Business law and economics, B.Tech. Textile students, PPT, R N Joshi
Sector-wise Analysis of India’s Textile and Clothing Export
Introduction
Textile and clothing (T&C) export consists of cotton yarn and fabrics, man-made yarn and fabrics, wool and silk fabrics and, made-ups and variety of garments.
In 2006, China share in the world export of textile of 22% and export of clothing to 30.6 %
India hold only 4.3% world textile export and 3.3% in the world clothing export in 2006.
Targeted to US$ 50,000 mn by 2010, with share of clothing to be US$ 25,000 mn (GOI 2005-06).
As USA and the Europe- major markets for Indian T&C
The World Export in Textiles and Clothing
The world export of T&C, US$273 bn in 1994, increased to US$530 bn in 2006
Registering nearly a two-fold rise.
The export of clothing grew faster than that of textile
During this period, clothing export increased 2.2 times, while textile increased only 1.7 times.
The share of clothing in the total T&C export significantly increased from 51.46% in 1994 to 58.68% in 2006.
Table-1 India’s and China’s Export in Textile and Clothing
Country / Share in World ExportTextile Export
Year / 1980 / 1990 / 2000 / 2006
EU (1st rank) / 49.4 / 48.7 / 35.6 / 32.6
China (2nd rank) / 4.6 / 6.9 / 10.2 / 22.3
USA (4th rank) / 6.8 / 4.8 / 6.9 / 5.8
India (7th rank) / 2.4 / 2.1 / 3.8 / 4.3
Clothing Export
China (1st rank) / 4.0 / 8.9 / 18.2 / 30.6
EU (2nd rank) / 42.0 / 37.7 / 26.9 / 26.8
India (5th rank) / 1.7 / 2.3 / 3.1 / 3.3
USA (9th rank) / 3.1 / 2.4 / 4.4 / 1.6
Source : WTO Trade Statistics
Clothing exports
Clothing export accounts for 45 % of the country’s total textile exports
Increase of 8.3% per annum during 1996-06
Consists of garments of cotton, man-made fibers and other materials
Impressive growth of garment export in 2005-06 was due to removal of import restrictions of clothing by the USA, Europe and Canada from January 1, 2005 (Roy 2005).
Cotton Textiles
The export of cotton textiles compose 29.5% share of total textile export
Cotton textiles exports recorded a CAGR of 2.1% during 1996-06.
The share of cotton textile in total textile export has declined from 37% in 1996 to 26% in 2006, whereas the share of clothing has increased from 39% to 49%.
Increase in the share of export of clothing is more desirable for the point of view of value addition and employment generation
Man-made Textiles
MM Textiles export: growth of 30.2% in 2002-03 and 28.2% in 2003-04.
MM export CAGR of 14.07% during 1996-06.
The export of MM textiles rose to US$ 2000 mn in 2006.
Its share has increased from 7.6% in 1995 to 11.7% in 2006
Silk Textiles
The export of silk textiles recorded a CAGR of 13.6 percent during 1996-06.
It rose from US$ 129 mn in 1996 to US$ 430 mn in 2006.
The export of silk was impressive in 1997-98, 1999-2000, 2000-01 and 2003-04.
Its share in total textile export has increased from 1.3% in 1996 to 2.3% in 2006.
Wool and Woolen Textiles
The exports of wool and woolen textiles declined by CAGR 3.8 percent.
It shows the negative trend in export till 2002-03. This was due to sluggish market conditions and over-stocking in major markets (GOI 2004-05).
However, wool and woolen textiles have recorded a significant growth during 2002-06.
• Important place: employment, value addition or income generation, and export earnings
• Employment: 16.98 million workers as per NSSO 61st round (2004-05)
• Manufacturing value added 11.6% of during 2006-07 (National Accounts Statistics)
• Total export earnings 13.8%, 2007-08 (Office of the Textile Commissioner)
• The share of clothing in total expenditure of households: 6.65% in 2004-05 at all India level (NSSO, 61st Round)
• The industry: small, fragmented, non-integrated units, except spinning sector.
• Government Policy: various taxes, labour and other regulations have favoured small-scale, labour-intensive enterprises
• Total employment 81.5% is in marginal and small firms.
• This industry structure: Affected the competitiveness of the textile industry.
• Policy reforms: 1990, 1999 induced recent technological development, export zones, labour market reforms, TUFS 1999,
• NTP 2000 (1) the removal of restrictions in loom capacity, (2) the use of automatic looms, and (3) the elimination of regulations, Garment production, small-scale de-reserved in 2000
• The industry strength: low-cost raw material base, low labour costs, a well-developed network of research, development, design, and testing institutes facilities.
• The cotton ginning sector: small units, problems of contamination, outdated technology, lack of cleaning machinery, failure to use effective management practices, and a lack of implementation of adequate grades and standards
SWOT analysis of Indian textile and clothing industry
Strengths
• Strong and diverse raw material base
• Third largest producer of cotton
• Fifth largest producer of man-made fibre and yarn
• Vertical and horizontal integrated textile value chain
• Strong presence in entire textile value chain from raw material to finished goods
•Globally competitive spinning industry
• Average cotton yarn spinning cost at US$ 2.5 per kg. Which is lower than all the countries including China
• Low wages: 0.75 US$/operator/hour, US$ 1 of China and US$ 3 of Turkey
• Unique strength in traditional handlooms and handicrafts
• Flexible production system
• Diverse design base
Weaknesses
• Structural weaknesses in weaving and processing
• 2% of shuttleless looms as % age of total looms as against world average of 16 % and China, Pakistan and Indonesia 15 %, 9% and 10 % respectively.
• Highly fragmented and technology backward textile processing sector
• Highly fragmented garment industry
•Except spinning, all other segments are predominantly in decentralized sector.
Opportunities
• Quota phase out – pushing the export growth to the level of 22 percent in 2005-06.
• Buoyant domestic economy
Increasing disposable income levels.
Increasing working female
• Population: The propensity to spend in the case of working women is higher by 1.3 times as compared to a house wife.
• Increased usage of credit cards, availability of cheap finance
• The revolution in organized retailing would increase the consumption of apparel and made-ups.
Threats
• Possibility of a global recession triggered by a weakening dollar.
• Higher competition specially after 2008 when China cannot be restrained under WTO.
• Non-availability of indigenous textile machinery.
• Lack of domestic capital and absence of desire of domestic industries to invest in
the quantities envisaged for 12% growth target.
Textile Policies
Ministry of Textiles
The Indian Textile Industry
} Suffered from severe technology obsolescence
and lack of economies of scale
} High cost of state-of the-art technology and
structural anomalies
} Access to timely and adequate capital, at
} internationally comparable rates of interest
in order to upgrade the level of its technology.
} Technology Upgradation Fund Scheme(TUFS)
launched on 01.04.1999 for a period of 5 years
,extended till 31.03.2007
1. Technology Upgradation Fund Scheme
} To provide the necessary impetus for the modernization of the textile and jute industry
Benefits under the scheme :
} 5% reimbursement of the normal interest charged by the lending agency on rupee term loan (RTL); or
} Coverage of 5% exchange fluctuation (interest & repayment) from the base rate on foreign currency loan (FCL); or
} 15% credit linked capital subsidy for the
SSI textile and jute sector; or 20% credit for the powerloom sector; or
} 5% interest reimbursement, plus 10% capital subsidy, for specified processing machinery.
} 25% capital subsidy on purchase of the new machinery and equipment for preloom & post-loom operations, handlooms.
Validity of Scheme : Launched on1.04.1999,
Fund allocated during the Xth Plan :
} Rs.1,270.00 crores.
} Cotton ginning & pressing, Spinning; Silk reeling & twisting; Wool scouring & combing; Synthetic filament yarn texturising, crimping and twisting; Viscose filament yarn (VFY); Weaving/knitting including non-wovens, fabric embroidery and technical textiles; Garments, made-up manufacturing; Processing of fibres, yarns, fabrics, garments, and made-ups; Jute industry.
} The Industrial Development Bank of India(IDBI), the Small Industries Development Bank of India (SIDBI), and the Industrial Finance Corporation of India Ltd. (IFCI) and 13 national banks are the nodal agencies
Textile Workers’ Rehabilitation Fund Scheme (TWRFS)
} September 15, 1986
} Providing interim relief to textile workers rendered unemployed as a consequence of the
permanent closure of any particular portion of, or the entire textile unit.
} A unit licensed or registered under the Industries (Development & Regulation) Act, 1951
} (i) Any worker is eligible for assistance under the scheme, earning a wage of Rs. 2500-3500 contributing to the Provident Fund
Period and Quantum of Relief
} Available only for three years on a tapering basis, The worker is entitled to get relief :
} • 75% of the wage equivalent in the first year
} • to the extent of 50% of the wage in the second year; and
} • to the extent of 25% of the wage equivalent in the third year.
SCHEME FOR INTEGRATED TEXTILES PARKS (SITP)
} Launched in August, 2005, by merging the Apparel Parks for Export Scheme (APE) and the Textile Centre Infrastructure Development Scheme (TCIDS).
} To provide the industry with world class infrastructure facilities for setting up of textile units in clusters.
} creation of 25 new textile parks
} Under the SITP, an amount of Rs. 625.00 crores, GOI 40% of the project cost,
} implemented through Industry Associations
Technology Mission on Cotton
} February 2000, to bring about tangible improvement in the productivity and quality of cotton.
} valid upto 31.03.2007.
} The Mission consists of four Mini Missions;
} improvement in the marketing infrastructure, modernization of ginning and pressing factories, to improve the quality of cotton by reducing contamination and ensuring better prices to the growers.
} For the installation of new bale presses and HVI/MVI laboratories, an additional incentive of Rs 7 lakhs and Rs. 4 lakhs, respectively,
} modernization of to 1000 G & P factories, in June 2005.
} 60% of the project cost is provided by TMC,
} Total Cost for modernization / setting up of 725 units : Rs. . 969.59 crores.
} The Cotton Corporation of India Ltd (CCI) is the implementing agency
} Forms of Application Website www.cotcrop.com.
The Jute Industry
} 4 million farm families
} cultivation of raw jute, processing of jute fibres, spinning, weaving, bleaching, dyeing, finishing and marketing of both raw jute and its finished products.
} The Jute Manufactures Development Council (JMDC), Kolkata is implementing Scheme
} Modernization, provides 15% / 20% on the capital
} Jute Service Centre Scheme (23 Centres in operation).
} Jute Raw Materials Bank Scheme (32 Banks)
} Market Support Scheme
} Product Development Scheme
} Design Development Scheme,
} Micro Finance Scheme for individuals and NGOs
} Jute Entrepreneurs Assistance (Capital Subsidy) Scheme
} JMDC, July 8, 2002.
} providing 15% / 20% incentive on the amount
} invested either from the entrepreneurs’
} Eligibility : All jute mills which pay statutory cess on the manufacture of jute goods
SERICULTURE AND SILK TEXTILE INDUSTRY SCHEMES
} Central Silk Board (CSB),
} R&D and Transfer of Technology
} Sericulture, and the silk sub-sectors of mulberry, eri, muga, tasar and oak tasar,
} Maintenance of foundation stock of silkworm seed, and pre-cocoon, postcocoon, and processing technologies.
} Developmental activities include the supply of silkworm seed to States and training to State Government extension staff and to entrepreneurs.
Catalytic Development Programme (CDP)
} production of quality cocoon and raw silk, Central Silk Board’s
Major schemes
} Support for raising nurseries of high yielding mulberry varieties
} On-Farm Training and Start-Up Tools to New Mulberry Sericulture:
} Assistance for Installation of Drip Irrigation
} Support for Use of Quality Disinfectants
} Assistance to Farmers for Construction of Rearing Houses
} WOOL & WOOLEN TEXTILE INDUSTRY SCHEME
} Export oriented industry
} employment to about 2.18 mn
} The country is the 11th largest producer of wool, contributing 1.8% of the total world production.
} Production of indigenous raw wool is estimated at 55.10 mn.kg. (2004-05).
} only 5% is of apparel grade. Therefore, the industry depends heavily on imported raw material. 85% of the total raw wool produced is carpet grade wool
} There are 718 woolen units in the country, majority SSI.
Integrated Wool Improvement Programme (IWIP)
} Sheep & Wool Improvement Scheme
} Development of Speciality Fibre, Pashmina, Angora Wool Development
} Support Services
} Quality Processing of Wool.
} proposals include programmes for breed
} improvement, provision of health care facilities, machinery in testing centers, and production facilities and training, etc.
} Pashmina Development Programme,Ladakh region of J&K,
} Validity of Scheme : in 2003-04
} Funds Allocated : Rs. 35.00 crores
}
DECENTRALISED POWERLOOM SECTOR SCHEMES
} 19.46 lakhs Powerlooms, 4.34 lakhs units
} contributes 63% of the total cloth production
} employment to about 48.65 lakhs persons.
Following schemes
} 20% Credit Linked Capital Subsidy Scheme
} Modernization and Strengthening of Powerloom Service Centres.
} Support to CAD Centres.
} Group Workshed Scheme
} Group Insurance Scheme for Weavers.
} The Scheme is in operation from 06.11.2003 FUNDS Rs. 34.10 crores.
HANDLOOM SECTOR SCHEMES
Development Schemes:
1. Deen Dayal Hathkargha Protsahan Yojana (DDHYP)
2. Integrated Handloom Training Project (IHTP)
Marketing Schemes:
1. Handloom Export Scheme (HES)
2. Marketing Promotion Programme (MPP)
} III Input Related Schemes:
Welfare Schemes: