The Government and industry advocates should continue to push the industry to

grow in new directions, to remain technologically advanced and to make

production even more economically viable, opines Senthilkumar M and S
Sivakumar..

Textile industry is the second largest industry in the world only next to agriculture.
It forms the backbone of the economy of developing nations, viz, India, China,
Pakistan, Bangladesh, etc. Textile industry comprises of a wide range of products
right from fibre formation up to the production of readymade garments.
In India, the textile industry contributes substantially to the foreign exchange
earned by the country. The export market consists of a wide range of items, viz,
cotton yarn and fabrics, man-made yarn and fabrics, wool and silk fabrics, madeups and a variety of garments. India's textile products, including handlooms and
handicrafts, are exported to more than hundred countries. However, USA, EU
Member States, Canada, UAE, Japan, Saudi Arabia, Republic of Korea,
Bangladesh, Turkey, etc are the major importers of our textile goods.
India's global textile share is 4 per cent, while the country captures 2.8 per cent of
the world's apparel market. In 2005 - 06, the sector exported goods worth US$ 17.1
billion - up from US$ 14 billion in 2004 - 05 - or 16.6 per cent of the country's
total exports. Among those goods were ready-made garments, cotton textiles, manmade fibre textiles, wool and woollen goods, silk, handicrafts, coir and jute.
With regard to the industry's structure, in its 2005 International Textile Machinery
Shipment Statistics report, the International Textile Manufacturers Federation
(ITMF), Switzerland, noted India's installed spinning capacities, as reported in
2004, numbered 37.5 million short-staple spindles - second in the world only to
China, which had 67 million short-staple spindles - and 9,90,000 long-staple
spindles - third in the world behind China, with 3.6 million long-staple spindles,
and Italy, with 2.6 million long-staple spindles. Open-end machine capacity that
year totaled 501,140 rotors, third behind China and Russia. In the weaving sector
that year, Indian firms reported 9,640 shuttleless looms and 90,230 shuttle looms.
Capacities in 2004 for filament weaving looms and wool weaving looms were
1,500 and 7,300, respectively.
Spinning
The production of spun yarn, including the production of yarn from SSI (small
scale industry) spinning sector was 3046 million kg in 1999 - 2000 and 3,458
million kg in 2005 - 06 (Table 1). The contribution from the SSI sector has been
about 5% of the total production of spun yarn.

Table 1

Cotton and its blended materials form about 90 % of the total textile production
(Table 2). Majority of the yarn production falls in the coarse and medium count
ranges, ie, from 10s to 40s. Hosiery yarn (knitting yarn) count normally ranges
from 10s to 30s Ne. It is understood that majority of coarser count yarn is utilised
for knitting, ie, for making garments/inner wear. However, fine count range is
preferred for production of sarees, dhoties and superfine shirting for weaving.
Depending upon the end use, various treatments, viz, twisting, singeing,
mercerising, etc are given to the yarn at various stages. Apart from the regular
yarns, fancy yarns like slub yarn, neppy yarn, multi-coloured yarn, cork screw
yarn, etc are also produced for a few end uses.
Table 2

Weaving

Fabric production in different sub sectors has been reported below. The cotton
fabric production is the major contribution for textile exports. The production of
fabric is good at the moment and it has been a continuous improvement for the past
two years. As of March 31, 2006, the powerlooms sub-sector - which produces
various cloth products, including greige and processed fabrics - consisted of
4,30,000 units with 1.94 million powerlooms.
The ministry projected the number of powerlooms to rise to 1.95 million in 2006 07. Of the total cloth produced in India, 62 per cent of it came from the
powerlooms sub-sector (Table 3), and the ministry estimates that more than 60 per
cent of the country's cloth exports originated from that sector. With its employment
of 4.86 million workers, the powerlooms sub-sector comprised approximately 60
per cent of total textile industry employment. Decentralised hosiery sector itself
contributes with a 15 - 20% growth every year for garments.
Table 3

Apparels
The apparel industry is one of India's largest foreign exchange earners, accounting
for nearly 16% of the country's total exports. The 1996 Indian textile exports
approximately amounted to Rs 35, 000 crore of which apparel occupied over Rs
14, 000 crore. It has been estimated that India has approximately 30,000
readymade garment manufacturing units and around three million people are
working in the industry. Today not only is the garment export business growing,
enthusiasm in the minds of the foreign buyers is also at a high. Today many leading
fashion labels are being associated with Indian products. India is increasingly
being looked upon as a major supplier of high quality fashion apparels and Indian
apparels have come to be appreciated in major markets internationally. The credit
for this goes to our exporter community.
Consistent efforts towards extensive market coverage, improving technical
capabilities and putting together an attractive and wide merchandise line have paid
rich dividends. But till today, our clothing industry is dominated by sub-contractors
and consists mainly of small units of 50 to 60 machines. India's supply base is
medium quality, relatively high fashion, but small volume business.
Profitability
Spinning mills have on an average 20,000 spindles each in India. It is small and
medium scale unit when compared with global competitors. Major weaving sectors
are decentralised and 90% of looms are auto looms. Further, a few shuttleless
looms are secondhand machines which can run at 60 - 80% efficiency of new
machine. Because of that reason the spinning mills and weaving mills profit
margin in the range of 5 - 10%. Similarly, each knitted garment unit has less than
500 sewing machines in India. Profitability of knitting sector is in the range of 10 20%.
Textile products produced from different countries, Profit margin is not much
difference when we consider single spindle or loom and sewing machine. The
reason for cheaper price from developed countries is mass production. Developed
countries like China has been installing an average of 1,00,000 spindles per

spinning mill. Similarly, garment unit has sewing machines in thousands. New
installations of weaving machines are a majority of shuttleless looms. These looms
are highly productive, entailing nearly 10 - 15 times more production than auto
looms. India is yet to reach this level and is in need of huge investment for hightech machines.
Competitive analysis
New machine installation or existing unit expansion is based on market scope for
the product. Product cost is the key to capture the market. Product cost is derived
from raw material cost, manufacturing cost and profit margin. As far as spinning is
concerned, raw material cost depends upon the material availability, seasonal
change and transport. Similarly, yarn cost in weaving and knitting is the deciding
factors to assess the raw material cost. The factors like capital investment (interest
and depreciation), labour & power cost and material waste expenses are
influencing the manufacturing cost.
Yarn and fabric manufacturing costs of different countries were tabulated. It gives
detailed information about various factors which are influencing the manufacturing
cost. India has low labour cost and high power cost in yarn and fabric
manufacturing. India has lower yarn index than all mentioned countries and
comparatively with china.
Industry trends
India's textile industry has grown rapidly since the Multi-Fibre Arrangement ended
in 2004, according to the Indian Government. Textile exports to the United States
and Europe have risen 26 per cent and 18 per cent respectively. China continues to
lead in terms of textiles and apparel exports. China's global textile and apparel
share in 2005 was 24.7 per cent - worth US$115.1 billion - in comparison to India's
3.4-per cent share, worth US$ 16.1 billion.
During the year 2005 - 06, the share of textiles exports including handicrafts, jute,
and coir in India's total exports was 16.63%. India's textiles exports have registered
strong growth in the post quota period. Textiles exports grew from US$ 14 billion
in 2004-05 to US$ 17 billion in 2005-06, recording a growth of 21.77%. Therefore,
the Government has fixed a higher target of US$ 19.73 billion for the year 2006 07.
The number of spindles installation in India has been on the rise since 2000 - 01 from 37.91 to 39.03 million in the year 2002 - 03. Then it came down significantly
during the year 2003 - 04 due to the closure of a large number of small scale
spinning units that year. From then onwards, it has has been steadily increasing
every year. Similarly, spinning machine utilisation is increasing every year. This is

due to the latest technological developments and utilisation of labour resources.

The same trend has followed for weaving sector. Looms installed in India came
down to 119 thousand in 2002. Again it went up and machine utilisation increased
up to 70% in the year 2006 (Table 5).
Textile industry growth rates for the last 10 years are given in the Table 6. Overall
industry growth rate has come down from the year 1995 to 2002. Then it increased
and now is being maintained at a constant rate. In recent years spinning and
knitting production and its growth rate are increasing rapidly.
Spinning mills were flourishing in the year 1995 - 96. After 10 years again the
trend is coming back. In order to sustain in the market, today industries are ready
to squeeze their profit margin to compete in the global market. In order to
compensate the annual turnover, they are forced to go mass production. This trend
is the most applicable in garment sectors.
Spinning and weaving
There were 1818 cotton/man-made fibre textiles mills (non-SSI) in the country as
on January 31, 2007 with a capacity of 35.37 million spindles, 4,48,000 rotors and
69,000 looms. The capacity utilisation in the spinning sector of the organised
textiles mill industry ranged from 80% to 93% during the period 2000 - 01 to 2005
- 06, whilst the capacity utilisation in the weaving sector ranged from 41% to 63%
during same period.
The production of spun yarn, including the production of yarn from SSI (small
scale industry) spinning sector was 3,046 million kg in 1999 - 2000 and 3,458
million kg. in 2005 - 06. The contribution from the SSI sector has been about 5%
in the total production of spun yarn.
Garments
Garments account for approximately 45% of the country's total textiles exports.
During the year 2004 - 2005, readymade garment exports were US$ 6 billion,
recording an increase of 4.1% as compared to the corresponding period of 2003 04. During 2005 - 2006 the readymade garment exports have amounted to US$
7.75 billion, recording an increase of 28.69 % over the exports during 2004 - 2005.
During the first quarter of 2006 - 2007 the readymade garment exports have
amounted to US$ 2.17 billion, recording an increase of 15.70% over the exports
during the corresponding period of 2005 - 2006.
The major competitors in this segment of the market are developed countries,
Asian Tigers like Korea, Taiwan, Hong Kong and Singapore, developing countries
like Indonesia, Thailand and Malaysia and neighboring countries like Bangladesh

and Myanmar and China, of course.

In order to ensure quality of garment exports, the SSI tag on the garment industry
shall be removed. Present equity participation of 24% by the foreign partners needs
to be reviewed and joint ventures with majority share holding as well as technical
collaborations should be allowed. Labour laws need a remodeling and
liberalisation. A research, development and training institute focused on post
garment processing like washing dyeing, etc is also needed. Indian government
should negotiate higher quotas from USA/EEC in accordance with its sizes and
capabilities. Measures like streamlining Internal Quota Administration and freesing
minimum export prices is crucial for the future of the garment export industry.
Factors affecting the market
Every industry has its own ups and downs. Textile industry is no exception. There
are many factors, which influence the market and the growth rate of textile sectors.
Major factors are infrastructure, volume of production, labour laws, availability of
manpower, power tariffs, fluctuation of currency rates and government policies.
Further, bulk production mainly depends on technology of the machine, utilisation
of the labour resource, financial assistances, etc.
Structural weaving and processing weaknesses, lack of capacity in India's textile
machinery manufacturing sector, and a fragmented garment industry as well as a
fragmented and technologically slow textile-processing sector are also the major
factors deciding the competitiveness of Indian textile industry in the global market.
Government policies such as subsidy, duty drawbacks should assist more weaving,
processing and apparel industries in near future.
Whatever said and done, the fact remains that India's textile industry is prominent
in the country's economy as well as globally. The Government and industry
advocates should continue to push the industry to grow in new directions, to
remain technologically advanced and to make production even more economically
viable. By doing so, the industry will be able to adapt to global changes and to take
on whatever challenges it faces and competitors that
may come its way.