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Indian Cotton & Textile Industry (Pratik Dokania)

Introduction
Indias textiles sector is one of the mainstays of the national economy and
contributes nearly 14% to Indias industrial output.
It is also one of the largest contributing sectors of Indias exports contributing
about 11% to the countrys total exports basket.
India earns about 27% of its foreign exchange through textile exports
India is the worlds second largest producer of textiles and garments after
China and accounts for about 14% of the world's production of textile fibres
and yarns.
India is the largest producer of jute, second largest producer of silk and
cotton; and third largest in cellulosic fibre.
India has the highest loom capacity (including hand looms) with 63 per cent
of the world's market share.
Indias domestic textile and apparel industry stands at $67bn and exports at
$41.4bn in the year 2014-15, up from $39.3bn in the last year, a marginal rise
of 5.4% compared to last year, whereas export of cotton textiles and raw
cotton touched $11.3bn in 2014-15 as against $13.3bn in 2013-14, a fall of
14.7%.
The textiles industry is labour intensive and is one of the largest employers.
Currently provides direct employment to more than 35 million people and
another 55 million in allied activities. It is the second largest employer after
agriculture
The textile and apparel industry can be broadly divided into two segments,
namely
Yarn & fibre, which includes handloom, handicrafts, sericulture, power
looms in the unorganised sector and
Processed fabrics & apparel in the organised sector.

Evolution of Cotton textile Industry (Rahul)


The modern textile industry took birth in India in the early nineteenth century
when the first textile mill in the country was established at fort Gloster near
Calcutta in 1818.
The cotton textile industry, however, made its real beginning in Bombay, in
1850s. The first cotton textile mill of Bombay was established in 1854 by a
Parsi cotton merchant then engaged in overseas and internal trade.
Indeed, the vast majority of the early mills were the handiwork of Parsi
merchants engaged in yarn and cloth trade at home and Chinese and African
markets.
The first cotton mill in Ahmedabad, which was eventually to emerge as a rival
centre to Bombay, was established in 1861. The spread of the textile industry
to Ahmedabad was largely due to the Gujarati trading class. The cotton textile
industry made rapid progress in the second half of the nineteenth century and
by the end of the century there were 178 cotton textile mills; but during the
year 1900 the cotton textile industry was in bad state due to the great famine
and a number of mills of Bombay and Ahmedabad were to be closed down for
long periods.
The two world War and the Swadeshi movement provided great stimulus to
the Indian cotton textile industry. However, during the period 1922 to 1937 the
industry was in doldrums and during this period a number of the Bombay mills
changed hands.
The Second World War, during which textile import from Japan completely
stopped, however, brought about an unprecedented growth of this industry.
The number of mills increased from 178 with 4.05 lakh looms in 1901 to 249
mills with 13.35 lakh looms in 1921 and further to 396 mills with over 20 lakh
looms in 1941.
By 1945 there were 417 mills employing 5.10 lakh workers. The cotton textile
industry is rightly described as a Swadeshi industry because it was developed
with indigenous entrepreneurship and capital and in the pre-independence era
the Swadeshi movement stimulated demand for Indian textile in the country.
The partition of the country at the time of independence affected the
cotton textile industry also. The Indian union got 409 out of the 423
textiles mills of the undivided India.
14 mills and 22 per cent of the land under cotton cultivation went to
Pakistan.
Some mills were closed down for some time. For a number of years since independence,
Indian mills had to import cotton from Pakistan and other countries. After independence,
the cotton textile industry made rapid strides under the Plans.
Between 1951 and 1982 the total number of spindles doubled from
11 million to 22million.
It increased further to well over 26 million by 1989-90

Major Trends (Rashi)


Ministry of Textiles is encouraging investments through increasing focus on
schemes such 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 USD24.8 billion
With the expiry of MFA in January 2005, cotton prices in India are now fully
integrated with international rates
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% over FY11-17
Fabric production rose from FY 2007 to 2014 with CAGR of 2.7% Major segment
cotton: 74%
Yarn grew from 3.8 million tonnes to 5.3 tonnes in FY 2014 thereby reporting a
CAGR of 4.9%
Man-made fibre CAGR of 1.7% FY07 to FY 2014
Strengths include
o Favourable trade policies
o Rising per capita income
o Shift towards branded products
o Increase in domestic demand
o Vast textile production capacity
o Large pool of skilled and cheap work force
o Entrepreneurial skills
o Efficient multi-fibre raw material manufacturing capacity
Weakness include
o Increased global competition in the post 2005
o trade regime under WTO
o Imports of cheap textiles from other Asian neighbours
o Use of outdated manufacturing technology
o Poor supply chain management
o Huge unorganized and decentralized sector

Indias Exports (Rengarajan)


India has overtaken Germany and Italy to emerge as the world's second
largest textile exporter. But it lags China, whose exports are nearly seven times
higher.
Data released by the Apparel Export Promotion Council, the industry body for
garment exporters, showed that India's textiles exports were estimated at $40
billion in 2013, compared with China's $274 billion.
Textiles includes everything from fibre and yarn to fabric, made-ups and
readymade garments made of cotton, silk, wool and synthetic yarn.
Over 55% of the global trade relates to readymade garments, where India ranked
sixth in 2013 with exports of $16 billion, which is around 40% of the country's
textiles exports.
India beat Turkey to move up a notch. For China the share of garments is
estimated at close to 60%, indicating that the government needs to provide a
bigger fillip to the readymade industry.
Apart from China, Italy and Germany, smaller countries such as Bangladesh and
Vietnam have overtaken India in recent years as major suppliers to retail chains in
Europe and the US on the back of cheap labour and lower-duty access
The industry had expected part of the business from Bangladesh to shift to India
after accidents in factories raised safety concerns. But it managed to log 18%
growth in the garments segment in 2013, compared to global growth of 6%.
Over the past few months the Indian garment industry has staged a recovery of sorts
which can be seen in the 23% rise in exports of shirts, trousers, skirts and other
readymade garments during 2013. Exporters said a change in focus to markets
beyond the US and the EU has helped. As of 2011 India accounted for 5.11% of
global textile exports
Exports in billion dollars
Country
China
India
Italy
Germany
bangladesh
World

2012
246
33
34
35
24
738

Biggest importers from India (cotton) 2014

China
Pakistan
Sri Lanka
Turkey
Egypt

3.22 billion
381 million
200 million
190 million
160 million

2013
274
40
36
35
28
773

growth
11
21
6
0
17
5

Road Ahead (Pratik Chakraborty)


Chinas devaluation of Yuan has made Indian exports to China more
uncompetitive and is likely to further widen the bilateral trade gap.
The Apparel, Made-ups and Home Furnishing Sector Skill Council (AMHSSC) will
train 20 lakh people by 2022 under the skill development programme
Road Ahead
The future for the Indian textile industry looks promising, buoyed by both strong
domestic consumption as well as export demand.
With consumerism and disposable income on the rise, the retail sector has
experienced a rapid growth in the past decade with the entry of several
international players like Marks & Spencer, Guess and Next into the Indian
market.
The organised apparel segment is expected to grow at a compound annual
growth rate (CAGR) of more than 13 per cent over a 10-year period.
The Indian textile industry has the potential to grow five-fold over the next ten
years to touch US$ 500 billion mark on the back of growing demand for
polyester fabric, according to a study by Wazir Advisors and PCI Xylenes and
Polyester.
Government Initiatives
The Indian government has come up with a number of export promotion policies
for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles
sector under the automatic route.
Duty free entitlement to garment exporters for import of trimmings,
embellishments and other specified items increased from 3 per cent to 5 per cent.
This initiative is expected to generate an additional RMG exports estimated at Rs
10,000 crore (US$ 1.61 billion).
The government has also proposed to extend 24/7 customs clearance facility at
13 airports and 14 sea ports resulting in faster clearance of import and export
cargo.
The proposal for imposing duty on branded items was dropped providing relief to
the entire value chain.
The Ministry of Textiles has approved a 'Scheme for promoting usage of
geotechnical textiles in North East Region (NER)' in order to capitalise on the
benefits of geotechnical textiles. The scheme has been approved with a financial
outlay of Rs 427 crore (US$ 69.12 million) for five years from 2014-15.
The Ministry of Textiles, Government of India plans to enter into an agreement
with Flipkart to provide an online platform to handloom weavers to sell their
products.
The foundation stone of the Trade Facilitation Centre and Craft Museum was laid
by Mr Narendra Modi, Prime Minister of India at Varanasi.
Detailed arrangement for purchase of cotton from the farmers by the Cotton
Corporation of India Ltd (CCI) under the Minimum Support Price Operation was
monitored. 343 purchase centres were finalised in consultation with the State
Governments after meetings with officers of CCI and the cotton producing states,
resulting in streamlining of operations.

Value Chain

After this the the textile goes to the Designer


Distributor/Wholesaler Retailer