Indian textiles industry is a well-established with showingstrong features and a bright future. In fact, the country is the second biggesttextiles manufacturer worldwide, right after China. Similar force isdemonstrated in the cotton production and consumption trend where India ranks just after China and USA. The textiles manufacturing business is the economic life ofthe country, which is still predominantly based on the agro alimentary sector.Employing around 35 million people, textiles industry stands as a pioneeractivity in the Indian manufacturing sector and it has a primordial importancein a major foreign currency revenue generator and further proves it in its 14%share of industrial production and the 20% of export revenues it generated.
Textiles industry is not limited to manufacture and exportof garments. The success of Indian textiles lies in an effective verticalintegrations policies which have helped operators in taming the processes whichwhile lying beyond simple manufacturing exercise do have a serious impact onit, for example, raw material treatment. Thus, cotton, jute, silk or wool andeven synthetic material are also produced by this industry to complement andstrengthen the garments manufacturing industry. Almost one quarter of theworld's spindle activities is hosted in India, again positioning itself justafter China. Looming is another important element that accounts for significantactivity in this industry; in fact, it takes an impressive 61 % share includinghand looms. The country is also significant textiles fiber and yarnmanufacturer on the world scene, taking on its own a 12% share of the world'sproduction volume. India ranks on the second place as regards in production ofsilk and cellulose fiber and yarn whilst standing on the fifth position whenit comes to synthetic fiber and yarn.
Indians have well understood the importance of staying onestep ahead of developments in the world economic environment. The industry isnow preparing itself to take share of opportunities expected to arise out ofthe market freed from quota restrictions and other trade barriers. Industryoperators are increasingly moving towards modernization and expansion asencouraged by the so-designated Textile Upgradation Fund Scheme implemented byGovernment of India.
The local textile sector is now at a critical stage where itshould prepare itself to rise and grab the opportunities that are availablethrough liberalization of the international market. Manufacturers however, werecaught in inadvertence as new players started to creep on the market at a timewhen most operators had attention on imminent opportunities coming from a quotafree market. Strategies and policies were mainly targeted towards expansionand modernization leaving more space to domestic players. Now it obviouslyappear that the latter have had ample freedom to strengthen them and they arenow more prepared than export-oriented companies.
According to WTO, India's share in the world trade in textiles& clothing during the last three years is as follows:
| Year 2004 2005 2006 | % age share
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Lack of competition is eroding enthusiasm, impacting onactivity on the European and USA markets. With the removal of quotas andsimilar trade barriers, observers expect the market to provide newopportunities with evaluations reaching S$1.4bn for towels and US$1.8 in bedlinen. China's impressive production capacity and its growing strengthcompelled Europe and USA markets to some serious reflections. To bring a haltto massive invasion of their products, EU and USA have imposed traderestrictions, which also encourage retailers to review their sourcing strategythrough diversification out of China. Now, undoubtedly India has good cards to play. With traders realizing the threat of relying on a singlemanufacturing source such as China, India could do well in proposing a valuablealternative to buyers on the international scene, but this is only possiblethrough an adequate and appropriate development strategy and macro-economicpolicy.
In that view, many manufacturing companies in India are rushing towards expansion and modernization options. Manufacturers are havingrecourse to fund raising programmes pushing EPS to higher growth, dissolvingequity on its way. Business collaborations with foreign, players, creation ofbuying offices and Government's effort to enhance quality production andexport are many visible signs of Indians coming into force on the globalmarket.
Value addition - route to higher price realizations
Terry towels coming from the Indian factories accounted for almost 21 % of the world market. With another 19% share in the bed linen market, India stands as a quality supplier to the USA. Indian products are more focused towards innovation and quality. Visible efforts in quality improvement, innovations through R&D programmes, and other value-added features bring a whole new dimension to the Indian products. In turn this resulted in higher profit as compared to other regional producers.
Customized and high-value added products are generally not affected by change in market parameters. As such, there were no exceptional price fluctuations on Indian markets during quota removal period. But such was not the case with other regional competitors' products, such as China, where prices were cut down significantly favoring buyers.
Sector Outlook
The future of the textiles industry seems to be bright in all aspects. As such Government places all its trust and relies sector for its strong 'employment creation' capability, more precisely in the garments manufacturing side. Lowering tax burdens on companies will play an important part in cutting down production costs and boosting competitiveness, increasing ability to tap high-volume orders from the global market. Modernization would enable companies provide quality and volume solutions which is in constant demand by international buyers.
The Indian textiles, renowned for their fineness and captivating colors for ages beyond 5000 years, have attracted connoisseurs, from all parts of the world. The textiles of India bear the imprint of the fine craftsmanship of the Indian weaver. The skill of weaving with deft fingers, drawing patterns and creating designs, is an art which has been handed down through generations from father to son, from time immemorial. These finest gossamer fabrics woven from yarns of superior finish are now being manufactured more and more on power looms.
The emergence of powerloom has transformed an art into a modern industry, producing around 30,000 million sq. meters of fabrics annually. The combination of traditional art and contemporary modern designs, has given a unique character to the Indian powerloom textiles. The modernization process undertaken by the powerloom industry has widened the scope of products such as grey, printed and dyed fabrics and cotton made-ups in a variety of sophisticated finishes and in a wide range of widths and sizes. Besides, the industry is now in a position to offer fabrics not only of cottons but also of rich blends of cotton, synthetics and other fibers. The process of economic liberalization has enabled the industry to become globally competitive, not only in terms of price, but also of quality. The ranges of products offered are many splendoured, rights from greys to finished fabrics and to made-ups.
The powerloom sector plays a pivotal role in meeting the clothes needs of the country. The powerloom industry produces a wide variety of cloth, both grey as well as processed. Production of cloth as well as generation of employment has been rapidly increasing in the powerloom sector. There are 19.46 lakhs powerlooms in the country distributed over approximately 4.34lakhs units. The powerloom sector contributes 63% of the total cloth production of the country, and provides employment to about 48.65 lakhs persons. It is estimated that more than 60% of the cloth meant for export comes from the powerloom sector.
The Government has launched a major programme for modernization of the powerloom sector by induction of 50,000 Shuttleless looms and 2.5lakh semi automatic/automatic looms in the decentralized powerloom sector. The emphasis has been on the Technology Upgradation Fund Scheme (TUFS).
About the Author:
The author is the Chairman of PDEXCIL, Mumbai.
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