Textile Industry

Industry Overview
India is second largest producer of textiles and garments in the world. Abundant
availability of textile raw material such as cotton, wool, silk and jute as well as
skilled and cheap workforce have made India a sourcing hub. The Indian textile
industry which is currently estimated at around US$ 108 billion is expected to
reach US $ 141 billion by 2021. The Indian textiles industry accounts for about
24% of worlds spindle capacity and 8% of global rotor capacity.
Indias textile industry plays a very substantive role in national economy for net
foreign exchange earnings. Textile sector is also one of the largest contributing
sectors of Indias export it contributes around 11 percent of the countrys total
exports. The textile industry realized export earnings for the year 2013-14 was
worth US$41.57 billion. India has overtaken Italy, Germany and Bangladesh to
emerge as worlds second largest exporter of textile. Textile exports from India
are expected to touch US$ 300 billion by the year 2024-25 according to
projections made by a report. The tradition of country makes our textile unique in
comparison to the other countries this provides the industry with capacity to
produce a variety of products catering the needs of different market segments
both in India as well as across the world.
Textile industry in India from many decades has also made a major contribution
to the national economy in terms of direct and indirect employment generation.
The sector contributes about 14% to industrial production, 4% to gross domestic
product (GDP). Textile sector provides direct employment to over 45 million
people. The textile sector is the second largest provider of employment after
agriculture. Thus the growth and development of this industry has a direct
impact on improvement of Indias economy.

India's Textile market size (US $ billion)

250

223

200
150
100

India's Textile market size

(US $ billion)

108
70

78

2009

2010

89

50
0
2011

2014

2021E

Source: www.ibef.org

The market is expected to expand at a healthy CAGR of 9.6 percent over 2014-20

Textile Categories
The textile industry encompasses a range of industries which use a variety of
natural and synthetic fibres to produce fabrics. The textile industry can be
broadly classified into two major categories, the organized mill sector and the
unorganized mill sector. Various initiative and efforts are being made to take
urgent and adequate steps to attract investment and encourage wide spread
development and growth in the unorganized sector.
Indian textile industry can be divided into many segments some of which are
showcased below

Indian
Textile Industry
Indian Textile
Industry

Cotton Textile

Organized
Organized
Sector
Sector

Man-Made

Silk

Woolen

Jute

Decentralized
Decentralized
Sector
Sector

Cotton
Mills
Cotton Mills
(Private
(Private &
&
public)

Hand
Hand Looms
Looms
(Cloth)
(Cloth)

Spinning
Mills(Yarn)
Mills(Yarn)

Power Looms
(Cloth)
(Cloth)

Composite
Composite
Mills(Yarn
Mills(Yarn &
&
Cloth)

Cotton Second largest cotton and cellulosic fibres producing country in

the world. Cotton yarn production increased by about by about 10% during
2013-14. It provides employment to huge population but its production
and employment is seasonal in nature.
Silk India is the second largest producer of silk and contributes about
18% to the total world raw silk production. Mulberry, Eri, Tasar and Muga
are the main types of silk produced in the country. It is a labour-intensive
sector.
Wool India has 3rd largest sheep population in the world, having about
6.15 crores sheep, producing 45 million kg of raw wool, and accounting for
3.1% of total world wool production. India ranks 6 th amongst clean wool
producer countries and 9th amongst greasy wool producers.
Man-Made Fibres the fourth largest in synthetic fibres/yarn globally. Manmade fibres production increased by about 4% during the period 2013-14.
Advent of man-made fibres has led to significant change in the Indian
textiles industry.
Jute India is the largest producer and second largest exporter of the ecofriendly jute goods

Some of the Major Players in Indian Textile Industry

Domestic Players
Source: moneycontrol.com

Major
Players

About the Company

Arvind

Started in 1931, Arvind mill was set up

Net
Sales
In Cr.
5224.6

Net
Profit
In Cr.
377.43

Market
Cap
In Cr.
7336.69

Mills

Bombay
Dyeing

Raymond
Ltd:

Welspun
India Ltd

Alok
Industries

Digjam

with the aim of manufacturing high-end

super fine fabrics in India. Arvind mill
has carved a niche with brand names
such as Arrow, Flying machine, USPA,
Mega mart and Arvind store.
Company was established in 1879 as
small operation of Indian spun cotton
yarn dip dyed by hand. Currently the
company specializes in stylish linen,
towels,
home
furnishing,
leisure
clothing, kids wear and a whole range
of products available at over 350
Bombay dyeing exclusive stores and
over 2000 multi brand retail stores. It
also has a polyester division were it
uses NGSS technology from Invista
polyester technologies and Chemtex
Technologies INC, USA.
Raymond commands over 60% market
share western suiting in India and
ranks among the first three fully
integrated manufacturers of worsted
suiting in the world. It exports its
product to more than 55 countries
including USA, Canada, Europe, Japan,
and the Middle east.
Welspun is a fully integrated home
textile manufacturer and one of the top
three globally. With a network spread
across 32 countries, the company
offers entire range of home textile
products to consumers from every
corner of the world.
Alok is a vertical integrated textile
company,
provides
end-to-end
solutions through this five division
Cotton Yarn, Apparel Fabric, Home
Textiles, Garments and Polyester Yarn.
Aloks large customer base comprises
domestic
and
overseas
retailers,
garment exporters in India and
converter countries who are vendors to
international majors.
It is the leading textile company of
India, manufacturing suiting fabrics,
Digjam has kept re-inventing itself
keeping pace with the changing trends.
It has high end presence in the

2378.2
7

24.56

1284.65

2645.3
2

100

2487.15

4407.5
6

510.14

8796.37

22130.
72

348.76

831.90

132.47

(14.56)

62.23

domestic
market.
The
company
manufactures 3000+ design-shade
combinations each year in light wool,
polyester wool and woollen fabrics for
the DIGJAM brand alone.
Foreign Players in Indian Textile Industry

Source:

www.makeinindia.com

Reiter (Switzerland)
Trurzschler (Germany)
Soktas (Turkey)
Zambiati (Italy)
Bilsar (Turkey)
Monti (Italy)
CMT (Mauritius)
E-land (S.Korea)
Nissinbo (Japan)
Marubeni (Japan)
Skaps (USA)
Ahlstorm (USA)
Terram (UK)
Strata Geosystems (USA)
Marks & Spencer (UK)
Zara (Spain)
Mango (Spain)
Promod (France)
Benetton (Italy)
Esprit (USA)
Levis (USA)
Forever 21 (USA)

Current Domestic textile and apparel market is estimated to be US$61bn. This

market is estimated to reach US$120bn by 2020 so there is huge opportunity for
foreign players to invest in India and reap benefits in short span of time. 100%
FDI is allowed under automatic route in Textile Sector.

140
120
24

100

80
60

20
0

Home Textiles(8.7%)

12
4

40
5
2
21

45

2005

2013

Technical
Textiles(11%)

89

Apparel(10.1%)

2020

Textile & Apparel Domestic Market

Note: Figures in bracket indicate CAGR from 2013 to 2020 (Source: Ministry of textile, UN
Comtrade & Wisedge Analysis

PORTERS FIVE FORCE ANALYSIS

1. The threat of new entrants: HIGH

With the increase in online fashion stores, the currently established
fashion brands might face competition in the future. Local designers and
new smaller brands are trying to enter the market through these online
retail fashion stores.
Also, with 100% FDI allowed in the Indian textile sector several
international players like Marks and Spencer, Zara, Guess and Next have
made their way into the Indian market posing threat to the existing
players.

2. Bargaining Power of suppliers: LOW

Because of the significant presence of small players and international
entrants.

3. Bargaining Power of buyers: MODERATE

Major clothing brands have better bargaining power over textile
manufacturers, as the product differentiation is low and number of players
are high and fragmented

4. Threat of Substitutes: MODERATE

No internal threat of substitution because there are no alternatives present
to the industry. Talking about external threats, Pakistan and Bangladesh
also provide cheap labour costs thus their exports are also competitive.
Though unlike China and Vietnam, India continues to retain a competitive
edge in terms of low labour costs, these countries rule the textile export
markets.

5. Intensity of rivalry: HIGH

Intense competition between established brands.

EXPORT SCENARIO

Exports have been a core feature of Indias textile and India's textile trade (USD
billion) apparel sector. They grew to USD 35.4 billion in FY14 from USD 17.6
billion in FY06, implying a CAGR of 9.1%. During FY15 (between April-November)
they touched USD 14.6 billion.

India's Textile Trade (USD Billion)

EXPORTS

IMPORTS
33.3

35.4
31.7

27.8
22.1
17.6

19.1

21.2

22.4
14.6

2.7
FY06

2.8
FY07

3.3
FY08

3.5
FY09

3.4
FY10

4.2
FY11

5.2

FY12

Source: Ministry of Textiles, Budget 2015, TechSci Research

5.4

FY13

2.7
FY14*

3.04
FY15*

Note: * FY15 Export data till November14

FY15 Import (April-Oct14)
FY14 Import (April-Oct)

Readymade garment is the largest contributor to total textile and apparel exports
from India in FY15 the segment had a share of 40 per cent. Cotton and manmade textiles were the two other major contributors with shares of 31 per cent
and 16 per cent respectively.

Percentage of Share in Indias textile exports (FY15)

10%3%
40%

16%

31%

Readymade Garments

Cotton Textiles

Handicrafts

Others(Silk,Wool,Jute)

Manmade Textiles

Source: www.ibef.org

The major textile exporters to US and European countries are China, Vietnam,
India, Bangladesh, Indonesia and Pakistan. Indian textile and apparel exports
have rose by nearly 7% during January-August 2014, according to the US
Department of Commerces Office of Textiles and Apparel (OTEXA). While the
steady pick in US demand is a major factor, larger domestic cotton supplies are
also helping India push textile and apparel exports.

US TEXTILE/APPAREL IMPORTS
30
25
20
15
10

Aug-13
Aug-14

5
0

Source: www.crisil.com

RECENT DEVELOPMENTS AND NEWS

1. The government has allowed 100% FDI in the Indian Textiles sector.
2. The setting up of integrated textile parks is one of the flagship schemes of the
Ministry of Textiles. 13 new textiles parks were approved by the Project Approval
Committee (PAC) chaired by the Minister of State for Textiles, Mr. Santosh Kumar
Gangwar. While these 13 textile parks will receive a grant of Rs. 520 crores from
the Government for infrastructure development, they are estimated to bring in
private sector investment of about Rs.3,240 crores to generate direct
employment for about 35,000 persons over the next three years.
3. During April-August 2014, textile exports registered a growth of 9.5 % against
the corresponding period of last year.
4. The proposal for imposing duty on branded items was dropped providing relief
to the entire value chain.
5. 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.
6. The foundation stone of the Trade Facilitation Centre and Craft Museum was
laid by Mr Narendra Modi, Prime Minister of India at Varanasi.

7. The government has proposed to extend 24/7 customs clearance facility at 13

airports and 14 sea ports, resulting in faster clearance of import and export
cargo.

References:
1.
2.
3.
4.
5.
6.

www.ibef.org
www.economictimes.com
www.makeinindia.com
www.moneycontrol.com
www.crisil.com
www.citiindia.com