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Thursday, August 23, 2007

Indian Textile & Apparels Industry – Challenges Ahead

(openPR) - On 23 Aug 2007, the textiletreasure.com online apparels magazine quoted Mr JK Arora the leading apparels expert as saying, "The Indian textile and apparels industry is in a stronger position now than it was in the last six decades. The industry, which was growing at 3 – 4 percent during the last six decades has now accelerated to an annual growth rate of 9 – 10 percent. There is a sense of optimism in the industry and textile and apparels sector has now become a ‘sunrise’ sector".

The catalysts, which have placed the industry on this trajectory of exponential growth are a buoyant domestic economy, a substantial increase in cotton production, the conducive policy environment provided by the Government, and the expiration of the Multi Fibre Agreement (MFA) on 31 December’2004 and implementation of Agreement on Textiles and Clothing (ATC).

The buoyant Indian economy, growing at the rate of 8 percent, has resulted in higher disposable income levels. The disposable income of Indian consumers has increased steadily. The proportion of the major consuming class (population that has an annual income of more than US$ 2000) has risen from 20 percent in 1995-96 to 28 percent in 2001-02. This is expected to move up to 35 percent by 2005-06, and to 48 percent by 2009-10. This translates into a growth of 9.3 percent over the next 8 years, and will result in higher spending capacity, manifesting itself in the greater consumption of textiles and apparels.

The Indian textile and apparels industry consumes a diverse range of fibres and yarn, but is predominantly cotton based. A significant increase in cotton production during the last two – three years has increased the availability of raw cotton to the domestic textiles and apparels industry at competitive prices, providing it with a competitive edge in the global market.

The Government has also provided industry a conducive policy environment and initiated schemes, which have facilitated the growth of the industry. The Technology Mission on Cotton has increased cotton production and reduced contamination levels. The Technology Upgradation Fund Scheme (TUFS) has facilitated the installation of the state-of-the-art / near state-of-the-art technology/machinery at competitive capital cost. The rationalization of fiscal duties has provided a level playing field to all segments, resulting in the holistic growth of the industry. Besides the government’s permission to allow import of a number of textile and apparels resources in terms of trimmings, embellishments, consumables and accessories, fabrics, linings/interlinings, etc. has made the apparels export industry in India much more competitive than ever before.

Not only this, the government, of late has been giving a lot of attention to strengthen infrastructure like roads, ports, power, water, telecommunications, etc. to supplement the efforts put in by the Indian textile and apparels industry to become a surrise industry.

To provide Indian consumers with world-class quality in textile and apparels and retail services, the government has recently allowed single-brand overseas retailers to set up retail shops in India. The multi-brand overseas retailers/super markets/investors are already in India to conduct wholesale business to feed existing retailers with quality products.

Quotas or quantitative restrictions imposed by developed nations, which restrained the export growth of the Indian textiles and apparels industry for over four decades, were eliminated with effect from 01 January 2005. This has unshackled Indian textiles and apparels exports, and this is evident from the growth registered in the quota markets. Apparels exports to the USA during 2005 and 2006 increased by 34.2 and 7.08 percent respectively, while textiles exports during 2006 to the US showed and impressive 12.42 percent growth. Similarly, in Europe, apparels exports increased by 30.6 and 17.50 % respectively in 2005 and 2006, while textile exports registered 2.2 and 3.5 percent growth in the similar period respectively. The increasing trends in exports is expected to continue in the years to come.

If we look at the US and EU import statistics for apparels alone, we find that these major global players are not inclined to source exclusively from China and India is considered as the second most preferred destination for major global retailers due to its strength of vertical and horizontal integration.

The Indian government has always and is continuing to consider the role of textiles and apparels manufacturing units in India as very critical in achieving the objectives of faster and more inclusive growth, and has laid emphasis on policies aimed at creating an environment in which entrepreneurship can flourish.

The textiles and apparels industry is targeted to grow at the rate of 16 percent in value terms to reach the level of US$ 115 billion (exports US$ 55 billion; domestic market US$ 60 billion) by 2012, while the fabric production is expected to grow at the rate of 12 percent in volume terms. Apparels alone are expected to grow at the rate of 16 percent in volume terms and 21 percent in value terms, while exports are expected to grow at the rate of 22 percent in value terms,

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