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Indian Textile Industry – SWOT Analysis

Saturday, November 12th, 2011

The Indian Textile Industry

The Indian textile industry is one of the leading textile industries in the world. Though it used to come under unorganized sector few years back, the scenario changed dramatically after the economic liberalization of the Indian economy. Liberalisation gave the much-needed push to the textile industry, which has now successfully become one of the largest in the world.As per the last statistics available from the Annual Report 2009-10 of the Ministry of Textiles, “The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to the country’s gross domestic product (GDP) and 17 per cent to the country’s export earnings.” Additionally, it provides direct employment to over 35 million people and is the second largest provider of employment after agriculture.

The report further says “The current domestic market of textile in India is expected to increase up to US$ 60 billion by 2012 from the current US$ 34.6 billion. The share of exports is also expected to increase from 4% to 7% within 2012.” Textile Accessories are also an important part of this segment.

Strengths of the Indian Textile Industry

India’s biggest strength lies in its big pool of cheap and talented workforce. However, apart from it there are few other important factors which contributes to its strength like

  • Huge Domestic Market consumption (due to its own population).
  • Tremendous Export Potential (Indian products are in great demand among the western importers)
  • The new age creative and risk taking entrepreneurs.
  • Use of latest technology which produces high quality multi-fiber raw material.
  • Supportive government policies.

The Indian Textile Industry has its fair share of weakness like:

  • The increased global competition due to WTO policies.
  • Use of outdated manufacturing technology from the low end suppliers.
  • Inefficient supply chain management.
  • Additionally, this sector is still unorganized at many levels and needs a lot of government reforms for further improvisation.

Opportunities

The western countries are now setting up their manufacturing units in India which single handedly opens up a wide array of possibilities for all the stakeholders within the textile industry.

Experts believe that the golden era of Chinese textile and apparel exports is over and the production base of global textiles is gradually shifting from China to India, Pakistan and other low cost destinations.

Threats:

Even though experts claim that China is past its glorious days, still one cannot afford to take china lightly and has to keep in mind the capability of Chinese exporters to supply quality products at cheap prices. Indian textile exporters cannot afford complacency and need to be on their toes for any changes within the international trade community.

Final Thought:

Global textile production has witnessed the growth of an astounding 25 percent (including the Textile Accessories ) in the last decade. Asian markets will continue to spearhead the growth of the textile industry in the years to come and the textile industry could go beyond the current $500 billion mark any time soon.

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Indian ban pushes Bangladeshi spinners to Australian cotton

Tuesday, June 8th, 2010

Submitted by Saurav Shukla

Dhaka, June 8 : Spinners in Bangladesh are switching to expensive cotton from Australia due to “uncertainties” caused by India’s export restrictions, the New Age newspaper said Tuesday.

Although India last month eased the restrictions partially, the newspaper said the spinners, awaiting arrival of 150,000 tonnes of Indian cotton contracted before a April 21 ban, found the suppliers “prevaricating”.

It quoted Syed Ishtiaq Ahmed, a director of Bangladesh Textile Mills Association (BTMA), as saying that Indian suppliers were not delivering the negotiated consignments, citing many pretexts.

“Bangladeshi spinners are even ready to pay cotton duty imposed by the Indian authorities but the suppliers are saying that they are unable to arrange stocks,” Ahmed said.

He said due to high costs, Australian cotton earlier did not attract them. But “global supply shortage and restriction on cotton exports by India this year have pushed Bangladeshi spinners to turn to Australian cotton”.

The Indian government had clamped the ban on export of cotton in a bid to control rising prices in the domestic market. It withdrew on May 21 the ban on Bangladesh and Pakistan bound consignments but on condition that export consignments would have to be licensed and contracted before the ban.

Shawkot Aziz Russel, managing director of the Partex Group, which has several spinning units, said no local spinner was sure about delivery of cotton consignments that had been contracted before the ban.

“Indian suppliers are telling us that they are yet to get clearance for shipping cotton to Bangladesh,” said Russel, whose company’s annual cotton procurement from India amounts to around $15 million.

Industry insiders estimate more than 150,000 tonnes of Australian cotton have been booked by Bangladeshi spinners.

“Nearly 30,000 tonnes of Australian cotton have been booked in the last few weeks by the Bangladeshi importers,” said Deepok K. Baral, managing director of DSM Commodities, a leading cotton merchant.(IANS)

Singapore-based Olam, a top global commodity trading house, alone has dealt more than 20,000 tonnes cotton contracts, said Baral, who represents Olam in Bangladesh.

China, Indonesia and Vietnam are major buyers of Australian cotton, but Bangladesh’s annual procurements from Australia remain at 5,000 tonnes or less.

News Source is http://www.topnews.in/

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Textiles exports may touch $24 billion in 2010-11

Monday, May 24th, 2010

SME Times News Bureau
With the revival of demand in Western markets, India’s textile exports may grow up to $24 billion in 2010-11 from an estimated $20 billion in the previous fiscal, industry and government officials have said in New Delhi.

“In 2009-10, our textiles exports are estimated at $20 billion due to the global economic crisis. We expect exports to be $24 billion for the current fiscal,” an official in the Textile Ministry said.

The textile exports are set to move in sync with the country’s overall exports, which have been growing for six months since November, 2009.

Federation of Indian Export Organisations (FIEO) President A Sakthivel said textile exports can reach $24 billion if the government extends a helping hand to the industry, which is facing problems.

There has been a steep rise in cotton prices, which shot up by over 20 per cent in the past six months, resulting in higher fabric costs.

“The target can be met provided the government continues some regulations on cotton and cotton yarn exports,” he said.

The government has brought cotton exports under the restricted category, with overseas shipments subject to licensing.

US and European markets, which account for 30-35 per cent of textile exports from India, have seen revival of demand across different sectors, exporters said.

The exporters are also exploring new markets like Africa, Latin America and Oceania.

“Orders are improving. Demand for fabric has also gone up,” said Confederation of Indian Textile Industry (CITI) Secretary General D K Nair.

News Source is http://smetimes.tradeindia.com

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Removing mistrust through bis coopn

Thursday, May 20th, 2010

United News of India

Setting aside political differences, India and Pakistan have decided to change public perception and remove the existing mistrust between the two countries through promotion of trade and business ties.

A two-day meeting of top Indian and Pakistani CEOs and entrepreneurs here, which concluded today, proposed several steps to aggressively pursue the benefits of economic cooperation and identified several sectors having the highest potential for bilateral cooperation.

These include energy, agriculture, health-care, information technology and education.

The conference which was inaugurated by Finance Minister Pranab Mukherjee yesterday, also urged the governments in both the countries to take all steps necessary to realize the tremendous potential of trade and commerce between the two countries. The meeting noted with concern that South Asia is the world’s least economically integrated region.

Mr Mukherjee, who was the External Affairs Minister when the 26/11, 2008, terror attacks on Mumbai took place, stressed the strong linkage and inter-dependence between peace and sustained economic growth and development of the two countries.

After the two-day deliberations, industry leaders of both the countries agreed that economic cooperation was crucial to peace and progress in a region that has the highest concentration of people living below the poverty line.

The participants said potential existed for the export of home textiles from Pakistan to India while a huge market existed in Pakistan for India’s polyester textiles.

In the field of IT, the fastest growing sector in both countries and the easiest area to cooperate in, India could collaborate with Pakistan by providing skilled resources at competitive rates.

Considerable potential existed for trade in agriculture through streamlining logistics and storage facilities.

The Joint Declaration said India and Pakistan could also collaborate on research for improved yields in, and greater export for, both the countries. In health-care, opportunity for collaboration existed in research and combating the three major diseases in both the countries–heart, diabetes and cancer.

For energy cooperation, the conference said both the countries had huge untapped reserves of energy and collaboration could lend impetus to accelerated growth and development.

In education, given the low average age in both countries (18.2 years in Pakistan and 22.5 years in India), education and skill development was an area of immediate concern and potential.

Cooperation and sharing of strategies in education is the best investment that both the countries can make, the Joint Declaration said.

Committees comprising business leaders from both the countries were established for IT and textile sectors while similar committees for other sectors were in the process of being set up, it added.

News’s Source is http://www.centralchronicle.com/

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Exports in April jump 36%; imports surge 43%

Thursday, May 20th, 2010

The real interesting story here is the huge surge in imports because I have never seen numbers this large. Dr Rahul Khullar New Delhi, May 19

Exports in 2010-11 have kicked off on a positive note with shipments in April the first month of this fiscal posting a 36.2 per cent year-on-year growth to touch $16.9 billion.

However, the robust growth comes over a low base. Last April, exports had fallen by 30 per cent to $12.4 billion due to the financial crisis.

It is not surprising that the Government did not express any great enthusiasm about the export growth in April.

Don’t get carried away by these numbers. You have an increase in percentage terms (in April) because of the low base (of April 2009), the Commerce Secretary, Dr Rahul Khullar, told reporters here on Wednesday.

Dr Khullar expressed concern over the Euro zone debt crisis and the US’ slow economic recovery. The US and the European Union are traditional markets for Indian exports with the EU accounting for a fifth of total exports, while shipments to the US comprise 12 per cent.

Meanwhile, indicating strong industrial recovery and increasing domestic growth, imports in April recorded a huge 43.3 per cent increase to $27.3 billion from $19.1 billion in April 2009. Oil imports rose to $8.1 billion from $4.7 billion in April last year, while gems and jewellery imports rose 118 per cent, chemicals (47 per cent) and iron and steel (141 per cent).

Revival signal The real interesting story here is the huge surge in imports because I have never seen numbers this large. Over $8 billion jump in a month, Dr Khullar said.

Mr A Sakthivel, President, Federation of Indian Export Organisations, said the import growth is an indication of revival of manufacturing sector which in turn will facilitate exports. Industrial production is registering double digit growth and the growth in March was 13.5 per cent. Industrial growth for 2009-10 was 10.4 per cent.

On the future outlook regarding exports, the Commerce Secretary said, Given the current global uncertainties, I won’t say things are fine on the export front. The situation in EU is certainly not normal. Recovery in US is still far from gung-ho. Therefore, to expect that exports (for 2010-11) will grow at 25-30 per cent is a pipedream. But when you get some degree of greater assurance, that is when jobs are back in the US and the employment situation starts picking up in Europe, then all of us will be able to breathe much easier than we are today.

Exports from sectors like textile (30 per cent growth), engineering goods (up 16 per cent), marine, petroleum products (80 per cent growth), gems and jewellery (36 per cent increase) posted a rise while food grains and handicrafts are faring poorly. Trade deficit for April increased to $10.4 billion from $6.7 billion in the same month last year.

The Government has set an export target of $200 billion for 2010-11, a 13 per cent growth over $176.5 billion in 2009-10.

Mr Sakthivel said, We need to regularly review our strategy in view of the set back in Euro zone. We hope the crisis won’t spread.

Mr Aman Chadha, Chairman, Engineering Exports Promotion Council, said, The weak sentiment in Euro zone is impacting our business. But certain markets like Germany and Italy are better, especially for segments like auto and auto parts. However, it is difficult to predict the future outlook.

India’s exports had contracted for 13 consecutive months starting October 2008. It turned positive in November 2009.

Dr Khullar said the Commerce Ministry is doing a stock-taking exercise in consultation with the industry to understand which sectors need to be incentivised in the forthcoming Foreign Trade Policy supplement to boost exports.

Mr Sakthivel demanded concessional credit to exporters as the interest rate in India is higher than what is prevailing in competing countries.

Article’s Source is http://www.thehindubusinessline.com/

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Silver lining: Exports of textiles to US on the rise

Tuesday, May 18th, 2010

M Allirajan, TNN, May 18, 2010, 12.21am IST

COIMBATORE: After declining for several months because of the global financial meltdown, textile exports to the US are finally back on track, recording growth in February and March. Textile and apparel exports to the US, which account for more than a quarter of shipments made by the industry, rose 8.3% year-on-year (y-o-y) in March to $487.8 million. Exports increased 7.7% y-o-y to $443.5 million in February, data with the office of textiles and apparel, US Department of Commerce shows.

Apparel exports to the US, however, posted a modest 2.8% growth in March to $315.1 million. “Demand has started to pick up in the US. The bookings are quite reasonable and (trade) enquiries have also been quite good,” says Premal Udani, chairman, Apparel Export Promotion Council (AEPC).

“We are seeing a real improvement across all segments of the industry. Orders are coming in and after nearly two years of slowdown we are witnessing a recovery,” says P Nataraj, managing director, KPR Mill. “The recovery is slowly taking shape in both domestic and international markets.” “This year (fiscal 2011) would definitely be better,” says A Sakthivel, president, Tirupur Exporters’ Association (TEA).

Garment exports to the EU, the largest market bloc for Indian markets, however, continues to remain weak. “Europe (demand) is somewhat weak because of the uncertainty faced by some countries (in the region),” says Udani.

“Orders to EU countries have been quite weak but the US has been much better,” says an exporter. Apparel exports to the EU are estimated to have come down by 16.8% to $4.5 billion in fiscal 2010.

While the industry is seeing a silver lining, some officials advise caution. Though inquiries are good, exporters are finding it difficult to convert them into orders as they have been adversely hit by rising raw material prices and the rupee appreciation, says Sakthivel.

News Source is http://timesofindia.indiatimes.com

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Dhaka textile firms lack skilled hands

Saturday, May 15th, 2010

PALPA: The cottage industries in Palpa are facing a shortage of workers after the youths from the district have been lured towards foreign employment. This situation has arisen after increasing number of youths from the district started going for foreign employment due to the low wages and irregular pay at home.

The traditional Dhaka textile industries, a hallmark of Palpa district, have been hit hard by shortage of skilled workers.

The Karki Dhaka Udhyog located in the district headquarters Tansen is facing shortage of manpower at present. This Dhaka textile factory needs approximately 60 skilled and semi-skilled workers. There are only 25 workers at present.

Proprietors of Dhaka textile industries in Palpa district say they are facing shortage of skilled human resources as an increasing number of youths started going abroad for work or those already employed at their factories left their jobs to go on foreign employment. Although more than 400

industries, including the Dhaka textile industries, have been registered in Palpa district, not even 50 per cent of them are in operation due to the shortage of skilled workers, an officer at the District Cottage and Small Industries Office said.

News Source is http://www.thehimalayantimes.com

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Industry grows 10.4% in ’09-10

Thursday, May 13th, 2010

NEW DELHI: The rate of expansion in industrial production slowed down to 13.5% in March from 15.1% in February as a partial withdrawal of stimulus measures and a rate hike took their toll but enough to ensure over 7% GDP growth rate for 2009-10.

This is the sixth consecutive month when the industrial output has posted a double-digit growth. For the full fiscal, industrial output grew at 10.4% against 2.8% in the previous fiscal when the global slowdown hit the economy.

Finance minister Pranab Mukherjee said the growth in March industrial output may have declined marginally but it was still good enough to ensure a 7.2% economic growth during 2009-10. For Planning Commission deputy chairman Montek Singh Ahluwalia too the marginal dip in March industrial growth figures will not impact th GDP estimates.

Commerce and industry minister Anand Sharma described the drop as “minor fluctuations”. “We will review as to why some slowdown is there and we will go into the reasons at ways of intervention to correct it,” he told reporters.

Analysts expect the factory output to ease a little more in the coming months due to the twin impact of withdrawal of stimulus and uncertainty about the global economic recovery. They also did not see the RBI as tightening policy based on these numbers. The RBI will wait for cues on inflationary pressures, demand in the economy and the overall global economic situation before tightening policy further.

Manufacturing, which makes up nearly 80% of the index for industrial production, grew by 14.3% in March. Mining recorded an increase of 11% and electricity generation 7.7%. Fourteen out of the 17 industrial groups showed positive growth in March. The sectors that witnessed negative growth were jute, textile products and wool, silk and man-made fibre textile.

Consumer durables, which was particularly hit by the global crisis, expanded 32% in the month, while capital goods production rose 27.4%. Consumer non-durables, which include consumer goods like toiletries and cosmetics, however, grew a modest 3.3% during March.

News source is http://timesofindia.indiatimes.com

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Textile mills shut across the country in protest

Wednesday, May 12th, 2010

FAISALABAD/KARACHI All the textile mills remained closed throughout the country on Tuesday in the wake of a strike call given by Value-Added Textile Forum against the yarn and cotton crisis and power load shedding.

Value-Added Textile Forum sources told TheNation that complete strike was observed in Faisalabad as well as in the country by the textile sector while some 10,000 textile mills were totally closed in Faisalabad including 400 stitching, 300 dying, 450 printing, 1,000 hosiery and 350 sizing units.

Rallies were organised in all the four districts of Faisalabad division including Jhang, Chiniot, Toba Tek Singh and Faisalabad districts. Protest were also reported from other major cities including Karachi, Gujranwala, Sialkot and Multan.

Most of the rallies were led by the factory owners. Thousands of textile workers took part in the rallies. The protesters carried banners and placards inscribed with slogans: ‘Save the Textile Industry, Save the Country and Clamp Complete ban on export of cotton and yarn’.

The activists also chanted slogans against Prime Minister Yousuf Raza Gilani and President Asif Zardari. The workers warned the government of dire consequences, asserting they would not allow anyone to play with the livelihood of the laborers.

Thousands of workers and owners of value-added textile sector took out protest processions from various places and blocked the city roads. The main protest procession was taken out from Khurrianwala Industrial Estate, which was led by Chairman Pakistan Textile Exporters Association Khurram Mukhtar and Vice Chairman Sohail Pasha and other leaders of Value-Added Textile Forum. The rally demanded total ban on export of yarn with a view to saving the industry from collapse and the workers jobs.

Read more here http://www.nation.com.pk

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Eurozone crisis may hit exports to EU: Fin Secy

Tuesday, May 11th, 2010

SME Times News Bureau
The Eurozone debt crisis may have some adverse short-term impact on Indian exports to the European Union, said Finance Secretary, Ashok Chawla on Monday.

Inaugurating ASSOCHAM organized Conference on Banking and Financial Regulators in New Delhi, Chawla admitted that India’s exports in short term to the EU and it’s market could face some problem due to it’s ongoing financial crisis.

Chawla, however, added that the financial turmoil will have “minimum effect” on India’s exports in current fiscal.

“In the long run, however, the impact would be negligible as India has faced bigger crisis of larger volumes without letting it’s economy shrink beyond a point and the current crisis of Europe are going to be a temporary affair,” he said.

“Therefore, there is no need to worry on this front,” assured the Finance Secretary.

On the same day, Commerce Minister Anand Sharma told reporters at the sidelines of a conference in the national capital that India has not seen any significant adverse impact from the European debt crisis.

A crisis of confidence in Europe has been triggered by a potential debt default by Greece. The European Union and the International Monetary Fund (IMF) have announced a $1 trillion emergency financial aid package, which is expected to stabilise world financial markets and curb speculative attacks on the Euro.

With the euro gaining USD 1.30 in the late European morning trading on Monday after assurances by European leaders to save the currency from falling apart, Indian firm who export a bulk of their products to the EU heaved a sigh of relief. In many export segments like garments, 50-70 percent of the invoicing is done in euro.

Chawla went on adding that domestic capital market would also absorb the off shoot of crisis, arisen in European markets in the sense that FIIs investments into it would continue and the flight of their capital is unlikely to other destinations.

The domestic economy, according to the Finance Secretary would move on to double digit growth rate but the challenge for policy maker will remain for this growth to be made inclusive.

Source of this news is http://smetimes.tradeindia.com

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