'Texcon2012 New Paradigms for Textiles Industry', organised by the Confederation of Indian Industry (CII) and the Ministry of Textiles, highlighted various new challenges faced by the US$ 91 bn industry.

Addressing the day-long conference, Paul Oswal, Chairman of Vardhman Textiles, said that increasing numbers of textile and clothing buyers in the US and Europe reevaluating the scale of operations of a country rather than that of individual-enterprises. For example, he said , in 2011 the top 10 supplying countries tothe US accounted for 80% of its textile and clothing imports as compared to 54%(62% in volume terms) in 2003. For Europe, this figure is even higher at 90% involume terms, which indicates a clear change in buyers sourcing strategies.

According to Oswal, this development could pose a major challenge for Indian companies."Despite isolated enterprises achieving excellence, we would not attract particular customers until there is a cluster of suppliers to look at", he said. "Therefore we have to develop whole country's relevance in terms of size and scale in those products". Oswal noted that India has shown its capabilities in household linens, where it is top exporter with a US$ 2bn share of the Us$15bn worldwide market.

Manufacturing Competitiveness

On the policy front there were some clear disagreements between the industry delegates and government officials while they tried to identify the necessary changes to enhance the Indian sectors manufacturing competitiveness.

One issue is the country's rigid labour laws that prohibit the hiring and firing of workers, which companies regard as serious hindrance for capacity building, and delegates pushed hard to highlight the issue.

However,as successive Indian governments have been unable to enact or enforce any labour reforms in the past decade due to severe political opposition, the officials at the conference refused to join the debate. They simply advised the industry to focus on other areas to improve efficiencies. Kiran Dhingra, the Secretary of Textiles suggested "small companies isolated in different parts should collaborate as clusters to achieve economies of scale, raise volumes,efficiency levels, technology enhancement and best designing techniques".

Also, Prashant Agarwal, joint Managing Director of consultant Wazir Advisors, argued the Indian textile industry requires significant investment though international joint ventures, skill upgrades, increasing productivity and generating revenues by focusing on the growing domestic market. He suggested that branded companies should work with unincorporated businesses by using them as commissioned weavers or manufacturers. Agarwal added that supply delays and a lack of design and product development are deterring foreign buyers from sourcing in India."Indian companies operate on a cut, make, trim model with only few having their own design setups", he noted.

And it is clear that domestic demand is there - Indian textile imports have grown to US$34bn in the financial year ending March 2012, up from US$26.8bn that year before: meanwhile the sector's share of the countrys total exports fell to 11%.

According to Oswal: "Indian productivity in spinning is good, in weaving it is average, but in knitting, processing and garmenting we are definitely lower and need to scale up".

Silver Lining

All this aside, and even with difficult economic conditions around the world, some speakers saw a silver lining for the Indian industry. Gautam Nair, Managing Director of apparel exporting company Matrix Clothing, said Indian exporters could receive more orders if they lower costs and speed delivery times, as importers in the US and Europe (who account for 27% and 50% of Indian textile exports respectively) are worrying that Chinese suppliers cannot deliver on speed and cost. And he said Indian manufacturers should not necessarily worry about other low-cost apparel manufacturing centres such as Bangladesh, Vietnam and Cambodia. Nair said that being small countries, they have limited growth potential and are heavily dependent on imported cotton. In comparison, he said, the "risk level of dealing with [companies in] India is less as it has [more] vertical integration between apparel manufacturers, fabric producers, yarn makers and cotton growers".

This article was originally published in the Stitch Times, August, 2012.