SUMMER TRAINING PROJECT REPORT

ON

STUDY OF EXPORT POTENTIAL IN JKM OVERSEAS PVT. LTD. (COTTON TEXTILE AT USA)

Submitted in Partial Fulfilment of the requirement for the Award of degree of

MASTER OF BUSINESS ADMINISTRATION

of GautamBuddh Technical University, uc!now

By ASHISH KUMAR SINGH Un !" #$! S%&!"'()(*n *+ MR ARUN KUMAR (SENIOR MERCHANDISER)

Un(#! In)#(#%#! O+ M,n,-!.!n# G"!,#!" N*( ,

"oll #o$ %&'(')%%'( '%(%

CERTIFICATE

TRAINING CERTIFICATE

PREFACE
The training re*ort is based u*on the lecture notes$ + *re*ared this re*ort during my vocational training ,('th -une .(% to '&th -uly .(%/ in JKM OVERSEAS PVT. LTD., GU"GA0#$ 1uring this *eriod + have the o**ortunity to gain !nowledge about my *ro2ect$ +t is an attem*t to *re*are 3BA training re*ort$ Again since this training re*ort is based u*on the wor! e4*erience during very short time, many long or detailed descri*tions have been emitted$ The *ro2ect re*ort is totally about the future and ca*ability of our te4tile industry to survive in the USA mar!et$ The sequence of cha*ters was selected !ee*ing in view of the training schedule made by the training instructor and also !ee* in view of *rocess$ AS5+S5 6U3A" S+#G5

ACKNO/LEDGEMENTS
At the onset + would li!e to e4tend my sincere gratitude to M). F*%0(, ,Faculty Guide/ for giving me an o**ortunity to wor! on this *ro2ect$ And last but not the least, + would li!e to than! all my friends and colleagues for their valuable advices and encouragement

DECLARATION
+, 7AS5+S5 6U3A" S+#G58 to declare that the Summer training re*ort entitled S#% y *+ E1&*"# P*#!n#(,2 (n JKM O'!")!,)

P'#. L# . (C*##*n T!1#(2! ,# USA)8 being submitted to the

U$P$T$U$ for the *artial fulfilment of the requirement for the degree of 3aster of Business Administration is my own endeavours and it has not been submitted earlier to any institution9university for any degree$

Place: 1ate: AS5+S5 6U3A" S+#G5

TABLE OF CONTENTS
TOPICS PAGE NO.

+ntroduction to the To*ic;;;;;;;;;;(<= 0b2ectives;;;;;;;;;;;;;;;;;; $$><? iterature "eview;;;;;;;;;;;;;;;$) @om*any Profile;;;;;;;;;;;;;;$A< (( "esearch 3ethodology;;;;;;;;;;;$$(' Product +ntroduction;;;;;;;;;;;(B<'> Global Scenario;;;;;;;;;;;;;;'?< B( +ndian Te4tile +ndustry;;;;;;;;;$B'<B>

+ndian Te4tile<Policies and;;;;;;$$$B?<=? Agreement And their im*lication US @otton Te4tile +ndustry;;;;;;;=)<>& Te4tile Cisa and e4*orts license;;;;?%<)>

requirements +ndiaDs E4*orts of @otton Te4tile;;;$$)?<&' @onclusion;;;;;;;;;;;;;;;;; &B<&= imitations;;;;;;;;;;;;;;;;; ;;&> "ecommendation;;;;;;;;;;;;&?<(%% Anne4ure;;;;;;;;;;;;;;;;(%(< ('>

INTRODUCTION TO THE TOPIC

The to*ic ta!en by me i$e$, 7EFP0"T P0TE#T+A 0F @0TT0#

TEFT+ ES T0 USA8 is mainly to learn the sco*e and future of cotton te4tiles in foreign mar!et and mainly in the mar!et of ma2or buyer i$e$ USA$ The *ro2ect will hel* my organiGation -63 0CE"SEAS to build u* the strategy accordingly and *lan for the future$ +s the USA mar!et will be as much *otential as it was in the *ast or not, if yes than to *lan for u*grading the quality and increase the *roduction$ But in other case if the future of the mar!et is in down sha*e than to *lan accordingly and start loo!ing for other ma2or mar!ets or *otential mar!ets where the com*any could find growth chances$ The United States constitutes a rich and *ros*erous mar!et$ The region also holds a *rominent *lace in +ndiaDs e4*ort and im*ort trade$ 0ne of the ma2or *roducts which +ndia e4*orts to these countries are the cotton te4tiles$ +ndian e4*ort to U$S in -an$93ar$ '%%A was "S$ AA'A$>? million i$e$ '=$%BH of the total e4*ort of cotton te4tile and in -an$93ar$'%%& it declines to "S$ A=A>$>> million i$e$ '%$B)H of the total e4*ort of the cotton te4tile in that *articular *eriod$

This trend shows a little bit of *essimistic *icture of the cotton te4tile e4*ort from +ndia to U$S$ +ndia shows an u* trend in the rest of the world covering considerably good mar!et share but in U$S as the quota restriction are still on and the other too many qualitative

restriction on the +ndian *roducts hel*s to bring down the mar!et share$ But only others are not res*onsible for the situation$ Ie here in +ndia did not *ay much attention on the quality of the cotton used in manufacturing of the *roduct$ The s*inning mills here are as old as our earth and neither the entre*reneurs nor the government has ta!en much care to im*rove the condition of the mills$ Ie all !now that the U$S$ is a buyers mar!et and it *rovides ma4imum su**ort to its customers$ As socio economic ob2ectives, the consumer is ensured the best quality *roduct at the most com*etitive *rices$ As a buyerJD mar!et, consumer is the !ing in the true sense of the term$ The consumer *rotection does not remain c onfined to national boundaries$ +t e4tends the national frontiers$ The *roduct liability clause a**licable to wide ranging *roducts or

consumer durable is the best form of *rotection and safeguard the interests of consumers and it also a**licable to te4tiles$ Therefore, in order to stay in the international mar!et and to survive, +ndia has to ma!e the quality *roduct irres*ective of fibre, fabric or the made<u*s, come what may$ As the mar!et is going to o*en in '%%(' and there will be no quantitative restrictions but there are several other non<tariffs barriers waiting for us$ So, this is the time to start ta!ing action in this regard to safeguard the interest of our country in the field of te4tile$

OBJECTIVE
Primary ob2ective of the Pro2ect is to carry out a study to assess the e4*ort *otential o**ortunity of @otton yarn, Fabrics and 3ade<u*s in the U$S$ The secondary ob2ective of the study is:< To collect data on *roduction of cotton yarn within the country, To collect data on the world cotton su**ly and distribution$ To identify the emerging the trends in the +ndian cotton te4tile industry$ To find out the im*lications of the Arrangement on Te4tiles and @lothing ,AT@/ and 3ulti<Fibre Arrangement ,3FA/$ To understand the rules and regulations *ertaining to the im*act of @otton yarn, 3ade<u*s a fabrics in the U$S$ Finally, to study the mar!et *otential of these *roducts in the U$S$

LITERATURE REVIE/
1ata has been gathered from 3+#+ST"K 0F @033E"@E A#1 T"A1E$ 1ata from 1GFT ,1irectorate general of foreign trade/ website$ 1ata from F+E0 ,Federation of im*ort and e4*ort organiGation/$ 1ata from A**arel e4*ort *romotion council$ Studied the *rocess and *rocedures by analyGing the course boo!s$ 1ata studied from USA trade ministry$

COMPANY PROFILE
-63 0CE"SEAS ,P/ T1$ ocated at '=', Gurgaon sohna road, bhondsi, 5aryana ,+#1+A/ was established in (&&'$ The founder of the com*any 3rs$+ndu 3odi a designer and *ainter by training and vocation started -63 0CE"SEAS with her *assion for cashmere, *ashmina and rare e4otic s!ills of india$ Ie at -63 believe in e4cellence and quality in *roducts$ To this end, we have invested heavily in our designs, quality systems and *eo*le to *roduce the finest fashion collections$ -63.s business segment include home *roducts, garments, fabrics, scarves, accessories$ The com*any has an annual turnover of more than L>% million and its business *resence in about more than '% countries which include USA, F"A#@E, U6, AUST"A +A, SPA+#, +TA K, BE G+U3, 50#G 60#G, S+#GAP0"E, -APA#, @5+#A, 60"EA, #ET5E" A#1S, TU"6EK and G"EE@E etc$ 0ur client list includes some of the leading names of fashion world li!e houses of Fraser, Anichini, @atstudio, Armani, 3a4 marra, Bellerose, #olita, "are, To**y Trading Grou* 5ong 6ong, @ortefiel etc$

PRODUCT RANGE3 0ur *roduct range includes:< F,)$(*n G",.!n#)3 5igh fashion value added and hand made garments for women, men, and !ids$ Ie do in both To*s and Bottoms$ The value addition on these fashion garments includes *rints, unique embroidery, s*ecial accessories, stitching techniques and much more$ H*.! C*22!4#(*n)3 This includes Blan!ets, Muilts, @ushion covers, @urtains, @overlets, Throws, Tableclothes and "unners$ @ashmere *roducts are one of our unique high end *roducts$ F,)$(*n A44!))*"(!)3 Scarves, 3ufflers, Stoles, Shawls, Bags and other fashion accessories are also included in our *roduct range$

PRODUCTION FACILITIES 0ur manufacturing ca*acity is more a function of the com*le4ity of the style being handled$ To cater to our clients requirements, we *resently have a labor *ool of over a thousand wor!ers at our dis*osal$ 0ur factory is an integrated unit where all *rocesses are in

house including weaving, dyeing, embroidery,hand9machine/, sewing, washing, quality chec!ing, finishing and *ac!ing etc$ Each ste* of the intricate *rocess is su*ervised via a meticulous quality assurance system$ Ie have a state of art )%,%%% sq$ft$ integrated manufacturing set u* near #EI 1E 5+,GU"GA0#/, +ndia a smaller (%,%%% sq$ft$ set u* in banglore$ Ie are in the *rocess of setting u* a large integrated unit in Banglore over a three acre cam*us to cater to our clients e4*anding requirements$ Ie value our *eo*le and thus we have maintained a clean, comfortable and *ollution free set u*$

RESEARCH METHODOLOGY
The methodology ado*ted for doing this *ro2ect encom*asses a detailed study of both *rimary and secondary source of information in order to find out the e4*ort *otential$ The information from *rimary sources has been gathered by *rimary interviews and discussions with e4*orters of te4tiles and garments to United States mar!et$ Personal interviews with *ersonnelDs in 5T!1&"*4(26 and 3inistry of Te4tiles hel*ed a lot to collect the information$ The secondary sources of include various data available in the various libraries, by way of des! research$ This also includes the *rinted and *ublished data available in #$! PHD C$,.7!" *+ C*..!"4! and In %)#"y8E)4*"# L(7","y9 T!1&"*4(2 ,n In#!"n!#. All the

information thus collected and was carefully studied and analyGed before the final re*ort was framed$

PRODUCT INTRODUCTION
COTTON YARN Iith the worldJs largest s*inning ca*acity ,over B'$(% million s*indles/ the finest varieties of raw cotton in abundance and a vast *ool of s!illed man*ower,

+ndia *roduced '),A&( million !gs$ of cotton yarn ,'%%%<'%%(/$ These large numbers are matched by equally su*erior and consistent quality and manufacturing *ractices$ Ihatever your s*ecific need, o*en<end or ring s*un, combed or carded, electronically cleared and auto<coned in greys, dyed, bleached, mercerised or gassed and signed varieties are available in all counts$ C*##*n Y,"n Ty&!) @otton yarn is classified on the basis of counts$ Ty*ically the higher count is of su*erior quality$ @oarse yarn ,less than ()s/ is used for low cost fabric, industrial garments etc$ 3edium quality yarn ,'%<=%s/ is used for shirtings, !nitting and other te4tiles$ Su*er fine yarn ,above =%s/ is used for *remium shirting and other so*histicated fabrics$

PRODUCTION OF SPUN YARN Unit: Million Kgs F(7"! @otton Blended (%%H #on<cotton Total :;;< 8:;;= (A&= B&> (&? '=A> :;;=8:;;> '(=A =A= (?' ')&= :;;>8:;;? ''(B >AB ()) '&)B

Source: Textile Commissioner's Office COTTON YARN MANUFACTURING "aw cotton is ginned ,im*urities removed/ and *ressed in bales ,of ()% !g each/ for su**ly to mills where it is fed into the blow room and is blown into loose form$ The loose cotton is *assed through a roller to form cotton layers or la*s$ The la*s are ta!en through carding9 combing *rocess where short fibers are removed and cotton is converted into a loose fibrous ro*e ,called sliver/$ The slivers are stretched through roving machines and further twisted, strengthened and drawn in ring frame ,s*indles/ to form yarn$ The yarn can be *ac!ed on cone winders or on reeling machines$ The latter *ac!ing is called han! yarn used by handloom o*erators$ @otton9 blended yarn is

woven into fabric on looms, which can be automatic ,in the organiGed sector/ or hand9 *ower o*erated mechanical looms in the unorganiGed sector$ The woven fabric is dyed, *rocessed and finished to ma!e the final cloth$ 1ue to insular government *olicies, there e4ists a big unorganiGed sector for te4tile *roduction, consisting of !hadi, cottage industries, handloom, etc$Two basic technologies are being used in the cotton te4tile industry < mechanical *rocessing for the conversion of fiber into yarn and yarn into gray cloth and chemical *rocessing for converting gray fabrics into finished fabrics$ T@* )&(nn(n- #!4$n*2*-(!) 8 "(n- )&(nn(n- ,n "*#*" (*&!n !n 8 OE) )&(nn(n- are *o*ular$ "ing s*inning uses a slightly longer *rocess$ +t gives a softer finish to the yarn and is versatile in s*inning yarns of different counts$ The basic technology of ring s*inning has remained almost unchanged for almost a century though evolutionary develo*ments leading to higher s*eeds and better quality have ta!en *lace in the *ast two decades$ Though invented earlier, 0E s*inning has become *o*ular since the (&)%s$ 3ore than (%H of world yarn is currently *roduced through this technology$ 0E yarns, using a shorter *rocess sequence, have a somewhat harsher handle$ The yarn feel and techno<economic factors

have meant that 0E, is largely ado*ted for coarser countsN ie counts below '%s$ 0E can also handle short fibers and cotton waste$ +ndian mills have in fact used 0E e4tensively as a waste s*inning technology$ Since cotton is a natural fiber, a single cotton ball can have fibers of uneven lengths$ Even the same variety of cotton grown in the same field would have fibers of varying lengths$ Besides, it would contain some foreign matter li!e bro!en leaves, seeds and dust since it is a field<grown cro*$ The s*inning of quality yarn involves three ste*s : The lint has to be cleaned and the fibers have to be made of relatively uniform length$ The fibers have to be oriented in the same direction$ The fiber mass has to be converted into a strand of similarly oriented fibers with the o*timum mechanical force so that it can be easily drawn out and twisted to form a continuous yarn strand without ru*turing the fibers in the *rocess$ To achieve this, sheets of fiber are gradually drawn out over ' or B stages into a decreasing mass of fibers *er unit length$ The *re*aratory s*inning *rocess is designed to achieve these three ob2ectives$ +n this *rocess it generates waste, which can either be

foreign matter or short fibers$ These short fibers are e4tracted, as they are unsuitable for s*inning finer yarn$ #ormally, such e4tracted fibers constitute about >H in carded yarns and (>H to '%H in combed yarns$ Such waste fibers can however be *rocessed, made uniform and converted into waste yarn$ 0E technology is more ade*t in this area$ Though these yarns are wea!, they are quite wor!able for handloom *roducts li!e OdhurriesO and OchaddarsO$ 0E s*inning has been ado*ted for su*erior coarse count s*inning only in the last > years with the emergence of denim weaving and furnishing fabric weaving for e4*ort$ FABRICS AT$! In (,n T"!,)%"! C$!)#A Ihen the high *riests of fashion floc! to +ndia, need we say more about our cotton fabricsP0ur treasure chest of cotton fabrics is overflowing with drills, *o*lins, cambric, twills, gabardines, sateens, dobby chec!s and stri*es, denims, safari suitings, industrial fabrics Q in a variety of widths, grey or finished<Truly a treasure chest of whose riches you can *arta!e$

F,7"(4) In42% !3 a$ A**arel < outer and inner wear$ b$ 5ousehold fabrics < furnishings, bed linen etc$ c$ Accessories< bags, belts, hand!erchiefs, etc$ d$ +ndustrial fabrics < filter cloth, *arachute cloth etc$

COTTON FABRICS MANUFACTURING Ieaving is interlacing of vertical yarn ,war*/ and horiGontal yarn ,weft/$ 1e*ending on the ty*e of weave, war* yarn sheet is divided and lifted$ An o*ening is created through which weft yarn is inserted$ Then the other *ortion of the war* sheet is lifted and weft yarn is *assed again$ This gives the binding as interstices are created through this *rocess$ Ieft yarn is carried across in a bobbin held in a shuttle$ This is the basic weaving *rocess$ 0ver the years, different techniques of weft insertions have been develo*ed$ Age<old method is to use the shuttle$ +n the handloom it is thrown from one end of the war*sheet to another by hand$ +n *owerloom the same is done through use of *ower$ +n an automatic loom when the yarn on weft bobbin ,*irn/ is

e4hausted it is changed automatically$ These are all shuttle looms$ There are other methods of insertion li!e through ra*ier, *ro2ectile and 2et of water or air$ Such weaving machines are !nown by their system of weft insertion eg ra*ier loom, *ro2ectile loom or machine and air loom$ +n the last >% years the rates of weft insertion have gone u* considerably$ From a modest '%% m9 minute in (&>%Js to about (,%%%< (>%% m9 minute today$ The a**ro4imate *roduction rates of different ty*es of looms for a basic sheeting fabric of '%s count, with ?% threads in war* as well as weft and ?BO wide are given below: R&. 5andloom 0rdinary loom 3odern auto shuttle loom "a*ier loom Pro2ectile loom Air 2et loom Source: Textile Commissioner's Office #ew *ro2ects for weaving *lain fabrics are based on air 2et weaving while weaving of *atterned fabrics such as suiting, use either ra*ier or '% (?% ''% =%% ?%% A%% .B > $*%" = '= =% )B ((% (=?

*ro2ectile OSulGerO looms$ The *ro2ect costs are evaluated with reference to a basic quality li!e '%4'% ,yarn count/, ?%4?% ,number of threads in an inch in war* and weft/ of ?BO width, A modern air 2et weaving *ro2ect for (%,%%% meter *er day of such a basic fabric costs a**ro4imately "sl%%mn$ The basic *lain weave fabric still constitutes )%H of total fabric *roduction$ 1ifferent weaves can be created by changing the number, *attern and sequence of the yarn threads that are lifted u* and down from the war* sheet$ The more *o*ular weaves are drills, satins and 2acquards in addition to the *lain weave$ 1ifferent designs are created by using colored yarns in the war* and the weft$ A multitude of fabrics can be created by combining colored yarns and different weaves, limited only by a designerJs imagination$ MADE UPS AA T*%4$ *+ #$! M,)#!"C) H,n A From time immemorial +ndain craftsmen have created e4otic fantasies woven from the finest cotton$ Their counter *arts have created an even larger and more e4quisite range of cotton made<u*s<table linen, bed linen, !itchen linen, toilet linen, furnishings, decorative fabrics Qand much more$

C*.&!#(#('! )4!n,"(* Te4tile mills have cultivated strengths in *articular *roduct lines and mar!ets over the years$ For e4am*le P"* %4#) Fine counts above =%s 3edium counts '%<=%s @oarse counts ?<'%s Sewing threads U*mar!et shirting U*mar!et trousers material cotton 1enim Blended shirtings Sarees 5ousehold fabrics 4*.&,ny GT#, Ginni, Premier Cardhman, GT#, Premier @oats Ciyella, oyal @oast Ciyella, 3ahavir Arvind, @oats Ciyella @oats Ciyella, 3afatlal Arvind 3afatlal, Bhilwara "eliance, 6hatau Bombay 1yeing

Source: PHD Chamber of Commerce, Journal.

GLOBAL SCENARIO
/ORLD COTTON SCENARIO Iorld cotton *rices re fallen are moving higher$ After five years of almost continuous decline, during which daily values of the @otloo! A +nde4 L ($(% *er *ound in '%%% to == cents at the end of

'%%>, the +nde4 increased to >( cents in -anuary '%%)$ #ot since the (&>%s has the @otloo! A +nde4 fallen for more than two consecutive seasons, and des*ite the u*turn in -anuary, '%%)9%A will be the fifth consecutive season in which average *rices have fallen$ As is often the case when trends change and the rise in *rices is *roceeding faster than many e4*ected and further gains during the second half of '%%)9%A and into '%%A9%& are li!ely$ Iorld cotton *roduction is forecast to dro* from an estimated (&$B million tons this season to less than (& million tons in '%%A9%& and consum*tion is e4*ected to climb to a record (&$> million tons ne4t season$ "eflecting im*roved health in the cotton economy, world e4*orts are rising from >$B million tons last season to nearly si4 million tons this season and a forecast of ?$B million tons in '%%A9%&$ Iorld cotton ending stoc!s are changing little this season, but a

decline to less than nine million tons is forecast ne4t season$ E4*orts by @hina are estimated at B%%%%% tons this season, double last seasonDs level and @hinaDs e4*orts may remain significant through ne4t season$ +m*orts by @hina, essentially Gero this season, may rise in '%%%9%($

/ORLD COTTON SUPPLY (Million tons :;;<8;= Production @onsum*tion E4*orts Ending Stoc!s @otloo! +nde4 Source: !C"C #ress release for March, $%%& /ORLD COTTON DISTRIBUTION (Million 'ales :;;<8;= Production @onsum*tion E4*orts Ending Stoc!s @otloo! +nde4 A A>$) A)$= '=$= ==$> >& :;;=8;> A)$& &%$) ')$( =($) >BR :;;>8;? A?$A &($& '&$) B?$> ?'R A (A$?? (&$%' >$B% &$?& >& :;;=8;> (&$=( (&$)> >$&% &$%) >BR :;;>8;? (A$&% '%$%( ?$=) )$&? ?'R

( )S cents #er #oun*. Statistical estimates are base* on current estimates of su##l+ an* use, &-. confi*ence inter/als exten* 0- cents #er #oun* abo/e an* belo1 each #oint estimate. Source: !C"C #ress release for March, $%%2 /ORLD TEXTILE FIBRE CONSUMPTION Iorld end<use te4tile fibre consum*tion is e4*ected to increase %$>H in '%%), not a very different scenario than the one registered in '%%?$ Iith higher e4*ected growth rates for the world economy, te4tile fibre consum*tion is li!ely to grow ($(H in '%%A$ Te4tile fibre consum*tion is e4*ected to reach =>$) million tons in (&&& and =?$' million tons in '%%A$ The *ro2ections for '%%) ta!es into account %$?H increase in industrial countries and %$BH in develo*ing countries and in eastern Euro*e and the former USS"$ Iithin industrial countries, e4*ected increases in #orth America ,($BH/ and Iestern Euro*e ,%$BH/ are offset by a %$)H decline in the -a*an, Australia and #ew Sealand grou* of industrial countries$ +n develo*ing countries, growth in Asia ,%$)H/, the 3iddle East and Euro*e ,($?H/ and America and the @aribbean, a region that entered into economic recession in '%%)$

The *ro2ections for '%%A ta!es into account increases of %$&H in develo*ing countries, ($'H in industrial countries and '$=H in

Eastern Euro*e and the former USS", a region which is e4*ected to e4*erience '$AH G1P growth in '%%A, the highest economic growth since the transition to a mar!et economy began$ The *ro2ected

increase in develo*ing countries is the result of economic recovery since e4*ected for atin America and the @aribbean, which will li!ely translate into an increase of ($>H in te4tile fibre consum*tion in the region and strengthening of G1P growth in other regions$ Te4tile fibre consum*tion is e4*ected to increase ($&H in the 3iddle East and Euro*e, 'H in Africa and %$>H in Asia in '%%A$

INDIAN TEXTILE INDUSTRY

The te4tile industry is one of the largest segments of the +ndian economy accounting for over one fifth of the industrial *roduction$ The combination of traditional art and contem*orary design has *roduced a variety of yarn, fabrics, home te4tile and other te4tile *roducts sought after the world over$ Iith over ( million hectors of cotton cultivation and an annual cro* of over B%%% million !g$ +ndia is among the world largest reservoirs of this *o*ular fibre$ +n addition the A% odd varieties of different descri*tion being grown in +ndia, enables the industryDs *roduce cover almost every conceivable count and construction of fabric, in a width of choice$ The *rocess of liberalisation begun in the last decade has seen the industry become globally com*etitive not only in terms of *rice but also quality$ 3odernisation has not been restricted to the installation of so*histicated *rocessing machinery, looms, auto corners, electric cleaner, and system conforming to +S0 &%%% standards$ Today with over (>%% s*inning mills over ')A com*osite units and around ($> million registered looms *roviding em*loyment to (> million *eo*le, the +ndian te4tile industry is a force to rec!on$

But we should also not forget that the mar!et is going to o*en in '%(% with the end of AT@ and the com*etition is going to increase tremendously, its high time for us to start thin!ing in terms of *roviding the world class *roduct$ As the EU will remove the quota restriction but there are going to be several non<tariff barriers for the country li!e +ndia, es*ecially against the four ma2or *layers such as U$6$, France, Germany and +taly$ 0ur main com*etitors are going to be @hina, Pa!istan, Bangladesh and other surrounding countries$ +t is true that the te4tile industry has shown a great *otential in the last few years and achieved the growth of about B%H including yarn, fabrics and the made<u*s but if now we have not ta!en the advantage of the TECHNOLOGY UPGRADATION FUND *rovide by the Government to re2uvenate the industry, we are not going to survive in the international mar!et$ INDIAN COTTON TEXTILE INDUSTRY +ndiaDs cotton te4tile industry occu*ies a unique *osition$ +t accounts for about seven *er cent of gross domestic *roduct ,G1P/, '% *er cent of the industrial out*ut, and over B% *er cent of the e4*ort earnings$ The industry contributes over "s$ >,%%% million in terms of e4cise duty

to the e4chequer$ After agriculture, this industry is the second largest em*loyment *rovider in the country as it *rovides gainful em*loyment to about BA million *eo*le$ A considerable number of *eo*le also get benefited through its indirect em*loyment$ At the time of inde*endence, te4tile industry, the largest organiGed industry in the country, com*rised an estimated '$> million handloom weavers and B>? mills, with an installed ca*acity of about (%$B million s*indles, '%%,%%% looms and )%%,%%% wor!ers$ After that, the increase in fabric *roduction is mainly because of availability of ma2or raw materials, namely, cotton and man<made fibers$ 5owever, the share of cotton gradually declined from && *er cent in the (&>%s to ?& *er cent in '%%?$ As an aftermath of *artition of the country, B% *er cent of cotton< growing area went to Pa!istan$ But, through concerted efforts, the country could achieve self Tsufficiency$ P"*-"!)) )* +," The *er ca*ita domestic availability of fabrics, e4cluding e4*orts, has increased from (($>B sq$ meters in (&>( to about 'A sq$ meters in (&&?$ +t was *laced at B%$&' sq$ meters in (&&)<&A$

The year '%%?<%) witnessed a bum*er cro* of ()$> million bales of ()% !g each/$ But, since the global *rices are low, it is unli!ely to *revent cotton im*orts$ The non<availability of good quality cotton and high contamination are also encouraging cotton im*orts$ The @otton Advisory Board has estimated the o*ening stoc! in the new cotton year at B$?> million bales and closing stoc! at =$& million bales$ The board has also *ro2ected an im*ort fall of >%%,%%% bales in final su**ly statistics and an increase of some (>%,%%% bales in demand$ COTTON TEXTILE INDUSTRY9 SECTOR /ISE OUTPUT (!n million s3. meters :;;<8;= :;;D8 S!4#*" ;: 3ills Power looms 5andlooms Total >,'(& '(,A?B >,A>( 'B,AB> ?,(A% '=,=') ),'%' '?,='' ),=>? 'A,)?> ),'?B '),A&( ',%%% (=,?== (,&&% (>,&&= :;;:8;E ;F ',')( (>,&)? ;G ',%(& (),'%( ;< F!7"%,"y) (,&>) (&,B>' (,)&A (A,AB% :;;E8 :;;F8 :;;G8 (A&"(2 H

Source: ma4a5ine, 6acts for +ou, 6eb, $%%2

T!4$n*2*-y %& -", ,#(*n The te4tile *olicy of (&A> *rovided the necessary im*etus to forward loo!ing mills to u*grade their technology by installing state<of<the<art machinery$ @urrently, a number of mills and garment units are equi**ed with such high<tech s*inning, weaving, !nitting and *rocessing machinery$ In4"!,)! (n n%.7!" *+ .(22) The number of cotton man<made fibre te4tile mills which was BAB in (&>( steadily increased to (,?'= in (&&)$ Also, the number of s*inning mills rose from (%) in (&>( to (,B=& in (&), with the s*inning ca*acity increasing from (($'> million s*indles to B'$'' million s*indles during the same *eriod$ G** -"*@#$ ",#! The *roduction of s*un yarn has also gradually increased from ?%' thousand tonnes in (&>( to about '$) million tons in '%%><%?, registering a com*ound annual growth rate of about B$B *er cent$ The fabric *roduction also increased substantially from si4 billion sq$ meters in (&>( to about BB billion sq$ meters in '%%><%?, recording a

com*ound annual growth rate of B$) *er cent$ +t was *laced at B),=B? million sq$ meters in '%%?<%)$ In4"!,)! (n )$,"! *+ &*@!"2**. )!4#*" The dominant share of mill sector in cloth *roduction has steadily declined and has been re*laced by *owerloom sector$ Share of handloom sector remained almost stagnant$ The *owerloom sector accounts for around )' *er cent of the total cloth *roduction, and its share has been growing over a *eriod$ The number of *owerlooms installed increased from ($%= million units in (&&% to ($>' million units in '%%><%?$ These are concentrated in 3aharashtra, Gu2arat, Andhra Pradesh, and in the Pun2ab region$ S(-n(+(4,n# 4$,n-!) From the mid (&A%s onwards, the mill cotton te4tile segment has been e4*eriencing significant changes caused by mar!et resurgence, mill restructuring, deregulation and the economic reforms$ +n recent years, the mar!et for cotton cloth has grown ra*idly, and the average rates of *rofit and value added *er wor!er im*roved$ 0ver the years, the fibre mi4 *attern of cloth has also undergone change$ +n the

(&>%s, cloth was mainly cotton<based, now, cotton cloth accounts for only ?% *er cent of the total *roduction$ The remaining =% *er cent is contributed by blended and (%% *er cent non<cotton cloth$ 0f course, there has been im*rovement in the quality of fabrics$ The IT0 te4tiles and clothing agreement has *rovided for a ten year *hase<out for te4tile quota system under multi<fibre arrangement ,3FA/ which ends on 1ecember B(, '%%&$ Thereafter the world trade in te4tiles will be totally free without quota to integrate it into the IT0 regime$ P"*72!.) +,4! The te4tile industry is not free from *roblems$ The ma2or *roblems include s!ewed fiscal duty structure, e4em*tions, evasion of duties, the rigid attitude of ban!s, redundant regulations, and an unequal com*etition from im*orts$ The raw material cotton itself is under *ressure from chea*er alternatives such as *olyester$ The cotton te4tile units are suffering from increasing raw material *rices and declining margins because of global com*etition$ The demand for *olyester and intermediates grew at about B% *er cent in '%%?<%) because of the growing tendency to

substitute *olyester for cotton$ The cost of *olyester too has come down because of fall in international *rices and also reductions in customs and e4cise duties$ The industry is thus made to rely on e4*orts, that too on non<quota countries$ There is a sti*ulation that s*inning mills ma!e half their yarn sales in the form of ban!s to handlooms which are e4em*ted from e4cise and sales ta4$ This only encourages misdeclaration, diversion, etc$ There are endless *rocedural bottlenec!s and transaction costs in te4tile e4*orts$ For instance, getting a duty<free advance license often ta!es a few monthDs time$ +t is the s*inning sector which is the worst affected$ +t has been continuously e4*eriencing declining *rofits and even losses$ The main reason for this is the rise in the costs of in*uts< cotton, *ower, interest, and overheads$ About ?% *er cent of them are in the red, and those with low *roductivity are becoming sic!$ The central budget for '%%A<'%%& increased the e4cise duty on cotton yarn from >$)> *er cent to &$' *er cent$ The units trying for large value additions are also adversely affected by the customs levy of >$> *er cent on im*orted cotton$

+t was sur*lus ca*acity, *articularly in @hina, +ndia and "ussia, that was really affecting the world mar!ets$ According to some studies, the e4cess ca*acity in @hina$ +ndia and "ussia was more of a domestic *roblem than global$ +t was estimated that these three countries had in all '& million s*indles either as obsolete or unused ca*acity$ Ihile +ndia and @hina had accounted for (% million s*indles each, the balance ,nine million s*indles/ was with "ussia$ +t is assumed that once quota curbs are removed, as envisaged in the IT0 tal!s, e4*orts would surge$ But, this may not ha**en$ After all, e4*orts of other countries are also limited by quotas$ +ndeed, the +ndian te4tile industry is facing an uncertain future and might soon begin to be buffeted by com*etition$ The T!1#(2! I%*#, E1&*"# P*2(4y has not been able to *romote the sectorDs long<term com*etitiveness$ +t does not address issues li!e the closure of unviable mills, the unequal advantage *ossessed by *ower looms over com*osite mills ,or s*inners/, or even remove the continuing ta4 bias against man<made fibers$ The *ast *erformance entitlements ,PPEs/ stay at )% *er cent, while quota tenures actually get lengthened from three years to five$

F%#%"! &2,n) The Sathyam Panel, set u* to *rovide in*uts for the *ro*osed new te4tile *olicy, has recommended setting u* of te4tile *ar!s in different *arts of the country$ +t has suggested that the ministry of te4tiles may introduce a suitable scheme to *rovide infrastructure grants to state governments for setting u* te4tile *ar!s$ The committee is of the o*inion that te4tile *ar!s should be integrated and have units covering all stages from s*inning, *re<weaving, weaving, !nitting, *rocessing to clothing9made<u* manufacturing$ +t has also suggested that in some areas only a**arel *ar!s could be set u* inde*endently, while in others, a**arel *ar!s could be *art of the te4tile *ar!s$ Another suggestion made by the committee is that the state governments should declare the units set u* in te4tile *ar!s as *ublic utilities, *rovided the units are e4*orting at least '> *er cent of their total *roduce$ The state governments should encourage foreign com*anies in setting u* their units in the te4tile *ar!s$ The *anel also suggested that the government should ensure quality facilities, *articularly uninterru*ted *ower, treated water,

telecommunication, ban!ing and insurance, customs office, and container services$ The Union Te4tile ministry had launched the TUF with an amount of "s$ '>%,%%% million to moderniGe the weaving and *rocessing sectors of the te4tile industry, besides 2ute, cotton ginning and *ressing units$ The fund came into effect from A*ril (, '%%A$ Financial institutions have already sanctioned more than "s$ ',?>% million under the TUF scheme to over (= com*anies$ The #ational +nstitute of Fashion Technology ,#+FT/ will also set u* a small grou* to hel* garment manufacturers in getting assistance under TUF scheme$ As is clear from the above discussion, in the conte4t of globaliGation of the +ndian economy, the te4tile industry should go in for moderniGation, *rofessionaliGation, effective quality control and enhanced training facilities$

LONG TERM PROJECTIONS OF TEXTILES AND COTTON CONSUMPTION The set of assum*tion used to *ro2ect world te4tile and cotton consum*tion in '%(' includes average growth of G1P since (&A% as long term G1P growth, *o*ulation *ro2ections from the United #ations, a continuation of the trend of cotton *rices relative to *rices of other te4tile fibers and increases in the +@A@ Te4tile Fibre Price +nde4 in tandem with inflation$ ong term *ro2ections suggests that world end<use te4tile

consum*tion will grow at an average rate of growth of end<use te4tile fibre consum*tion has decreased over the last three decades, from B$)H during the (&?%s to B$(H during the (&)%s$ '$>H during the (&A%s and '$BH between (&&% and (&&A$ ower rates of growth of

world G1P ,from >$BH during the (&?%s to B$(H during the (&A%s/ and lower growth of the world *o*ulation ,from '$(H during the (&?%s to ($)H during the (&&%s/$ Iorld end<use cotton consum*tion will li!ely increase at an average annual rate that of te4tile fibre consum*tion and is *ro2ected to reach '%$> million tons in '%('$ End use cotton consum*tion increased

faster than consum*tion of other fibers during the (&A%s$ 5owever, the loss of com*etitiveness of cotton resulted in the fluctuation of cotton consum*tion around (A$> million tons between (&A& and (&&>$ Gains in cotton consum*tion since (&&> have been far less than the gains registered by non<cotton fibers$ A current *ro2ection suggests that cotton will continue to lose share of the world te4tiles mar!et from =($&H in (&&A to =%H in '%%>$ INDIAN TEXTILE H POLICIES J AGREEMENT AND THEIR IMPLICATION D. INDIAN EXPORT IUOTA POLICY AND ITS

IMPLICATION +n #ovember (&&&, the government unveiled a new five year te4tile e4*ort quota *olicy to gear u* the +ndian industry to face global com*etition after the *hase out of the 3FA in '%(%$ +t is widely believed that countries li!e @hina have a much greater com*etitive edge over +ndia once 3FA quotes get *hased out$ The new *olicy will be effective from -anuary (, '%%A to 1ecember B(, '%(%, coinciding with the ending of quota regime under 3FA$ The significant as*ect of the *olicy is that it has retained high value entitlement for a**arels to

chec! the downward trend in unit value realiGation$ The *olicy also ta!es care of com*laints regarding misutilisation of new investors entitlement$ A two<*ronged strategy has been ado*ted by lin!ing investment with Technology U*gradation Fund ,TUF/ and introducing actual user condition by ma!ing the quota non T transferable$ +n the case of a**arel e4*orts, the transfers could be effected through electronic transfer system$ N!@ T!1#(2! E1&*"#) I%*#, P*2(4y The new quota *olicy is e4*ected to benefit the te4tile industry to the tune of "s$ '>%,%%% million mainly through e4*orts$ +ts im*ortant features are:

Muota for *ast *erformance rationaliGedN Muota for new investment raised to induce moderniGations$ Procedures sim*lified for better utiliGation of quota and for trans*arency$

readymade goods entitlement raised to => *er cent for handloom made<u*s e4*ort quotaN

 entitlement for millsN for handloom made<u*s e4*ort quota, the ready goods entitlement raised by five *er cent to => *er centN and in case of mill and *owerloom made<u*s, the entitlement raised to (> *er cent from the *resent (% *er cent$ :. AGREEMENT OF TEXTILES AND CLOTHING (ATC) AND ITS IMPLICATIONS Iorld Trade in Te4tiles and @lothing has been sub2ect to an array of bilateral quota arrangements over the *ast three decade termed as 3ulti Fibre Arrangement ,3FA/$ The arrangement when terminated in '%%>, had a membershi* of B& countries A ,= from EU, US, #orway, Finland and Australia/ were develo*ed countries or im*orting countries and B( were develo*ing countries or e4*orting countries$ They had around &% bilateral restraint agreements in addition to '& non<3FA Agreements or unilateral measures, when Agreement on Te4tiles and @lothing ,AT@/ came in force$ The agreements *rescribes removed of these restrictions in four *hases within (% years:

(?H of the *roducts on the list be removed in (st -an '%%? ()H of the *roducts on the list be removed by (st -an '%%) (AH of the *roducts on the list be removed by (st -an '%%A =&H of the *roducts on the list be removed by(st -an '%%& The agreement also requires countries to *hase out non<3FA restrictions within (% years$ The Te4tile 3onitoring Body is to oversee im*lementation of *hasing out$ I.&,4# *+ ATC (GATT) *n In (,n T!1#(2!) ,n G,".!n#) S!4#*" The Agreement has great relevance for +ndia whose e4*orts of the sector is more than US L B billion, The SI0T analysis of the sector in the light of GATT could be summarised as: S#"!n-#$)3 0ne of the largest *roducer of cotton, 2ute, sil! and man made fibres *resence of entire chain of manufacturing e$g$ in cotton, from growing ginning, s*inning, weaving, *rocessing to clothing garments 9 made<u*s and also *resence of vibrant te4tiles machinery sector and su**ort institutions as #+FT$ Availability of chea* s!illed labour$

/!,Kn!))!)3 ow *roductivity at all levels, from growing to ginning to s*inning to weaving ,ca*acity utiliGation as low as >%H in most of the sub<sectors/, *oor infrastructure< both e4ternally ,basic

infrastructure *orts, roads, *ower etc$/ and internally ,&%H of units being very small or in tiny sector/, absence of *roductive economy of scales in most sub<sectors, absence of CAT, too much regulations and control on dynamic of sub<sectors, restrictive im*art regime and trade *olicy environment, technological obsolescence$ strategy$ O&&*"#%n(#(!)3 Iith the *hasing out of restrictive trade *olicies< 3FA and other M"s, substantial increase in siGe of the mar!ets e4*ected$ Besides the other develo*ed countries, new mar!ets would be o*ened u* in develo*ing countries$ Post GATT, the trade of Te4tiles and clothing is e4*ected to rise by USL '= billion *er year$ T$"!,#)3 3a2or benefits of AT@ agreement under GATT not to be available before '%%'$ Muotas are being removed, but non< tariff barriers ,e$g$ in the name of anti<du*ing, consumer safety, eco< labelling etc/ are fast re*lacing quotas$ Phasing out of Muotas also mean countries to e4*ort on their com*arative advantage onlyN ac! of long term

com*etition in international mar!et to increase manifold$

C*n42%)(*n3 The gains are not there for +ndia to go and claim$ +t would require double the effort to even remain at the *lace where +ndia now is to te4tiles and Garment E4*ortsN B years down the line$ Gains could be manifold, but only if, the sector gears u* to challenge$ IMPLICATIONS
($

The actual effect of the agreement would be noticed by '%%' when Brd stage begins as it is *ossible for the ma2or restraining countries to meet their obligations to integrate their te4tile trade in first ' stages without significantly removing restrictions es*ecially by EU and USA$

'$ The AT@ *ermits countries to ta!e safeguard actions during the transitional *eriod$ B$ The agreement has the clause of self<destruction built in$ Iith com*letion of *hasing out, the agreement will also end in '%%>$ Then te4tile and clothing sector will be totally integrated in GATT$

=$ Prices Price is the most im*ortant factor in the cotton te4tile industry$ As this industry in +ndia is the labour intensive industry, therefore, almost A%H of the realisation get dis*osed in the form of salary and wages$ So, in order to be com*etitive in the international mar!et a very com*etitive rates has to be quote by the +ndian e4*orter$ The +ndian e4*orter face e4tensive com*etition from the neighbouring countries li!e Pa!istan, @hina and Bangladesh but more from Pa!istan and Bangladesh$ As in these countries the local currency is much more wea!er than that of +ndia$ Therefore the e4*orter in this region en2oy the lu4ury of selling their goods at the lower rates and because of the wea!er currency the reimbursement is almost equal to that of our country$ +n this Bangladesh is allotted the status of the least develo*ed nation and therefore the other restrictions which we have to face is totally e4em*ted for them$ There are no quota restriction for them in the Euro and other foreign mar!ets$ The develo*ment of 2ute industry in Bangladesh is a good e4am*le of this$

SIGNIFICANT

EXPORT

PROMOTION

ACTIVITIES

UNDERTAKEN DURING THE YEAR3 1uring the year under review, the @ouncil had underta!en various e4*ort *romotion activities, the most significant of which are listed below: +ndian @otton Te4tile Show was organised in @olombo, Sri an!a$ Si4teen leading +ndian com*anies *redominantly fabric manufacturers and e4*orters, *artici*ated at the show$ The show was conducted at the time when EU quota for Sri an!an made trousers 9 shirts 9 blouses was lifted, thus creating an o**ortunity for +ndian e4*orters to cater to the needs of the e4*anding raw material requirements of the a**arel

manufacturers$ +t was a well<timed event aimed at creating a synergy between the +ndian manufacturers of te4tiles and Sri an!an a**arel *roducers$ Around >%% visitors, namely a**arel manufacturers,

wholesalers, im*orters and agents visited the show$ Based on the feedbac! received from the *artici*ants, an antici*ated

business to the e4tent of "s$ >% crores was generated at the show$ A Buyer<Seller<3eet ,BS3/ was organised for ' days in 3umbai for a visiting de*artmental stores delegation from BraGil$ The event was organised in association with the 3inistry of @ommerce under OFocus A@J *rogramme$ The ob2ective of the show was to dis*lay the entire range of te4tile *roducts available in +ndia including garments$ The @ouncil received a very good res*onse from the trade and forty com*anies *artici*ated in the meet$ E4*orters were able to establish contracts and had useful business discussions with the re*resentatives of the de*artmental stores$ A meeting with a delegation from All Pa!istani Te4tile 3ills Association ,APT3A/ was organised in 3umbai to discuss issues relating to the emerging trends in te4tile trade worldwide as well as develo*ments li!e formation of regional trade blocs which had the *otential to create ma2or hurdles for the te4tile manufacturers in both the countries$ eading members of the

@ouncil deliberated various issues with the delegates and even e4*lored the *ossibility of mutually increasing trade in the

world mar!et, given the fact that the *roduct lines and mar!ets were similar for e4*orters based in the two countries$ The @ouncil also organised a meeting in 3umbai with a visiting delegation from the Sri an!an A**arel E4*orters Association$ The ob2ective of the meeting was to discuss *ossibilities of increased coo*eration between the +ndian su**liers of fabrics Q yarns and Sri an!an A**arel 3anufacturers, es*ecially in view of the free trade agreement signed by the two countries$ +ndian e4*orters and delegates were of the unanimous view that the te4tile and clothing industry in both the countries can loo! forward to further coo*eration in terms of forging alliances and sourcing raw materials for mutual benefit and thereby develo* a Jvalue added chainJ in te4tile and clothing sector as a strategic ste* to boost trade within the region$ A FTA ,Foreign Trade Association/ s*onsored delegation from Euro*ean Union visited +ndia during the month of 1ecember '%%%$ The @ouncil arranged interaction sessions with leading members of the different sectors of +ndian te4tile industry namely: cotton, man<made and a**arel$ The meetings focused on the following issues:

< Sco*e of EU investment 9 2oint ventures in *rocessing and weaving sector < Possibilities of creating effective su**ly chain between ,i/ +ndian s*inning units and those weaving Q *rocessing units and ,ii/ between weaving Q *rocessing units and +ndian a**arel units$ < "e<e4*ort of *rocessed fabrics to EU and world mar!ets$ < "eci*rocal mar!et access for EU e4*orters in +ndian mar!et$ 1iscussions were held in three different sessions and +ndian entre*reneurs Q the delegates e4*ressed their views on the sub2ects mentioned above and e4changed ideas on how best the te4tile industries in +ndia and EU could coo*erate to mutually benefit from reci*rocal arrangements$ A sub<grou* on JTrade PolicyJ under +ndo Australia -oint Business Grou* on Te4tiles and #atural Fibres was set u* with the E4ecutive 1irector of Te4*rocil as convenor$ The ob2ective of the sub<grou* was to *romote greater understanding on bilateral and third country *olicy issues of mutual interest and e4*lore *ossibilities of greater regional coo*eration consistent with IT0

norms for semi<*rocessing and finishing of Australian raw materials in +ndia$ +n this connection a *resentation was made by the @ouncil, during the meeting of the -oint Business Grou* held in #ew 1elhi with a focus on the *ossibility of increased mar!et access by +ndia to Australia and vice<versa$ Subsequently a re*ort was submitted to the 3inistry of Te4tiles$ A meeting between the +ndian @otton Te4tile e4*orters and the +ndian Ambassador to CeneGuela, Shri "$ Ciswanathan was organiGed at 3umbai$ Shri Ciswanathan e4*lained to the e4*orters the o**ortunities available to them to increase their business in entire atin America and CeneGuela in *articular$

U.S. COTTON TEXTILE INDUSTRY U$S$ (.&*"#) of cotton te4tiles ,yarn and fabric/ and a**arel have been rising during (&&A at twice the average rate of the last decade$ +n *art because of this im*ort surge, U.S. #!1#(2! mills are e4*ected to use less cotton fiber in '%%)9%A$ The U.S. milling industry *urchases domestically *roduced cotton fiber almost e4clusively, and farmers are seeing their best customer reduce its *urchases$ At the same time, Asian #!1#(2! e4*orters that traditionally shi* to the U.S. are now e4*ected to enter the ne4t century with wea!er currencies and with notably lower wages and incomes than originally e4*ected, ma!ing their e4*orts more *rice<com*etitive$ @onsequently, the coming termination of U.S. #!1#(2! im*ort quotas in '%(% could have a larger im*act on #!1#(2! trade and cotton *roduction than *reviously antici*ated$ 1uring '%%A, the U.S. economy and U.S. dollar have *robably been their strongest against the rest of the world since the mid< &A%Js$ +n *articular, the U.S. economy and currency have strengthened enormously relative to the #!1#(2! e4*orting countries affected by the Asian financial crisis$ The volume of U.S. #!1#(2! (.&*"#) during -anuary<-une '%%A com*ared with a year earlier rose '' *ercent$

I.&*"#) from Thailand, South 6orea, and Pa!istan rose =%, B%, and => *ercent$ Since the system of im*ort quotas originally develo*ed under the 3ulti<fibre Arrangement ,3FA/ will largely remain in effect through '%(%, the *otential for (.&*"#) from these countries has limits$ 5owever, Iorld Trade 0rganiGation ,IT0/ rules schedule a gradual elimination of quota restrictions through termination of selected quotas before '%(% and accelerated increases in quantities for the remaining quotas$ @hanges in the nature of the #!1#(2! industry and in trade *olicy have altered the structure of world #!1#(2! trade since the (&A%Js$ The increasing technical com*le4ity and vertical integration of the U.S. #!1#(2! industry, combined with several decades of global trade liberaliGation, suggest that U.S. cotton farmers will continue to find both domestic and foreign customers for their fiber des*ite a continually shrin!ing U.S. share of a**arel sold in the U.S. and worldwide$ Apparel Imports Grow Despite Quotas The 3FA quotas evolved during the decades before the Uruguay "ound of the General Agreement on Tariffs and Trade

,GATT/, largely in res*onse to surging (.&*"#) of a**arel from develo*ing countries$ Although te4tiles have become increasingly ca*ital<intensive, a**arel remains *robably the worldJs most labor< intensive industrial good$ Thus, a**arel industries in high<wage, develo*ed countries li!e the U.S. are inevitably vulnerable to com*etition from develo*ing countries$ The 3FA quotas reflected this<quota levels and growth rates for a**arel were more restrictive than those for yarn and fabric, and a**arel quotas to meet IT0 obliga tions are scheduled to terminate later, on average, than yarn and fabric quotas$ A**arel *roduction has steadily migrated to develo*ing countries des*ite the use of 3FA quota restrictions$ Ihen these e4*ort<oriented a**arel industries first a**ear in develo*ing countries, they are li!ely to im*ort fabric from more develo*ed countries$ ater, fabric *roduction a**ears, with yarn im*orted from more develo*ed countries$ Finally, a yarn industry develo*s, and fiber is im*orted$ A number of Asian countries have followed this sequence, beginning with -a*an, followed by Taiwan and South 6orea, then @hina and Southeast Asia$ Bangladesh is at an intermediate stage it is 2ust beginning to re*lace its #!1#(2! (.&*"#) with a domestic industry<and Cietnam has only recently begun e4*anding its a**arel e4*orting

industry$ Two generaliGations hel* e4*lain why a growing a**arel industry in a develo*ing country has traditionally resulted in a grow< ing #!1#(2! industry there 0ne concerns the reduction of transaction costs through vertical coordination between a**arel and te4tile industries sharing a common economic environment$ Since

develo*ing countries may accumulate a significant share of their industrial financial and human ca*ital through foreign trade in a**arel, a logical a**lication for these new resources is *roducing a familiar *roduct with an assured mar!et<te4tiles$ 1omestic #!1#(2! *roduction means the a**arel and #!1#(2! industries share a common currency and economy, ma!ing them less li!ely to incur the cost of changing customers ,for the a**arel industry/ or su**liers ,for the #!1#(2! industry/ during *eriods of economic disru*tion$ This, along with cultural affinity, can encourage s*ecialiGed investment within the industry with less ris! that foreign firms<or their governments<will later a**ro*riate inordinate shares of *rofits$ S*ecialiGation *ermits economies of scale, and the reduced ris! *ermits greater amounts of such cost<cutting investment$ The other generaliGation is that develo*ing countries have traditionally *ursued *olicies that favor nascent ca*ital<intensive industries, even at the e4*ense of e4isting labor<intensive ones$ Their underlying *remise has been that by

increasing the amount of ca*ital available *er member of the labor force, the wages and wellbeing of the *o*ulation will increase$ To this end, develo*ing countries have tended to subsidiGe ca*ital, lowering the cost of develo*ing a ca*ital<intensive te4tile industry to su**ly the already e4isting local a**arel firms$ Also, trade *olicies have assured that effective rates of tariff *rotection for #!1#(2! *roducts have been high<often in e4cess of (%% *ercent$ Ihile firms e4*orting a**arel *roducts have had wides*read access to duty<free #!1#(2! (.&*"#), this access has not always been consistent$ Muantitative restrictions, credit restrictions, and duty *re*ayments, among other methods, have been used to restrict (.&*"#)$ 3oreover, sudden *olicy changes have also occurred$ 1uring the (&)%Js, for e4am*le, +ndonesia assessed im*ort duties on the basis of assumed *rices rather than invoices, to avoid the underinvoicing ins*ired by currency controls$ +n (&)>, the assumed *rices on te4tiles were raised )> *ercent$ +n contrast, +ndonesia o*erated concessionary e4change rates for raw cotton and cotton yarn to facilitate its (.&*"#) when the countryJs currency was overvalued$ Under these circumstances, the shift of a**arel *roduction out of a develo*ed country li!e the U.S. has eventually resulted also in the shift of the initial fiber consuming segment of the industry<yarn *roduction$ A continuation of this trend could have negative

im*lications for U.S. cotton farmers since foreign yarn *roducers utiliGe a lower share of U.S. fiber than do domestic yarn *roducers$ +ndeed, during the (&)%Js and early (&A%Js, as the U.S. share of world cotton yarn *roduction fell, the U.S. share of cotton fiber *roduction fell as well$ 5owever, technical change and restructuring in the U.S. #!1#(2! and a**arel industry, and a global trend toward trade liberaliGation, mean these older relationshi*s are not li!ely to e4ert as strong an influence$ U.S. Cotton: Fiber for a Restru turing In!ustr" Under com*etition from (.&*"#), and in res*onse to the o**ortunities *rovided by the #orth America Free Trade Agreement ,#AFTA/ and the @aribbean Basin +nitiative, the U.S. #!1#(2! and a**arel industry has become more amenable to underta!ing foreign direct investment ,F1+/ and e4*orting from the foreign *lants, two strategies that tend to *reserve U.S. fiber consum*tion des*ite growing a**arel (.&*"#)$ Attrition in the U.S. a**arel industry has fallen more heavily on smaller firms, leading to an increase in the average firmJs ca*ital and !nowledge intensity, ma!ing it more li!ely for the firm to engage in F1+ or in outward *rocessing$ Firms engaged in outward *rocessing of a**arel *erform only the most ca*ital<intensive ste*s<li!e cutting

fabric<in the develo*ed country and contract the labor<intensive ste*s< such as sewing<to a develo*ing country$ Certical integration has *roceeded since the (&A%Js to a greater e4tent in the U.S. industry than elsewhere, and a com*any that *ursues vertical integration domestically is li!ely to *ursue it globally$ The same efforts to ca*ture *rofits from intangible ca*ital ,e$g$, brand loyalty, technical e4*ertise/ occur across borders as well as within the home country of the vertically ntegrated firm$ Thus, with vertical interation, the ca*ital< intensive *roduction ould more li!ely remain in the firmJs some country than would be the case if the ste*s were *erformed by different firms, even as the labor<intensive ste*s are moved to low< wage countries$ These develo*ments have not been confined to the U.S. "elatively greater rates if vertical integration and F1+ are long standing attributes of -a*anJs #!1#(2! industry, and outward *rocessing trade between Euro*e and Eastern Euro*e has also increased$ Poland has become the second largest mar!et for the Euro*ean UnionJs fabric ,after the U.S./, resulting in a reduced cotton fabric trade deficit for the EU$ Tunisia and 3orocco are also im*ortant EU outward *rocessing *oints$ Trade liberaliGation may reduce develo*ing countriesJ ability to limit

(.&*"#) from develo*ed countries$ Ihile it is *ossible for develo*ing countries with balance<of<*ayments *roblems to maintain quantitative restrictions on trade and remain in conformity with IT0 *rovisions, the trend has been toward reducing such barriers$ By not subsidiGing and *rotecting ca*ital<intensive industries, develo*ing countries can more effectively e4*loit their com*arative advantage in *roducing labor<intensive goods$ This would im*ly im*orting ca*ital<intensive intermediate *roducts, and under conditions of general global liberaliGation of trade and investment, such new *atterns are emerging U.S. +ncreased I.&*"#) of @otton Te4tiles and A**arel from 3ost of +ts Su**liers in '%%) 1uring the first half of '%%), 3e4ico was the largest source of #!1#(2! and a**arel (.&*"#) to the U.S. surging =% *ercent from -anuary to -une<with a grou* of @aribbean Basin countries ,led by 5onduras and the 1ominican "e*ublic/ the second largest, rising 'B *ercent$ U.S. ex#orts of te4tiles to these regions also rose substantially, and virtually all of the cotton fiber used by their industries was U.S.<origin$ iberaliGation of #!1#(2! trade with 3e4ico and, to a lesser e4tent, the @aribbean Basin, has *ermitted increased F1+ by U.S. com*anies and domestic investment by 3e4ican, @aribbean, and @entral American firms oriented to using U.S. cotton$ +n '%%?, Asia accounted for less than half of all U.S. cotton #!1#(2! and

a**arel (.&*"#), com*ared with ?> *ercent in '%%'$ #orth America ,including 3e4ico and the @aribbean Basin/ accounted for B) *ercent of all U.S. cotton #!1#(2! (.&*"#), com*ared with (& *ercent in '%%'$ This #!1#(2! trade shift can be quantified in terms of U.S.<*roduced cotton fiber, based on earlier research by US1AJs Economic "esearch Service on the amount of U.S. sourced cotton fiber embodied in #!1#(2! and a**arel (.&*"#)$ +n '%%', nearly '$( billion *ounds of cotton te4tiles and a**arel were im*orted by the U.S. from the (% largest im*ort sources, and about '? *ercent of that was returning U.S.<*roduced fiber$ 1uring '%%?, B$( billion *ounds were im*orted from the (% largest sources, and nearly =% *ercent was returning U.S. fiber$ Forecasting develo*ments in location of #!1#(2! *roduction requires careful e4amination of each countryJs domestic investment, changing industry structure, and changing international trade *olicies$ Iith *otentially large shifts in a**arel *roduction after '%(%, this e4amination will be crucial in foreseeing the international distribution of #!1#(2! *roduction$ 1uring most of the '%th century, increased foreign a**arel *roduction also *ulled #!1#(2! *roduction into countries that utiliGed a higher *ro*ortion of non U.S. fiber, reducing *ros*ects for U.S. cotton growers$ 5owever, a continuation of more recent trends in industrial organiGation and trade *olicy could mean

#!1#(2! trade rather than *roduction follows shifting a**arel *roduction, sustaining cotton *roduction in the U.S.

TEXTILE VISA AND EXPORT LICENSE REIUIREMENTS A te4tile visa is an endorsement in the form of a stam* on an invoice or e4*ort control license which is e4ecuted by a foreign government$ +t is used to control the e4*ortation of te4tiles and te4tile *roducts to the United States and to *rohibit the unauthoriGed entry of the merchandise into this country$ A visa system is the most effective way to *revent illegal transhi*ments and quota fraud$ +t also ensures that both the foreign government and the United States count merchandise and charge quotas in the same way so that overshi*ments, incorrect quota charges and embargoes can be avoided$ +f a visa has an incorrect category, quantity or other incorrect or missing data, or a shi*ment arrives without a visa, the entry is re2ected and the merchandise is not released until the im*orter re*orts the discre*ancy to the foreign government and receives a new visa or visa waiver from the government$ By issuing a new visa or visa waiver the foreign

government is ac!nowledging that it has been advised of the category under which @ustoms is classifying the merchandise and charging the

quota, if any, and9or the quantity that is being charged$ 5owever, a visa does not guarantee entry of the merchandise into the U$S$ +f the quota closes between the time the visa is issued in the foreign country and the shi*ments arrival in the U$S$ the shi*ment will not be released to the im*orter until the quota o*ens again$ A visa may cover either quota or non<quota merchandise$ @onversely, quota merchandise may or may not require a visa de*ending u*on the country of origin$ As of this date, the United States has entered into visa agreements with a number of countries but is enforcing quotas ,administered by the U$S$ @ustoms Service/ on merchandise from additional countries with which the U$S$ has no visa agreements$ Therefore, shi*ments from the countries without a visa agreement do not require a visa but are charged to the a**ro*riate quota$ 0n occasion, when bilateral agreements la*se and quotas are not in force, the visa agreement, which is a se*arate agreement that remains in force, requires that shi*ments continue to be accom*anied by a visa$ Each visa agreement is different$ 3ost are com*rehensive

agreements$ This means that all commercial shi*ments of te4tiles or te4tile *roducts of vegetable fibers, wool, man<made fibers, and sil! blends covered by a category number from a country with which the

U$S$ has such an agreement must be accom*anied by a visa in order to enter the U$S$ 5owever, other agreements cover only a s*ecific,

limited number of categories, ,e$g$, only cotton in categories B%%<B?&/$ Also, some agreements have e4em*tions for commercial shi*ments valued at L'>% or less ,although this e4em*tion is being *hased out of all new or renegotiated agreements/, or for traditional fol!lore cottage industry *roducts$ A further difference can be found in agreements which require the visa to show the e4act category and quantity in the shi*ment while others do not$ To administer these agreements, te4tile *roducts are grou*ed under B<digit category numbers$ The category numbers were develo*ed by the @ommittee for the +m*lementation of Te4tile Agreements ,@+TA/, an interagency committee com*rised of re*resentatives from the 1e*artments of State, @ommerce, abor, and the Treasury and the 0ffice of the United States Trade "e*resentative$ These category designations cover some several thousand (%<digit legal9statistical item numbers under which the merchandise is classified in the 5armoniGed Tariff Schedule of the United States Annotated ,5TSUSA/$ The category system was develo*ed to sim*lify the monitoring and control of te4tile im*orts and to facilitate the negotiation of bilateral

agreements by aggregating the several thousand htusa item numbers into a more manageable (?) categories$ however, this effort to sim*lify the system has been ham*ered by the fact that these (?) categories have been further subdivided by country into a**ro4imately =%%<=>% subcategories, sub<sub<categories and merged categories in order to establish quotas on a more narrow range of merchandise$ Each of these sub*arts has a se*arate quota$ These narrow brea!outs were made to *rotect s*ecific segments of the mar!et for U$S$ domestic *roducers who are being affected by the large volume of foreign im*orts in these subcategories$ Ihen a shi*ment arrives at a *ort in the United States, the @ustoms im*ort s*ecialist reviews the visa documents for accuracy and com*leteness *rior to release of the merchandise$ The review ensures that the category number, quantity, signature, date, and visa number are correct and match the shi*ment involved$ 0nly after this action is com*leted and the merchandise is charged to the quota ,if required/ is the shi*ment released to the im*orter$ PERSONAL USE SHIPMENTS3 3erchandise im*orted for the *ersonel use of the im*orter and not for resale, regardless of value, whether or not accom*anying the traveler,

e4ce*t for tailor<made suits from 5ong 6ong, are e4em*t from quota, visa and e4em*t certification requirements$ For 5ong 6ong, made<to< measure suits of wool, man<made fiber, sil! blend and vegetable fibers other than cotton, regardless of value, not accom*anying the traveller, will require visas ,==B9?=B9A=BU(V or ===9?==9A==U(V/$ Personal use shi*ments are defined in @ha*ter &A, Subcha*ters +C, C, C+, C++, and FC+ of the 5TSUSA, @F" (=B$'( and Section >$' of the @ustoms +ns*ectorJs 5andboo!$ To qualify as a *ersonal shi*ment, the article must be for the *ersonal or household use of the im*orter ,including gifts/ and not intended for resale or sale on commission$ COMMERCIAL SAMPLES3 P"0PE" K 3A"6E1 @033E"@+A SA3P E S5+P3E#TS,

CA UE1 AT LA%% 0" ESS, F"03 certain countries do not require a visa or e4em*t certification and are not sub2ect to quota$ These shi*ments may also be entered under the informal entry *rocedures$ The guidelines for what would qualify as O*ro*erly mar!ed commercial sam*lesO can be found in *aragra*h =a<h, of @ustoms 1irective #umber B>%%<%), dated February 'A, (&A?, or in tele4

W((%?(, dated August B, (&AA$ The guidelines are quoted, in *art, as follows: a$ The invoice for these shi*ments must contain the statement

O3ar!ed Sam*le < #ot for "esaleO$ b$ The inside of the article must be indelibly stam*ed with the word OSam*leO$ This stam*ing must be in contrasting color to the article, near the country of origin label, in one ,(/ inch or greater letters and *hysically *laced on the article itself$ c$ Articles which are trans*arent or inca*able of being mar!ed ,such as briefs, bi!inis, hosiery, blouses without collars, sheer or very thin scarves or garments, etc$/ and for which the stam*ing of OSam*leO would render the article unsuitable for use as a trade sam*le, the following guidelines are *rovided: ($ Fabric labels, not smaller than ' (9'O by (9'O containing the words OSA3P E<#ot to be soldO, must be cons*icuously and *ermanently affi4ed to the article in close *ro4imity to the country of origin label$ ,Please note that *aragra*hs d, e and h of the directive are not *ertinent to this section and have been omitted$/

f$ The invoice must have been annotated with the notation required in *aragra*h =a above and the article mar!ed in accordance with the *rovisions of =b and c above, *rior to im*ortation into the U$S$ The im*orter will not be allowed to do this after im*ortation$ g$ Although these Osam*lesO may be entered under the informal entry *rocedures ,and are e4em*t from quota, visa and e4em*t certification requirements/ they do not qualify for entry under item &A(($%%$?%, 5TSUSA$ Accordingly, they are sub2ect to duty under the a**ro*riate 5TSUSA item number$ MUTILATED SAMPLES 8 HTSUSA ?>DD.;;.<;3 Sam*les classified under 5TSUSA &A(($%%$?% are duty<free, do not require a visa or e4em*t certification and are e4em*t from quota requirements$ See 5eadquarters tele4 W ()%?, dated February ((, (&A), for the mutilation guidelines$

STANDARDILED VISA NUMBER3 Cisa numbers are required for all visas and e4*ort licenses$ @ertain countries use the standard nine digit number ,e$g$, &+#('B=>?/ which is re*orted to the Muota Section$ +f a country is not on the

standardiGed system, do not re*ort the visa number to the Muota Section$ Prior to the effective dates for countries using the standard number, re*ort the standardiGed dummy number when re*orting shi*ments ,i$e$ yr, country code, B Geros, and then the category number, &+#%%%B=A/$ The standardiGed visa number is included in re*orts sent to each foreign government$ A government can then verify the categories and quantities they authoriGed for e4*ort to the U$S$ against the categories and quantities charged by U$S$ @ustoms at the time of entry$ This can reduce the reverification of discre*ancies to the s*ecific shi*ments at variance rather than having to review all entries covering a *articular category as had been the case before the creation of the standardiGed visa number$ +t is e4*ected that more countries will ado*t the

standardiGed visa number in the future$ VISA NUMBER REIUIRED ON CF =G;D3

Under the authority of *aragra*h B= 1 of @ustoms 1irective #o$ B>>%<%B, dated Se*tember 'A, (&A=, the visa number ,whether or not it is the standard nine digit number/ must be re*orted in column B= on the @F )>%(, Entry Summary, for shi*ments which require a te4tile visa or e4*ort license ,including 5ong 6ong/$ The number must be shown for each line item covering each se*arate category number$ Failure to re*ort this number will result in re2ection of the entry summary and if it is a Olive entryO ,entry9entry summary/ the shi*ment will not be released until the entry summary is in *ro*er form$ The statistical co*y of the @F )>%( or the statistical information re*orted by the bro!er under the AB+ *rogram must include this number *rior to transmittal of this information to the @ensus Bureau$ E4em*t

certification numbers will not be re*orted on the @F )>%( or in AB+$ 0nly one visa number may a**ly to a single line$ +f a line could have more than one visa number, then se*arate lines must be *rovided for each visa number$ DATE OF EXPORT FROM COUNTRY OF ORIGIN

REIUIRED ON CF =G;D3 Under the authority of section ('$(B%,i/ of the @ustoms "egulations, and *aragra*h (= of @hange #o$ (, dated -uly 'B, (&A> to @ustoms

1irective #o$ B>>%<%B, dated Se*tember 'A, (&A=, for quota, visa or e4*ort license requirements, and statistical *ur*oses, if the country of e4*ortation is different from the country of origin, T5E 1ATE 0F EFP0"T F"03 T5E @0U#T"K 0F 0"+G+# 3UST BE "EP0"TE1 0# T5E @F )>%( in column B=, for all te4tiles and te4tile *roducts classified in @ha*ters >%<?B, *lus @ha*ters =' and &= of the 5armoniGed Tariff Schedule of the United States Annotated ,5TSUSA/, regardless of whether or not the merchandise requires a visa or is sub2ect to quota restraints$ As in the case of the visa

number, failure to re*ort this date will result in re2ection of the entry summary and may delay release of the shi*ment$ FOLKLORE PRODUCTS DESIGNATION AFA REIUIRED ON CF =G;D3 Shi*ments of handloomed fabric, hand<made articles made of handloomed fabric and traditional fol!lore *roducts of the cottage industry, are e4em*t from quota and visa requirements if they are a *roduct of a country with which the U$S$ has both a bilateral and a visa agreement which s*ecifically e4em*ts such *roducts, *rovided the foreign government has issued a *ro*er and correct e4em*t certification$ These agreements only waive the quota and visa

requirements$ They do not waive the duty$ The merchandise must be re*orted in column B= of the @F )>%( by *lacing the symbol OFO as a *refi4 to the a**ro*riate ((<digit 5TSUSA item number in accordance with statistical headnote ,(/ of Section ((, 5TUSA and *aragra*h B% of @ustoms 1irective B>>%<%B, dated Se*tember 'A, (&A=$ Iith the e4ce*tion of the 5TSUSA numbers for certified fol!lore *roducts shown below in the discussion of GSP e4em*tions for certain rug and wall hangings, these numbers will be the regular 5TSUSA item numbers for the articles in question$ As in the visa number and date of e4*ort requirements, failure to *rovide the fol!lore *refi4 will result in re2ection of the entry summary$ MERGED AND PART CATEGORIES3 Because of the *roliferation of merged and *art categories in te4tile agreements signed over the *ast several years, it has become necessary to consolidate this information into a single issuance$ This re*ort includes the merged categories *ermitted, both for visa and S*ecial Access Program e4em*t certification, as well as the *art category designations required to be *resent on visas from those countries requiring correct categories$ @ountries omitted *resently have no

merged or *art categories for visa or e4em*t certification *ur*oses$

As such categories become *art of future agreements, this guide will be u*dated$ 3ore recent agreements contain language s*ecifying that any merged or *art categories for quota *ur*oses are automatically a**licable for visa *ur*oses as well$ As additional countries agree to this condition, you will be notified through this re*ort$ Previously, visa and quota agreements had been signed se*arately and at different times, so that in some cases, merged and *art categories for visa *ur*oses are not the same as those for quota *ur*oses$ Therefore, for countries other than those indicated in this re*ort, along with visa boo! telegrams and other issuances relating solely to visa requirements, may be used to determine the correct merged and *art categories for visa *ur*oses$

Agreements have *rovided a Obas!etO category ,e$g$ ?>&<0/ for 5TS numbers remaining after s*ecific *art categories ,e$g$ ?>&<5/ have been bloc!ed off$ 5owever, in some agreements this was not done$ +n those cases where a Obas!etO or OotherO category is not shown, only the basic category number ,without any suffi4/ is required, even though there are suffi4es for the s*ecific *arts in the category$ @ertain merged categories a**ly to e4em*t certifications for the S*ecial Access Program$ They are listed se*erately where a**licable$ For e4am*le, loo! at the merged categories for 5aiti$ The list is the same for visa and SAP

*ur*oses, e4ce*t for categories B=&9?=& in the SAP list$ This means that the categories B=&9?=& may be merged for the *ur*ose of the SAP e4em*t certification, but they may not be merged on a te4tile visa$ 1escri*tive language a**ears in the guide, for ease of reference, but is not e4haustive$ 0nly the hts numbers com*letely re*resent the *art categories$

INDIA6S EXPORTS OF COTTON TEXTILES +ndia has made very ra*id strides of te4tiles goods in the last (<(> decades$ +n fact the te4tile sector at *resent is the single largest net foreign e4change earner< constituting nearly B%H of the total foreign e4change earned$ Ihat is more, the e4*orts are increasing *henomenally year after year$ 5owever, considering the total te4tile e4*orts in the world, our countryDs share is a mere 'H$ +n +ndia, out of the total earnings from e4*ort of te4tile items made from different fibres, the share of the items of cotton origin which include woven and !nitted fabrics, garments, sewing threads yarns etc$, the highest at about ?>H$ @onsidering that +ndia is a ma2or cotton *roducing country, its te4tile industry is largely cotton based and *reference all over the world for te4tiles from renewable natural fibres li!e cotton, there is great sco*e for our cotton te4tile e4*orts in the world mar!et$ Iithin all the cotton grou*, the trend in the e4*orts from our mill sector has been shifting from e4*ort of fabrics to that of yarn in the recent years$ This is also indicative of the growing from demand for cotton yarns in the global mar!et$ Accordingly, under the *resent liberal industrial *olicies of the Government, several new, modern

(%%H e4*ort oriented s*inning mills are being established in different *arts of the country$ To com*ete successfully in the world mar!et, our yarns have to meet the international quality norms$ +n achieving the desiring quality, all the B 3Ds<3aterial, 3en and 3achines *lay a very vital role$ +n what follows, the cotton *roduced at *resent in the country, their qualities, their su*eriorityDs and deficiencies etc$ are discussed and measure to be ado*ted for *roducing world class yarns and fabrics from indigenous cottons are suggested$ E4*orts of cotton te4tiles have made a turnaround this fiscal recording a growth of ?$>H as against a fall of '$=H during '%%)<'%%A$ 5owever, e4*orts are still short of the target$ E4*orts of cotton te4tiles during (&&&<'%%% stood at USL B?=?$A> million as against USL B=''$=) million during '%%)<'%%A$ The industry has been able to achieve &B$>(H of the overall e4*ort target of USL B&%% million fi4ed for the year$ E4*orts of fabrics and made<u*s increased by =$&>H to USL '(%B$&' million as against USL'%%=$>B million during (&&A<(&&&$ These e4*orts to quota countries declined slightly to USL ((A)$== million

,USL ((&?$(A million/$ +n contrast, e4*orts to non<quota countries increased to USL &(?$=A million as against USL A%A$B> million$ E4*orts of yarn and sewing thread went u* by A$AH to USL (>='$&B million as against USL(=() million during (&&A<&&$ E4*orts to quota countries declined shar*ly to USL (?)$=( million ,USL ('%B$=& million/$ E4*orts to non<quota countries went u* to USL (B)>$>' million from USL ('%B$=& million during the *revious year$ Growth in e4*orts of readymade garments has not been *henomenal either$ E4*orts during (&&&<'%%% at USL >>'=$= million were =$&H higher than that in '%%A<'%%& ,USL>'?A$= million/$ E4*orts to the two main mar!ets the US and the EU have shown stagnation$

SHIPMENTS OF YARN9 FABRICS9 MADE8UPS PERMITTED AGAINST RESTRAINT LIMITS TO USA DURING THE PERIOD JANUARY 8 FEBRUARY :;;> @ategory 1escri*tion U#+ KEA" T A$ ECE S5+PT PE" @E#T CA UE UCA 3$ "s$ "s$ CA U E 3$ US L G"*%& I '(A ,Karn 3S 3E 3S 3E '(A ,Karn 3S 3E 3S 3E '(& ,1uc!/ 3S 3E 3S 3E B(B ,@otton 3S 3E '%%& >)$)>? '$>A =$=) =>$%( ()$=> %$&' '%%A A>$(%' )$A& &$') '>'$B' B($&A >$=B '%%& &=$>%? ?$?& )$%A ()>$&) '?$B% B$?( '%%A (&$('( '$>& (B$>> (%?$?% =($(? '$'& '%%& '($>A? '$)& ('$&B (('$&% =%$=) '$B' '%%A (&$('( ($== )$>B ?'$>( =B$=( ($B= '%%& '($>A? ($?B )$>> ??$?& =%$&( ($B?

1yed Fabrics/

1yed Fabrics/

Sheeting/

3S 3E B(= Po*lin/ ,@otton 3S 3E 3S 3E B(> ,@otton 3S 3E 3S 3E B() 3S

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3E 3S 3E 3adeu*s ,339P / 3S 3E 3S 3E 3adeu*s ,5 / 3S 3E 3S 3E 33F Te4tiles 3S 3E 3S 3E SUMMARY G"0UP + 3S 3E 3S 3E G"0UP ++ 3S 3E '%%& ?>$%%% (>$%% 'B$%A (=)'$=> %$%% B%$'% '%%A 'A?$)?> 'B$&> A$B> ()?)$B( %$%% BA$%% '%%& B%'$(%> 'B$=% )$)> '%%)$?' %$%% =($() '%%A (%$%%% ($=( (=$(% (=>$?& (%B$BB B$(B '%%& A$%%% ($(( (B$AA A($(& )B$(= ($?) '%%A B$%%% %$>B ()$?) ='$'= )&$)% %$&( '%%& B$%%% %$>' ()$BB '?$=( >%$)& %$>= '%%A ')$%%% )$'? '?$A& (')A$A> ()?$(> ')$>% '%%& '&$%%% (%$%% B=$=A ('(>$=& ('($>> '=$&B '%%A '%$%%% ($>B )$?> &)$'' ?B$>= '$%&

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EXPORTS OF COTTON YARN9 FABRICS9 MADEUPS9 ETC9 (INCLUDING HANDLOOM) FIGURES IN LAKH RUPEES) C*%n#"y USA Bangladesh 5ong 6ong U6 +taly Germany 6orea "e* United Arab Emirates :;;>8:;;? '=B%&($=' &&('%$%( &B()($)= A&BB&$?> ?&B&&$&A ?>%BB$(% >&A%($&& >%>A>$)' C*%n#"y USA Bangladesh 5ong 6ong U6 +taly Germany 6orea "e* United Emirates -a*an 3auritius 0thers Total E4*orts =&>&A$)& =>BAA$'> )B='=%$B= (>&A))%$&& -a*an 3auritius 0thers =>((=$== B&>%&$(' >&)>)&$)) (BBAA'=$== Arab :;;=8:;;> (&=%?'$&= ?A%B=$B% )B??>$A) A=(='$=' >?%)($>' >>A?&$>% A''='$>B ='>B'$%B

INDIA6S EXPORTS OF COTTON TEXTILES IN US DOLLARS Perio* Co/ere*: 77.77. F,7"(4) J M, !%&) :;;<8 :;;= Target A*r93ar '=%%$% % Performance A*r93ar H achievement E4*orts to Muota H of total e4*orts E4*orts quota H of total e4*orts H growth of B>$B= ='$(A A>$(> AA$>) >>$?' ?B$== to =&($%B ?=$?? B??$%) >)$A' '?)$(% ))$=( (=$A> ==B$A? ?($'( (($=B =)=$'B >?A$== ==$B? )('$'A =')$'A B?$>? )=($BB target B($?= '?$BA B%$?? B>$)% )>&$=> '=%%$% % ?BB$() (6i4ures in Million )S8 Y,"n J S. T$"!, :;;=8 :;;> ()%%$% % >'($') (>%%$% % >B>$== =(%%$% % ('A%$) ' B($'= B&%%$% % ((?A$? ( '&$&? T*#,2 :;;>8:;;?

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CONCLUSIONS
After a careful and in<de*th dis! research we have come to the following conclusion:< '$ The *hase out of the 3FA under the IT0 agreement will create an e4*ort o**ortunity of an additional L()> billion a year for the develo*ing countries$ But, how far +ndia would be able to ta!e advantage of the o**ortunities would de*end on the efforts and dynamism of the industry, bac!ed u* by the encouragement and su**ort of the government$ B$ The +ndian cotton industry has shown a considerable self reliance but this is not enough to com*ete in the world mar!et$ =$ #eed for the *rocess of restructuring must be carried forward in order to ma!e the industry growing$ >$ +n order to !ee* *ace with the com*etitors there is no clear cut *olicy *ac!age which should address to the *roblem of the sector$ ?$ +n adequate modernisation and transforming technology in the country$ )$ ac! of e4*osure of the im*orters to *artici*ate in favour and e4hibition in ma2or world mar!et$ hence, they lac! vision$

A$ Government *olicies are to *olitics resulting in dis*arity in various *arts and region of the country$ The study indicates that although +ndia has substantially e4tended into the U$S$ mar!et and they have shown an increase in volume of business$ But for +ndia to hold an and increase mar!et *enetration and consumer based in the U$S$ mar!et$ +t is in im*erative for +ndia not only to im*rove its current infrastructure but also the Government of +ndia should ma!e concerted effort to evolve and im*lement a**ro*riate *olicy measures$

LIMITATIONS
The study of this *ro2ect was confined to the #ational @a*ital "egion of 1elhi$ 3any e4*orters were able to *rovide with their views, which otherwise could have been very hel*ful in the ma!ing of the *ro2ect$

RECOMMENDATIONS
The time has come for +ndia to e4ecute both immediate and long term strategies for e4*ort of cotton yarn, fabrics and madeu*s$ +ndia has shown in the *ast that it is able to withstand the international com*etition in the above categories, there e4*orts having s*urted during the *ast few years$ The following are the recommendations we suggest for a sustainable e4*ort growth to these mar!ets:< The 3FA im*osition will hel* +ndia to ma!e its mar! in the U$S$ 3ar!et$ Since the e4*orts of cotton yarn, fabrics and made u*s were restricted by quotas it made sense to try to u*grade the *roducts inorder to increase the unit value of the e4*ort items 3FA has *rovided a !ind of a mar!et share and if +ndia comes u* with better quality and *rice, *reference will be given to it$ +n order to survive with the global com*etition the +ndian cotton industry has to show considerable self reliance and has to develo* a truly global outloo! in order to ma!e a ma2or client in the world mar!et$

 The cotton industry in +ndia has to ma!e u* for the last time $ +n order to regain its *osition in the world the *rocess of restructuring must be carried$ A *olicy *ac!age in required not only tom address the *roblem of the mill , *owerloom and handloom sector with in an integrated framewor! but about attend to the im*ortant issues li!e fibre use, cotton *ricing and cotton yield$ All restrictions on the im*orts and e4*orts should be lifted if liberalisation is to be ta!en to its logical conclusion$ There is also a need a*art from *olitical e4*edience in some instance, it is also im*ortant to *rotect some sectors when their survival is threatened due to the interventions of the government$ Government should decide in to budgetary *rovisions, on the

im*ort and e4cise duty structure, ta4ation etc$ The *rogramme rationalistion and moderation of the indirect duty structure has to be carried further to encourage and facilitate greater *roduction as well as e4*orts and also to stimulate heartily com*etition and im*rovement of quality$ All obstacles, infrastructured or

*rocedural, to e4*orts have to be removed$

 E4*orts should be encouraged to *artici*ate in fairs and e4hibitions in ma2or mar!ets as well as in buyer better meets etc$ an addition to this the research association, the te4tile committee and the e4*ort *romotion councils should hel* the e4*orters by creating awareness about environmental and safety as*ects of their *roducts$ There is an urgent need for the modernisation and technological u*gradation in the above fields$ As this with have a general im*act on im*rovement of standards of *roducts$ The industry can become much more internationally com*etitors through modernisation and transforming its activities from the small s!ill sector to larger units to strengthen their *osition and get economics of sale$ +ndia also needs to im*rove its research and develo*ment efforts, which can be com*ared to world standards$ There is an urgent need for building u* a cadre of e4*erts infighting antidum*ing efforts measures$

 For +ndia to im*rove its mar!et share in the U$S$ 3ar!et, +ndia e4*orters must 7loo! for *artners instead of buyers8 in these mar!ets$ The no$ of methods of forging strategic alliances with their U$S$ counter *arts and industry must be e4*lored$ +ndia must also attem*t at branding the *roducts atleast at the trade level$ @onsumer interaction with the users of the raw material or intermediate te4tile *roducts mar!eted by +ndian e4*orters, in a long run would ensure a closes relationshi* and better understanding with their allies$ Attem*ts must be made also to e4*ort value added fabrics in finished form, +ndian industry also needs to concentrate on im*roving the quality of meaning and finishing$

A area which +ndia has reflected for long, is the mar!et for technical9 industrial te4tiles$ +t is felt that there is a sco*e for collaboration between U$S$ and +ndian industry in this field$

ANNEXURE D 8 GLOSSARY S#,&2! +(7!" (.,n8., !) 3an<made fibers of *redetermined but variable lengths$ ,Ty*ically BA mm for PSF and CSF >( mm/$ C*n#(n%*%) +(2,.!n# y,"n A yarn com*osed of one or more filaments that run essentially the whole length of the yarn$ G",y +,7"(4 Ioven or !nitted fabrics as they leave the loom or !nitting machine ie before any bleaching, dyeing or finishing treatment has been given to them$ Some of these fabrics, however, may contain dyed or finished yarns$ C*%n# *+ y,"n 3ethods of variously e4*ressing the ,length *er unit mass/ of yarn$ /,"& To arrange threads in long lengths *arallel to one another *re*aratory to further *rocessing$

/!+# Threads widthways in a fabric as woven Karn intended for use as in ,(/

H*K This is a measure of *roductivity$ +t measures the number of man< hours ta!en to *roduce a !g of yarn$ C*%n# *+ +,7"(4 @ount of cloth is indicated by enumerating < first the number of war* ends *er inch, then the number of filling *ic!s *er inch$ For instance ?A 4 )' means there are ?A war* ends *er inch and )' filling inch$ +n cotton gray goods when the word OsquareO is used such as OA% squareO it means the construction or count of the cloth is A% 4 A%$ +n cotton goods the number of yards to *ounds is generally quoted with the end and *ic! descri*tion$ +n certain linen cloths such as table damas!, the count is indicated by the total number of threads in one square inch$ This same ty*e of count designation carries over in sheeting for beds with such designations as Oty*e (?%O$ B,2! *+ 4*##*n A bag, sac!, square or oblong *ac!age usually made of 2ute or burla* into which cotton, wool, sta*le or sil! is com*ressed$ The American cotton bale is usually >= inches ,(B> cm/ long and ,?)$> cm/ wide, '?

cubic feet in bul!, covered with bagging and fastened with ties$ The average weight is >%% *ounds ,''> !g/$ C*%n#"y *+ *"(-(n Peru, BraGil Egy*t, +ndia A'!",-! @!(-$# (K-) &%<(('$> B(> Q (A%

ANNEXURE : 8 YARN IUALITY PARAMETERS The quality of yarn is ty*ically assessed by focussing on certain general *arameter such as strength, evenness ,short<term variations in diameter/ and im*erfections ,thic! and thin segments in the fiber clum*s, also referred to as ne*s/$ There are no universally acce*ted quality standards and they differ to some e4tent across buyers and countries$ 5owever, certain broad< based norms have gained international credibility based onX statistics collected by Uster ,a Swiss manufacturer of quality measurement instruments/$ For fabric quality, standards tend to vary to an even greater e4tent de*ending on the buyer and the country$ There is a wide variation in the fault measurement system, classification system and acce*tance$

Some even refer to the initial quality sam*le and measure bul! against this sam*le$ Cery broadly, however, the following standards are in use: For USA: Y(%% *oints for fabrics Z>%O width Y >% *oints for fabrics Y >%O width For EE@ : Y(% defects9 (%%m$ For made<u*s and garments, it differs from buyer to buyer but generally they are *rescribed in terms of an agreed sam*le *iece for quality ie defects and general a**earance$

ANNEXURE E 8 DISTRIBUTION MUCH SCOPE FOR INNOVATION Karn distributionThough the main yarn mar!ets are 3umbai, Surat, Ahmedabad, @oimbatore, Tiru**ur, Salem, 1elhi, Amritsar,

+cchal!aran2i and 3alegaon, all the centers function as one single mar!et since trans*ort costs from one center to another com*rise less than (H of the yarn value$ Thus mills in @oimbatore send their yarn all the way to Ahmedabad and mills in udhiana to +chal!aran2i$ Karn is *ac!ed in bags of >% cones, each having ( !g of yarn$ The ease of yarn trans*ort allows the setting u* of weaving units even at centers without s*inning facilities and also enables locational se*aration of s*inning and weaving units within the same com*any$ Karn distribution is organiGed into two tiers$ 3ills sell their yarn to bro!ers9 dealers who in turn sell it to the handloom and *owerloom weavers$ The bro!ers ty*ically charge between (H to 'H as commission$ The commission is almost 'H for blended yarn$ @otton yarn is sold on cash basis while blended yarn is sold on => days credit$

F,7"(4 ()#"(7%#(*n Fabric has traditionally been distributed through a three<tier channel < wholesalers, semi<wholesalers and retailers < with facilitating agents li!e bro!ers and OadatiyasO$ Iholesalers buy and sell in *ac!ed bales, semi<wholesalers buy bales and sell in *ieces while retailers buy *ieces and sell in meter$ Iholesale cloth mar!ets have grown around manufacturing centers li!e 3umbai and Ahmedabad, while semi< wholesale mar!ets have been scattered$ The overall length of the distribution channels is between &% to ('% days while the overall distribution margin is between =%H and )>H$ The wholesalers ty*ically have gross margins of >H to AH, the semi<wholesalers ('H to '%H and the retailers '>H to >%H$ These margins vary by *roduct$ They are lower for the lower *riced standard *roducts and higher for the more e4*ensive OfancyO items$ For these margins, the distribution trade serves several functions such as *roviding mar!et intelligence, holding inventories and ris! ta!ing for trade credit and the notional ris!s of *roduct obsolescence and *rice variation$ The wholesalers also *rovide design in*uts and buy at their own ris!$ 3ills in fact usually *roduce fabrics with designs in res*onse to s*ecific wholesale orders$ Thus the ris! of design failure as well as trading ris! is borne

by the wholesalers$ @redit *eriod ranges from (> < B% days for wholesalers and => < ?% days for semi<wholesalers and retailers$ @redit terms vary widely between com*anies, areas and *roducts$ +n each case, the credit ris! is borne by the channel$ 3ills have been e4*erimenting with different distribution systems since the *ast few years$ There is an attem*t to shorten the channel by eliminating either the wholesalers or the semi<wholesalers or both$ @alico, 1@3 and Binny are cases in *oint$ Ihen the mills sell directly to the semi<wholesalers, the design ris! rests with the mills, as manufacturing is not on a *re<sold basis$ 3any mills have therefore ado*ted a three tier system for design fabrics and a two tier system for *lain fabrics$ Given the margins and the functions *erformed, distribution in the cotton te4tile industry a**ears to *rovide a good deal of sco*e for new innovative a**roaches$ +m*rovements in communication, infrastructure and the movement of goods have made a homogenous national mar!et *ossible$ A good deal of information is available on local differences and more so*histicated mar!et research9 intelligence is now *ossible$ The com*arative evaluation < of the costs of direct retailing vis<a<vis the costs of using a channel would have to be done on an ongoing basis$ Iith increasing com*etition,

manufacturers are loo!ing for ways to reducing the distribution s*read$ The availability of com*uters and the relevant software hel* to control the logistics better$ @entral warehouses, which distribute *roducts directly to the retailers are now feasible and economical$ These would be *articularly beneficial in *roduct categories such as blouse material where hundreds of colors need to be !e*t in inventory to be able to service the mar!et countrywide$ @entral warehouses such as these would eliminate the inventory carrying and distribution functions *erformed by the wholesalers and semi<wholesalers and render com*anies more in sync with customer requirements$ These may also *rove to be more efficient and economical$ Such o*tions would *rovide a critical com*etitive advantage$

ANNEXURE F 8 TEXTILE MANUFACTURING PROCESS S&(nn(n- B2*@ R**. @otton bales are o*ened and fed into it$ +t o*ens lum*s of cotton, removes dirt and foreign matter$ "olls cotton fiber mass into sheets for feeding into cards ,+n advanced machines such fibers are fed into cards directly through chutes/$ C," ) Further o*ens fiber lum*s, removes dirt and very short fibers, se*arates fibers and orients them in a vertical direction$ Fibers are then converted into a sliver to be fed into draw frame$ D",@ +",.! Several carded slivers are combined and drawn to *roduce another sliver$ +t achieves *aralleliGation, orientation and uniformity in the sliver$ C*.7(nThis *rocess is o*tionally used$ +t is used in case of su*erior yarns, which require high degree of uniformity and orientation$ +t se*arates

each fiber, removes short fibers and again orients all fibers in the vertical direction$ S&!! +",.! @arded or combed sliver of fiber is drawn and twisted into roving$ "oving has less mass *er length com*ared to sliver$ +t has 2ust enough twist to hold the fiber together and is very wea!$ R(n- +",.! "oving is fed, detwisted, drawn and twisted again to form yarn$ Twist inserted through a revolving s*indle around a ring into a strand of fiber delivered from a *air of rollers$ Twist inserted here is much higher than at the roving stage and it im*arts strength to the resultant yarn$ There is an o*timum twist to achieve strength in each count of yarn$ ower or higher twist reduces the strength$ ower twist ma!es the yarn soft, higher twist ma!es it more lively, cris* and curly$ 0*timum twist also de*ends on the cotton used$ For the same count of yarn, if su*erior longer sta*le cotton is used desirable yarn strength is achieved with less twists$ Also for certain uses li!e hosiery and !nit goods as the *rocess does not *ut too much tension on yarn li!e

weaving, wea!er yarns are acce*table$ As a result, hosiery or !nitted yarns are *roduced with lower twists than weaving yarns$ O&!n !n )&(nn(n- (OE) 0E starts with carded or combed sliver$ @ombed sliver is used in a very few limited a**lications$ Predominantly it uses carded sliver$ +t o*ens the sliver feeds into a rotor where the o*en fibers form yarn around an end of yarn, which is then drawn out$ Because of the nature of the *rocess, all fibers are not oriented in the vertical direction and as a$ result, 0E yarns are generally wea!er and harsher than ring yarns from the same raw material and of the same count$ 0E machine also winds the yarn into a large conical *ac!age$

/!,'(nIeaving is done in two stages: Pre*aratory < which *re*ares the yarn for weaving, and actual weaving which converts the yarn into fabric$ The different stages in the weaving *rocess are s*ecified below: /(n (nEssentially this converts the *ac!age of the yarn$ +n ring s*inning yarn is wound on the bobbin$ A bobbin normally holds about (,%%% to B,%%% m of yarn weighing about ?% to A%g$ This is too small to handle$ Besides ring yarn would have some faults which can either create *roblems in weaving or in the a**earance of the fabric$ A winding machine unwinds the yarn from bobbins and winds them on a much bigger *ac!age called cones, A cone normally contains about ( to ($'>!g of yarn, in other words, about (> to '% bobbins are converted into one cone$ +t also clears the yarn to remove faults$ 3odem automatic machines clear the yarn electronically to remove faults such as thin and thic! *laces and ne*s ,small lum*s of fibers/$ +t also delivers the yarn in e4act metered length$ At brea!s it *roduces a !not free yarn by s*licing the bro!en ends together$ The nature of this

*ac!age also, ma!es it trans*ortable over long distances$ Thus s*inning mills end *roduct is in this *ac!age and this becomes the terminal manufacturing *rocess$ Karn is sold hi cone forms and to ensure good weaving it is s*ecified as OAnte coned, electronically cleared and s*licedO$ ,#ote: +n case of dyed yarns for *attern weaving cones are dyed before the ne4t *rocess of war*ing/$ /,"&(n@ones of yarn are creeled on to a machine and a sheet of yarn on beam is *roduced by winding about >%% to )%% threads together$ +ts length is *recise and *reset to avoid wastage at subsequent stage$ S(0(nIar* yarns have to withstand tension and chafing in the weaving stage$ +t is therefore necessary to strengthen them and im*ort surface smoothness$ This is done in siGing *rocess whereby several beams of yarn de*ending on the number of threads required in a war* sheet ,which is determined in fabric width and density/ are *assed through a starch based solution$ After *assing through this solution it is wound

on beams$ This is called weaverJs beam and now the final yarn is ready for weaving$ /!,'(nIeaving is interlacing of vertical yarn ,war*/ and horiGontal yarn ,weft/$ 1e*ending on the ty*e of weave, war* yarn sheet is divided and lifted$ An o*ening is created through which weft yarn is inserted$ Then the other *ortion of the war* sheet is lifted and weft yarn is *assed again$ This gives the binding as interstices are created through this *rocess$ Ieft yarn is carried across in a bobbin held in a shuttle$ This is the basic weaving *rocess$ 0ver the years, different techniques of weft insertions have been develo*ed$ Age<old method is to use the shuttle$ +n the handloom it is thrown from one end of the war*sheet to another by hand$ +n *owerloom the same is done through use of *ower$ +n an automatic loom when the yarn on weft bobbin ,*irn/ is e4hausted it is changed automatically$ These are all shuttle looms$ There are other methods of insertion li!e through ra*ier, *ro2ectile and 2et of water or air$ Such weaving machines are !nown by their system of weft insertion eg ra*ier loom, *ro2ectile loom or machine and air loom$ +n the last >% years the rates of weft insertion have gone u*

considerably$ From a modest '%% m9 minute in (&>%Js to about (,%%%< (>%% m9 minute today$ The a**ro4imate *roduction rates of different ty*es of looms for a basic sheeting fabric of '%s count, with ?% threads in war* as well as weft and ?BO wide are given below: "&. 5andloom 0rdinary loom 3odern auto shuttle loom "a*ier loom Pro2ectile loom Air 2et loom '% (?% ''% =%% ?%% A%% .B > $*%" = '= =% )B ((% (=?

Though some weaving *ro2ects continue to be based on auto shuttle looms, they are a dwindling tribe given the unfavorable techno< economic im*lications and the stringent demand for maintaining consistent quality standards$ #ew weaving *ro2ects have become ca*ital intensive$ #ew *ro2ects for weaving *lain fabrics are based on air 2et weaving while weaving of *atterned fabrics such as suiting, use either ra*ier or *ro2ectile OSulGerO looms$ The *ro2ect costs are

evaluated with reference to a basic quality li!e '%4'% ,yarn count/, ?%4?% ,number of threads in an inch in war* and weft/ of ?BO width, A modern air 2et weaving *ro2ect for (%,%%% meter *er day of such a basic fabric costs a**ro4imately "sl%%mn$ The basic *lain weave fabric still constitutes )%H of total fabric *roduction$ 1ifferent weaves can be created by changing the number, *attern and sequence of the yarn threads that are lifted u* and down from the war* sheet$ The more *o*ular weaves are drills, satins and 2acquards in addition to the *lain weave$ 1ifferent designs are created by using colored yarns in the war* and the weft$ A multitude of fabrics can be created by combining colored yarns and different weaves, limited only by a designerJs imagination$ Ieaving s*eeds have increased significantly in the quest for im*rovements in *roductivity$ 3achine manufacturers also attem*t to *rovide fle4ibility to enable weaving of different ty*es of fabric on the same machine$ There is however a trade<off between the s*eed and fle4ibility and the cost of the machine$ 3ost of the modern machines ensure a basic quality level$ +nvestment decisions in looms are guided by the ty*e of fabric to be *roduced and the degree of fle4ibility required to minimiGe the ris! inherent in changing fashions$ Pro2ectile

looms are very fle4ible and therefore very e4*ensive machines$ Air 2ets are somewhat infle4ible hut highly *roductive enabling reduction in the cost *er unit of *roduction$ Auto shuttle looms are the least e4*ensive, though quite slow by current standards$ They are however the most economical choice for fabrics li!e voiles$ They cost a**ro4imately "s%$>mn com*ared to "s($><($)mn for im*orted air 2et and "s'$'<'$>mn for *ro2ectile looms with '>H im*ort duty$

ANNEXURE G 8 CHEMICAL PROCESSING Ihile s*inning and weaving have been !nown and *racticed for centuries, they essentially remain the same, chemical *rocessing is relatively modern and ma2or develo*ments in this field are more recent$ Gray fabric contains dirt, foreign matter, starch and natural oils and therefore has a dull a**earance$ As a consumer *roduct, fabric has to offer *rotection, comfort, fashion and convenience in handling and cleaning$ Thus, it has to be cleaned, colored, im*arted with the required handle and other desired *ro*erties such as dra*e, dimensional stability, crease resistance and stain resistance and soil release$ This is done through the four stages of chemical *rocessing viG bleaching, dyeing, *rinting and finishing$ Process technology is mainly develo*ed around tem*erature, dwell time, *ressure, chemical formula and dosing, and vertical and horiGontal forces on fabrics$ 3achines are designed to achieve the desired levels on the above *arameter for different fabrics in a standardiGed and easily re*roducible way$ A brief descri*tion of each stage of *rocessing is given below:

B2!,4$(n@leaning, removing dirt, natural oils, bringing out the inherent lustre of fibers, swelling of fibers fur softness and absorbency$ @hemicals li!e enGymes for desiGing, caustic soda, hydrogen *ero4ide are added and the fabric is brought to boil under *ressure$ This stage also *re*ares fabric for dyeing, *rinting, and finishing$ @onventional 6iers for boiling under *ressure, or continuous bleaching range, -bo4, -umbo -iggers, etc$ +n addition to basic bleaching the fabric is *assed through a solution of caustic liquor to swell the fibers which im*arts greater absorbency and lustre to the fabric$ This *rocess is done on mercerising machines$ @hemicals used are caustic soda, hydrogen *ero4ide, starches and enGymes Dy!(nTo im*art colors to fabric$ The colored fabric should have a high fastness to washing, sometimes to even bleaching, sunlight, and *ers*iration$ This is done on the various ty*es of dyeing machines, -iggers, *adding machines, continuous dyeing, 2et dyeing machines, etc$

P"(n#(nCarious motifs or images are *rinted on the fabric$ +n mass *roduction this has to be done continuously$ 5owever, designs also need to be changed$ Batch siGes vary with ty*e of fabric, end use and the duration of a fashion cycle$ These are done through roller *rinting machines, screen<*rinting machines, transfer *rinting machines, and au4iliary machines$ F(n()$(nThis is the final stage of fabric ma!ing$ Fabrics have to be made dimensionally uniform and stable and im*arted a good desired handle$ 1ifferent merchandisers for different fabrics require different handles$ @onsumers loo! for crease resistance, soil release, stain resistance easy washing and *ressing etc$ Basic machines are stenter, drying machines, calendars shrin!<*roof range etc$ "esins, softness, lubricants and starches are also used$