Made in india textile and garments industry
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Transcript of Made in india textile and garments industry
International EconomicsGroup 4 (Amit, Anoop, Bhavia, Rahul and Vivek)
PGDM Executive 2014-15
To understand the factors
influencing the purchase intention of branded Perfumes
Introduction
Advantage India
Key Facts
Strategies Adopted
Growth Drivers
1
2
3
4
5
Policy Support
FDI in Textiles & Garments
Opportunities
Conclusion
7
8
9
10
AGENDA
US, Canada Europe
ASEAN
China
South Asia
Over The Years, Production Has Converged Towards Asia From Western Countries
Production Hubs
Consumption Centres
CAFTA / CBI
South Asia
Japan
China
INTRODUCTION
CountryTrade Value in
2000(US$ mn)
CAGR since 2000
Korea Republic 5027 -12%
Dominican Republic 2555 -10%
USA 8629 -8%
Mexico 8631 -7%
Canada 328 -6%
CountryTrade Value in
2000 (US$ mn)
CAGR since 2000
Vietnam 1821 22%
Cambodia 970 18%
China 36071 16%
Bangladesh 5067 10%
India 5960 8%
Pakistan 2144 8%
Declining Apparel Exports of Western / Developed Countries
Growing Apparel Exports of Asian Countries
INTRODUCTION
TEXTILES AND APPARELEXECUTIVE SUMMARY … (1/2)
Rising per capita income,favourable demographics and a
shift in preference to brandedproducts to boost demand
Favourable trade policies andsuperior quality to drive textile
exports
Increase in domestic demandset to boost cloth production
CAGR: 11.2% 141
100
67
2014 2017E 2021E
2014 2017E 2021E
CAGR: 10.8%82
6540
2014 2017E 2021E
2014 2017E 2021E
CAGR: 20.8% 112
63.5
33
The domestic textile andapparel industry in India is
estimated to reach USD 141billion by 2021 and USD 100billion by 2017 from USD 67
billion in 2014
Textile and apparel exportsfrom India is expected to
increase to USD 82 billion by2021 and to USD 65 billion by2017 from USD 40 billion in
2014
Total cloth production in India isexpected to grow to 112 billion
square metres by FY17 from63.5 billion square metres in
FY14
2014 2015(P)* 2017E
Source: Ministry of Textiles, Make in India
INDIA SNAPSHOT
TEXTILES AND APPARELEXECUTIVE SUMMARY … (2/2)
Rising government focus andfavourable policies to support
the industry
CAGR: 1.7% 4.25
4.18
11th plan outlay Proposed 12th planoutlay
In the 12th Five Year Plan, theGovernment plans to provide abudgetary support to textiles ofUSD 4.25 billion against USD
4.18 billion in the 11th Five YearPlan
USD (billions)
Source: Ministry of Textiles
INDIA SNAPSHOT
TEXTILES AND APPAREL
2014•
MarketValue:
USD99billion
•
•
•
Robust demandIncreased penetration of organized •
retail, favorable demographics, andrising income levels to drive textiledemand
Growth in building and constructionwill continue to drive demand for non-clothing textiles
AdvantageIndia
Competitiveadvantage •
Abundant availability of raw materialssuch as cotton, wool, silk and jute
•
India enjoys a comparative advantagein terms of skilled manpower and incost of production relative to major
textile producers •
Increasing investmentsHuge investments are being made byGovernment under Scheme forIntegrated Textile Parks (SITP)-(USD 184.98 Million) and TechnologyUp gradation Fund Scheme (TUFS)-(term loan sanctioned in Feb,2015-USD 2198.45 Million) to encouragemore private equity and to train
workforce.
Policy support100 per cent FDI (automatic route) isallowed in the Indian textile sector
Under Union Budget 2015-16,government has allocated USD 39.81
million for integrated parks in India
Free trade with ASEAN countries andproposed agreement with EuropeanUnion will boost exports
2023F
MarketValue:
USD226billion
Source: Federation of Indian Chambers of Commerce and Industry
ADVANTAGE INDIA
TEXTILES AND APPAREL
The textile and apparel industry can be broadly divided into two segments:
Yarn and fibre (include natural and man-made)
Processed fabrics (including woolen textiles, silk textiles, jute textiles, cotton textiles and technical textiles),Readymade Garments (RMGs) and apparel
Key segments of the textile industry
Process
Output
Rawmaterial
Cotton,jute, silk,
wool
Ginning Spinning
Fibre* Yarn
Weaving/knitting
Fabric
Processing
Processedfabric
Garment/apparel
production
Finalgarment/Apparel
Yarn and fibre segment Woollen textiles
Silk textiles
Jute textiles Technical textiles
TEXTILE AND APPAREL SECTOR
TEXTILES AND APPAREL
The fundamental strength of the textile industry in India is its strong production base of wide range of fibre/yarns from naturalfibres like cotton, jute, silk and wool to synthetic /man-made fibres like polyester, viscose, nylon and acrylic
According to UN Comtrade data released in June, 2014
India was announced as the world’s second largest exporter of textiles and clothing in the world
And 6th largest exporter of clothing only
India accounts 63 per cent of the market share of textiles and garments
India is the 2nd biggest producer of silk and cotton
Indian textile industry accounts for about 24 per cent of the world’s spindle capacity and 8 per cent of global rotor capacity
India has the highest loom capacity (including hand looms) with 63 per cent of the world’s market share
India accounts for about 14 per cent of the world’s production of textile fibres and yarns (largest producer of jute, secondlargest producer of silk and cotton; and third largest in cellulosic fibre)
Source: Textile Ministry, Make in India
KEY FACTS
TEXTILES AND APPAREL
Textile plays a major role in the Indian economy
It contributes 14 per cent to industrial production and4 per cent to GDP
With over 45 million people, the industry is one ofthe largest source of employment generation in the
country
The industry accounts for nearly 13 per cent of totalexports
The size of India’s textile market in 2014 was USD 99.0billion which is expected to touch USD 226 billion market by
2023 at a CAGR of 8.7 per cent between 2009-23E
India's textile market size (USD billion)
226
CAGR: 8.7%
89 9970 78
2009 2010 2011 2014 2023E
Source: Ministry of Textiles
GROWTH OVER THE YEARS
TEXTILES AND APPAREL
Exports have been a core feature of India’s textile andapparel sector, a fact corroborated by trade figures
Exports grew to USD 35.4 billion in FY14 from USD 17.6billion in FY06, implying a CAGR of 9.1 per cent
Exports during FY15 (between April-November) touchedUSD 14.6 billion
However, in FY14 India’s Textile Exports crossed the markof FY12 also and touched USD 35.4 Billion.
India's textile trade (USD billion)
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14* FY15*
Exports Imports
Source: Ministry of Textiles
GROWTH OVER THE YEARS……
TEXTILES AND APPAREL
Readymade garments was the largest contributor to totaltextile and apparel exports from India in FY15 the segmenthad a share of 40 per cent
Cotton and man-made textiles were the major contributorswith shares of 31 per cent and 16 per cent, respectively
Shares in India’s textile exports (FY15)
Ready Made Garments
3%10%
16% 40%
31%
Cotton Textiles
Man Made Textiles
Handicrafts (Carpet,Handloom, Coir,
Handicrafts excludingcarpets)
Others (Silk, Wool,Jute)
Source: Ministry of Textiles
EXPORTS DISRTIBUTION
TEXTILES AND APPAREL
Company Business areas
Welspun India Ltd Home textiles, bathrobes, terry towels
Vardhman Group Yarn, fabric, sewing threads, acrylic fiber
Alok Industries Ltd
Raymond Ltd
Arvind Mills Ltd
Home textiles, woven and knitted apparel fabric,garments and polyester yarn
Worsted suiting, tailored clothing, denim, shirting,woollen outerwear
Spinning, weaving, processing and garmentproduction (denims, shirting, khakis and knitwear)
Bombay Dyeing & Manufacturing Bed linen, towels, furnishings, fabric for suits, shirts,Company Ltd dresses and saris in cotton and polyester blends
Garden Silk Mills Ltd Dyed and printed fabric
KEY PLAYERS
TEXTILES AND APPAREL
• Ministry of Textiles is encouraging investments through increasing focus on schemes suchIncreasing investment in
TUFS
Multi-Fibre Arrangement(MFA)
Public-PrivatePartnership (PPP)
Technical textiles
as Technology Up-gradation Fund Scheme (TUFS) and cluster development activities• TUFS for the textile sector to continue in the 12th Five Year plan with an investment target
of USD 24.8 billion
• With the expiry of MFA in January 2005, cotton prices in India are now fully integrated with international rates. In 2014, the government has cleared 13 proposal of new textile parks
in different states.
• The Ministry of Textiles commenced an initiative to establish institutes under the Public- Private Partnership (PPP) model to encourage private sector participation in the
development of the industry
• Technical textiles, which has been growing at around twice the rate of textiles for clothing applications over the past few years, is now expected to post a CAGR of 20 per cent over
FY11-17• USD 70.83 million has been allocated to promote the use of Geotechnical textiles in the
North East states. In FY14
Source: Ministry of Textiles
TRENDS IN INDIA’S TEXTILE SECTOR
TEXTILES AND APPAREL
Focus on high growthdomestic market
Focus on backwardintegration
Focus on forwardintegration
Diversification
• Welspun India is currently focusing on setting up a shop-in-shop strategy, where it will open shops in large retail stores, curtailing capex and risk, to focus on the domestic
market
• Welspun India plans to increase its internal supply of yarn and greige from ~35 per cent in February 2014 to 70-75 per cent by June 2014, through its backward integration strategy
• Vardhman Textiles Ltd has entered into garment manufacturing business through a collaboration with Nisshinbo, a Japanese manufacturer of yarns
• Raymond group under its group company J.K.Helene Curtis is looking to ramp up male grooming segment by unleashing new variants of shampoos and deos
STRATEGIES ADOPTED
GROWTH DRIVERS
Growing demand
Rising demand inexports
Inviting
Increasing demandin domestic market
due to changingtaste and
preferences
Growing populationdriving demand for
textiles
Policy support
100 per cent FDI intextile sector
Government settingup SITPs and Mega
Cluster Zones
Increasing loansunder TUFS
Increasing investments
Growing domesticand foreign
i
nvestments
Resulting in
Commitment ofUSD140 billion of
foreign investments
Governmentinvestment
schemes (TCIDSand APES)
Source: Ministry of TextilesNotes: TCIDS - Textile Center Infrastructure Development Scheme, APES - Apparel Park for Exports Scheme
GROWTH DRIVERS
CONTINUED SUPPORT TO TEXTILE SECTOR BY THE GOVERNMENT IN FY16 BUDGET
• USD 252 million has been allocated forTUFS scheme
•
•
USD 24.8 million has been allocated forNational Handloom Development
ProgramUSD 33.34 million has been allocated forHuman Resource Development
Stress onmechanisation
•
Union BudgetAllocation of USD 39.8million for apparel parks
Some of the key tax reliefsin Budget FY16:
• Zero excise duty for the Tax sops andcotton products financial
• Structure of the excise packageduty on Man-Made Fibrehas been same
•
Infrastructuresupport
•
under SITPUSD 26.05 million havebeen allocated for NERTextile Promotion
SchemeUSD 1.33 million hasbeen allocated to Trade
Facilitation Centre andCraft Museum
Source: Union Budget FY15-16, Ministry of TextileNotes: SITP - Scheme for Integrated Textile Parks,TUFS - Technology Up gradation Fund Scheme, NER - North East Region
CONTINUED SUPPORT …..
TEXTILES AND APPAREL
By 2014, India’s population had almost doubled comparedto figures 30 years before
The IMF expects India’s population to touch 1.34
India‘s population in billions
CAGR: 1.8%
1.261.34
billion by end-2019 as compared to 1.34 billion in2014
India’s growing population has been a key driver of textileconsumption growth in the country
Moreover, according to World Bank, urban populationaccounts for 32 per cent of the total population of India.This also works as demand driver due to changing taste
and preferences in the urban part of India
It has been complemented by a young population which isgrowing and at the same time is exposed to changing tastesand fashion
Complementing this factor is rising female workforceparticipation in the country
1.03
0.85
0.69
1980 1990 2000
1.2
2010 2014 2019F
Source: World Bank
CHANGING DEMOGRAPHICS…..
TEXTILES AND APPAREL
Capacity built over years has led to low cost of productionper unit in India’s textile industry; this has lent a strongcompetitive advantage to the country’s textile exportersrelative to key global peers
Growing Textile and Clothing Exports from India(USD billion)
35.4CAGR: 9.13% 33.3
The sector has also witnessed increasing outsourcing overthe years as Indian players moved up the value chain frombeing mere converters to vendor partners of global retailgiants
The strong performance of textile exports is reflected in thevalue of exports from the sector over the years. Textileexports grew by 11.7 per cent to USD 35.4 billion in FY14.
However, there is a growth (CAGR) of 9.13 per cent overthe period of FY07 to FY14
22.219.2
21.1
31.7
27.8
24.122.4
In the coming decades, Africa and Latin America could verywell turn out to be key markets for Indian textiles
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15*
Source: Ministry of Textiles, Budget 2015
(*data shown for FY15 is from April to November only)
STRONG GLOBAL DEMAND
TEXTILES AND APPAREL
Technology Up-gradation Fund Scheme
(TUFS)
National Textile Policy -2000
Foreign DirectInvestment
Scheme for IntegratedTextiles Parks (SITP)
Technical textileindustry
• TUFS for the textile sector to continue in the 12th Five Year Plan with an investment targetof USD 24.8 billion
• Investment was made to promote modernisation and up-gradation of the textile industry byproviding credit at reduced rates
• The policy was introduced for the overall development of textile industry• Key areas of focus include technological upgrades, enhancement of productivity, product
diversification and financing arrangements
• FDI of up to 100 per cent is allowed in the textile sector through the automatic route
• SITP was set up in 2005 to provide necessary infrastructure to new textile units; under SITP, 40 projects (worth USD900 million) have been sanctioned• The planned outlay for the textiles and apparel sector under the 11th Five Year Plan (20012-17) was USD 2.9 billion
• Government of India has planned an increase in the fund outlay for technical textiles industry to more than USD 117 million during the current 12th Five Year Plan (2012-17)
POLICY SUPPORT
TEXTILES AND APPAREL
•
•
North: Kashmir, Ludhiana andPanipat account for 80 per cent
of woollens in India
West: Ahmedabad, Mumbai,Surat, Rajkot, Indore and
Vadodara are the key places forcotton industry
• East: Bihar for jute, parts of UttarPradesh for woollen and Bengal
for cotton and jute industry
Major textile andapparel zones
• South: Tirpur,Coimabtore andMadurai for hosiery.
• Bengaluru, Mysore and Chennaifor silk
KEY TEXTILES AND APPAREL ZONES IN INDIA
100 per cent FDI is approved in the sector
Indian Textile industry experienced noticeable growth in theFY15, as FDI increased to USD 1587.83 million in FY15from USD 1424.92 million in FY14. In addition, till May’15FDI inflow in Textile industry stood at USD 1647.09 million.
During FY10-15, FDI in textiles and apparel industry grew ata CAGR of 14.21 per cent
The textiles industry in India is experiencing a significantincrease in collaboration between global majors anddomestic companies
International apparel giants, such as Hugo Boss, LizClaiborne, Diesel and Kanz, have already startedoperations in India
Trends of FDI in Textile Industry (USD million)
1,647.091587.83
1424.92
1226.021122.17
956.97817.26
FY10 FY11 FY12 FY13 FY14 FY15 FY16*
Source: Ministry of Commerce and Industry
FOREIGN INVESTMENTS INTO THE SECTOR
TEXTILES AND APPAREL
Immense growth potential
• The Indian textile industry is setfor strong growth, buoyed by
both strong domesticconsumption as well as exportdemand
• The sector is expected to bereached to USD 226 billion by
FY2023
• Population is expected to reachto 1.34 billion by FY2019
• Urbanisation is expected tosupport higher growth due tochange in fashion and trends
Private sector participation in silkproduction
• The Central Silk Board setstargets for raw silk productionand encourages farmers andprivate players to grow silk
• To achieve these targets,alliances with the private sector,
especially major agro-basedindustries in pre-cocoon and
post-cocoon segments has beenencouraged
Proposed FDI in multi-brand retail
• For the textile industry, theproposed hike in FDI limit in
multi-brand retail will bring inmore players, thereby providingmore options to consumers
• It will also bring in greaterinvestments along the entire
value chain - from agriculturalproduction to final manufacturedgoods
• With global retail brands assuredof a domestic foothold,
outsourcing will also risesignificantly
OPPURTUNITIES
TEXTILES AND APPAREL
Retail sector offers growthpotential
• With consumerism anddisposable income on the rise,
the retail sector has experienceda rapid growth in the pastdecade with several internationalplayers like Marks & Spencer,Guess and Next having enteredIndian market
• The organised apparel segmentis expected to grow at a
Compound Annual Growth Rate(CAGR) of more than 13 per cent
over a 10-year period
Centers of Excellence (CoE) forresearch and technical training
• The CoEs are aimed at creatingtesting and evaluation facilitiesas well as developing resourcecentres and training facilities
• Existing four CoEs, BTRA forGeotech, SITRA for Meditech,NITRA for Protech andSASMIRA for Agrotech, wouldbe upgraded in terms ofdevelopment of incubationcentre and support for
development of prototypes
• Fund support would be providedfor appointing experts to develop
these facilities
Foreign investments
• The government is takinginitiatives to attract foreign
investments in the textile sectorthrough promotional visits to
countries such as Japan,Germany, Italy and France
Notes: BTRA - The Bombay Textile Research Association, SITRA - South India Textile Research Association,NITRA - Northern India Textile Research Association, SASMIRA - Synthetic & Art Silk Mills Research Association
OPPURTUNITIES
TEXTILES AND APPARELALOK INDUSTRIES: INTEGRATED TEXTILE SOLUTIONS
Focus on specialityfabrics; plans to
Polyester yarn
Home textile
Garments - woven &knitted
Embroidery
Apparel fabric
Cotton andblended yarn
Tie-ups WithGlobal Retail
GiantsAcquisition of
QS to gain retailholding in the
UK -2007
Organic growthin textiles 1995*
Financial andtechnical
collaborationthrough JV
enter in technicaltextiles
JV with NTC - FY152008 ~USD4.01
billionturnover
2007 ISO 9001,2000 and three
other internationalaccreditations
FY05USD272
millionturnover
1986 1988 1990 1992 1993 1995 2003 2004 2006 2007 2008 2010 2011 2012 2013 2014 2015
Source: Company Annual Reports and Presentation,
ALOK INDUSTRIES
TEXTILES AND APPAREL
The city has more than 5,000 garment manufacturing and job work units, and is one of the most organized processing andfinishing garment clusters in India
Its hosiery hub became the first textile cluster in India to comply with zero liquid discharge guidelines
Exports from Tirupur (USD billion)• The textiles industry in Tirupur contributes about 80 per cent to India’s hosiery exports and around 3 Percent in tot export trade
• Exports from Tirupur increased at a CAGR of 8.3per cent from USD 1.4 billion in FY05 to USD 3
billion in FY 14
• The Government of India granted the city the statusof Town of Export Excellence
• To diversify from cotton, firms in Tirupur isevaluating the process to manufacture swim wear
and sports wear
2.52.4
1.9
1.4
FY05 FY06 FY07 FY08
CAGR: 8.3%
2.72.5 2.4
FY09 FY10 FY11
3.0
2.62.4
FY12 FY13 FY14
Source: Ministry of Textiles
TIRUPUR: TEXTILES HUB OF INDIA
THANK YOU