Western countries are now shifting focus towards the Asian countries for their textile and apparel business. What are the current Indian market potential, and its growth prospects? Can India reach the export value of 80billion USD by 2020?
Global textile and apparel trade is recovering from the pinch of recession and is estimated to grow from the current $510 billion to reach $1 trillion by 2020. Growth is spurred by the increasing momentum of exports from the Asian countries. A recent research report about the Textile and Apparel sector on India states that the industry's all set to go through a drastic change. The results of exploration are amazing.From the current value of `
Currently menswear comprises of 43%, a major share of the Indian apparel market, and is further estimated to grow by 9%. Womenswear is quickly catching up with it, to grow by 12% and reach 43% by 2020. Kidswear market is also growing with 10% projected growth for boys, and 11% for girls. Home textiles sector is also expected to grow from `15, 570 crore at a CAGR of 9%, and reach `40, 000 crore by 2020. Developed countries will experience a decline in their apparel business, while fresh opportunities will be created for developing countries creating an increased market opportunity for $500 billion USD.
Growth Drivers:
Growth of the Indian textile and apparel sector is due to the increased sourcing from other developed, and developing countries to Asian countries. India, Pakistan, China, Cambodia, Bangladesh, Sri Lanka, and Vietnam are on the radar currently. The main strength of India is that it is considered as a suitable alternative for China. With an increasing Yuan appreciation, and rising labor costs in China, countries that are currently have their operations in China are seeking for alternatives. The main substitute is India due to its nearness to China, availability of abundant and skilled labor, appropriate infrastructure, and supply chain. An investment of ` 3.20 lakh crore is required across the supply chain in India to tap the market potential. With an additional investment of ` 2000 crore, SEZ alone has the potential to export around `5000 crore worth of apparel every year.
Foreign Institutional Investors (FII):
India is also a preferred destination of Foreign Institutional Investors (FII). Birla groups, Bombay Dyeing, Alok industries, Arvind, and S Kumars are a few to name, who have been benefited by FII. A projected growth is on the cards for both domestic, and export market, which will have a positive impact on the profitability with the volumes moving up. Key textile players underwent an enormous expansion during 2005-2009, despite the recession era. They will be in a profitable position, enjoying significant cash inflows, as they have already invested for major capital expenditures.
Brands on the Expansion Mode:
Indian garments are considered as the right value for money. International brands are showing increased trust in India which enhanced the brand value of Indian garments. Gap sources almost 30% of its apparels from India. Brands renowned for their jeans apparels such as Adidas, Van Heusen, Arrow, Killer, Zodiac, and Pepe are expanding into new product categories such as womanswear. Killer brands plans for brand extension by introducing watches, and perfumes. Well established players like Century Mills are extending their label to womenswear.
India is on the global radar for textile, and apparel sector supported by its increasing population, income level, growing market penetration of more and more players, and rapid urbanization of smaller towns. This would be the best chance for India to increase its foot prints in the global textile arena.
References:
1. http://www.business-standard.com
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