TABLE OF CONTENT

ACKNOWLEDGEMENT ABSTRACT HISTORY OF INDIAN TEXTILE INDUSTRY...2 INDIAN TEXTILE INDUSTRY..3 POSITION OF INDIAN TEXTILE INDUSTRY4 MAJOR MANUFACTURERS AND THEIR MARKET SHARE..5 INDUSTRY SUPPLY CHAIN..6 INDIA S COMPETITI!ENESS.." GO!ERNMENT POLICIES .................## TEXTILE COMPANIES IN INDIA .....#5 BCG MATRIX..#$ PORTERS FI!E FORCE MODEL....2% SEGMENT ANALYSIS...25 SWOT ANALYSIS OF TEXTILE INDUSTRY.......2" C&'()*+,- T./0,&1&-+/)1 I,,&2)3+&, &4 T.53+1. I,6783*+.8 +, I,6+) ),6 C0+,)..2$ W0)3 T0. C0+,.8. A*. D&+,- R+-03 9.......................................................................................34 PRESENT SCENARIO OF TEXTILE INDUSTRY...............................................................36

CONCLUSION..........................................................................................................................3:

REFRENCES.............................................................................................................................4%

HISTORY OF INDIAN TEXTILE INDUSTRY

The history of textiles in India dates back to nearly five thousand years to the days of the Harappan civilization. Evidences that India has been trading silk in return for spices from the 2nd century have been found. This shows that textiles are an industry which has existed for centuries in our country. ecently there has been a sizeable increase in the demand for Indian textiles in the market. India is fast emerging as a competitor to !hina in textile exports. The "overnment of India has also realized this fact and lowered the customs duty and reduced the restrictions on the imported textile machinery. The intention of the government#s move is to enable the Indian producers to compete in the world market with high $uality products. The results of the government#s move can be visible as Indian companies like %rvind &ills' &afatlal' "rasim( eliance Industries have become prominent players in the world. The Indian textile industry is the second largest in the world)second only to !hina. The other competing countries are *orea and Taiwan. Indian Textile constitutes +,- of the total exports of our country. The history of apparel and textiles in India dates back to the use of mordant dyes and printing blocks around +... /!. The foundations of the India0s textile trade with other countries started as early as the second century /!. % hoard of block printed and resistdyed fabrics' primarily of "u1arati origin' discovered in the tombs of 2ostat' Egypt' are the proof of large scale Indian export of cotton textiles to the Egypt in medieval periods. 3uring the 4+th century' Indian silk was used as barter for spices from the western countries. Towards the end of the 45th century' the /ritish East India !ompany had begun exports of Indian silks and several other cotton fabrics to other economies. These included the famous fine &uslin cloth of /engal' 6rissa and /ihar. 7ainted and printed cottons or chintz was widely practiced between India' 8ava' !hina and the 7hilippines' long before the arrival of the Europeans. India Textile Industry is one of the largest textile industries in the world. Today' Indian economy is largely dependent on textile manufacturing and exports.

INDIAN TEXTILE INDUSTRY

Textile Industry in India is the second largest employment generator after agriculture. It holds significant status in India as it provides one of the most fundamental necessities of the people. Textile industry was one of the earliest industries to come into existence in India and it accounts for more than +.- of the total exports. In fact Indian textile industry is the second largest in the world' second only to !hina. The Indian textile industry has a significant presence in the economy as well as in the international textile economy. Its contribution to the Indian economy is manifested in terms of its contribution to the industrial production' employment generation and foreign exchange earnings. It contributes 49 percent of industrial production' : percent of excise collections' 4; percent of employment in the industrial sector' nearly 2. percent to the country#s total export earning and 9 percent to the "ross 3omestic 7roduct. It is closely linked with the agricultural and rural economy. It is the single largest employer in the industrial sector employing about +, million people. If the employment in allied sectors like ginning' agriculture' pressing' cotton trade' 1ute' etc. are added then the total employment is estimated at :+ million. The net foreign exchange earnings in this sector are one of the highest and' together with carpet and handicrafts' account for over +5 percent of total export earnings at over <= > 4. billion. Textiles' alone' account for about 2, percent of India#s total forex earnings. India#s textile industry since its beginning continues to be predominantly cotton based with about ?, percent of fabric consumption in the country being accounted for by cotton. The industry is highly localized in %hmedabad and /ombay in the western part of the country though other centers exist including *anpur' !alcutta' Indore' !oimbatore' and =holapur. The structure of the textile industry is extremely complex with the modern' sophisticated and highly mechanized mill sector on the one hand and the hand spinning and hand weaving @handloomA sector on the other. /etween the two falls the small)scale power loom sector. The latter two are together known as the decentralized sector. 6ver the years' the government has granted a whole range of concessions to the non)mill sector as a result of which the share of the decentralized sector has increased considerably in the total production. 6f the two sub)sectors of the decentralized sector' the power loom sector has shown the faster rate of growth. In the production of fabrics the decentralized sector accounts for roughly :9 percent while the mill sector has a share of only ? percent.

POSITION OF INDIAN TEXTILE INDUSTRY

The Indian textile industry contributes about 49 per cent to industrial production' 9 per cent to the country0s gross domestic product @"37A and 45 per cent to the country#s export earnings' according to the %nnual eport 2..:)4. of the &inistry of Textiles. It provides direct employment to over +, million workers directly and it accounts for 24- of the total employment generated in the economy and is the second largest provider of employment after agriculture. =ome of the textile clusters in which productions happens are very huge and significant for the overall industry' for example

7anipat produces 5,- of all blankets produced in India Tirupur contributes ;.- of the country#s cotton hosiery exports Budhiana makes :,- of total woolen knitwear produced

%ccording to the &inistry of Textiles' Export target in textiles in 2.4. at <=3 is ,. billion. the cumulative production of cloth during %pril#.:) &arch#4. has increased by ;.+ per cent as compared to the corresponding period of the previous year. &oreover' total textile exports have increased to <=> 4;.? billion during %pril#.:) 8anuary#4.' from <=> 45.5 billion during the corresponding period of the previous year' registering an increase of 9.:, per cent in rupee terms. 2urther' the share of textile exports in total exports has increased to 42.+? per cent during %pril#.:)8anuary#4.' according to the &inistry of Textiles. %s per the Index of Industrial 7roduction @II7A data released by the !entral =tatistical 6rganisation @!=6A' cotton textiles has registered a growth of ,., per cent during %pril &arch 2..:)4.' while wool' silk and man)made fibre textiles have registered a growth of ;.2 per cent while textile products including wearing apparel have registered a growth of ;., per cent. The textile sector has increased their investment in pro1ects to upgrade their e$uipment amid fierce market competition and to meet the growing demand for more textile products. Total investment in the textile industry between 2..9 and 2..; was around s.?,'95; crore in India' which is expected to reach s.4',.'?.. crore by 2.42. This enhanced investment would generate 45.+5 million 1obs)) 42..2 million direct and ,.+, million indirectCby 2.42.

MAJOR MANUFACTURERS AND THEIR MARKET SHARE

In 2..?' the largest apparel manufacturers and exporters were countries from the %sia)7acific region which included countries like !hina' Hong *ong' 7hillipines' &alaysia' Indonesia' /angladesh' =rilanka' 7akistan' Thailand and India. The other ma1or apparel manufacturing nations were <=%' Italy' "ermany and &exico. To understand Indias position among other textile producing the industry contributes :- of "37 and +,- of foreign exchange earning' Indias share in global exports is only +- compared to !hinas 4+.5,- percent. In addition to !hina' other developing countries are emerging as serious competitive threats to India. Booking at export shares' *orea @?-A and Taiwan @,.,-A are ahead of India' while Turkey @2.:-A has already caught up and others likeThailand @2.+-A and Indonesia @2-A are not much further behind. The reason for this development is the fact that India lags behind these countries in investment levels' technology' $uality and logistics. If India were competitive in some key segments it could serve as a basis for building a modern industry' but there is no evidence of such signs' except to some extent in the spinning industry.

INDUSTRY SUPPLY CHAIN

The apparel industry supply chain can be broadly categorized into six ma1or components ) raw materials' textile plants' apparel plants' export chains' retail stores and customers.

INDIA S COMPETITI!ENESS

!6DT I/<TI6D T6 E!6D6&EF

The textile industry occupies a uni$ue place in our country. 6ne of the earliest to come into existence in India' it accounts for 49- of the total Industrial production' contributes to nearly 2.- of the total exports. /eing the largest foreign exchange earner' accounting for more than , per cent of "37 and providing direct employment to +; million people' primarily the weaker sections' it is the second most important sector only after agriculture. The Do.4 exporter of textiles' !hina' has a share of more than 4. per cent followed by *orea with ;.4 per cent( India0s hovers at +.,)9 per cent. In clothing exports' !hina holds a share of 4;., per cent followed by Italy @?.5 per centA and India @+ per centA. India0s share may look small but in monetary terms it is large. It has a uni$ue position as a self)reliant industry' from the production of raw materials to the delivery of finished products' with substantial value)addition at each stage of processing( it is a ma1or contribution to the country0s economy. The industry is composed of handlooms' powerlooms and mills. Ghile the mill sector is well)organised and modern' the same cannot be said of the powerloom and handloom segments. The mill sector has managed to grab a reasonable share of the world export market. %lthough the development of textile sector was earlier taking place in terms of general policies' in recognition of the importance of this sector' for the first time a separate 7olicy =tatement was made in 4:;, in regard to development of textile sector. The textile policy of 2... aims at achieving the target of textile and apparel exports of <= > ,. billion by 2.4. of which the share of garments will be <= > 2, billion. The main markets for Indian textiles and apparels are <=%' <%E' <*' "ermany' 2rance' Italy' ussia' !anada' /angladesh and 8apan. The main ob1ective of the textile policy 2... is to provide cloth of acceptable $uality at reasonable prices for the vast ma1ority of the population of the country' to increasingly contribute to the provision of sustainable employment and the economic growth of the nation( and to compete with confidence for an increasing share of the global market

T%/BE =H6GID" THE ID3I%#= !6&7ETITIHEDE== GITH 6THE !6<DT EF

There is no denying India is competitive enough and will become even more competitive once its infrastructure issues are sorted out. !hina has probably already reached its peak and further improvements may not be as dramatic. !ountries and their positive and negative aspects with regard to textiles *EE !6<DT IE= I E"I6D= C0+,) I,6+); P)<+83), M.5+/& =NAFTA>; T7*<.? ASEAN =!+.3,)'; C)'@&6+); I,6&,.8+)> AGOA =A4*+/),> /&7,3*+.8; B),-1)6.80 H&,- K&,-; K&*.); T)+A), *EE 76=ITIHE= *EE DE"%TIHE=

Efficient' low cost' vertically integrated Hertically integrated' low cost 7roximity to market' duty and $uota free !heap labor Juota and tariff free' cheap labor Trading hubs proximity to !hina Don)$uota barriers likely to prove irritant to imports

"rowth at the cost of profits Backs economies of scale and infrastructure support Back of !hina and Indias degree of competitiveness Do other cost or locational advantage Back of integration and !hina and Indias has degree of competitiveness Do cost advantage' protected currently by $uotas Huge but choosy market

USA ),6 EU

Indian Textiles targets) 11th Five year Plan @2..5)2.42A

&arket size of <=> 44, /illion Export target <=> ,, /illion 3omestic market <=> ?. /illion India#s market share in world textiles trade to grow from +- to ; 42 &illion additional 1obs Investment s.4,.'?.. !rs

TEKTIBE= EK76 T T% "ET @ID /IBBI6D=A

7

Y.)* = A(*+1 M)*/0> 2%%:B%$ 2%%"B%: 2%%6B%" 2%%5B%6 2%%4B%5 2%%3B%4 2%%2B%3 2%%#B%2

T)*-.3 29.4; 24.4? 4:.5+ 4,.,?, 4,.4? 4?.+4 4,.., 4+.52

A/0+.2.'.,3 29.4? 24.49 4:.?2 45.;. 4+..9 4+.4? 42.94 4..5?

T67 4. EK76 TE = @TEKTIBEA

C&7,3*? Billion US$
Hong *ong !hina =outh *orea "ermany Italy Taiwan <=% 2rance /elgium)Buxembourg 8apan 5.:: 5.4. ?..9 49... :.;. ?.4+ ,..+ 5.24 ?.,9 ,.;;

#$$% % share
5.?; ?.;2 ,.;4 4+.9? :.9+ ,.:. 9.;+ 9.?, ?.2: ,.?,

Billion US$
49.? 4+.;+ 4+.+, 4+.., 42.: 42.5+ :.4: ,.;? 5..4 ?.5,

#$$" % share
:.92 ;.:2 ;.?4 ;.92 ;.+2 ;.24 ,.:+
5.64

9.,2 9.+,

T67 4. EK76 TE = @%77% EBA Country 1990

Billion US$ % share

1997
Billion US$ % share

!hina Hong *ong Italy <=% "ermany Turkey 2rance <* =outh *orea Thailand T&3)1 =3&( #%> W&*16

:.94 4,.+5 42..5 2.,5 5.;2 +.99 9.?, +..; ;.44 2.;? 6$.3: #%3.%%

:.49 49.:2 44.52 2.9: 5.,: +.+9 9.,4 2.:: 5.;5 2.5; 6".36 #%%.%%

+4.; 2+.44 49.;, ;.?; 5.2: ?.5 ,.+9 ,.2; 9.4: +.55 ###.%# #5#.%%

24..? 4,.+. :.;+ ,.5, 9.;+ 9.99 +.,9 +.,. 2.55 2.,. "3.52 #%%.%%

GO!ERNMENT POLICIES D%TI6D%B TEKTIBE 76BI!E 2...

6D D6HE&/E 2' the "overnment announced the Dew Textile 7olicy @DT7A' outlining measures to make India a global player in textiles and readymade garments by raising exports from >44 billion to >,. billion by 2.4.. 6f this' the share of readymade garments will be half. The "overnment has decided to de reserve the garment industry from the ==I category to make the former internationally more competitive. Till now' the garment sector was under ==I reservation' with an investment ceiling of s + crore' and the maximum foreign direct investment limit of 29 per cent. There are two more modifications. 2irst' the 23I limit of 29 per cent has been removed' and foreign companies will be able to make 4.. per cent investments through the 2oreign Investment 7romotion /oard @2I7/A route. =econd' the ,. per cent export obligation on firms with foreign e$uity has been done away with. The "overnment intends to implement' in a time)bound manner' the Technology <pgradation 2und =cheme covering all manufacturing sectors of the industry. %ccording to the Textiles &inister' &r *ashiram ana' response to this scheme is improving' and proposals worth s 44'... crore were received. %cording to the /I' exports of readymade garments in the 44 years from 4:;5);; to 4::;):: rose from >4'9+. million to >9'999 million )) more than threefold. The annual average growth rate readymade exports during this period were 4..: percent' against the overall export growth rate of :.5 percent.

Exports of readymade to the developed countries are improving. %gainst exports of >925 million to the <=' in 4:;5);;' they touched >4',.+ million )) again' more than threefold)) in 4::;)::. There have been similar increases in despatches to the <*' "ermany' 2rance' !anada' Italy' 8apan and the Detherlands. There was a decline in exports to the !ommonwealth of Independent =tates @!I=A because of the unstable conditions. India was also able to capture markets in developing countries' especially the <%E. The rising trend of readymade garment exports' even to the most developed countries' proves beyond doubt the competitive ability of the small sector. TECHNOLOGY UPGRA ATION FUN !CHE"E #TUF!$% "overnment of India' &inistry of Textiles has launched a Technology <pgradation 2und =cheme @T<2=A for the Textile and 8ute Industries' which is in operation since .4..9.4::: for , years i.e. up to +4..+.2..9. There is no cap on funding under this scheme. It is an open)ended scheme depending on the capacity of the industry to absorb funds in bankable and techno)economically feasible proposals. The main features of the T<2= are given belowF ) I. The scheme provides a reimbursement of ,- point on the Interest charged by the lending agency on a pro1ect of Technology <p gradation in conformity with the scheme. II. The identified sectors in the textile industry viz. !otton ginning and pressing' spinningIsilk reeling and twistingIwool scouring and combingI synthetic filament yarn texturising' crimping and twisting' manufacturing of viscose filament yarn @H2EA I Hiscose =taple 2iber @H=2A' weavingIknitting including non woven and technical textiles' garmentsImade)ups' 8ute industry are eligible to avail of these concessional loan for their technology up gradation re$uirements. Investments in common infrastructure or facilities owned by the association' trust or co)operative society of the units participating in the T<2 =cheme and other investments specified are also eligible for funding under the scheme. Technology levels are benchmarked in terms of specified machinery for each sector of the textile industry. &achinery with technology levels lower than that specified will not be permitted for funding under the T<2 =cheme. "eneral eligibility condition and sector specific eligibility conditions have also been specified in the scheme. H. Dodal agencies for the scheme are as followsF ) 2or the Textile Industry @excluding ==I sectorA L I3/I 2or the ==I Textile =ector @!otton "inning M 7ressing' Geaving' *nitting' 7rocessing M "armenting &anufacturingA ) =I3/I 2or 8ute Industry ) I2!I HI. The interest N,- would be reimbursed to the respective nodal agency through the budget @planA provisions of the &inistry of Textiles.

III.

IH.

HII. HIII. IK.

The functioning of the scheme is being periodically monitored by T%&! !haired by Textile !ommissioner and Inter)&inisterial =teering !ommittee' !haired by =ecretary @TextilesA. % special cell has been set up in the financing institutions for expeditiously processing loan application received under the scheme. %ll the 4; =2!s' 45 =I3!s and 44 Twin function I3!s' EKI& /ank and D!3! have been co) opted by =I3/I and I3/I. 2urther =I3/I has co opted ;4 commercial banks' coop. banks and D=I! and I3/I has co)opted +? commercial banks' 4 co)operative bank and 9 %I2Is @I2!I' I!I!I' II/I and BI!A have also been co)opted by I3/I. I2!I has coopted + =2!s' 4 =I3!' ? commercial banks' + %I2Is and Exim /ank for financing 1ute industry under the scheme. %n option has also been provided to the =mall =cale Textile and 8ute Industries to avail of either 42- !redit Binked !apital =ubsidy @!B!=A or the existing ,- interest reimbursement under the T<2=. !B!=)T<2= will be in operation from 4st 8an.' 2..2 to +4st &arch' 2..9. There is no distinction between public sector' co)operative sector or private sector mills under the scheme' if pro1ect proposal is bankable and technoeconomically feasible. Indian textile industry should have focused on all ma1or sectors right from fibre to fashion and planned for an organized growth across the supply chain so as to compete with !hina and even countries such as 7akistan' Hietnam and Thailand. Instead' the industry had put ma1ority of its stock in the spinning sector. This is clearly evident in the utilization of Technology <pgradation 2und =cheme effectively by the spinning sector. %lthough it is a positive outcome' in my opinion' the industry turned a blind eye on value)adding sectors such as weaving and finishing.

K.

TEKTIBE G6 *E =# EH%/IBIT%TI6D 2<D3 =!HE&E @TG 2=AF Textile Gorkers# ehabilitation 2und =cheme came into force with effect from 4,th =ept. 4:;?.The ob1ective of TG 2= is to give interim relief to the workers rendered 1obless due to permanent closure of the mills. %nother reason also was to curtail the widespread disguised employment in the textile industry. elief under the scheme is available only for + years on a tapering basis' 5,- of the wage e$uivalent in the first year' ,.- in the second year and 2,- in the third year. The government has established various research associations for the textile industry like %hmedabad Textile Industry esearch %ssociation' %hmedabad /ombay Textile esearch %ssociation' &umbai =outh India Textile esearch %ssociation' !oimbatore Dorthern India Textile esearch %ssociation' "haziabad =ilk and %rt =ilk &ills esearch %ssociation' &umbai

It has a few export promotion councils also like Handloom Export 7romotion !ouncil' &adras %pparel Export 7romotion !ouncil' Dew 3elhi !otton Textile Export 7romotion council' &umbai The =ynthetic and ayon Textiles Export 7romotion !ouncil' &umbai Indian =ilk Export 7romotion !ouncil' &umbai Gool and Goollens Export 7romotion council' Dew 3elhi !arpet Export 7romotion !ouncil' Dew 3elhi Export 7romotion !ouncil for Handicrafts 7owerloom 3evelopment M Export 7romotion !ouncil

2.2 C7)1+3? I'(*&2.'.,3

The Textile !ommission' under the &inistry of Textiles' facilitates firms in the industry to improve their $uality levels and also get recognised $uality certifications. 6ut of 2,. textile companies that have been taken up by the !ommission' 4+? are certified I=6 :..4. The other two certifications that have been targeted by the Textile !ommission are I=6 49... Environmental &anagement =tandards and =% ;... !ode of !onduct &anagement =tandards . 2.3 F&*.+-, D+*./3 I,2.83'.,3 =FDI> P&1+/? 4..- 23I is allowed in the textile sector under the automatic route. 23I in sectors to the extent permitted under automatic route does not re$uire any prior approval either by the "overnment of India or eserve /ank of India @ /IA. The investors are only re$uired to notify the egional 6ffice concerned of /I within +. days of receipt of in word remittance. &inistry of Textiles has set up 23I !ell to attract 23I in the textile sector in the country. The 23I cell will operate with the following ob1ectivesF O To provide assistance and advisory support @including liaison with other organisations

and =tate "overnmentsA O %ssist foreign companies in finding out 1oint venture partners O To sort out operational problems O &aintenance and monitoring of data pertaining to domestic textile production and foreign investmen 2oreign investment and market presence was not very high in India#s textile and apparel sector. Gith liberalisation in investment and the subse$uent the removal of $uantitative restrictions on several textile products' the Indian market now has the presence of several international brands. However' the presence is more in the nature of brand licensing with Indian players rather than direct investment. <.=. brands have a larger presence in the market than others. %ccording to official data from the =ecretariat of Industrial %ssistance @=I%A' the total foreign investment approved in the sector since 4::4 is in the region of <= >;. million' of which E.<. investment is estimated to be <=> 4?., million a little over 2. per cent of total approvals' from 9? applications. The largest number of approvals was of investments from <* @4?A and Italy @49A' together representing more than 5, per cent of the cases and ;? per cent of the value approved.

TEXTILE COMPANIES IN INDIA

India being one of the fastest growing economies of the world' which has both positively and negatively' affected the Indian textile industry. 6n one hand it has become a ma1or retailing hub and a host for various multinational companies on the other hand this has a negative effect on the domestic players. The emergence of mall' brand slavery' fashion awareness' rise in the income level has further reinforced the competition among the multinationals and the domestic players and has lead to opening of number of retail outlets in India. The introduction of H%T and the growth of organized retail industry are also likely to push up growth in the textiles and apparel sector domestically too. Ghile the garments business will pose its own set of challenges in terms of providing flexibility in operations and dealing with labor productivity issues' an increasing contribution to revenues from the garments business' which is less capital)intensive and margins)accretive' would augur well for earnings growth.

"6*%B3%= EK76 T=
Incorporated in 4:5:' based in /angalore' it#s one of India0s largest manufacturers and designer of garments for men' women and children and caters to the needs of several international fashion brands

and retailers. "okaldas Exports has been a ma1or player in the readymade garment industry across the globe. In the present Indian fashion retailing' "okaldas has grabbed a distinguished place for itself in the form of PThe GearhouseP catering to the specific fashion needs of the people. The Gearhouse has high profile outlets in /angalore' !hennai' Hyderabad and !oimbatore. %n I=6 :..4F2... !ertified !ompany has a capacity to produce and export 2., million garments a month. The "roup0s products include coats' suits' 1ackets' parkas' windcheaters' ski wear( warmups' surf wear' swim wear( trousers' shorts( casual wear shirts' ladies blouses and dresses for customers in international market. It mainly operates in India but exports its products to countries like the <nited =tates of %merica' !anada' &exico' <nited *ingdom' "ermany' %ustria' =pain' Italy' 2rance' Detherlands' &iddle East' =outh %frica' 8apan' 3enmark' Taiwan and Hong *ong. % few of the manufacturing units are 4..- export units with capabilities of mass production. They have the license to import duty)free fabrics and accessories from all over the world for re)export. It has over 9;'... employees who work in around 9; fully e$uipped' modern' manufacturing factories.

% HID3 / %D3=
%rvind &ills Btd. was incorporated in 4:+4 with share capital s.2,2,... @>,,...A in %hmedabad by the Balbhai group. The !ompany0s operations are divided into the Textile 3ivision' telecom division and garments division. Ge will be ma1orly concentrating on the garments division. 7roducts manufactured are dhoties' sarees' mulls' dorias' crepes' shirtings' coatings' printed lawns M voiles cambrics' twills gabardine etc. %rvind /rands is part of the Balbhai "roup' which holds licenses for leading international brands such as %rrow' Bee' Grangler' "ant and Tommy Hilfiger for retail and wholesale sales in the local market. Its mainstream brands are Excalibur and 2lying &achine. In addition' it owns an array of casual sportswear and denim brands marketed in India' including 2lying &achine' Dewport and uf M Tuf 1eans and Excalibur shirts along with licensed relationship with various international brands like Dautica' 8ansport' *ipling' Hero by Grangler' Bee iders and Tommy Hilfiger' and 1oint ventures with H2 !orporation and 3iesel. but the company is facing severe competition from ma1or brands like Bouis 7hilippe' 7ark %venue and small brands like Trigger and /lackberrys. It produces about 44. million meters of denim every year and the garment section is doing extremely well because of the customer loyalty it en1oys. The demand for 1eans' in particular' is expected to rise' as manufacturing companies in the <= have shut operations.

*6<T6D=
The winner of Q best retailer leadership award 2..;R organized by retail congress' &umbai' *outons etail India Bimited engages in the design' manufacture' and retail of men#s wear and integrated apparel in India. It currently sells its apparel using the Q*outonsR and Q!harlie 6utlawR brands. &r. *ohli along with his brother in law &r. =awheny partnered to set up !harlie0s !reation. In 4::5 the !ompany diversified its business by introducing non)denim trousers in the existing product range of denim apparel. The company has inaugurated its ;:th family =tore in Hyderabad' which it claims to be its largest store in the country. *outons India has an annual finishing and manufacturing capacity of 22.:2 million pieces and 42.+? million pieces of apparel' respectively. The capacity utilization for the same was 94.24- and 24.::- respectively at the end of 2E2..5.*outons has 4; manufacturingIfinishing units and 49 warehouses spread across various locations in and around "urgaon. The company0s strategy is to have small' but more stores. This helps to save costs and at the same increase reach of the company. The company has a phenomenal growth record.

S63I%!
Sodiac !lothing !ompany Btd manufactures' exports and imports garments' textiles accessories etc. Sodiac has been in the apparel business for a period of ,. years by now and is known for its $uality shirts. Sodiac' is today' the largest selling shirts M tie brand at =hopper0s =top according to /rand E$uity @The Economic TimesA The !ompany started business in 4:,9 and export of readymade garments to Europe started in early 0?.s' which included mainly ties and shirts. 2or many decades' Sodiac has been synonymous with ties. The business of ties is a high fashion business and Sodiac has taken this to new highs in India and across the globe. In fact' one can say that in India Sodiac is generically associated with ties. 2ollowing Sodiac0s huge success with ties' the company entered the arena of men0s accessories with !uff links' /elts' Gallets and Handkerchiefs. In 4:5+' Sodiac had a stand)alone exclusive shirt shop in Hotel Ta1 in &umbai. The company then entered the domestic shirt segment in late 0;.s.It employs around +,.. people in 5 manufacturing units in 4? offices located in <*' <=' "ermany' <%E etc.Each manufacturing unit is spread over +,... s$.ft and has modern e$uipment to spread ?. yards of cloth at a time. %ll the manufacturing units are same in design and layout. Juality is maintained throughout the 9. stages of assembly line. %ll the units have their own power generating units in order to be efficient. It has its own ;. exclusive outlets and around 2... multibranded outlets. Its continuously showing profit and has a consistently growing export business.

H6<=E 62 7E% B
House of 7earl 2ashions Bimited is a multinational ready to wear apparel manufacturing company. The company also provides supply chain solutions for the fashion industry globally along with warehousing M distribution networks in the <* M <=. It operates in 44 strategic locations in six continents. It has two brands *ool hearts' 3!! in the <nited =tates of %merica. The brand *ool hearts focuses on the young fashion' where as the focus of 3!! is more towards the &issy segment It basically deals with + streams which are manufacturing to etailers' souring solutions for retailers' &arketing' 3istribution M /randing for etailers. It takes care of the whole process from design M development' manufacturing or sourcing till offering a range of pre retailing services' warehousing to delivering at the door step on a call off basis. It manufactures a broad range of products comprising of knits' woven' sweaters and bottoms in basic as well as complex designs. It has a good manufacturing capacity( the present in)house manufacturing capacity of the company is twenty million pieces. 7er annum spread over more than 52,'... s$ feet of built up area with efficiently designed layouts to ensure smooth flow of materials. The company is planning to double the capacity by expanding the operations in !hennai' /angladesh M Indonesia. It intends to have a capacity of +.million pieces by the end of 2..:. The company adopts integrated marketing techni$ues and has merchandising teams in !anada' Europe' H*' <*' and <=' closely interacting with existing and potential customers at their doorstep. The !ompany shares were listed on the stock exchanges first time in 2eb' .5. It recently went for a 1oint venture with BE 6=' a premium apparel brand from "ermany.

H% I% EK76 TE =

Haria Exports Btd. is a leading garment exporter in the country for the last twenty four years. It is a =tar Trading !ompany and has won the golden status certificate in the year 4:::. This company occupies a uni$ue place in the industry of the by its contribution to Industrial output' employment generation and 2oreign exchange earnings. Even though the textile industry has the distinctive advantage in respect of raw material and skilled labor' the industry is suffering from technology obsolescence which in turn affects the $uality' productivity and cost effectiveness. The high capital cost is impeding the process of Hi)Tech up gradation. Therefore' the "overnment of India' &inistry of Textile has launched Technology <p gradation 2und =cheme for Textiles M 8ute Industries of s.2,...... crores at a concessional rate of interest of appx.,-. In order to compete with the outside world' the company is paying attention to the application of technology' closely following up the fashion trends and improved product $uality. In order to be more cost efficient the company has ac$uired latest machinery which ascertained exact material consumption depending upon the style and pattern. The "overnment policies' interest rates' export incentives etc may also affect the overall performance of the company' but even then the company is optimistic about its revenue and growth.

EHIDIK
The company started in 4::? with the manufacture of headgears' baseball caps and high altitude 1ackets' using cotton textile and leather' mainly for exports. The company was incorporated on 4st &ay 4::? as Evinix 2ashion %ccessories 7rivate Bimited under the !ompanies %ct' 4:,?. &r. =an1ay Tane1a' brother of &r. au1eev Tane1a @the original promoter of the companyA 1oined the !ompany as a 7romoter replacing &rs.%nuradha Tane1a' who disassociated herself from the company. The name of the company was changed to Evinix %ccessories 7rivate Bimited from Evinix Ksesryz and a fresh !ertificate of Incorporation dated 2.th &arch 2..+ was taken. In &arch 2..,' &Is %mbros Exports 7rivate Bimited took e$uity stake in the company. The apparel category constitutes men and women#s shirts' trousers' skirts and tops' kidswear and nightwear. 6rganic cotton wear for expecting mothers and infants is an additional strength. They use 6rganic cotton and its products through its brand name Q6thentixR) %uthentic =ustainable Textiles' lends a uni$ue personality to each garment manufactured and supplied by Evinix. The company came out with a principle of apid etail suggesting that every merchandise has a limited shelf life at !<T stores( !<T is an acronym for !omfortable' <rban and Trendy. Evinix is setting up !<T stores @averaging 9...),... s$ feetA in fast urbanizing young Indian towns. It recently launched the !<T youth style store in a1kot. The apid etail business concept embraces the e.t.o.a.d concept i.e. the exact time of awaited departure when the product will move out to the next best price bracket.

7E% B "B6/%B
7earl "lobal Bimited was incorporated on 2+rd 6ctober' 4:5: under the name 7earl %gencies 7rivate Bimited. The !ompany became a 3eemed 7ublic !ompany with effect from 4st 8uly' 4::4 The name of the !ompany was change to 7E% B "B6/%B BI&ITE3 @7"BA on 2nd =eptember' 4::+ in terms of =ection 24 of the !ompanies %ct' 4:,? as per fresh !ertificate of Incorporation issued by the egistrar of !ompanies' 3elhi M Haryana. 7"B manufactures' sells' and exports ready to wear apparel in India. The company primarily produces garments in woven and knitted fabrics. Its products include casual wear dresses' ladies# blouses' and bottoms. The company is based in "urgaon' India. 7"B is a subsidiary of House of 7earl 2ashions Bimited.

/%D" 6HE =E%= BT3

/ang 6verseas limited#s principal activity is to manufacture and market textiles and apparels. The "roup0s textile includes readymade garments' under garments and hosiery.It markets with a brand name of Thomas =cott. The "roup operates only in India. It was incorporated in the year 4::2 and is presently providing fashion fabrics and meeting ready to wear re$uirements of the customers in apparel' textile and etail segment. The company started the business from trading in textile and since 4::;' they are conceptualizing and designing fashion fabrics and outsourcing the manufacturing process of the same from countries like Turkey' 7ortugal' &auritius and other European !ountries. In the same year' they launched our seasonal fabric collections in textile under the name P/odywavesP' marketed through their own distribution channel to different brands and retailers. They have ventured into ready)to)wear mens0 segment in 2... by outsourcing manufacturing process and in turn selling to various international brands. They launched ready)to) wear mens0 garments under our brand name PThomas =cottP in 2..2. They started their own first apparels manufacturing unit in /angalore in the year 2.., in the name of eunion !lothing !ompany with an installed capacity of +,.'... pieces per annum and in the year 2..? then they started the second manufacturing unit in the name of 2ormal !lothing !ompany with an installed capacity of +?.'... pieces per annum. %t present they have installed capacity of 52.'... and ,9.'... pieces per annum at their eunion !lothing !ompany and 2ormal !lothing !ompany. Their products are presently retailed through 4,5 point of sales comprises of our own etail outlets' Barge format stores @B2=A like =hoppers0 =top' 7yramid' "lobus' the B66T' =%"% and &ulti /rand 6utlets @&/6A spread all over India. They cater to the demand of various other apparel manufacturer and brands also. They have centralized warehousing and logistics centre at *alher Hillage near /hiwandi to facilitate our supply chain management as well.

BCG MATRIX
/!" &atrix is also called the /oston &atrix because it was created by /ruce Hendeson for the company /oston !onsulting "roup in 4:5.. The /!" matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. !tar The high growth and high market share brands that exist in Indian market and are the market leaders. This category consists of the companies like Sodiac' 3u 7ont etc. These companies are regularly investing in M3 and gaining market share as time passes. These stars try to become the cash cows of the future and want to remain in the market. Cash C&'s The companies which have low business growth and high market share are the cash cows that generate milk continuously with the small investment to be as the mature company in the market. ()esti&n *ar+s @also known as 7roblem !hildsA The companies that have high growth rate and lower market share are the $uestion mark as they could be new ventures started or they are companies that do not have li$uidity enough to increase

their share in the market. /ut these companies have potential to be the star in the market due to good growth rate and thus they could invest more into their business to expand as the star and then becoming the cash cows. &gs The dogs are more charitable pets that exist in the market and have the low market share and low growth rate so these companies are better to get out of the market or much cash is re$uired to set them up. These companies have the cash traps which ties up the money in a business with the lower potential.

"6*%B3%=
In the present Indian fashion retailing' "okaldas has grabbed a distinguished place for itself in the form of PThe GearhouseP catering to the specific fashion needs of the people. It ainly operates in India but exports its products to countries like the <nited =tates of %merica' !anada' &exico' <nited *ingdom' "ermany' %ustria' =pain' Italy' 2rance' Detherlands' &iddle East' =outh %frica' 8apan' 3enmark' Taiwan and Hong *ong. This means the company has a high growth rate since its inception.Therefore I put it in star.

PORTERS FI!E FORCE MODEL

I. I=* 62 DEG EDT E /E 76TEDTI%B !6&7ETIT6

#. B*),6 L&?)13?
The existing players have been in the industry for a long period of time and have established a good reputation with their customers in domestic as well as foreign market. This has resulted in the high brand loyalty by customers. /ut this will not act as a potential barrier for other companies because most of the Indian textile companies operate in /)To)/ segment and all the players keep competing among themselves for new consignments from the clients.

2. A@8&173. /&83 A62),3)-.

%bundant availability of raw material is one of the key advantages of the Indian textile industry( this also gives a ma1or opportunity to Indian textile industry and creates a barrier for foreign players to compete with Indian companies in cost advantage. India is more cost competitive vis)T)vis countries like /razil' !hina and =outh *orea in manufacture of textiles !ost advantage arises mainly from the large pool of low cost but skilled manpower available in India In case of textured yarn and fabric' India is less competitive' which is a result of the higher tax burden @excise dutyA on manmade textiles in the country India#s position is strong vis)T)vis other countries in most raw materials Bargest producer of 1ute =econd largest producer of silk Third largest producer of cotton' accounting for nearly 4?- of global production Third largest producer of cellulosic fiberIyarn 2ifth largest producer of synthetic fibersIyarn Eleventh largest producer of wool !otton ) 7redominant fabric used in the industry Gith 9.4+ million metric tons of production' country accounts for almost 4?- of global production of cotton India also leads the world in cultivated area under cotton @roughly ;.;2 million hectares in 2..9).,A 8ute ) 6ccupies an important place in the Indian economy Has a strong contribution to direct employment as well livelihood in the tertiary sector and allied activities India leads globally in 1ute with its annual production of 5., million bales in 2..9)., =ilk ) Highly remunerative cash crop' with minimum investment and sustained attractive returns

 India accounts for 4;- of world raw silk production @4,.59 thousand tones production in 2..+).9A India has the uni$ue distinction of being endowed with all 9 varieties of silk ) &ulberry' Eri' Tasar' &uga Gool ) Gith its annual production of ,..5 thousand tons of raw wool fiber' India accounts of roughly 2- of global production

3. E/&,&'+.8 &4 S/)1.D

The textile industry across the value chain is largely decentralized <nits mostly independent and small scale in nature' rather than composite units undertaking all activities together Barge scope for entry of organised integrated textile manufacturers

4. C783&'.* 8A+3/0+,- /&83D

%s earlier mentioned that the existing players are operating in this industry for a long period and also have established long term relationship with their customers. 6ver a period of time these companies have customised their products as per the needs of the customers therefore customers also prefer to still to the existing suppliers rather than moving to others as there is a high switching cost involved here and if the customers switch to new suppliers than again he need to train the suppliers as per their re$uirements

5. G&2.*,'.,3 R.-71)3+&,8D
Historically the textile industry in India has been reserved for the small scale sector' which has been exempted from taxes' thus discouraging investments in increasing scale The government' through its various /udget announcements has sought to rationalize taxes /udget 2..2).+F Textiles brought under the ambit of !envat @credit for duties paid on inputs or capital goodsA and introduced on all yarns /udget 2..+).9F !envat extended across the entire textile chain to include fabrics' made)ups and apparel( excise duty exemptions on many sectors and processes' specially ==I removed( excise duty rates reduced /udget 2..9).,F !envat made optional ) every manufacturer allowed to choose between a complete exemption from payment of excise duty or adopt the !envat route( excise duties lowered to 9- on cotton textiles and ;- on non cotton textiles

@except man made fibers' polyester filament yarn' nylon filament yarnA for those claiming !envat credit %lways government regulations aimed at improving competitiveness of industry to face a post $uota regime Several government initiatives targeted to attract investments: T./0,&1&-? 7( -*)6)3+&, 47,6 8/0.'.D =cheme launched in 4::: to provide firms access low interest loans for technology up gradation and setting up new units with state)of)art technology =cheme has disbursed ID :4.?4 bn till +4st 3ecember 2.., P&1+/? *.1)3.6 3& 4&*.+-, +,2.83'.,3D <p to 4..- foreign direct investment allowed in textile and apparel manufacturing industry' with approval of the 2oreign Investment 7romotion /oard @2I7/A <=3 4..2 bn of 23I in the sector approved between 4::4 and 2..9 !ompanies free to set up fully)owned sourcing @liaisonA offices' as well as marketing operations U(-*)6+,- I,4*)83*7/37*.D Q=cheme for Integrated Textile 7arksR @=IT7A' based on public)private partnership model to build world class infrastructure facilities 7roduct specific Q!luster %pproachR targeting development of 4.. additional clusters in textiles Technology &ission on !otton @T&!A' focusing on cotton M3' dissemination of technology to farmers' improvement of market infrastructure and modernization of ginning and pressing sector.

II. THE EKTEDT 62 IH%B E %&6D" E=T%/BI=HE3 2I &=

#. I,6783*? /&'(.3+3+2. 83*7/37*.D

7

=ince this industry is highly fragmented there is always high probability during the boom phase that many new players could enter this industry which would lead to a price war and ultimately end up with the bankruptcy of some players or consolidation of industry. =o' this is a treat to the existing players. /ut also the existing players work a lot on cost efficiencies therefore the treat of new entrant is negated by the cost efficiencies of existing players

2. I,6783*? D.'),6D
In the current scenario textile exports have declined drastically and even in domestic demand there is a little slowdown. 3ue to which textile companies are working on reducing cost by ways of reducing the work force' decrease in operation cost etc. %lso this will evoke more rivalry among the existing players as they all will like to maintain their market share in spite of the slump in industry

3. E5+3 B)**+.*D
This is not 1ust a labour intensive industry but even the cost involved in plant setup is very high along with that with the invent of many new technologies many companies have adapted to modern techni$ues to remain competitive in industry as well as to produce better products for their customers in lesser time and with lesser cost. Therefore because of high involvement and emotional attachment with the business as it has been a traditional business for generations for many companies they still prefer to stick and continue with the business. /ut in the current scenario many textile mills have closed down because of deep cut in demand and high operational cost due to severe global crisis.

III. THE /% "%IDID" 76GE 62 /<EE =

Indian textile companies are facing a tough competition from !hinese' /razilian and =outh *orean companies as they are able to produce at a lower cost compared to Indian companies This industry is fragmented and there are large number of players in the industry' therefore buyer get the option of choosing from many suppliers Indian textile industry is no more 1ust a mass producer of textile rather it has moved into niece segment and has developed capability to produce finest $uality of fabric which provides them distinctive competencies against other countries as well as small players who could cater to mass consumers only. Therefore overall buying power of buyer will defer from company to company. !ompanies like %rvind mill' aymond' aditya birla group have achieved certain degree of distinctive competencies therefore with them buying power of buyer is negated to large extent against their competencies. /ut many small companies who are mass producer of textile face a strong buying power of buyer.

IH. THE /% "%IDID" 76GE 62 =<77BIE

Here again bargaining power of supplier dictated by the segment that they are targeting to' for a niece players and companies who have achieved operational excellence can dictate terms to buyers but for small players who 1ust produce for mass consumption do not have much say in the business deal and the prices are mostly dictated by the buyer.

H. THE TH E%T 62 =</=TIT<TE 7 63<!T

Textile itself is a very broader term and is a solution to a very basic need of any human being therefore there is as such no substitute to this but within the textile industry there are many substitutes to different category of textiles. In India there are various types of textile produced from cotton' silk' synthetic etc. There is always a risk of substitution of one type with the other type also there is constant research carried out to develop new types of textiles but combining different textiles in different proportion. /ut in broader perspective there is no substitute to textile.

SEGMENT ANALYSIS
India#s textile industry comprises mostly small)scale' non)integrated spinning' weaving' finishing' and apparel)making enterprises. The figure below depicts the overall value chain and the number and type of units within the industry.

T.53+1. S./3&* E H+-0 L.2.1 !)17. C0)+,

S(+,,+,- '+118
Gith an installed capacity of 9. million spindles' India accounts for about 22 per cent of the world#s spindle capacity. In 2..,' India#s spinning sector consisted of about 4'4?4 small)scale independent

firms and 4',?? larger scale independent units. Independent spinning mills account for about 5, per cent of capacity and :2 per cent of production.

K,+3FW.)2+,-FK,+33+,- U,+38
India#s weaving and knitting sector is highly fragmented' small)scale' and labour)intensive. The woven fabric production industry can be divided into three sectorsF powerloom' handloom and mill sector. In 2.., it consisted of about +.: million handlooms' 4.; million power looms' and ..4 million looms in the organised sector. The decentralised power loom sector accounts for :, per cent of the total cloth production. The knitted fabric forms 4; per cent of the total fabric production.

P*&/.88+,- U,+38
The processing industry is largely decentralised and marked by hand processing units and independent processing units. !omposite mill sectors are very few falling into the organized category. 6verall' about 2'+.. processors are operating in India' including about 2'4.. independent units and 2.. units that are integrated with spinning' weaving or knitting units.

G)*'.,3 M),74)/37*+,- U,+38

=mall)scale fabricators dominate garment manufacturing. &ost garment manufacturing units fare reasonably well on the technology count. The bulk of apparel is produced by about 55'... small) scale units classified as domestic manufacturers' manufacturer exporters' and fabricators @subcontractorsA. The fragmented structure of the industry provides the advantage of a large pool of skilled workers in different areas of textile manufacturing' and also gives scope for entry of organized integrated textile manufacturers. =mall scale units in different sectors can also be leveraged as a supply base for sourcing materials at low cost. %part from these advantages' the industry has also been experiencing consistent growth across different sectors' making it one of the key potential sectors in India.
P*&67/3+&, ),6 E5(&*38 India has been experiencing strong performance in the textile industry' across different segments of the value chain' from raw materials to garments. 3omestic production has been growing' as well as exports.

T.53+1. E5(&*38 The Indian textile industry contributes substantially to India#s export earnings. The export basket consists of wide range of items containing cotton yarn and fabrics' man)made yarn and fabrics' wool and silk fabrics' made)ups and variety of garments. India#s textile products' including handlooms and handicrafts' are exported to more than hundred countries. However' <=%' E< &ember =tates' !anada' <.%.E.' 8apan' =audi %rabia' epublic of *orea' /angladesh' Turkey' etc are the ma1or importers of our textile goods. 3uring the year 2..,).?' the share of textiles exports including handicrafts' 1ute' and coir in India#s total exports was 4?.?+-. India#s textiles exports have registered strong growth in the post $uota period. Textiles exports grew from <=> 49..+ billion in 2..9)., to <=> 45..; billion in 2..,).?' recording a growth of 24.; per cent. Therefore' the "overnment has fixed a higher target of <=> 4:.5+ billion for the year 2..?).5.

SWOT ANALYSIS OF TEXTILE INDUSTRY

STRENGTHS
emoval of $uota restrictions to give a ma1or boost to the exports. India is one of the largest exporters of Earn in international market and contributes around 2,- share of the global trade in !otton Earn. Bow per capita consumption of textiles in India as the world consumption is ?.;' India only consume 2.; of it. That#s why there is large scope of manufacturing and exports. %vailability of the cheap labour in India would help the development of the textiles at the lower cost. !ost competition is not much in India as ma1ority of Indian population is not dependent on the big brands like %rmani' <nited !olours of /eneton etc' so India itself does not hold much competition with these brands. The large cotton production in India would lead to the development of the textile mills in the better way' as India does not have to import the raw material from outside. There are well established production bases for made ups export as well as for domestic purpose.

WEAKNESS

 The most serious problem of the industry is the lack of ade$uateprocessing facilities( there is over)dependence on hand processors and traditional items. The Indian textile industry is fragmented. &ost of the =&Es are tiny and cottage type units without sufficient capital back)up. The government policies in India for the textile industries are traditional as they are not upgraded like the up gradation of the policies for the IT industries. The $uality of wider)width fabrics for meeting the export demand is lacking in many respects' which is acting as a disadvantage to the growth of the industry. The technology used in the most of the textile mills is old enough that they can#t be modified' but there have to be new machineries imported to give the edge in technological advancements in this sector.

OPPORTUNITIES
%s per available information' the market for processed cotton fabric will increase in the European and other markets and' therefore' the powerloom industry may benefit and expand substantially. 2urther the growth in the export segment will be mainly from cotton made)ups and garments along with processed fabrics. "rey fabric export is continuing to grow and will show increasing trends. Halue added products will have greater demand and' therefore' processing will play an important role. India with traditional designs and craftsmanship can command a greater market share for niche products in made)ups and garments. Indian companies need to focus on the product development and this could easily be possible as there is the greater scope in the Indian &arket. %s the new generation is keen towards the western culture the training for specially textiles could be provided to them and they could be encouraged to develop the efficient sector of India. Increased use of computer aided designing to develop the designing capabilities of the textile. <sing new technologies and softwares ease the use of virtual design on the computer and then choosing from various alternatives.

THREATS
Increased competition in the domestic market yield to the development of the more =&Es which invest more to survive in the market. The working area of most of the industries in the textile industries is not hygienic enough to give the workers more comfortable area to work in. so this condition has to be improved. Deed to revamp consumer consciousness !hinese goods are cheap as well as the machinery provided by them is also cheap. =o the threat for the export and designing is the !hinese %ggression over the International market. !ontinuously $uality improvement is needed to make sure that people would rely on Indian goods not on the foreign goods.

 Traditional items like terry towels are manufactured in E6<s all over the country with superior $uality. This has been eroding the traditional markets for powerloom and handloom products forcing them to go for product diversification.

C&'()*+,- T./0,&1&-+/)1 I,,&2)3+&, &4 T.53+1. I,6783*+.8 +, I,6+) ),6 C0+,)

I. !)*+&78 C0)*)/3.*+83+/8 &4 C0+,.8. ),6 I,6+), C&'(),+.8

!hinese companies are specializing in reducing the cost to a very competitive level' not only by means of cheap labor' but also through mass production and high productivity. In fact' the average wage of !hinese workers is higher than that of Indian workers. Ghile a !hinese textile worker earns normally >4.. per month' an Indian worker is usually only paid >5. per month. However' the !hinese companies cut the costs even lower than their Indian and other competitors through mass production and returns)to)scale of the economy. The biggest factories in India looklike lightweight players in !hina. 2or example' the largest spinning company in India'Hardhman "roup' has a capacity of ,..'... spindles. In contrast' the largest !hinesespinning company' Gei$iao Textile' is running +'...'... spindles. The largest weaving company in India' %rvind &ills produces 44. million meters of denim and +. million meters of fabric per year' while Gei$iao Textile has a capacity of 4,5 7

million meters of denim and ;99 million meters of fabric in total. 6n average' the size of !hinese textile companies is five times larger than that of the Indian ones. %nother important aspect of cost efficiency is high productivity per worker. !ompared with their Indian counterparts' the !hinese workers are much more disciplined and work more intensively. The managers are strict in controlling the working time and efficiency of workers. Even military)style management is introduced to some factories. /esides' !hina has invested heavily in modern e$uipment to boost productivity. %ccording to the International Textile &anufacturers 2ederation' between 2... and 2.4. over ,,of spinning machines and over ?;- of weaving machines delivered worldwide went to !hina. + !onse$uently the productivity of the !hinese worker is significantly higher' adding <=>,... in value to what he produces compared with the <=>2?.. for his Indian e$uivalent. %lthough Indian companies are not able to beat the !hinese in terms of cost and productivity' their strength is in small batch orders and customization. /ecause of the large capacity of !hinese companies' small orders are not attractive to them' since the rearrangement of working positions in a big factory may cause bigger costs' or the unused capacity may cause larger loss of opportunity cost. 6n the other hand' Indian companies are more flexible and can accept this kind of order. /esides' the English speaking Indians have the advantage of communication with Gestern customers' and that is important for customized products. Bast but not least' most of the Indian textile enterprises have a longer history and better management than the !hinese companies. &ost of the !hinese enterprises have no more than +. years of history and are still striving to standardize their manufacturing procedure and $uality control because their expansion has been so fast. In contrast' most Indian companies are $uite experienced in maintaining high $uality and have an established control system. This also gives an advantage to Indian companies in customized production' as $uality control is more important in the high)end market. !ustomized products bring more profit. 2or example' !hina#s export of textile products to the <= in 2.4. was > +;.95 billion in value and 2?... billion s$uare meters in volume. The average value of the !hinese exports is <=>4.9; per s$uare meter. India#s textile exports to the <= in 2.4. were <=>,.+; billion in value and +.2? million s$uare meters in volume. The average value of the Indian exports is <=>4.?, per s$uare meter', about 42- higher than the !hinese products. The Indian companies are satisfied with their high)margin manufacturing. Indian garment producers make it clearF for items under <=>+.' leave it to !hina. %bove <=>4,.' leave it to European companies. II. R.)8&,8 4&* 6+44.*.,3 '&6.18

Ghy is there such a difference in business modelsU %ctually in both !hina and India the cost)conscious and the profit)conscious models exist. %lthough focusing on reducing cost' the !hinese companies do not forget to pursue more value)added products and profit. Indian companies also introduce new machinery and enhance management to improve cost)efficiency. However' historic' cultural' and social contexts in each country inform the various emphases and strategies that enterprises use in their decisions. =uch decisions cannot be simply explained through static comparative advantages. %s we see' labor costs in India are as cheap as in !hina' and !hina has as many engineers as India. 6nly by examining the development path comprehensively can we understand the reasons behind the divergence in business patterns. %s mentioned before' today#s ma1or !hinese textile companies are pretty young. Ghile the old state)owned textile enterprises lost their competence and went bankrupt' competitive private textile mills and garment factories were set up only after the economic reform in 4:5;. =ince the focus of early economic reform in !hina was in rural areas' some of the peasants and small hand)workers became the first beneficiaries of reform and established their enterprises. Today ;5.,- of the textile and apparel enterprises are based in rural areas. =ome of the most famous apparel brands such as QEounger'R QBuomen'R Q=hanshan'R and Q=anhongR were all founded and managed by former peasants. !onse$uently these companies lag in human capital and technology ac$uisition. The $uality of such QproductionRwas of course pathetic and there was no design' for they simply copied others#products. However' in the early 4:;.s !hina was still largely locked into a planned economy. The shortage of consumer products was so serious that the consideration of $uality and brand was merely secondary. The basic products were still salable on the world market' and !hina#s textile giants today obtained their first capital in this manner. educing costs' increasing productivity and managing mass production continue to be the ma1or themes of !hinese textile industry. In comparison' many Indian textile enterprises have a long and stable development history' which can be traced back to the colonial era. %rvind &ills was founded in 4:+4( 7remier &ills was set up in 4:9:( The aymond "roup was incorporated in 4:2,( Bakshmi &ills was established in 4:4.. Even the Qyounger brotherR Hardhman' established in 4:?2' is almost two decades older than its !hinese counterparts. Through a long period of market operation' Indian companies have relatively established market networks and regular customer groups. Dot concerned with survival' they are aiming at higher profit. /esides' the founders and managers of Indian enterprises are either experienced experts in the textile industry or industrialists who are able to understand sophisticated technology. The Indian entrepreneurs belong almost exclusively to the upper classes in the social @casteA system. They have the knowledge' the capital' and

the social relationships to build up their enterprises. Their good educational background' systematic management' and technological and financial capability enable them to consider more value added and profit' whereas the !hinese village entrepreneurs struggled for survival under circumstances of little technology and little capital for a long period. %part from management' the external conditions in India are not friendly to mass production. The road traffic' train transportation' and harbor facilities in India are of poor $uality. estrictive labor laws prevent companies from recruiting large numbers of workers. Ghen the enterprises hire more than 4.. workers' they have to deal with worker unions. <nder the unions# pressure' only 2- of Indian textile factories have three shifts' whereas about 2.- of !hinese counterparts are operating 29 hours a day. In short' the choices between two paths of technological development L promoting productivity or customization L have been decided by the historical' cultural' economic' and social conditions in India and !hina. <nder its particular socio)political conditions' it was reasonable for !hinese enterprises to prioritize a mass production model' which led to the !hinese textile industry#s amazing boom. /y contrast' Indian companies based their strategies on market experience and mature management' which do not trigger explosive growth' but are stable and effective.

III. T./0,&1&-? I'(*&2.'.,3 ),6 A6)(3)3+&, The aforementioned characteristics describe the general trends of technology management in the textile and apparel companies in India and !hina so far. In specific development phases and concrete enterprises' more varieties of developing approaches and strategies can be observed. There are continuous experiments for technological improvement( however' development is always a try)and)fail process. The final success of technological transformation usually means the adaptation of technology into the local social and market circumstances. Thus' there are also various development tracks in each of these two countries lately with the arrival of new technologies. #. D+-+3)1+G)3+&, &4 30. E,3.*(*+8.8 =ERP ),6 CRM> In the age of information technology' E 7 @Enterprise esource 7lanningA and ! & @!ustomer elations &anagementA software systems have been introduced to the textile and apparel industries in both countries. =ome of the Indian textile entrepreneurs' owing to their higher education and better understanding of technology' even set up their own E 7I! & companies several years ago as a strategy of

business diversification. However' since the size of the Indian textile and apparel companies is usually $uite small' there is not sufficient market demand for E 7 software' which is designed for managing large)scale production. &any of the companies use only ! & software. In comparison' the situation in !hina is much more complicated and needs multi)level technological adaptation. 2irst' international E 7 software companies like =%7 and 6racle are too expensive for low)profit textile and apparel companies. The software produced by these international companies is not suitable to the uni$ue business models and corporate backgrounds of local !hinese enterprises. =econd' for many companies' there is no need for an overall E 7I! & software. These companies are primarily interested in managing the crowded manufacturing sector and raising production efficiency. Therefore the E 7 software often is introduced together with @semi)Aautomated machinery. This actually avoids the problem of incompatibility of hardware and software too. Third' the application of the E 7 software means restructuring the company organization as well. 2or a few entrepreneurs' the ma1or advantage of E 7 software is not that it promotes productivity' but that it provides a chance to standardize the whole manufacturing process and modernize the enterprise structure. =tandardization becomes the target of the managers because it significantly reduces the risk ofaccidents and lays the groundwork for further development.

%s more and more !hinese textile and apparel companies utilize E 7 software' one conse$uence is that !hinese companies are becoming more flexible so that they can cut into Indian companies# market territory. 2or example' previously an order of ,'... pieces of knitwear was unattractive to !hinese companies' because the whole line of 9. workers would be trained for an entire day' but after maybe + days the order is complete and the workers need to be trained again. Gith the installation of E 7 and automation machinery it is possible to allocate only 4. workers in the production linefor a similar order. The other +. workers can then be given other orders. The hanging circulation system enabled by E 7 programing can send the re$uired items to the designated positions so that the whole production line can be divided into several parts to fit the order. In addition' E 7 systems enhance the capability of customization. Integrated with computer)aided design and manufacturing' circulation systems can flexibly move cloth between various procedures to make customized products. 2. RHD )/3+2+3+.8 Today !hinese apparel companies aspire to enter the high)end market' but one of the key obstacles is the lack of high)$uality textile fabrics. %lthough !hina is the number one apparel export country' it imports large amounts of high)$uality textile

fabrics every year. !ompared with the international leading brands' the !hinese)made fabrics are still not satisfactory in respect of color' texture' $uality etc.5 !hina also exports immense amount of textile fabrics' but these exports are mainly littleprocessed or low)costs products. <.=. and European companies even use these very cheap primary fabrics @e.g. gray fabricsA for further processing and sell them back to !hina at a much higher price. The main reason for this awkward situation is that !hinese companies used to compete in the low)end market for long time. Donetheless' during recent years' there are more and more fabric companies that want to move up the value chain and are capable of manufacturing advanced textile materials. Eet' these new products are not yet widely known to industry or accepted by the designers in apparel companies. % few large apparel companies are also planning to build their own fabrics branch in order to can catch the initiative of the market directly. 2or instance' one of the largest garment groups Eoungor has invested over <=> 4.. million to develop high)end fabrics in cooperation with 8apanese enterprises. !hinese apparel and garment companies are apparently eager to play a bigger role in the high)end market with its research on high)$uality fabrics. In comparison' many Indian textile enterprises are already able to manufacture high)$uality fabrics. Their M3 interest lies rather in the prediction of market trends and control of $uality( and because their business model depends on customization and high $uality' they want to keep their edge over the !hinese competitors.

W0)3 T0. C0+,.8. A*. D&+,- R+-03 9

!hinese textile industry is an interesting case study of how policy intervention' firm level changes' and strategic technology choices helped it to become an important player in the world market. It is important to point out that most of these changes have taken place over years and that the industry has been successively climbing up the value added ladder. Ghile it is difficult to create a single visual of these efforts' one can identify several factors that have contributed positively to the growth of the !hinese textile sector. Together' their current global market share is close to 2?- including both primary textiles and apparels.The !hinese industry has followed a two pronged strategy in building market share' i.e.' developing large volumeIlow cost units and low volumeIhigh value adding units. This dual strategy has drawn !hinese expatriates from Hong *ong' Taiwan' Europe and the <= who have played the role of Qmarket makersR as well as producers with factories in !hina. It must' however' be mentioned that the $uality of the domestic market is far inferior to that of export markets and is thereby open to competition' 1ust like India' after year 2..9 . In fact' the extent of competition in the domestic market is not as intense as one finds in India. !hinese policy has encouraged export oriented units in a variety of ways that range from the

availability of credit for buying new e$uipment to canalizing raw materials and finished goods through centralized channels. This has helped in reducing uncertainty in availability of good $uality material forexports. In addition' it has setup a single apex body for each of the sub)sectors in order to facilitate export formalities and to better coordinate across the sub)sectors. Gith implementation of the Qresponsibility system'R pressures on most state enterprises has increased to perform' especially' since the wage bill has been linked to output levels. This has driven many firms to export as that was the only way to fund purchase of new technology through which they could increase their output and conse$uently their wages bills. %nother pillar in thismodernization process has been technological upgradation. =ince 4:;,' cotton M silk firms have imported e$uipment worth <=> 4bn each year @Gang' 4::;A. However by the year 2... only 2.)2, - of the total technology stock would have been updated. cotton %nother example of such investments has been the =tate run /ei1ing Do. + !otton &ill which has invested close to <=>4bn in new e$uipment in the last ten years. %nother feature of this growth has been a spateof 1oint ventures that each of these firms have entered with firms outside !hina ) most of thesefirms produce to specifications provided by foreign partners. There has been another facet of development in the !hinese textile industry which has provided a significant long term benefit to individual firms. !hina does not have a long or strong history of managerial initiatives. However' its secondary and technical education programs are very stringent. !hinese firms have recognized this lacunae and have started to invest in in)companytraining of its workforce in modern technology and managerial skills. 6n the average' !hinese textile firms give 5. hours of training each year to an experienced worker as opposed to +2 hours in !anada and 4. hours in India @!handra et al.' 4::;A. This survey also found that about 4?- ofIndian firms did not provide any training to a new employee as compared to 4.;in !hina. Toput these efforts in perspective' the training that a long term auto worker gets as a new hire at=aturn#s plant in the <=% is between +,. to 5.. hours @ ubinstein et al.' 4::+A. !hinese workunitson shop floor are increasingly making productivity related decisions. . The !hinese government has been anxious to enter new application areas in textiles and has set up a commercial M3 organization' the !hinese Textile =cience and Technology 3evelopment !orporation' to help develop new capabilities especially in industrial textiles. 2inally' Hong *ong has been playing a key role in !hina#s growth. It provides high $uality design M apparel manufacturing and marketing services' efficient financial and shipping facilities that have considerably reduced delivery times' and plants that are capable of $uick ramp up to meets customers# short delivery re$uirements. This network of low cost operations in mainland !hina' fashion design' operational skills for $uick turn)around M efficient port handling in Hong *ong' and !hinese market makers in Europe M <=% have allowed the !hinese textile industry to make significant strides. !hina#s position in the textile industry is extremely strong and undoubtedly leads the

global production. % study presented by the end of 2..: claims that' even under the negative effects of the global financial crisis' !hina is still the most competitive location in the world for the textile industry 3uring the financial crisis' while the overall decrease in !hinese exports amounted around 4,-' the textile industry felt only partially the downturn effects. Textile export amounts decreased by a relatively low 5- in 2..: and it took very little time of to show significant signs of recovery. In the first 4. months of 2.4.' !hina exported more than <=> ?2 billion dollars in textile' a rise of 2:- comparatively to the same period in 2..:. In this same period' exports of clothes also grew' totalling more than <=> 4..' presenting an increase of nearly 2.- compared to 2..:. !hinese prevailing competitiveness in the textile industry is also supported by public investments and industry internal organization in !hina. There are cities' like !hangshu !ity @8iangsu provinceA and 3ongguan !ity @"uangdongA' which concentrate a high number of textile enterprises @2+.. and ?,.. textile companies respectivelyA. !ompanies in these cities are co)ordinately moving to improve the industry competitiveness. It is an important movement' given !hina#s accession into GT6. In addition' these textile industrial centres help to attract new companies and investors due to the existing appropriated infrastructure and business momentum.

PRESENT SCENARIO
!hina#s textile exports reached 2.?.,+ billion dollars in 2.4.' among which the exports of textile raw materials were 9.5+? billion dollars' the textile fabrics were 52.+ billion dollars and the garments exports were 42:., billion dollars. India was the second textile production and export nation' which was only next to !hina' the textile industry accounted for 49- of the total industrial output' the direct employment staff was ?,.9 million and the indirect employment staff was about 4.. million. In 2.4.' India#s total exports of textiles got ,. billion dollars' which accounted for +.- of the total exports. India#s textiles were exported more than 42. countries and regions' which it was $uite competitive in the international market. %s the second textile production country' India would become the big winner that it was only next to !hina. It was reported by GT6 that !hina and India were the biggest beneficiaries for canceling the $uota system' while the competition of textile industry also increased between two countries. =een from the textile raw materials' the international market share was small between !hina and India. 2..5V2..;' India#s international market share was e$ual with !hina' and it indicated the export competitiveness of textile raw materials was $uite in !hina and India. 2..:V2.4.' India#s international market share also declined.

However' in the aspects of textile fabrics' !hina#s international market share of fabrics was higher than India' which it showed !hina#s export competitiveness of textile fabrics was stronger than India. &oreover' !hina#s international market share of garments also was higher than India' which it stated !hina#s export competitiveness of garments was stronger than India. %s the leading textile production and export country' !hina#s international position was stable. Ghether the textile raw material or fabrics and garments' !hina#s international market share was higher than India among 2..?)2.4.. !hina#s export of textile raw materials had no advantages. !hina was a net importer of the textile raw materials' while India was the net exporter of the textile raw materials. &eanwhile' !hina#s international market share of garments was higher than India' and !hina#s garment competitiveness was stronger than India in the international market. !hina and India were the production and export nation for fabrics and garments' and they had obvious advantage in the garment industry' which mainly depended on labor factor. India was the net exporter of textile materials' which the international market share of garments was less than !hina' and it was argued that India#s textile industry focused on the raw material' while !hina tended to fabrics and garments. The trade competition of textiles would more and more intense between !hina and India in the international market. %lthough India#s international competitiveness of fabrics and garments was less than !hina' it was obvious for India#s transformation achievements of industrial structure' and !hina#s and India#s product structural differences would be reduced..

!hina0s dominance of the global garments trade may be eroded as rising labour and raw material costs are making it tougher to compete with rival %sian producers' a textile industry executive said. P!hina is gradually losing its traditional competitiveness in production costs' while other %sian countries are speeding up development'00 =un uizhe' vice president of the !hina Dational Textile M %pparel !ouncil' said at a conference in /ei1ing on Tuesday.
!hina accounted for almost a third of world garment exports last year' according to =un. % slowdown in shipments may help to reduce the country0s trade surplus' which surged ,2 - in the first 44 months of 2..5 from a year earlier to >2+; billion. Textiles and apparel accounted for 4, - of total exports. Q!hina will only be a textile export 1uggernaut for a fixed period of time' perhaps 4. to 4, years'00 obert %ntoshak' president of Dashville)based cotton information provider "lobecot Inc. said at the conference. 6ther %sian nations' such as /angladesh' 7akistan and India' will take some of !hina0s business' while Hietnam and !ambodia may become apparel Qtigers'00 %ntoshak said in an interview.!hina0s average wages have risen more than ,. - in the past five years' while the yuan currency has gained about 49 - against the dollar since the end of a peg in 2..,.The government has also cut export tax rebates and tightened lending. Q7roduction costs have increased in terms of raw material' labour' energy and environmental protection'00 =un said. Q ising interest rates and capital shortages also affect the industry.00 !hina exported >4,?.? billion worth of clothing and textile products in the first 44 months of last year' up 2. - from a year earlier' the top economic planning body' the Dational 3evelopment and eform !ommission' said on 3ec. 24.!hina0s growth in exports of apparel may slow after 2.4.' and its purchases of shoes and clothing from overseas may rise as domestic consumers become more affluent' %ntoshaksaid.

The expected rise in !hina0s consumption may be offset by declines in developed countries' he added. !hina0s cotton imports fell +5- to 2.49 million tons in the first 44 months of 2..5 from a year ago' according to customs data.

FUTURE OUTLOOK Expectations are high, prospects are bright, but capitalising on the new emerging opportunities will be a challenge for textile companies. Some prerequisites to be included in the globally competing textile industry are: Imbibing global best practices Adopting rapidly changing technologies and efficient processes Inno ation !etwor"ing and better supply chain management Ability to lin" up to global alue chains. #he Indian textiles industry has established its supremacy in cotton based products, especially in the readymade garments and home furnishings segment. #hese two segments will be the "ey dri ers of growth for Indian textiles. $eadymade garment exports were worth %S& ' bn in ()*+ and will cross %S& ,+ bn by the end of -*,*, assuming a conser ati e growth of ,./ per annum. #he readymade garment segment will be the principal dri er of growth e en in the domestic industry. #he changing preferences of Indian consumers 00 from buying cloth to readymade garments 00 ha e prompted se eral companies to mo e up the alue chain into the finished products segment

C&,/178+&,
The development of textiles industries in !hina and India has shown different paths of technological innovation. Ghether promoting productivity or enhancing customization' both approaches are viable strategies for local industries. % company#s choice largely depends on historical' cultural' social and other factors. &eanwhile the decisions made by the companies will influence the paths of further technology development in the industry and the society. It also seems that both countries are trying to break their limitsF !hina wants to enter the high)end market and India has to increase its production scale. %s the technological transformation of the textile industries continues' the respective national characters of India and !hina are going to change with time too. In the aftermath of the &ulti)2iber %greement' the global textile market is further integrating and the competition is growing fiercer. 2acing new market challenges' Indian and !hinese textile industries are again facing fundamental transformation. To effectively tackle the situation India needs to invest in research and development to develop new products' reduce transaction costs' reduce per unit costs' and finally' improve its raw material base. India needs to move from the lower)end markets to middle level value)for)money markets and export high value)added products of international standard. Thus the industry should diversify in design to ensure $uality output and technological advancement. 7

The weakest links in the entire chain are the powerlooms and the processing houses. The latter especially are very important because they are responsible for the highest value addition in the manufacturing line. % powerloom co)operative structure could be evolved for pooling of common services and functions such as $uality testing' marketing' short)term financing' etc. 2urther' because of the geographical proximity en1oyed' a cluster approach can be adopted. The government also needs to make policy changes like dereserving the small)scale sector so that it can achieve economies of scale and adopt a synergistic approach.Handlooms by their very nature can adopt a strategy of PnicheR marketing. In this respect' export promotion' common credit and marketing facilities and more significantly publicity are important areas for co)operation. Here too' a co)operative structure would be useful though government agencies should be involved because of their outreach. Dewer and more innovative forms of involvement are re$uired where decentralisation should be a key element. India has made little attempt to forge partnerships L in e$uity' technology and distribution in overseas markets. The newer nuances of global apparel trade demand 1oint control of brand positioning' distributing and $uality assurance systems.

The Indian textile industry has recognised the need for a cradle)to)grave approach when tackling environmental issues i.e. eco prescription should be applied right from the stage of cultivation to spinning to weaving to chemical processing to packaging. Here especially there is great scope for private )public partnerships. % great deal of work has been done by Indian trade and industry to comply with ecological and environmental regulations' and so Indian garments can adopt an appropriate label signifying a distinct $uality. Efficiency and output of handloom and powerloom sectors also needs to be increased. The clothing sector needs the support of high $uality and cost)effective cloth processing facilities. &odernisation of mills is a must.Human resource is another area of focus. The workforce must be trained and oriented towards high productivity.

The business environment of the future will be intensely competitive. !ountries will want their own interests to be safeguarded. %s tariffs tumble' non)tariff barriers will be adopted. Dew consumer demands and expectations coupled with new techni$ues in the market will add a new dimension. E) commerce will unleash new possibilities. This will demand a new mindset to eliminate wastes' delays' and avoidable transaction costs. Effective entrepreneur)friendly institutional support will need to be extended by the "overnment' business and umbrella organisations.

References

History of Textile - http://www.textileasart.com/weaving.htm History of clothing and textiles - http://en.wikipedia.org/wiki/History_of_textiles Multi Fibre Arrangement - http://en.wikipedia.org/wiki/Bra_wars China's migrant workers hit by economic pinch as 20 million lose jobs http://business.timesonline.co.uk/
http://www.thehindubusinessline.in/2003/12/26/stories/20031226000 0 00.ht! http://www.business"st#nd#rd.$o!/indi#/news/indi#n"te%tile"industr&"should"'r#b"$hin#s" !#r(et"sh#re"s#n)#&"l#lbh#i/3*0+,0/ http://www.e-uit&!#ster.$o!/rese#r$h"it/se$tor"in.o/te%tiles/Te%tiles"/e$tor"0n#l&sis" Report.#sp S12# A!A3)SIS http://www.s#1#.in/blo'/2011/11/indi#n"te%tile"industr&"swot"#n#l&sis/

International Textile &anufacturer 2ederation' 6ctober 2.44' 033(DFFAAA./&31&&<./&'F78.*4+1.8F4+1.FUG@.<2%##F%6.(64.