Textile & Apparel Industry

Building Sustainable Businesses in the Growing Domestic Market

Contents
Current Status of Indian Textile & Apparel Market Evolving Indian Consumers and Changing Consumption Patterns Some Opportunities in Domestic Apparel Market Strategies to Develop Competitive and Sustainable Businesses Conclusion About Technopak 01 02

06

12 17 18

Building Sustainable Businesses in the Growing Domestic Market |

Current Status of Indian Textile & Apparel Market

Overview The present size of Indian Textile and Apparel market is US$ 62 Billion out of which US$ 22 Billion is contributed by exports while the rest US$ 40 Billion is domestic market.
Indian Textile and Apparel Market US $ 62 Billion INR 265,500 Crore Domestic Market US $ 40 Billion INR 172,000 Crore Textiles US $ 10 Billion INR 43,500 Crore Clothing US $ 30 Billion INR 128,500 Crore Textiles US $ 12 Billion INR 50,000 Crore Exports US $ 22 Billion INR 93,500 Crore Clothing US $ 10 Billion INR 43,500 Crore

Growing Textile and Apparel Exports Exports in Textiles and Apparel have registered a strong growth in the last few years with 11% CAGR from 2004-05 to 2007-08. The single largest category is woven apparel followed by knitted apparel, made-ups and cotton based textiles.
India domestic market 50 40 US$ Billion 30 20 10 0 22 2006 26 2007 2008 2011 2014 India export market 25 48 US$ Billion 36 30 20 15 10 5 0 14.3 4 3 2 2 2
2004-05

9%
13%

22.4

AG 1% C
5 3 2 3 2 2

R
5 4 2 4 2 2
2006-07

Woven Apparel

5 4 2 5 3 2
2007-08

Knitted Apparel Made-Ups Cotton Products Synthetics Products Other Textile Products

2005-06

Source: UN Comtrade, Technopak Analysis, Values rounded off

Growing Domestic Market Indian domestic textiles and apparel market is one of the fastest growing market in the world and offers huge market potential for textile and apparel manufacturers. It is expected to become one of the major consumption bases in near future. Out of the total market size of US $ 40 Billion, Clothing contributes US $ 30 Billion, while rest US$10 billion is contributed by Textiles (Home textiles, Technical textiles and other textiles end-uses). The domestic market has shown a significant growth in past few years registering a Compounded Annual Growth Rate (CAGR) of ~13%. Despite the recent demand slump, the domestic market is expected to grow at around 9% in the next 5 years. In this context , the industry needs to focus on the domestic market more intensely and understand the market dynamics in more detail in order to tap the complete potential. Further we discuss these opportunities for Indian textile and apparel companies in the domestic market and strategies for developing sustainable businesses with the changing requirements of the domestic market.

Evolving Indian Consumers and Changing Consumption Patterns

| Building Sustainable Businesses in the Growing Domestic Market

Understanding catalysts of change that are propelling India India has been witnessing sustained high growth of GDP since 1991 of ~ 6% per year leading to fundamental transformation of the economy. There are many growth drivers for these changes include favorable demographics, dropping dependency ratio and rapidly rising education levels. A check on the latest demographics show us a growing opportunity: Predominantly young consumers: 72% of Indian population constitutes of people below 39 years, with 32% between 20-39 years having high consumption potential. Literacy rate to touch almost 90% by 2013 from present 70%; with female literacy touching 83% from present 69% Dependency ratio reducing with 13 million new people join the workforce every year. Besides demographics, there is also a very promising broad-basing of economic activity geographically as well as into the various components of the gross domestic output . There is also a broad-basing of the nature of jobs that match the current skill sets of the population and this is helping in spreading out the positive effect of economic growth.
Increasing discretionary expenditure
~ 500 Million consumers (excluding BPL families) across Urban and Rural India (18+ years) ~ 270 Million in Rural India ~ 230 Million in Urban India ~ 80 Million in the top 100 cities ~ 75 Million in the top 70 cities ~ 45 Million in top 30 cities ~ 30 Million in the top 8 cities
Food & Grocery Rent, Utilities & Education Fuel, Transport & Communication Savings & Investment Discretionary Expenditure Source: India Consumer Trends, Technopak analysis

be used. While in 1991, consumption was more on broader basic requirements, it is now focused on lifestyle and aspirational products. More importantly, there are shifts occurring in the consumption basket away from the traditional spending categories such as apparel, home furniture & furnishings categories and consumer electronics. Both telecom and domestic transport spending are now in the top 5 consumer spending categories, while travel has also become significant. It is thus seen that new categories of consumption are taking up share of wallet and their markets in India have crossed the Rs.100,000 crore mark reflecting huge opportunity. These categories on which consumers are spending more on are Education (including training and coaching) Healthcare (reactive and preventive)

Retail Categories Food & Grocery Healthcare Apparel & Home Textiles Telecom Jewelry & Watches Personal Transport (Vehicles+Fuel+Repairs) Travel and Leisure CDIT Home - Furniture, Furnishing etc Personal Care Eating out Footwear Health & Beauty Services

Size (in Rs Cr) 1,250,000 1,65,000 1,40,000 1,20,000 1,18,000 1,15,000 60,000 55,000 50,000 48,000 24,000 19,000 4,000
Source: Technopak Analysis

2003 27% 40% 4% 9% 20%

2008

2013

30% 4% 10%

36%

32%

32%

Food services (Restaurants, Ready-To-Cook and Ready-to-eat) Home IT (Hardware, Software, Internet, Gaming) and mobiles Travel and tourism What does it mean for the Indian apparel market? New categories such as mobiles, education, healthcare etc are moving faster than textile and apparel because while the consumer still associates apparel with his basic need, the other categories are aspirational. His desire to blend in to the global environment is pushing him to spend more on non apparel categories. Though the overall size of the apparel market is still growing at 9% CAGR and the aspirational apparel category has the potential to grow much faster. Hence, Apparel will have to re-define itself in a new avatar to appeal to this evolved consumer i.e. as a category that fulfills a desire rather than a need.

5% 20%

11%

20%

What does the new Indian consumer want: Local preferences with a global appeal Indian consumer is evolving and need based consumption categories have become low-involvement items for the core consuming classes. Spending is shifting from basic to discretionary. As has been already illustrated above, the share of food and grocery in the consumers wallet continue to drop releasing money for discretionary expenditure. F&G share expected to decline from 36% in 2008 to 32% in 2013 The shift to thrift is redefining value in terms of price, brand and quality. Increasingly values the money earned; therefore product offer is not only about good pricing, but also about quality, convenience, consistency, innovation, experience Product needs to fulfill not just a basic need, but an aspiration. It necessarily does not need to be expensive or branded, however it should address the Desire the intangible sense of success or the promise of success Family ties are still the most important factor in an Indians life though family structures and how time is spent together is changing. Families are turning nuclear and children have become a focal point of all shopping and purchase decisions. Shopping & Eating Out remain top family leisure activities. With time poverty, shopping with family helps increase time shared with family Indian consumers waking up to their aspirations beyond basic needs Against the above backdrop of positive changes in demographics and economic activity, we are looking at a consumer who has the capacity to spend, wants to spend and now has more options to spend. The consumption basket is expanding to include many more products on which discretionary income can

| Building Sustainable Businesses in the Growing Domestic Market

Building Sustainable Businesses in the Growing Domestic Market |

Some Opportunities in Domestic Apparel Market

Segments with High Growth Potential

It is evident that the Indian consumer is ready for change, demanding options and looking out for product that suits and matches their needs and aspirations. With the back drop of changes, Indian apparel market is moving away from the traditional segmentation to a much deeper and wider segmentation based on consumer needs. Indian apparel market can be broken up into men, women and kids, but within each there are a number of segments that are emerging reflecting changing needs. Some of the segments that are potential opportunities to watch out for are: 1. 2. 3. 4. 5. 6. 7. 8. Womens wear Casual wear Kids wear School Uniforms Inner wear Plus size clothing Active wear / Exercise wear / Swimwear Youth fashion / College fashion

3. Kids wear Kids wear is a major category with few established players. Very few brands namely Lilliput, Gini and Jony, Catmoss, Benetton, Disney, Barbie. Some brands have extended into this category though not very successfully i.e. OYO by Spykar, Zapp by Raymond(closed down). It still holds a large opportunity which is clearly untapped.

Kids wear Market Rs. 32,000 Crore 100% 80% 60% 40% 20% 0%

Inner wear Market Rs. 14,000 Crore

Womens Inner wear 8500

Mens Inner wear 5500

I-Body Suits

I-T-shirts

Frocks

T-shirts

Lowers

Jeans

Ethnic wear

Low

Economy

Medium

Premium

Super Premium

All above segments are discussed further in detail: 1. Womens Wear Womens formal wear and ethnic wear markets are still ruled by unorganized players. With more women expected to enter corporate world, both these segments are good opportunities because of the market size
2008 Womens wear Market of SEC A&B is INR 25,300 Crore Urban Womens Wear Market 14% Ethnic wear 47% Nightwear 17% Casual Market 22% 61% 64% 95% 39% Formal Market 13% 36% 5% Sarees Peticoats Ethnic Wear 5% Blouses T-shirt 95% 48% 36% Woven shirts 33% Western Suits 36% Trousers/Skirts Lingerie 52% 67% 62% 64% 49% 50% Woolens 53% 51% 50% 47% 86%

Source: Technopak Analysis

4. School Uniforms Scope in organized retail of good quality uniforms is very high with very few organized players in this high growth potential segment Uniforms form almost 40% of the Rs. 32,000 Crore Kids wear market in India. With literacy rates increasing and the private education market estimated at Rs. 172,000 crore, uniforms form an essential part of the apparel market The impetus will come not only from sheer numbers at the lower price brackets, but from the rise of high end schooling education in the form of world schools and international schools . Present state of the market in this category This category is highly fragmented and unorganized with hardly any large players. SKNL, is the only organized player and they are able to cater to a small part of the market. Uniforms available are sub-standard quality of stitching and lack standardization Shopping for uniforms is a bad Shopping experience and uniform retailers are found in very low key markets Internationally, most brands like Marks and Spencer, Next , JC Penny have brand extensions into uniforms while there are some standalone uniform brands like K-12 gear, Academy Uniforms, First In Class etc 5. Inner wear Inner wear market in India, estimated at Rs 14,000 Crores, is largely unorganized with more than 75% of the industry dominated by unorganized indigenous players. However there is a growing awareness of physical appearances among consumers leading to demand for more variety and designs which is driving the organized market growth. Some of the bottlenecks for growth of innerwear and subsequent opportunity for modern retailers include: Lack of innovation and product differentiation in this product Lack of standard sizing Low penetration and distribution levels

Party Marker 1%

Urban-Branded

Urban-Unbranded

Source: Technopak Analysis

2. Casual Wear Casual wear segments are expected to grow between 10-15% as compare to 9% growth of overall Indian Apparel Market. More than 50% of the clothes in this category are bought by youth (age 13-30) Increase of buying frequency of casual wear is spurred by: Preference for more comfort wear Increase in employability Acceptance of Casual wear in work places 7
| Building Sustainable Businesses in the Growing Domestic Market

2008 Casual Wear Market (INR 000 Crore) Children Women 6 5

Casual wear Shirts Trousers T-Shirts Jackets Sweaters Jeans TOTAL

Men's (Rs Crores) 3290 2280 3300 560 130 2840 12400

Men

12

Casual

Source: Technopak Analysis

Night wear 690 150 90 100

Womens (Rs Crores)

1330

1240 4600

Jeans

Building Sustainable Businesses in the Growing Domestic Market |

6. Plus Size Apparel Plus size apparel market (Rs 11,000 Crores) is virtually untapped. It is estimated that ~8% of the Indian population comprises plus sizes, hence the potential market for plus size is 8% of Indian apparel market, but only 0.15% of present market consists of this segment. India only has a handful of brands in this category like Revolution, mustard, AND etc. None of the western wear brands have extended into the plus sizes. Internationally besides stand alone plus size brands like Brylane, Evans, Igigi, most regular brands like Next, M&S have plus sizes.

Plus size % of Indian population

Increasing Presence of International Players - Driving Efficiencies

Plus size 8%

Rest 92%
Source: Technopak Analysis

With more and more international brands and retailers looking at India as their next destination, the competition in the domestic market is expected to shoot up significantly. However, at the same time the international brands / retailers like Zara, Wal-mart, Tesco etc. will also bring with them superior technology and economies of scale across the supply chain, thus making it imperative for the domestic players to tighten up their operations. Already established retailers in India are looking to upgrade their existing systems, for example , Future Group is making investments worth crore of rupees in new technology and processes with a view to sustain its potential growth in the Indian market and also looking at partnerships with global majors for improving supply chain scales and efficiencies. As a result, the productivity and efficiencies of domestic players will improve along with skill up gradation. Also the competition from these international retailers / brands will eat up substantial portion of the market pie . Hence in this backdrop, domestic players need to be efficient and forward thinking in terms of their offering to the customer and establish an upper hand in the market vis--vis these MNCs. For the manufacturers it offers enormous market potential since the international players would be looking at sourcing from local players. Hence in this context manufacturers need to align themselves as per the international players sourcing requirements.

7. Active wear / Exercise wear / Swim wear Indians get more and more health conscious and look for sports & games to address this need. They are also looking to live fuller lives by participating a lot more in outdoor activities as a way to connect to family, friends and their unfulfilled aspirations. Active wear for various sports such as football, tennis, golf, rock-climbing, cricket, swimming is finally gaining acceptance. Exercise wear specially for gyming, exercising, walking and jogging is also becoming important besides apparel for more spiritual inclinations like yoga, meditation etc. Currently the market for active wear is estimated to be Rs 1100 crores and growing at 13%. While India is already home to brands like Reebok, Adidas, Nike and Puma who are showing tremendous growth figures, there still exists potential for brands focusing on specific sporting categories Besides brand based retailing, another important concept is the event centric merchandise retailing which is very popular in the sporting industry, for example FIFA apparel etc
Growth in store numbers of active wear brands

International players expanding in India Wal-Mart (already present with Bharti) Tesco (planning) Arcadia (Topshop, Topman) Inditex (Zara) M&S Carrefour (planning) Gucci (already present) Mother care (already present) etc....

Major active wear brands in India

Retailer Reebok Adidas Nike Puma In India Since 1995 1996 1995 2002 Turnover (Rs Crores) 1148 518 293 158 Share of Apparel in Total Sales 50% 45% 40% 30%

800 700 600 500 400 300 200 100 0 180 70 0 2005 360 165 7 2006 200 14 2007 505

675

720

Growing Value Retail in India

Reebok Adidas Puma

450 325

36 2008

50 2009

Rural India constitutes more than half of Indias apparel market. The rural consumption is also growing significantly and is expected to provide much of the economic growth in coming years. Consequently there is huge potential for value retailing which has so far been unexplored by majority of Indian apparel retailers. Also with entry of Zara into India by next year it wont be surprising to see the Zara like fast fashion business model emerge in the Indian market. Already many apparel companies have taken note of this opportunity and are foraying into the mass market, with some like Koutons already having significant presence (78% of their stores already present in below top 35 cities).
Some examples of Indian apparel companies looking towards mass market SKNL Planning to launch a mass brand for the tier 3 and tier 4 cities Arvind - Planning to locate a significant share of 30 outlets to be added this year in tier 3 cities Alok - Planning to triple its H&A store count by next March, with a strong focus on the tier 2 and tier 3 cities. It already has outlets in Moga and Firozpur in Punjab, and Latur in Maharashtra. Welspun Retail - Planning to add 70-80 Welhome stores in FY11, with 30 percent focused on villages.

Source: Technopak Analysis, Company Reports

8. Youth fashion / College fashion There is also significant potential in youth fashion market as college going youngsters are getting more fashion conscious. Internationally there are brands like American Eagle Outfitters, Aeropostale, True religion etc. which are positioned as fashion labels specifically for the youth. In India there are approximately 11 Million Youth (15-24 years of age) in top consuming strata in 70 cities and this segment offers an opportunity for brands to position themselves for specific age groups like 13-19 years , 20-25 years etc. and establish their brands amongst these specific consumers.

| Building Sustainable Businesses in the Growing Domestic Market

Building Sustainable Businesses in the Growing Domestic Market |

10

Subsequently, this means a huge opportunity for Indian textile and apparel manufacturers to look towards catering to the domestic value market . For manufacturers this means more emphasis on fashion at low prices. Hence firms need to take designing more seriously along with improving operational efficiencies. Companies also need to establish strong supply relationships with these upcoming value retailers to become first partners of choice for their fast fashion requirements.

% share of retail presence across various cities Hypermarkets No. of store No. of cities 10 7 10% 35% 50% 9% 30% 67% 40% Central 26% Shoppers stop Big Bazaar 46% Westside 64% 49% Pantaloon 33% 113 58 Department stores / large format stores 27 9 37 19 8% 5% 39% 41% 18 8 45 22 11% 9% 31% 9% 20% 25% Raymond 8% 10% 1% Koutons 51% 44% 402 184 Exclusive stores ~1400 ~500 41 18 10% 7% 78% 32% 29% 104 38 15% 12%

Strategies to Develop Competitive and Sustainable Businesses

45%

Lifestyle

Wills Lifestyle Top35

Top4

Top15

11

| Building Sustainable Businesses in the Growing Domestic Market

Fab India Others

Providing Value Added Services & Developing Niche Positioning

Service Orientation With the growing domestic market and growing presence of international retailers suppliers need to align themselves as per requirements of the retailers. The big retailers would also be looking at sourcing from established partners in the supply chain and would be expecting certain pre requisites from their suppliers. In this regard suppliers need to look at integrating and offering value added services to retailers like design, logistics, warehousing etc. in order to establish long term supply chain partnerships. Particularly logistics and warehousing play a significant role in the Indian domestic market due to the long distances between supply bases and markets, and suppliers should look towards working closely with retailers in these areas. Also textile and apparel companies should look at investing in IT and developing linkages across the supply chain for driving efficiencies.
One stop solution Forecasting Designing Manufacturing Logistics Warehousing IT Linkages Supply chain partnership Retailers / brands Need for specialized positioning : customized solutions Value added Jeans supplier Formal shirts manufacturer Value fashion supplier Private label supplier Kids wear manufacturer etc..

Hug Shirt by Cute Circuit Product innovation in apparel Cute Circuit, based in UK, is a Fashionable Technology company that creates design excellence in the fields of Wearable Technology and Interaction Design. The company has developed a shirt called The Hug Shirt - a shirt that makes people send hugs over distance. Its a smart textile product with sensors embedded in the shirt that feel the strength of the touch, the skin warmth and the heartbeat rate of the sender and actuators that recreate the sensation of touch, warmth and emotion of the hug to the shirt of the distant loved one. The Hug Shirt was nominated as one of the best Inventions of 2006 by Time Magazine.

There are also many successful examples of innovation at various levels from other industries that the textile industry can get inspired from. Some of these examples are discussed below: Innovation in other industries
Price and Design Innovation Tata Nano: By now Tata Nano has become a household name. The Worlds Cheapest Car by Tata is a supreme example of innovation in price and design and is an inspiration for other industries to strive for similar objectives and results. Suppy Chain Innovation Started in the year 1984, Suguna poultry is today, a leading poultry Company in India with a steadily increasing global presence. Its turnover exceeded Rs 2000 crores in 2007-08. Its pioneering efforts in contract farming have helped thousands of farmers to grow along with the company. Suguna has reduced the number of middle men in Trading, Feed Supplies, Medicine Supplies, Chick Supplies etc., by directly supplying all the above to farmers. Innovative use of IT has also helped the company streamline its supply chain - a first of its kind in the poultry farming industry.

Manufacturers

Manufacturing Innovation Jain Irrigation is the pioneer of Micro Irrigation systems in India. It is the largest irrigation company in India & the only manufacturer of complete drip irrigation systems in the world. In addition to the irrigation business, it is the largest manufacturer of Plastic pipes. Due to its sustained efforts, today it has a presence in 110 countries with a turnover of US $ 456 million . It has grown at a rate of 41% CAGR for the last 5 years. Thus, because of its thrust on manufacturing innovation & having a global outlook, it has managed to grow phenomenally.

Adopting Global Best Practices

Companies also need to adopt best management practices like lean manufacturing , Kaizen, six sigma etc. for improving overall efficiencies and productivity. This would not only improve the financial returns for companies but also make them more cost competitive in the market. In this textile and apparel companies can take a cue from other industries in reaping respective benefits of best management practices. Some of these examples are given below:
Best management practices in other industries Companies in other industries have been very active in implementing best management practices like lean manufacturing / six sigma etc helping them achieve significant gains. Textile companies also need to get active in implementing these best practices to put themselves in a better position in the long term. Some of the examples of companies gaining from these are given below: Asian Paints made savings of more than Rs 20 crores in a year after implementing one Six Sigma project. Capacities at their manufacturing plants increased by more than 100% without any capital investment. Wipro was able to save more than Rs 100 crores due to implementation of lean manufacturing / six sigma. Bharti Broadband made productivity enhancements, improved customer satisfaction and process effectiveness by implementing Six Sigma. Some prominent practitioners of Six Sigma processes are ICICI Bank, ITC and Reliance Industries. Also a whole host of BPOs like ICICI OneSource and WNS have adopted Six Sigma processes as part of the service level agreements. Many other large Indian companies such as HCL and Tata Motors have also adopted lean manufacturing principles very successfully

Niche Positioning With growing specialization at the retail level, suppliers should also look at developing niche / specialized product competencies and offer customized solutions for respective retailers / brands based on their specific requirements. For example, an upmarket brand might be looking at large product depth / variety, while a value retailer would be looking at basic products but with high fashion content. Hence suppliers need to position themselves appropriately and develop these specific skills in order to serve the specific requirements of their buyers.

Innovating to Survive
Examples of textile and apparel companies With increasing global competition and evolving looking to innovate consumerism it is slowly becoming a must for textile manufacturer to be innovative. Firms need to explore Arvind Ltd. Product Planning to develop denim salwarinnovation kameez and, maybe sarees to innovation both in terms of processes, marketing and expand in the rural market products. Activities like R&D and designing should Producing 'novel' garments be treated as key success factors and a pre-requisite RBR Garments Product innovation using varied fabrics and fibre like rather than an afterthought. Apart from process based minerale fibre, soya bean fibre etc. innovations companies should also not shy away Levi's Marketing Selling Jeans on EMI scheme from exploring new business models in the context of innovation the ever changing consumption space. In this regard there are many apparel companies who have already realized the importance of business innovation to survive in the increasingly competitive market place and are looking to differentiate their product offering across various levels.

13

| Building Sustainable Businesses in the Growing Domestic Market

Building Sustainable Businesses in the Growing Domestic Market |

14

Developing Manpower
With so many new industries growing like telecom, IT , automobiles, banking etc., one of the challenges for the industry today is attracting skilled and qualified manpower and staff to work in the textile industry. While, many of the big textile companies regularly recruit from major textile institutes in technical grade (engineering, design, merchandising), there is still a general lack of interest amongst most of the Managerial grade students joining the industry. In this except for a few big firms like ITC, Arvind etc. not many companies have been able to recruit students from premier MBA/ Engineering institutes like IIM / IIT. The industry needs fresh and innovative thoughts to improve its existing work practices and drive efficiencies in manufacturing and supply chain. The best way to do this is by reaching out to the young managerial talent and give them the right incentives to join the T&A industry. T&A companies also need to increase the industry-academia interaction to nurture talent at the base level and for other purposes also like Research & Development, training existing staff in best practices etc. The industry needs to reach out to the academia and in this regard can take cue from companies in other industries which are collaborating with academia in many ways. Such industry- academia interaction helps in developing affinity for students to work in the industry in future. There are 103 textile institutes in India along with 118 National Institutes of Fashion Technology, which can be tapped for this purpose. The industry must make best efforts to attract higher and highest quality talent at all levels to provide the intellectual backbone for engineering a renaissance for itself in the next 10 years
Examples of Industry-Academia Collaboration in other industries
Company NASSCOM TESCO Airtel Bharat Forge Patni Computers Industry IT & ITES Retail Telecom Aviation IT Collaboration with Academic Institute Collaborating with Ministry of HRD to set up new IIITs Runs a Retail Certification course with IIM-Bangalore Has tied up with NMIMS to train its staff in the latest marketing techniques Has Partnered with BITS, Pilani to help its employees attain degrees in manufacturing management Have developed specialized courses in supply chain management along with SP Jain Institute of Management Top 5 sectors of preference for the students (B-School survey by AC Nielson) FMCG Management consulting, IT consulting, Banking and Retailing -----------------No Textiles ?

consumers in the other countries get aware of sustainability issues, it is going to put tremendous pressure on Indian manufacturers to comply. The young consumer is moving from the industrial economy to the sustainable economy and manufacturers/retailers globally have to build that into our processes. Hence companies need to gear up towards going green and give more weightage to environmental friendliness going forward.

Leveraging FTAs
Historically, Free Trade Agreements have played a significant role in determining trade dynamics across the World. Many trade agreements like NAFTA, EFTA, AGOA, GSP benefits have been instrumental in developing the textile and apparel industry of respective countries. India has also established a few trade agreements with countries like Sri Lanka, Thailand, ASEAN etc. and further negotiations are in progress with many countries like EU, Australia, Japan etc. The major benefits of these FTAs include: Decreased sourcing costs of key products included in the agreements Availability of variety of products for the domestic market Hence it is important for firms to keep track of these agreements and understand the key benefits that can be leveraged from the respective countries both in terms of sourcing as well as marketing in those countries.
Indias Major Trade Agreements
Country ASEAN Sri Lanka Thailand S. Korea Singapore Chile SAFTA Afghanistan Bhutan Mercosur PTA Turkey Australia New zealand GCC Taiwan EU US Status Concluded Concluded Concluded Concluded Concluded Concluded Concluded Concluded Concluded Concluded Negotiating Negotiating Negotiating Negotiating Negotiating Negotiating Negotiating
Source: Ministry of Commerce

Environmental Sustainability
Environmental sustainability is the ability to maintain the qualities that are valued in the physical environment. It is clearly emerging that the worlds coastline and watersheds are increasingly affected by economic changes and environmental degradation, consumers have become edgy about the effect of human activity on the environment. In such a scenario, environment sustainability has become an industry in itself. With increasing concerns regarding the effect of the textile industry on the environment, at all stages of its chain, i.e. raw material, fiber, fabric, apparel, processing; more and more textile researchers, producers and manufacturers are looking to biodegradable and sustainable fibers as an effective way of reducing the impact textiles have on the environment. More and more people are now focusing on the responsibility of industry and consumer priorities, and introducing new measuring tools for electricity and water usage, carbon footprint and traceability. As

15

| Building Sustainable Businesses in the Growing Domestic Market

Building Sustainable Businesses in the Growing Domestic Market |

16

Conclusion
The Indian domestic apparel market offers enormous opportunity going forward due to various consumption growth drivers inherent in the Indian economy. Overall consumption patterns are changing with decreasing apparel share of wallet and increase of more products in consumption basket. In this context apparel companies need to study the domestic market dynamics more intensely in order to sustain apparels share in the consumption basket. A scan of the apparel market throws out some important opportunities that companies need to look more closely. Promising apparel segments like Womens wear, Casual wear, Kids wear, Inner wear, Plus size clothing, School Uniforms, Active wear and youth fashion offer huge opportunity for apparel companies / brands / retailers as consumer demands get more specific going forward. Also the mass market offers significant opportunity for companies as value retailing takes its root in India. The increasing presence of foreign retailers in the domestic market is also expected to influence domestic players to improve their operations and offering to the customers. To tap the above opportunities and sustain businesses in this changing consumption scenario, companies need to align themselves with the market requirements and develop required competencies. Manufacturers need to get more service oriented and look to develop a niche positioning for themselves amongst their buyers. With growing competition suppliers also need to have orientation towards innovation across their business in terms of products, processes and adopt best manufacturing practices to increase competitiveness. There also needs to be more focus given to hitherto overlooked areas like manpower development, environment friendliness and leveraging trade agreements for reducing sourcing costs.

About Technopak
We are a management consulting firm with a difference. Founded in 1991 on the principle of concept to commissioning, we are in the top 5 consulting firms in India by revenues. We are strategic advisors to our clients during the ideation phase, implementation guides through start-up phase, and trusted advisors overall. The industries we serve include Retail, Consumer Products, Fashion (Textiles & Apparel), Healthcare, Hospitality & Tourism, Leisure & Entertainment, Food & Agriculture and Education. Our clients are leading Indian and international businesses, entrepreneurs, investment houses, multilateral development bodies and governments. Our 600+ clients include Aditya Birla Group, Apollo Hospitals, Arvind Limited, Asian Development Bank, Asian Paints, Temasek Holdings, Essar, GMR Group, Godrej Group, Gujarat Government, Hospital Corporation of America, ICICI Limited, Hindustan Unilever Limited, International Finance Corporation, Lenovo International, Mahindra Group, Marks & Spencer, Mother Dairy Foods, Ministries of Food Processing, Textiles & Commerce, Raymond, Reliance Industries, Samsung, Sequoia Capital, Starwood (Sheraton), Tata Group, United Nations Development Program, Walt Disney, Warburg Pincus and many other Indian and international leaders.

Services we offer in Management Consulting

At Technopak, we foster innovation and creativity which challenge conventional thinking and generate practical and far reaching solutions for our clients. In 2008, we worked with over 130 clients across 180+ projects, in 20 countries besides India, across 5 continents. Our key services are: Business Strategy. Assistance in developing value creating strategies based on consumer insights, competition mapping, international benchmarking and client capabilities. Start-Up Assistance. Leveraging operations and industry expertise to commission the concept on turnkey basis. Performance Enhancement. Operations, industry & management of change expertise to enhance the performance and value of client operations and businesses. Capital Advisory. Supporting business strategy and execution with comprehensive capital advisory in our industries of focus. Consumer Insights. Holistic consumer & shopper understanding applied to offer implementable business solutions.

17

| Building Sustainable Businesses in the Growing Domestic Market

Building Sustainable Businesses in the Growing Domestic Market |

18

Services we offer through our Group Companies

Insights and innovation led product, packaging, space and strategic design, including design research, concepts, engineering and prototyping. A blend of unique, contemporary and relevant concepts and solutions. www.foleydesigns.com

Holistic consumer understanding applied to offer implementable business solutions revolving around shopper insights, trend insights, design and innovation insights, marketing communication and measuring customer delight. www.indiamindscape.com

Strategizing, planning and managing creation, development and growth of brands through a scientific, transparent and process-driven methodology. www.vertebrand.com

Engineering
Planning, implementation and project management of plants, warehouses and entertainment centers with a focus on modernization, process improvement, technical valuation, power & water audit and environmental engineering. www.technopak.com/engineering Technopak Financial Advisory Services Technopak Financial Advisory Services (TFAS) is the financial and transaction advisory services arm of Technopak . With its team of experienced transaction professionals located in India and across US and Europe; TFAS offers its clients a global transaction ability, deep understanding of its industries of focus, and an efficient negotiating platform for stakeholders.

Services we offer through our Strategic Partnerships

Worlds largest privately held real estate services firm. We offer, through them, comprehensive retail real estate solutions to our clients.

www.cushwake.com

UKs leading design consultancy for developing brand environments. We offer, through them, design solution for retail environments.

www.dalziel-pow.co.uk

Global research and consulting firm specializing in the study of human behavior in retail, service, home, and online environments. We offer consumer and shopper insights.

www.envirosell.com
DEVEREUX

A R C H I T E C T S

Partners with Technopak for delivering Projects in India. They are one of the top architectural practices in the UK with extensive experience in architectural and urban design projects in UK and internationally. The practice has major specialisms in Healthcare Architecture

www.devereuxarchitects.com 19
| Building Sustainable Businesses in the Growing Domestic Market

Technopak Advisors Pvt. Ltd. Gurgaon

4th Floor, Tower A, Building 8, DLF Cyber City, Phase II, Gurgaon 122 002, (National Capital Region of Delhi) (India) T: +91-124-454 1111, F: +91-124-454 1199

Prashant Agarwal Vice President prashant.agarwal@technopak.com T: +91-9871195008 Ashish Dhir Associate Vice President ashish.dhir@technopak.com T: +91-9871654747 Priya Sachdeva Senior Consultant priya.sachdeva@technopak.com T: +91-9312626145

Bangalore

Prestige Solitaire, Ground Floor, 6 Brunton Road, Off MG Road, Bangalore 560 025 (India) T: +91-80-4034 8600, F: +91-80-4034 8699

Mumbai

101-105, 2nd Floor, Sunjana Tower, Sun Magnetica Service Road, Luis Wadi, Thane West, Mumbai 400 602 (India) T: +91-22-2583 2222, F: +91-22-2583 8408

Website: www.technopak.com