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About us

Market Analysis
Trade Analysis
Training and Consultancy
Seminars and Workshops
Industry targeted events –
Fairs, Buyer Seller Meets
Fashion and Product
Colour and Trend
Print and web magazines
Fashion Forward Trends
Apparel Online India
Apparel Online
Stitch World
Resource Guide

Apparel Resources is as an organization with
over two decades of deep interaction with
the Apparel and Textile industry in the Indian
subcontinent under the name and style Apparel
Resources. We are an established name as a
knowledge partner to not only the industry but
also to the academicians and students. The
organization is actively involved in Research &
Development, Industrial Training and Consultancy
initiatives. Apparel Resources has been involved
in conducting surveys, publishing annual Top
100 rating of companies in the garment industry
besides insightful research/ analysis of textile
and apparel trade statistics, especially related to
global trade.


Scope of
White Paper
The textile value chain in India is very well
integrated and any movement along the chain,
even at the crop level impacts the whole cycle. In
fact, for the industry, it really doesn’t matter if the
cotton prices are high or low, what matters is that
it should be stable. If prices suddenly go up or
abruptly go down then it affects the industry and
disrupts their calculations, stock evaluations and
orders in the pipeline. Over the past nearly two
years the indecisive policies of the Government
has shaken the foundation of the textile industry,
yet there are many positive indications that give
confidence for growth. This SWOT analysis is the
result of in-depth discussions with many industry


table of content
• SWOT Analysis


Subsidies for more than 5-10 years
is a bad subsidy
Weaving sector dominated by powerloom
Wet processing remains a weakness
Skilled labour migration and commitment will
seriously hamper industry
High power and transaction cost, erode
Spinning of cotton yarn will lead us to glory
MMF segment needs more attention
Support to weaving sector to boost textile
value chain
Declining trends in garment manufacturing
and exports

• Industry View Points



SWOT Analysis
Textile Industry on Course
The Indian textile industry, one of the oldest industries in the country
contributes about 14 per cent to industrial production, 4 per cent
to the country’s Gross Domestic Product (GDP), 17 per cent to the
country’s export earnings, while generating employment for over 40
million people, second only to agriculture. Yet, the industry has failed
to reach heights, despite industrial optimism… but all is not lost and
the Government over the last few years, and particularly in the current
budget, has taken steps to strength the textile industry.

Heritage cannot be maintained
at the cost of growth
One of the biggest roadblocks for growth of the textile industry is
that even today the Government equates the labour intensive textile
industry to be a handicraft industry. Protection of the handloom
sector is still a prime concern. Yet, the industry is convinced that
The Handlooms (Reservation of Articles for Production) Act, 1985,
needs to be revisited in view of today’s realities. The Handlooms Act
has reserved almost all mass-consumed items to be produced by
handlooms since 1985. This reservation continues till date, despite
the fact that it would be impossible to clothe a billion people
economically by using handlooms.
Over 75 per cent of the goods exported from the Karur region,
through the Handloom Export Promotion Council, too, are made on
powerloom or even on shuttle-less looms. “The reservation persists in
spite of the common knowledge that most mass-consumed items are
produced only on powerlooms. When hank yarn was brought under
the excise net in 2002, powerloom units, strangely enough, were up
in arms against the order, and openly admitted that bulk of the hank
yarn was indeed consumed by them,” Says Manikam Ramaswami,
CMD, Loyal Textiles.
Social objectives of a country should not be mixed with the
manufacturing sector. They are different issues altogether and should
have different approaches of being dealt with. The Government has
to evaluate whether the policy/action is commercially sustainable,



Total cotton
production has
increased from
2689 mn kg in FY
2001-02 to 5,678
mn kg according
to provisional
figures for FY
2012-13. While
exports of cotton
constituted only
0.33% of cotton
consumption a
decade ago, in
the running FY the
share of exports is
20%. Total cotton
exported was 1190
mn kg., while local
for spinning was
4488 mn kg.

if not then both the industry and the handworker will die a natural
death. One cannot be the scapegoat for the other to survive. “In
view of the fast changing economic and global trade scenario, the
unrealistic Act has been curtailing the liberal growth of the weaving
and decentralized power looms sector for decades apart making
the clothing expensive for the rural India and limiting the standard
of living of the handloom weavers,” says Southern India Mills’
Association (SIMA) Chief S Dinakaran seeking a new handloom policy.

Subsidies for more than 5-10 years
is a bad subsidy
With a skewed view on how to support the industry, the industry has
unfortunately become dependent on subsidies. Even if a subsidy has
to be given it should be for a limited time period and if the industry
does not sustain itself during that period then it is an industry or a
company which cannot sustain in the long term. We are a developing
economy, a growing country and have to be efficient to compete
globally. If there is a need to support with subsidies, there should
be a definite plan with clear objectives and goals. Today, because of
excessive protectiveness, leading to an inability to sustain themselves
a handloom worker earns substantially less as compared to other
business. Further, it is no secret that a large portion of the subsidy
actually goes to the middleman, rather than the actual weavers.

Weaving sector dominated by
As there is a preference for small scale industries in manufacturing,
so there are concessions available to smaller units and that is an
incentive for people to remain small. In the rest of the world people
are trying to grow and have incentives to get bigger, in India we
are giving incentives the other way round. The same was true for
the textile industry, till a few years ago. “One of the most important
decisions that has led to major investments in textile over the last
8 years is that discrimination based on size, technology and sector
has been withdrawn and uniformed policy adopted. This has given
confidence to the industry,” says SP Oswal, Chairman, Vardhman
According to latest information there are about 1200 medium to
large scale textile mills in India and the share of organized mill



Of total fibre export
in 2010-11 of
1791.76 mn kg,
man-made fibre
is 246.88 mn kg,
which is 13.78%.
The share of cotton
is 68.59% at
1229.08 mn kg. At
the yarn stage, of
total yarn export of
1464.91 tonnes,
man-made filament
yarn accounts
for 30.41%,
while cotton yarn
including threads
accounts for

fabrics in India is just 4%, while the remaining 96% comes from the
unorganized sector, of which about 65% is powerloom, 10-12% is
handloom and the balance is decentralized knitting. Because of faulty
policies in the past, there are people who operate 20 powerloom
units in different names, if they joined them it could be one big unit
with latest technology, but they are more viable if they remain small.
“The process of consolidation has to start now. The technology
upgradation scheme has led to some modernization, but a lot more
needs to happen. While the bigger mills will continue to invest,
powerloom sectors are less forthcoming,” says DK Nair, Secretary
General, Confederation of Indian Textile Industry.
Encouragingly, the technology in the power loom industry is improving,
though it is still mostly second-hand machines from Japan and
Germany. One original shuttleless loom costs about Rs. 30-35 lakh
and with preparatory machines it will go to about Rs. 40 lakh plus
investment and one needs at least 10 of them to be competitive,
sadly, there are very few powerloom units which can afford that sort of
investment, yet as of today, around 85% of garment export from India
is based on powerloom and knitted fabric.

Wet processing remains a weakness
The processing segment has also suffered because of lopsided
Government policies in the past. Until 5 years back the Government
was giving excise exemption to what was called hand processors
while excise was being collected from organized processors, that is
why 60% of fabric produced in India even today is produced by hand
processors and organized processing in India till date is only about
10-15%, that too mostly with the mills.
Thankfully the Government has stopped the incentives to the hand
processors, but now complying with provisions of zero discharge is
almost impossible. Getting the best technology for processing is not
a problem, the main problem is the environment issue, and it is not
only about strict rules, it takes about 2 years to get the permission
to set up a processing unit… there is a local pollution board, a state
pollution board, a central pollution board, and then there are various
court decisions that have to be adhered to. “The only real solution
is to develop processing clusters near the sea shores with marine
discharge facility,” says Nair.



Of total fabric
production in FY
2011-12, 2,432
mn sq. metres was
produced by mill
sector and 58,932
mn sq. metres came
from decentralized
In the mill’s sector,
of the 2,432 mn sq.
metres produced,
1827 mn. sq. metres
is in 100% cotton,
535 mn. sq. metres
is blended fabric
and 70 mn. sq.
metres is 100% non
cotton fabrics.

Of the total 38,279
mn sq metres of
fabric produced by
the decentralized
powerloom segment,
11,958 mn sq
metres is cotton
fabric, 6,228 mn sq
metres consists of
blended fabric and
20,093 mn sq mtrs
is of 100% noncotton fabrics.

“It is true to a great extent that the processing sector is one of the
weakest links in the entire textile value chain. It happened due to
the historical past in terms of industrials and fiscal policy which had
discriminated against the modern technology driven; volume based
processing facilities in the country. However, with the changed fiscal
policy regime in the last couple of years, there is a steady growth in
the modern textile processing capacity in the country. With financial
assistance available under the TUF scheme and capital subsidy for
processing units in India, the situation has been undergoing a change
and processing sector may emerge as a stronger segment of the
textile value chain in near future,” says Oswal.
Some suggestions made by the industry on improving the processing
sector, while keeping check on environment regulations includereplacing conventional rapid jet dyeing machine with low liquor ratio
jet dyeing machine, replacing steam dryer with RF dryer for dyeing
yarn, replacing inefficient boilers with coal-fired water tube boiler
with bag-filter, replacing ordinary submersible pump with an energyefficient ones, installing additional fourth effect caustic recovery
plants, using naphtha-based gas turbine with waste heat recovery
boiler (cogeneration), monitoring for heat recovery potentials and
recovery and reuse of waste water in fabric dyeing.

Skilled labour migration and
commitment will seriously hamper
While cheap labour and strong entrepreneurial skills have always
been the backbone of the Indian Apparel and Textile Industry today,
many in the industry feel that the first and the foremost hindrance to
growth today for mill sectors is the crisis situation of availability and
commitment, due to the policies like NREGA which has perpetuated
the absenteeism culture of the workforce. The industry stalwarts are
pushing to expedite labour law reforms. In the meanwhile availability
of skilled workforce is also a concern. “The recent skill development
initiatives announced by the Government have been welcomed by
the industry as a step in the right direction,” said Oswal.

High power and transaction cost,
erode competitiveness
For an industry that is already facing inherent problems, the
continuing shortage of power mostly in south India and hike in power



The percentage share
of mill’s sector in total
fabric production was
3.96% in FY 2011-12.

The combined
installed capacity
of the three largest
components in
the man-made
fibre segment –
Viscose staple fibre,
polyester staple
fibre and polyester
filament fibre is
3735.54 mn kg of
which production is
of 2531.89 mn kg.

Exports of Indian
MMF textiles scaled
an all-time high
of US $ 5,699 mn
in 2011-12, as
compared to US $
5,013 mn in 201011, registering a
year-on-year growth
of 14%.

cost in other states is a matter of grave concern. Competitiveness of
the industry depends on many factors and there have been demands
from big players to introduce power sector reforms to make power
available at internationally competitive cost.
Another major concern for the industry is the relatively higher
transaction costs compared to other countries with whom India is
competing in the export markets. Transaction cost, which includes
cost for documentation, customs clearance, port and terminal
handling and inland transport and handling cost for exports in
India stands at US $ 945 per container as compared to US $ 500
per container for China. The factors that led to the relatively higher
transaction costs are multiplicity of rules and regulations, inadequate
infrastructural facilities and thus higher inland transportation costs
and higher port and terminal charges, rule-bound administrative
procedures, practices, amongst others. Hence in addition to
addressing the various other trade policy issues, reduction of
transaction costs is another priority area that needs to be addressed.

Spinning of cotton yarn will lead us to
The one segment we are really good at is spinning, because that is
the only segment where there was no handloom sector, no excise
issue, so proper industrial set-up could be established from the
starting. Today, we are the second largest producer of yarn in the
world, second only to China. With China decreasing their yarn
production due to increasing cost, India is the ideal choice of country
to increase yarn production. The Indian industry has 34 million cotton
textile spindles for manufacturing cotton yarn which accounts for 70%
of India’s textile exports. China has 40 million cotton spindles.
Major expansions are happening in spinning. Interestingly, a major
reason for bigger investment in spinning also stems from the fact that
it is less labour intensive and technologies for automation in spinning
have brought success for many. The target is to cross yarn production
of China by 2020.

MMF segment needs more attention
In man-made fibre, the problem is that we have very few big
producers of the yarn – Reliance Industries and Indo Rama in
polyester and Grasim in viscose. In fact, in the case of polyester

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