.6 18.920.3 21

2000 2005 2010 2015(P)

Increased participation of women in workforce has led to their financial independence. As a result,


ate clothing for women. Also, their spending on


: Working Women in Indian Organized Sector (%)

readymade Indian ethnic wear with the entry of large retailers like

Women are following fast changing fashion which results in higher no. of

60+

12

iii. Increasing internet penetration

Besides this one of the decisive key change drivers in Indian consumption pattern is growth

of internet penetration in India. According to Internet World Stats (IWS), Indian internet

penetration has followed the pattern below-

Figure 10: Number of Internet Users in India (million)

Number of internet users has been increasing at a CAGR of ~24% between 2005- 2010.

Internet penetration in India is expected to increase to 19% of the population by 2015, up

from the current 9%. Increase in internet penetration has increased awareness among

Indians regarding western clothing & organized retail.

iv. Growth of Organized retail

The organized retail segment in India is projected to be 9 per cent of total retail market by

2015 and 20 per cent by 2020.

Figure 11: Size of Organized Retail & Organized Retail (India)

The share of organized retail in total retail has doubled in the last 5 years, from ~3% to ~7%,

growing at a CAGR of ~32% (2005-2010).

27

80

237

2005 2010 2015 (P)

290

500

1000

8.7 35 90

2005 2010 2015 P

Total Retail Organised Retail

+24%

+24%

13

Figure 12: Growth Rate Comparisons- Organized Retail, GDP & Private Consumption in % (India)

Increasing disposable incomes, expansion of stores and supporting economic factors will

lead to higher sales in apparel.

7% 6%9%

3%5% 7%

7% 8% 8% 8%9% 10% 9%

6% 7% 8% 9% 9% 9% 9%

33% 31% 27%

16%21%

31% 29% 27% 25% 25%

2006 2007 2008 2009 2010 2011 2012 P 2013 P 2014 P 2015 P

Private Consumption GDP Growth Organized Retail

14

b. Global

The global trade in textiles and apparel is estimated at US$ 650 bn. in 2011. This is

approximately 4% of the total global trade of all commodities estimated at ~ US$ 15 trillion.

In previous 15 years (1995 to 2010) the textile and apparel trade has grown at a modest

CAGR of 5% per annum.

Figure 13: Global Trade of Textiles & Apparel (US$ Bn)

During 1995 to 2000, the trade growth remained muted @ 3% CAGR. However, it

accelerated to 7% during 2000 to 2005 and then fell in subsequent 5 years to 4% CAGR.

In the last 10 years, world has witnessed a gradual shift in textile production from

developed / western countries to developing / Asian countries.

Figure 14: Shift of Textile Production over last 10 years

304 360504 556 616 628 542 610 650

1995 2000 2005 2006 2007 2008 2009 2010 2011

(Est.)

Major Consumption Hub Major Production Hub

During last 5 years, several new suppliers like

spectacular growth in exports.

of major textile & apparel exporter countries

Figure 15: Growth of Top Textile & Apparel Exporter Countries

Over last year or so, the industry has seen an unprecedented increase in

the globe. This along with raw material price fluctuations has

industry. With these constraints, the

have already started seeing an upward trend.

In near future, it is expected that the manufacturers will have to focus increasingly on

improving the operational efficiencies, productivity, reducing wastages and go for process

automation and control in order

15

several new suppliers like Bangladesh and Viet Nam have

in exports. Below is a graphical representation of the growth

apparel exporter countries over last 5 years.

: Growth of Top Textile & Apparel Exporter Countries over last 5 years

(Having Export Value > US $ 5 bn)

the industry has seen an unprecedented increase in

This along with raw material price fluctuations has led to major ripples in the

With these constraints, the days of lowest prices are over. The unit value prices

have already started seeing an upward trend.

it is expected that the manufacturers will have to focus increasingly on


on and control in order to drive their competitiveness.

and Viet Nam have shown

Below is a graphical representation of the growth rates

over last 5 years

the industry has seen an unprecedented increase in labor costs across

led to major ripples in the

The unit value prices

it is expected that the manufacturers will have to focus increasingly on


16

4. Growth Imperatives

a. Government support policies

The textile industry, being one of the most significant sectors in the Indian economy, has

been a key focus area for the Government of India. Government policy has played a

fundamental role in shaping the growth, structure and technological evolution of the textile

sector in India over the last decade. The strong demand from domestic and export market

coupled with conducive policy environment provided by the Government has catalyzed the

growth of the textile industry.

With the objective of accelerating growth in investments and exports; Government of India

has launched several schemes. Some of the major schemes are discussed briefly ahead:

i) Technology Upgradation Fund Scheme (TUFS)–

The Technology Upgradation Fund Scheme (TUFS) is the flagship Scheme of the Ministry of

Textiles which was launched on April 1, 1999. It was launched to enable firms to access low-

interest loans for technology upgradation.

The Scheme mainly provides for -

• Reimbursement of 5% (4% for spinning machinery) interest charged by the

financial institutions

• Coverage of exchange rate fluctuation not exceeding 5% (4% in respect of

spinning machinery) points per annum in respect of foreign currency loans

instead of 5% interest support

• 5% interest reimbursement plus 10% capital subsidy for specified finishing

machinery, garmenting machinery and technical textiles machinery.

ii) Scheme for Integrated Textile Parks (SITP)

The Scheme was introduced to neutralize the weakness of fragmentation in the various sub

segments of textile value chain and unavailability of quality infrastructure.

The primary objective of the SITP is to provide the industry with world-class infrastructure

facilities for setting up their textile units to facilitate textile units to meet international

environmental and social standards.

iii) Development of Mega Cluster

The broad objectives of the Mega cluster approach Scheme is to enhance the

competitiveness of the Powerloom clusters, Handloom clusters & Handicraft clusters, in

terms of increased market share and ensuring increased productivity by higher unit value

realization of the products. The scheme comprises of following components:

17

Comprehensive Powerloom Cluster Development Scheme:-To assist entrepreneurs to set up

world-class units with modern infrastructure, latest technology and adequate training and

human resource development along with appropriate market linkages

Comprehensive Handloom Cluster Development Scheme: - To address the challenges faced

by weavers within the cooperative sector and outside, due to poor infrastructure in some

clusters

Comprehensive Handicraft Cluster Development Scheme:-To enhance the competitiveness

in terms of access to technology, increased market share, ensure effective integration of

scattered artisans and linking them to SMEs, generate additional livelihood opportunities,

provide linkages in terms of adequate infrastructure technology, product security and other

such components.

iv) Integrated Skill Development Scheme (ISDS)

Integrated Skill Development Scheme was launched by the Ministry of Textiles to train

candidates according to the industry needs, provide professionals skills in multiple fields in

textiles, and provide knowledge to the working professionals on the developments in the

industry.

ISDS aims to train over 27 Lacs people within the next 5 years. The scheme would cover all

the sub sectors of the textile sector such as textile and apparel, handlooms, jute and

sericulture.

v) Technology Mission of Technical Textiles (TMTT)

Government has launched TMTT with two mini missions for a period of five years (from

2010-11 to 2014-15). The aim of TMTT is to address the issues like lack of basic

infrastructure in terms of testing facilities, lack of market development support, skilled

manpower, lack of R & D, absence of regulatory measures, absence of specifications and

standards for technical textiles etc. The total fund outlay for TMTT is Rs 200 Crores.

Mini Mission I of TMTT is aimed at Standardization, creating common testing facilities with

national international accreditation, indigenous development of prototypes and resource

center with IT infrastructure, incubation centre by establishing four new Centers of

Excellence (COEs) and upgradation of existing four COEs.

Mini Mission II of TMTT is to provide support under 6 components, i.e.,

a. Support for business start-up;

b. Providing fund support for organizing workshops;

c. Social compliance through standardization, regulatory measures;

d. Market development Support for marketing support to bulk and institutional

buyers;

18

e. Market development Support for export sales and

f. Contract Research and Development through IITs/TRAs/Textile Institutes.

In addition, FDI policy for manufacturing in this sector is quite hassle free as 100% FDI is

allowed under the automatic route*. Apart from these larger schemes which target a broad

range of industry, there are various schemes specifically targeted to help decentralized

sectors grow like handloom, silk and powerloom.

*FDI under automatic route implies that the foreign companies do not need a prior approval

for investment by the authorities. The investors are only required to intimate the Regional

office concerned of the Reserve Bank within 30 days of receipt of inward remittance.

b. Enhancing manufacturing competitiveness

A manufacturer can focus on a large number of business parameters in order to improve the

manufacturing competitiveness. Some of the most critical, having significant impacts are

discussed below:

i. Skill upgradation

With increasing labor costs and decreasing availability, skill upgradation is one such

paradigm which can solve the manpower challenge that industries face, to some extent. On

one hand skill upgradation can increase the influx of manpower from distant corners of the

industry; whereas on the other making them skilled in operations of their choice can check

the inter segment migration to some extent.

ii. Technology upgradation

Despite considerable amount of global exposure, technological modernization and

diversification, a large section of Indian Textile industry continues to work on conventional

manufacturing technologies. Technological advancements have improved not only the

productivities, efficiencies and quality but also have enhanced the product mix.

iii. Partnerships

Partnership will help open the gateway of opportunities to expand the Indian market. One

of the reasons is that many western manufacturers are looking for a destination to expand

their manufacturing bases in order to be more competitive. Secondly, Indian domestic

consumption in itself has become quite attractive for international players. However, in

order to succeed in a large, diverse market such as India, a partnership with local player who

has an existing network and operational understanding of various channels is what the

international players want to tap. This creates opportunities for Indian manufacturers to

upgrade their existing technical, quality and design knowhow and also start tapping into

global marketing network.

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c. Realizing domestic market potential

Indian apparel market currently valued at ~US$ 36 billion is expected to grow at a CAGR of

15% in next 5 years and is estimated to be pegged at ~US$ 74 billion by 2016. This growth is

primarily driven by increase in disposable income, brand penetration, working population,

apart from increase in per capita consumption of clothing due to favorable consumer

demographics.

Currently Men’s wear is the biggest segment of the market, however women’s wear is

growing faster than other apparel segments and is expected to gain majority share in future.

Kidswear is also growing rapidly with a CAGR of 14%.

Figure 16: Size of Indian Apparel Market (Rs. 000’ Crores)

There is a huge potential in the apparel market backed by fashion consciousness of

consumers, rapid urbanization, increasing government infrastructure spending and growing

sectors, etc.

Although many brands have entered the Indian retail space in last decade, but still many

brands have not marked their presence in India due to poor infrastructure, high real estate

costs and FDI regulations. The total Retail Space in India has increased from 1.5 Mn sq. ft. in

2001 to 53 Mn sq. ft. in 2010, growing at a CAGR of 43%. Another 65 mn sqft will be added

in next 5 years time. So, here is a huge opportunity for Indian retail to expand.

8 10 13237

912

26

22

3

5

57

9

20

23

28

36

74

2007 2009 2011 2016 (P)

Kidswear Unisex wear Womens wear Menswear

+12%

+15%

20

Table 1: Inter Country Comparison of Retail Space

Country Per Capita Total Retail

Space (sq. Ft.)

Per Capita Mall

Space (sq. ft/.)

Dubai n/a 25.3

USA 46.6 23.1

Singapore 15.7 7.2

Australia,

New Zealand 24-31 5.5-6.8

UK 12 3.9

Japan 12-13 3.8

China 11.2 2.7

India 2.22 0.09

India has a huge scope of expansion as the retail space per capita in India is very less in

comparison with other countries.

Besides, due to recent liberalization of the Foreign Direct Investment (FDI), India has

become one of the fastest growing destinations for FDI inflows. 100% FDI in single brand

retail is a welcome sign for the luxury and niche retailers. Moreover, the revival of the

proposal to permit 51% FDI in multi-brand retail could bring a positive impact on Indian

retail sector. This is very well demonstrated in Scandinavian furniture retailer IKEA’s

announcement of its plans to invest Rs 10,500 crores (~US$ 2 billion) in retail in India.

Organized retail will result in more productive, efficient & compliant manufacturing units,

more employment, increased domestic supply opportunity and more consumption.

21

About CII

The Confederation of Indian Industry (CII) works to create and sustain an environment

conducive to the growth of industry in India, partnering industry and government alike

through advisory and consultative processes.

CII is a non-government, not-for-profit, industry led and industry managed organisation,

playing a proactive role in India's development process. Founded over 117 years ago, it is

India's premier business association, with a direct membership of over 7000 organisations

from the private as well as public sectors, including SMEs and MNCs, and an indirect

membership of over 90,000 companies from around 400 national and regional sectoral

associations.

CII catalyses change by working closely with government on policy issues, enhancing

efficiency, competitiveness and expanding business opportunities for industry through a

range of specialised services and global linkages. It also provides a platform for sectoral

consensus building and networking. Major emphasis is laid on projecting a positive image of

business, assisting industry to identify and execute corporate citizenship programmes.

Partnerships with over 120 NGOs across the country carry forward our initiatives in

integrated and inclusive development, which include health, education, livelihood, diversity

management, skill development and water, to name a few.

The CII Theme for 2012-13, ‘Reviving Economic Growth: Reforms and Governance,’ accords

top priority to restoring the growth trajectory of the nation, while building Global

Competitiveness, Inclusivity and Sustainability. Towards this, CII advocacy will focus on

structural reforms, both at the Centre and in the States, and effective governance, while

taking efforts and initiatives in Affirmative Action, Skill Development, and International

Engagement to the next level.

With 63 offices including 10 Centres of Excellence in India, and 7 overseas offices in

Australia, China, France, Singapore, South Africa, UK, and USA, as well as institutional

partnerships with 223 counterpart organisations in 90 countries, CII serves as a reference

point for Indian industry and the international business community.

Confederation of Indian Industry

Northern Region

Block 3, Dakshin Marg, Sector 31 A, Chandigarh

T: +91-172-6510188 • F: +91-172- 2606259

E: [email protected] • W: www.cii.in

Reach us via our Membership Helpline: 00-91-11-435 46244 / 00-91-99104 46244

CII Helpline Toll free No: 1800-103-12

22

About Wazir Advisors

Wazir Advisors is a management consulting firm based out of India that advises clients

globally on business strategies, mergers and acquisitions, joint ventures, funding and

investments. Wazir is focused on the Indian consumer segments like Fashion & Lifestyle,

Food & FMCG, Education, Media & Entertainment, Health & Wellness, Consumer Durables,

etc.

Wazir offers strategic direction and momentum to Indian and multi-national firms that are

looking to address the growing needs of one of the world’s largest and fastest growing

market. Wazir assists its clients in developing winning business strategies and implementing

them successfully from end to end.

With a team of experienced professionals, Wazir offers a comprehensive range of services

to its clients to create, compete and develop their consumer-centric businesses in the

exciting and challenging Indian market. Wazir’s team comprises of engineers, MBA’s,

financial experts and economists from reputed institutes like INSEAD, IIT, IIM, TIT, NIFT, IMS,

IIFT and ICFAI.

Wazir’s service offerings:

a. Strategic Advisory Services

-Assess market opportunity

-Develop business & sales strategy

-Conduct business & financial planning

-Support action planning & assist

implementation

b. Business Advisory Services

-Facilitate M&A

-Promote JV & alliances

-Provide funding & investment support

c. Services for International Companies

-Develop market entry strategy

-Pursue M&A opportunities

-Identifying local partners: JV, franchisee

or licensee

-Facilitate setting up business in India

d. Services for PE Funds

-Develop sector investment strategy

-Identify targets & facilitate investments

-Due diligence of target companies

Documents

New Paradigms for Textiles Industry