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TO STUDY THE MARKETING SYSTEMS OF ORGANISED TEXTILE MILLS

AND SUGGEST APPROCRIATE ONE IN THE WAKE OF WTO

A Report

Submitted to

N.R.Institute of Business Management

On

July 24,2004

In

Partial Fulfillment of the requirement for the Summer training in

Master of Business Management Programme

By

Vijay Shah

Avinash Rana

(MBA-1)


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Acknowledgements

Preparing a project of this nature is an arduous task and I were fortunate enough to get

support from a large number of persons to whom I shall always remain grateful.

I would record our gratitude to Ahmedabad Textiles Industries Research Association

(ATIRA) for allowing us to undertake the project.

I take this opportunity to thanks Dr. M.M.Gharia, Director for providing us opportunity

to work for ATIRA.

I are also desirous of placing on record profound indebtedness to Mr. RM.Shankar,

Principal Scientific Officer, ATIRA, for the valuable advice, guidance, precious time

and support that he offered.

Last be not the least, I would also like to thanks all the respondents for giving us their

precious time and relevant information and experience, I require which this project would

have been a different story.


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PREFACE

Textile sector has occupied important position in Indian economy since decades. It has

been second largest employment providing sector after agriculture in India and

constitutes 27% of Indias total exports.

The most important contribution of the textiles industry to the nation is the creation of

employment opportunities, which has been increasingly being a burden to absorb the

growing unemployment. Besides direct employment and income generation, the sector

has been largely responsible to generate additional employment and income in the

upstream and downstream industries such as machine manufacturing, packaging,

transport, domestic trade and export, agricultural activities and so on.

Indian textile industry has a very important role to play at the countrys macro economic

level. Just to put things in perspective, the sector contributes to almost 14% of the

industrial production and about 35% of the gross export earnings. The sectors

contribution to the GDP stands at over 6%. Due to all of the above, the growth of the

industry has a bearing on the development of the economy, especially exports.

The Indian textile industry is amongst the very few in the world that is truly vertically

integrated from raw material to finished products. It contains within itself, fibre-

production, spinning, knitting and weaving, as well as apparel manufacture.

Also India has highest area under irrigation for cotton in the world. So textile remains as

a critical industry for Indian people. Cotton has the largest share (around 58% of mill

consumption), Indian industry has over the years steadily diversified its raw material base

to include man-made fibres such as polyester, viscose, acrylic, polypropylene etc.(accounting for around 39% of raw material consumed), as well as other natural fibres

(including silk, wool, linen etc.).


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The agreement on textiles and clothing promises abolition of all quota restriction in

international trade in textiles and clothing by the year 2005. This provides tremendous

scope for export expansion from developing countries.

The dismantling of the quota regime represents both an opportunity as well as threat. An

opportunity because markets will no longer be restricted, a threat because markets will no

longer be guaranteed by quotas, and even the domestic market will be completely open to

competition.

With the removal of quotas for textile products from 1st Jan 2005 it would be important to

visualize its effect in advance and take counter steps to strengthen our position in global

market. It would be important for Indian textile industry to develop marketing systems

that can help it to sustain in changing scenario. So there is pressing need to study the

impact of the WTO and also know what major players of the industry are doing to face

the situation

Some of the renowned mills in the country had gained excellent reputation of providing

quality products and are exporting a significant amount to developed markets. So it

remains important to recognize this sector and help them prosper in the wake of WTO.

Although Indian textile sector has been doing significantly well in recent years but it

would be interesting to see what major composite mills are doing to face the challenges

posed by WTO and how they are trying to adapt to the changes.


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CONTENTS

Sr. No. Topics Page1. About ATIRA 1

2. Introduction to WTO 3

3. General implications of WTO on Indian textile industry 84. SWOT Analysis of Indian textile industry 10

5. Facts about Indian textiles 13

6. Research study 147. Role of government of government with regard to textiles 16

8. Primary data 19

9. Finding from the study 23

10. Recommendations 2711. Limitations 28

Annexures

I. Questionnaire 29

II. Graphs showing data about textile industry 29


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Executive summary

This project highlights the background of the Indian textile industry and opportunity in

the future scenario, which has in its store some threats and opportunities for the textile

industry caused by the removal of quotas. The objectives of the study was to study the

marketing systems of organized mills in Ahmedabad and to suggest an appropriate

marketing systems to enhance themselves in future scenario after removal of quotas.

The project emphasis on the preparedness and planning of the organized textile mills of

Ahmedabad.

The project includes the SWOT analysis of Indian textile industry, which reveals thatoverall India is in better position than most of the countries in textile sector. But still

India has to improve upon to emerge as major exporter of textiles in world market after

removal of quotas.

With objectives in mind we undertake this study, which included the secondary data as

well as primary data collection in the form of questionnaire. For primary data collection

convenient sampling was used. Care was taken that we has diverse respondents.

There is not much of the scope of using mathematical tools for analysis since sample size

was too small for that. This can be credited to the complexity and intricacy of

interviewing the top management of the mills in the limited time. Still the feedback form

the renowned mills included in the study cannot be ignored which can be applicable to

other mills.


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The important findings from the study are:

All the mills surveyed considered removal of quotas as favourable to their mills as

well as the industry.

They considered it necessary to focus on quality to sustain in future.

Import of textiles may not be threat to organized mill sector but they may prove

disastrous for small-scale textile units.

There may not be any change in advertising expenditure after removal of quotas.

Fabrics and ready-made garments would be focused more.

Major markets would be EU and US after removal of quotas.

PTAs and RTAs can affect Indian textile exports to certain extent.

It would necessary for the small-scale textile units to save themselves form biases

under the pretext of codes of conduct for industries.

Based on the findings form the primary sources and secondary sources and studying what

major mills of the country are doing to take removal of quotas as opportunity report has

suggested some of the recommendation that can be useful for other mills which are still ill

prepared or unaware of the situation. Some of the recommendations include price quality

match, focus on quality, increasing capacity if mills are to improve in exports, target fabrics

and RMG as main products, target US and EU as major markets and form strong distribution

network in EU.


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