Boosting exports in Apparels and Garments sectors

Overview of Indian textile industry India Textile Industry is one of the leading textile industries in the world. Though was predominantly unorganized industry even a few years back, but the scenario started changing after the economic liberalization of Indian economy in 1991. The opening up of economy gave the much-needed thrust to the Indian textile industry, which has now successfully become one of the largest in the world. India textile industry largely depends upon the textile manufacturing and export. It also plays a major role in the economy of the country. India earns about 27% of its total foreign exchange through textile exports. Further, the textile industry of India also contributes nearly 14% of the total industrial production of the country. It also contributes around 3% to the GDP of the country. India textile industry is also the largest in the country in terms of employment generation. It not only generates jobs in its own industry, but also opens up scopes for the other ancillary sectors. India textile industry currently generates employment to more than 35 million people. Indian textile industry can be divided into several segments, some of which can be listed as below: Cotton Textiles Silk Textiles Woolen Textiles Readymade Garments Hand-crafted Textiles Jute and Coir

Current Scenario The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to the country's gross domestic product (GDP) and 17 per cent to the countrys export earnings. The industry provides direct employment to over 35 million people and is the second largest provider of employment after agriculture. Fabric production rose to 60,996 million sq meters in FY 2011 from 52,665 million sq meters in FY 2007. Production of raw cotton grew to 32.5 million bales in FY11 from 28 million bales in FY07, while production of man-made fiber rose to 1,281 million kgs in FY11 from 1139 million kgs in FY07. Production of yarn grew to 6,233 million kgs in FY11 from 5,183 million kgs in FY07. India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5 per cent to 8 per cent and reach US$ 80 billion by 2020.Exports of textile grew to USD26.8 billion in FY10 from USD 17.6 billion in FY06. Indias textile trade is dominated by exports with a CAGR of 6.3 per cent during the same period.

STRATEGIES TO BOOST EXPORT

Boosting garment exports needs to combine the tactics for winning a short distance race as well as strategies for winning the long distance run. This indeed is a tall order. The macro strategies shall revolve around extricating India from the 'stuck in the middle' position. India's advantage is undoubtedly in its own 'package programme' using Indian cotton, silk, linen, jute, wool and synthetic fabrics, rather than using only imported fabrics based on CMT. India's major strength also emanates from its variety of handcrafted skills, design inspiration and creativity of its professionals and workers. The ability to print, work with small quantities and ensure rapid product development are essential ingredients of the current value chain. It has become abundantly clear that if these areas are upgraded and strengthened, India has the potential to develop competitive advantage. The key to such upgradation is in treating India's entire 'textile complex' of yarn, fabrics, processing facilities and garment making as part of an overall system and integrating the technology levels, product mix options etc. with value added garment marketing. The essential micro and macro level strategies are now discussed.

Micro Level Strategies a) Backward integration: Because of the lack of modernisation and technological advancement in the fabric sector, the inherent strengths of a versatile fabric base have not moved into building a long-term favourable position. Fabric quality and availability, being pointed out as major dissatisfiers, are arising out of outdated technology in weaving, lack of modernisation of processing and finishing technology including building in necessary eco-friendliness and international quality standards. Limited quantities ordered in frequent spells are going to be more the order of the day in garment imports by major destination markets. Here, modern processing and finishing technology supported by quick response manufacturing, which helps a number of companies to project unique selling propositions based on the same have become most important for garment exporters. These processes include high quality bleaching, washing, continuous dyeing, variety of finishes, coatings, zero-zero shrinkage and width control. There is a case for large garment exporters or a consortium of small and medium garment exporters to integrate backwards in order to reduce turn-around time,

maintain secrecy of processing recipes, for ensuring consistency and cost control. A number of companies are now examining the feasibility of backward integration though some exporters hold the view that all these operations brought under the umbrella of a garment exporter could make it huge and bureaucratic reducing the speed and efficiency in the longrun. b) Fabric quality assurance: As fabric constitutes a lion's share of the unit cost of garments, a great deal of attention has to be paid for quality control at the fabric level. While that the garment exporters ensure in process quality control for garments and finished garments inspection, a proper quality assurance system for garment exports should go backward and initiate the quality control, at least from the weaving and processing stage to garmenting. Offering this integrated value is going to help in using fabric element as a source of differential advantage. c) Manufacturing and product quality assurance: A large number of problems in manufacturing and product quality arise from problems in patterns and specific problems in certain kind of products, owing to lack of technical understanding. CAD-CAM systems would become part of every garment exporter's operating environment. Another area which affects manufacturing quality is lack of sufficient supervision at the floor level. As revealed through discussions with companies abroad, supervisor-worker ratio need to be improved in India to reach international standards. Supervisory training is a key ingredient in upgrading manufacturing and for achieving productivity and quality. Systems and practices are other major areas which need attention. One of the major problem areas is the control of information and material flows on the production floor. From the research findings it is clear that the competitors have moved to 'long-term favourable position' mainly because of superior manufacturing and product quality. Upgradation of technology on a continous basis is essential in today's times. Quality is a multi-dimensional construct and, therefore, from quality of design to quality of presentation and all such intrinsic and extrinsic quality elements ultimately build up the manufacturing and product quality levels. d) Management of lead time. Lead time is a major deterrent in dealing with India for many importer segments. The exporters have to make efforts to reduce the lead time in a planned manner, from the stage of order placement to delivery. Every exporter shall undertake a delivery and process analysis for benchmarking operations and for reducing delays. The

aspect of time in order management offers considerable opportunity for developing competitiveness, especially because of the propensity of the buyer to order close to the season and during the progress of the season. e) Product diversification: Building competitive advantage also envisages product

diversification to move from particular season to all seasons and budget/discount and mass merchandising stores to brand manufacturer importers like Liz, Levis, etc., and better department stores and speciality chains. Structured garments, outerwear, nightwear, workwear, protective wear, corporate and institutional wear, lingerie, higher gsm knits, and specialised knits offer new areas of growth. f) Channel selection and specialization: Channels constitute one of the most important aspects of the marketing variables and most often the exporters fail to make a perfect match with their proposed distribution and retail channels. As was established by the research, there is neither any specialisation shown in 'fashion' or 'basic' garments nor any specific match shown with department stores, speciality chains etc. Channel selection, relationship marketing with the buyers, and a complete high level service package are essential ingredients for developing ,competitive advantage. The exporters also heed to specialise in some specific channels in order to gain sustainable long-term advantage. g) Design advantage and product development support: Indian yarn-dyed fabric designs and multi-structured fabrics have caught the fancies of many manufacturers and retailers around the world. The multi-coloured prints from India are also favourites. The summer collections are not considered complete by many companies unless Indian yarn-dyed wovens are included. A well thought-out strategy has to be initiated to preserve this and convert this as a 'marketing advantage'. There are many alternatives' as to how this can be achieved. One alternative is for Indian exporters to work in close collaboration with designers to promote collections using Indian fabrics. Alternatively, strategic alliances with designer groups abroad may help. Yet another approach is using 'piggyback' riding on famous designers by motivating them to use Indian fabrics in their collections. Indian design advantage and inexpensive product development support can be used as elements of advantage effectively.

h) Market-fashion information and computer network for tracking: Improving the level of information availability is part of building competitive advantage. Information and knowledge are now considered major assets in developing competitive advantage. While the exporters require timely fashion and market information, importers require considerable information about Indian fabrics, accessories, costs, productivity, etc. There is also need for continuous information flow on tracking of purchase orders, production scheduling, progress of raw material sourcing and several other related elements which today need the support of computer networking for online information systems and management. The exporters shall incorporate the modem information technology in their working systems and practices, including MIS, e-mail, internet etc. i) Branding. As a 'creative marketer of quality apparel', the Indian garment exporter needs to explore the most important value adding element of marketing, namely 'branding'. Both wholesale and retail branding permit better unit value realisation and premium for creativity. A number of Indian exporters have attempted to take this route and have met with considerable appreciation in unit value realisation apart from brand loyalty which brings premium prices as well as upgradation of quality. Acquiring brands and building them in target markets or even creating new brands where possible are strategies to achieve value added marketing, helping in the pursuit of competitive advantage. j) Technological upgradation. In order to occupy the slots being vacated by the South East Asian countries, there needs to be a considerably higher level of investment in garment manufacturing technology in tandem with the wage levels, productivity requirements and cost-benefit. Investment in manufacturing facilities and modernisation are going to be critical ingredients for success in the post-MFA scenario. Upgrading skill and technical expertise. Though the Indian labour is abundant, their skill level on high speed machines has been found to be insufficient. Intensive training to upgrade skill in tune with technological advancement is a must for competitive advantage. Every exporter needs to strengthen the onthe-job training facilities in the export units. Enterprise oriented in-house training programmes shall become part of every large enterprise.

Macro Level Strategies

a) Strategic gaps and strategic fit: Abundant labour and plentiful cotton are not enough anymore to achieve competitive advantage in garment exports. A study by the Zurich based International Textile Manufacturers' Association (ITMA) points towards the conclusion that India would just remain as a cotton fibre source for the mills and fabric producers in the least developed countries on completion of the MFA phase-out, if the transition period is not used to develop competitive advantage. Cost leadership is susceptible to price pressure and without quality and timely delivery, it has no meaning. The new positioning has to be aimed at moving from comparative advantage to competitive advantage, where fabric quality, delivery, speed, productivity of labour and competitive prices will become the elements of the value chain and that too of the entire textile complex to match that of importers leading to sustainable competitive advantage. There are a number of positioning distances that have to be bridged before the route to competitive advantage can be achieved. The current 'Q namely 'quota' driven mentality, has to be replaced by another 'Q namely, 'quality'. The quality has to be consistent every time. On-time delivery has to come on top of the mind as a major factor. Necessary manufacturing capacity and productivity have to be built in. 'Speed' is going to be of crucial importance in the times ahead. b) Communication of fibre to fashion approach: It is necessary to highlight the success stories of Indian garment exporters in the destination markets through a well coordinated publicity and advertising campaign. Owing to poor communication in general about the impressive strides India is making in textile and clothing, there is hardly any appreciation of India's higher potential and value especially at international for a where garment leaders meet. There is no documented research, on Indian garment companies to look up to, for reassurance in the overseas importing community, especially considering the small scale nature of the industry. The new strategy for competitive advantage should communicate the changed image, through pictures of manufacturing facilities, successful designs from India, modern textile factories and processing houses, etc., without which the image of the 1970s and 1980s might persist. The idea shall be to market the power

house of the textile complex in India from fibre to fashion. Launching of an advertising campaign projecting 20 to 25 top garment exporters, their factories and strategies could help in bringing about substantial perceptual change in target markets, if persisted over a period of time. In the same communication campaign, the potential of the domestic market can also be highlighted for driving home the message of twin advantages: a competitive country to source from and a large domestic market to expand their brand reach. c) Development of powerloom fabric sector: The Indian garment export industry's extreme dependence on the powerloom sector is likely to continue in the absence of a viable alternative. The powerloom sector is seen as cost effective mainly because of absence of duties and other financial obligations of the organised mill sector. On the one hand, if the structure and modus of the powerloom sector is drastically changed, the competitiveness of the garment sector may suffer. On the other hand, without effecting a radical change in the quality level of the powerloom sector, there cannot be substantial improvement in garment exports. Quality from the point of view of yarn, cone-dyeing, printing etc. needs to be considerably improved through appropriate financing schemes for the powerloom sector as well as by establishing common facilities. Today, because of the dependence of the powerloom on non-banking channels for finance and in the absence of proper dyeing facilities, there are many problems in the consistency and acceptability of fabric quality. The price is also highly inflated because of the interest burden and high rejection rates of fabrics. Development and modernisation of the powerloom sector forms a pre-condition for the success of the garment export efforts. In the long-term, the powerlooms need to be organised as modern loom clusters with a centralised hub of various support facilities in a mono-product zone format. d) Apparel fabrics from organised mill sector: The fabric requirements of the garment export sector have been mainly met from the powerloom fabric sector. However, the advantages of powerloom fabric production mainly emanate from the lack of financial obligations, as faced by the organised mill sector. With the limited fabric range produced by the powerloom sector and the inherent quality problems, the garment sector cannot improve its performance either in terms of unit value realisation or in terms of diversification of products. The mill sector should be made to work in tandem with the

garment export sector, thus orchestrating a 'partnership' approach in value added marketing. A comprehensive approach needs to be formulated, incorporating the organised mill sector into the overall garment export strategy so that upgradation in quality, higher unit value realisation and product diversification could be accelerated. e) Modernisation of garment export industry and backward integration: There is no doubt that modernisation of the garment manufacturing units, powerloom fabric producers and fabric processors is critical for the quantum jump of the garment sector, in terms of quality and growth. Fabric processing, finishing, washes, lamination, coatings etc. have become essential in the whole value chain of garment manufacturing and marketing. However, the thrust area is better needles, machinery and special purpose machines as well as improving production systems and practices to enhance functional quality and productivity. The specific areas of backward integration would envisage for knit fabrics, compacting, washing, and printing equipment. In the case of woven garments, dyeing facilities washing plants, fabric brushing, coating facilities etc. need to be considered as part of backward integration. The remarkable benefits of vertical integration in the knitwear sector need not be over emphasised. In the case of the woven garment sector, the integration needs to be mainly with fabric processing, fInishing and such other value adding activities. f) Infrastructure: The infrastructure of many of the garment clusters leaves much to be desired. For instance, Okhla Industrial Estate in New Delhi, which has a high concentration of garment units in Delhi has very poor infrastructure of roads and electric supply. Similar problems exist in a number of places. One good example to emulate is that of the Jabel Ali Export Processing Zone in Dubai, which has one of the best port facilities in the world is well recognised, for the excellent export infrastructure. From India, garments have to be often airlifted because of delays which are associated with infrastructure. This leads to high incidence of costs and erosion of profitability, through delays. As the garment manufacturing centres in India have acquired: a certain level of specialisation, it is desirable to develop infrastructure in each of the production centres related to the, specialisation of the production centres.

g) Export promotion. The export promotion of the apparel sector in the hands of the AEPC has been mainly focusing on quota, administration, buyer-seller meets and India Garment Fair. Such export promotion has limited scope in influencing fashion cues. A new approach has to be formulated. The fairs should have both 'fabrics for garments' and 'garment stalls' under the same roof, as marketing of garments is inextricably linked to fabrics from India. Product based garment fairs need to be organised, for example, 'sportswear in Bangalore' or 'men's wear in Madras' and 'women's wear in Delhi or Bombay'. In such fairs, manufacturers of relevant fabrics shall also be given stalls. It has to be emphasised that India's main strength is the availability of fabrics within India and the abundance of inexpensive labour. Both these essential aspects have to be combined to make a comprehensive marketing effort. With only imported fabrics, India will become a CM (cut-make) country, depending entirely upon productivity. Combined groups of 'fabric manufacturers and garment exporters' have to together make presentations to select overseas buyers for bringing sharp focus to India's capabilities.