Textiles Clothing

CONTENT
Chapters Particulars
EXECUTIVE SUMMARY Chapter I
Introduction 1.1. Background 1.2. 1.3. Methodology Limitations & Constraints
Page No.
i-vi
1-2 2-3 3
Chapter II
Textile and Garments Sector Global Scenario 2.1. 2.2. 2.3. 2.4. 2.5. Background Structure of Global Textile & Clothing Market Impact of Global Meltdown on Indian Economy
Prospects for Indian Textiles and Garments sector
4 4-6 6-8 8 8
The Changing Scenario
Chapter III
Indian Textile & Garments Sector A Review 3.1. 3.2. 3.3. Background Structure of Indian Textile Industry Indias Textile & Garments Trade 9-10 10-14 14 14-15 15-16 16-17 17-18 18-20
3.3.1. Indias Textile Exports 3.3.2. The Composition of Indian Textile Exports 3.3.3. Direction of Trade 3.3.4. Indias share in World Textile Trade 3.3.5. Indias Textile Imports
Chapter IV
Performance of Indian Textile & Garments Sector 4.1. 4.2. 4.3. Introduction Textile and Garments Sector: A Profile Textile and Garments Sector: The Organized Factory Sector
I
21 21 22 22-23
4.2.1. Textiles and Garments Clusters in India
4.3.1. Textile and Garments Sector Share in Total Manufacturing 4.3.2. State Level Distribution of Textile and Garments Sector 4.3.3. Labour Productivity in the Organized Factory Sector: A State level Study 4.3.4. Estimation of Partial Productivity and Total Factor Productivity Growth: Textile and Garments Sector All India Analysis
23-24 24-25 25-27 27-29
Chapter V
Field Survey Findings 5.1. 5.2. 5.3. 5.4. 5.5. 5.6. 5.7. Profile of Textile Manufacturing units Implementation of ISO Its impact on Business Turnover of Textile Manufacturing Units Profitability of the Manufacturing Units FDI and ICT Usage Employment Profile Trade Related Information 30-31 31 31 32-33 33 33-34 34 34-36 36-37 38 39 39 39-40 40-41
5.7.1. Comparison with other countries in the export Market 5.8. 5.9. 5.10. 5.11. 5.12. Domestic Market Manufacturing Cost Related Details Price related Factors Factors affecting Productivity Factors responsible for Competitiveness of the sector
5.13. Measures adopted by the Industry for improving competitiveness in domestic and export market 5.14. Requirements for Competitiveness enhancing Productivity &
41
5.15.
Region-wise findings of major Problems faced by the Textile Sector

II
41-42
Chapter VI
Recommendations
43-46
REFERENCES
47-48
Annexure
Annexure - 1 : Survey Questionnaire Annexure - 2 : List of Units Contacted for the Study Annexure - 3 : (Methodology Adopted for Partial and Total Factor Productivity Estimations)
49-57 58-60 61-63
III
LIST OF TABLES
Table No. 2.1 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 Particulars Year on Year Growth in Secondary Sector Structure of Indian textile Industry Installed Capacity: Textile and Garments Sector Sector-wise Production of Cloth (millions sq. meters.) Production of Fibres and Yarn Production of Cloth (millions sq. mtrs) Textile Exports (Rs. millions) Textile Exports (value in US $ millions) Country-wise Export of Textile Items by India India's Share in World Export of Textile and Clothing (Billion US $) Item wise Textile Imports by India (Rs. million) Country-wise Import of Textile and Clothing by India (2001-02 and 2007-08) Textile and Garments Sector: Registered Manufacturing (All India) Textile & Garments: Registered Manufacturing (All India) Share of Textile & Manufacturing in India Garments Sector in Total Page No 7 10 11 12 13 14 15 16 17 18
3.10 3.11
19 20
4.1
22
4.2 4.3
23 24
IV
4.4 4.5
State wise Share of Textile and Garments Sector (2004-05) The Change in Share of Major States in the Textile & Garments Sector Labour Productivity Growth (%) Partial Productivity Estimates for Labour and Capital inputs Labour, Capital, and Total Factor Productivity Growth Index of Labour, Capital, and Total factor Productivity Growth Relationship between Size and Quality Accreditation Annual Turnover of Textile Manufacturing Units : State wise Average (Rs. Lakhs) Average Profitability of the Manufacturing Units (19912000 period) Average on Profitability of the Manufacturing units (20002008) Extent of ICT usage in firms operation/production Share of Exports earnings to Total Sales Competitive advantage of India in the Export Market Import of finished products Factors hindering Export of textile products (%) Factors hindering the quantity of imports (%)
24 25
4.6 4.7
26 27
4.8 4.9
28 29
5.1 5.2
31 31
5.3
32
5.4
33
5.5 5.6 5.7 5.8 5.9 5.10
33 34 35 35 35 36
5.11 5.12
Domestic Market share of the Textile units (%) Share of Domestic Manufacturing units sales to Total sales for the
36 37
5.13 5.14 5.15 5.16
Nature of Competition in the Domestic Market Cost competitiveness of the firm during the last five years Range of increase in Cost Competitiveness Ratio of various Cost Components in Total Cost of Production Response % Labour productivity of the unit during the last five years
37 38 38 38
5.17
39
VI
Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector
EXECUTIVE SUMMARY
Introduction The global textile and clothing industry occupies an important position in the total volume of merchandise trade across countries. Developing countries account for little over two-third of world exports in textiles and clothing. In the global textile market the major importers are USA, European Union and Canada. Asia has been the principal sourcing region for imports of textiles and clothing by both USA and European Union. India accounts for 22 per cent of the worlds installed capacity of spindles and is one of the largest exporters of yarn in international market. Indian industry contributes about 25 per cent share in the world trade of cotton yarn. It has second highest spindleage in the world after China. Indian textile has the highest loomage (including handlooms) in the world and contributes about 61 per cent to the world loomage. The contribution of India is about 12 per cent of the world production of textile fibres and yarns (including jute). India is the largest producer of jute, second largest producer of silk, third largest producer of cotton and cellulose fibre/yarn and fifth largest producer of synthetic fibres/yarns. The textile sector also has a direct link with the rural economy and performance of major fibre crops and crafts such as cotton, wool, silk, handicrafts and handlooms, which employ millions of farmers and crafts persons in rural and semi-urban areas. India produces a variety of textiles and clothin items. India is rich in traditional workers adept at value-adding tasks, which could give Indian companies significant margin advantage. India has the largest area under cotton cultivation and is the third largest production of cotton in the world after China and U.S. a key raw material in the textile and garment industry, accounts for about 30% of the fabric cost and 13% of the garment cost. India has an abundant supply of locally grown long staple cotton, which lends it a cost advantage in the home textile and apparels segments. India is still a relatively small yet growing player in the global apparel market. Since the global economic recession seems to be easing, and new economies are growing as those of India, textile industry in India would grow provided it takes competition and innovation seriously. Structure of Indian Textile Industry Textile industry in India comprises mostly of small-scale, non-integrated spinning, weaving, finishing, and apparel-making enterprises. Such a structure arose due to the policies on tax, labour and other regulations that favoured small-scale, labour-intensive enterprises, while discriminating against large-scale, capital-intensive operations. There is a modern mill sector on the one hand and handloom and powerloom sectors on the other. Small-scale unorganized players dominate the industry, where the regulations are less stringent. Most of the units are in handloom sector and the employment is also the highest. On an average around 2 workers work in each handloom unit, thus making handloom sector mostly homebased. Based on the latest data available for the period 2007-08, power loom sector alone accounted for 62% of the total cloth production. However, the organized mill sector accounted for only 3% of the total cloth production during the same period and the quantity of cloth produced by
National Productivity Council, New Delhi
Page No.
it is continuously declining. The share of both handloom and mill sector has almost halved in the past decade. The rise in cloth production is due to positive growth rate in production of cloth by power loom and hosiery. This indicates the diminishing importance of handlooms in comparison to power looms. The handloom sector is continuously becoming marginalized. Further the share of cotton cloth in Indian cloth production was as high as 60% in 1995-96, though over the years its share declined gradually to 46% in 2004-05. However, the years 2005-06 and 2007-08 have shown an increase in cotton cloth production. This indicates that in the recent years there is a renewed interest for cotton cloth production. Indias Textile Exports The Textiles exports basket consists of Ready-made garments, Cotton textiles, Textiles made from man-made fibre, Wool and Woollen goods, Silk, Handicrafts, Coir, and Jute. Further, the export basket consists of variety of items: cotton yarn and fabrics, wool and silk fabrics, man-made yarn and fabrics, etc., of which man-made textiles and silk showed the highest growth rate. The Textile Policy of 1985 heralded a new beginning for the textile industry by focusing on the deep-rooted structural weaknesses. The reforms in 1990s further boosted the textile industry. The textile industry was de-licensed and reforms on fiscal and export front were pursued. As a result, Indias Textile export during the financial year 2007-08 have reached Rs.923940 million from Rs.154836 million in 1992-93 marking an annual growth of 13 per cent per annum. This period also witnessed drastic decline in the share of textile export in total exports as it declined from 29% of total exports in 1992-93 to 15% in 2007-08. Indias Textile Imports One of the significant aspects of Indias textile sector is that it has relatively negligible import content. Textile imports increased from Rs.13426 million in 1992-93 to Rs.139140 million in 2007-08. Major markets for textile import, are Chinese Republic, China Taipei, Korea Republic and middle and low-income countries, accounting for around 36% of imports in textiles and clothing. Undoubtedly, the global textile and clothing industry is growing significantly in the post quota regime. The extent to which Indian textile and clothing industry can improve its position in the global market depends on its potential competitiveness. Productivity Growth in Textile and Garments Sector One of the important aspects of the textile and garments industry is its contribution to employment. If at all it is believed that Indian textile and garments industry will grow by leaps and bounds during the post quota regime it is precisely because of its advantages in terms of labour productivity in relation to the prevailing wage rate. Among handloom, powerloom and mill sector, powerloom sector occupies a dominant position followed by the handloom and organized mills sector. As far as the labour productivity is concerned, it was the least for handlooms (877 sq.mtrs. per worker) as compared to powerlooms (5896 sq.mtrs.) and organized mill sector (1500 sq.mtrs.). Thus, it
Page No.
ii
is quite apparent that though the handloom sector provides the largest employment, it also has the lowest labour productivity levels. Exports from the handloom sector constitute a negligible 2% of the total textile exports from India. In fact, this share has declined from 5% in 1995-96. If the production levels are not improved, handloom sector may not be able to withstand the competition owing to globalization though it occupies a significant position in terms of employment, flexibility of small production, uniqueness, innovation and adaptability. Labour Productivity in the Organized Factory Sector Labour productivity (Gross Value Added per worker) growth estimated at 1993-94 prices for the textile and garments sector at the all India level has shown a declining trend over the years. In the recent years the growth pattern of labour productivity across the states appears to be skewed. In other words, the national growth in labour productivity in the textile sector is dominated by a few States. The States such as Haryana, Karnataka, Madhya Pradesh, Orissa, exhibit growth in labour productivity, which is higher than the national average in the recent years. The interstate disparity in the labour productivity growth in the recent years is certainly a concern. The States such as Andhra Pradesh, Haryana, J&K, Orissa, Rajasthan & Tamil Nadu etc. have shown better labour productivity growth in the recent years in comparison to earlier decades. This probably implies that the growth is concentrated in a few regions where the textile sector has some advantages either in terms of raw material availability or in terms of the availability of skilled manpower. Capital Productivity growth and Total Factor productivity growth during the last decade reveal secular growth trends with minor fluctuations at all India level. Findings based on Field Investigations From the field survey it is found that most of the manufacturing units (60%) have implemented quality accreditations such as ISO 9000, 9001, SA 8000 etc. The implementation has resulted in boosting their business. Turnover of the firms exhibited an increasing trend between 2003-04 to 2006-07, however, in 2007-08 it declined. Such decline in average annual turnover could be attributed to rising rupee phenomenon that dented the export margins of the textile sector. Very few (Less than 10%) manufacturing units reported the presence of Foreign Direct Investment (FDI). In the case of use of Information Communication Technology (ICT) in the firms operations, only 29 percent respondents confirmed to use it at various levels of operations. The average employment figures estimated for the textile manufacturing units under survey have shown a steady increase from 502 employees per unit during 2003-04 to 565 employees per unit during 2007-08. Except during the last year we notice consistent increase in employment across the units. The decline in employment reported during the last year indicates that the sector is facing problems due to increasing competition and the adverse effects on export from a rising rupee against dollar
Page No.
iii
during the first half of 2008 and the subsequent global economic recession and decline in global export demand during the second half of 2008. Very high proportion of manufacturing units (65%) reported that they are engaged in exports and the reported an increase in exports during the last five years. At the same time, only a small segment (32%) of the manufacturers is engaged in importing finished products to India. Major countries from where the finished products are imported are Germany, Japan, Netherlands, USA, Europe, Thailand, Malaysia, Korea, China and Hongkong. Cost competitiveness have been reported to increase by 63% manufacturing units during the last five years. Wages and salaries constitute less than 10% of total cost. All components of cost except raw materials and taxes were reported to increase in the range of 1-10% in the recent years. Quality of the present educational system for catering to the requirements of the industry were reported to be satisfactory by 56% units, quality of infrastructure (both social and physical) in the respective state was woefully short of the requirements. In the case of physical infrastructure, availability of Power and Road need to be improved. As far as Government interface with business/private sector is concerned, majority (68%) were not satisfied with interface. Recommendations It has been found that one of the major cost components in the production is the energy consumed during the production process that offsets the competitiveness of the sector. It is therefore suggested that the option of subsidizing unit rates of power or encourage the use of other viable options such as non conventional energy sources. There is a need to strengthen the availability of energy/power for the manufacturing units since the power outages are quite frequent. In view of such bottlenecks there is need for developing dedicated/captive power generating sources specifically for the major textile clusters. This necessitates the involvement of state level agencies, private partners, etc., to work out initially as a viable project on pilot basis for replication at a large scale. Other options could be to bring in other alternate sources of power supply systems such as renewable energy etc. Various financial incentive schemes are currently available for such applications. Though textiles and garments sector are already getting the benefit of various developmental schemes specifically in the SME sector, it is facing major threat from other competing countries such as Bangladesh, China etc., there is a need to further support the textile and garments sector. Vocational training through ITIs, Textile Design & Management Institutions specially in the area of Apparel Manufacturing, Quality Control and Designing needs to be encouraged so that skilled work force is available. | Page No. iv
Inter-state tax regime has to be simplified for textile goods movement as truck waiting time at each barrier is too long due to entry tax etc, increasing transit time which ultimately results in avoidable additional costs and burden to the buyer/ consumer. Quality and cost of production are the key factors for sustaining in the Post liberalization and free trade regime. Technology is critical, therefore, modernization of the units and up gradation of technology is imperative. Both advanced as well as indigenous technology needs to be integrated in the system. Since the manufacturing units are working on thinly spread margins and the cash flow is a major constraint for majority of the manufacturing units, there is need to work out time bound refund mechanisms from Technology Up gradation Fund (TUF) provided by Government for the modernization of the units. In order to offset the loss of international competitiveness of the Indian Textile and garments sector due to the exchange rate fluctuations, Government needs to carry on with reimbursement schemes such as duty drawback, market development assistance etc., on a continuous basis. Since the future of the textile and garments sector is based on the production and export of Apparels, there is a need to focus on the development and growth of this segment of the sector. Existing support measures available to textile garments manufacturers and traders for attending, showcasing and publicizing Indian textile and garments at the international trade fares and exhibitions needs to be strengthened. Regulatory function of the concerned government Ministries, Departments, State Government need to be focused on controlling raw material exports with a view to ensure stable yarn prices in the country and to make the sector more competitive and productive. Since the handloom sector is a major employment and export earner, it is in the interest of the Indian textile industry that support measures are urgently introduced for the survival and growth of the handloom sector. Since Total Factor Productivity (TFP) contribution is relatively stagnant there is a need to encourage more of technical innovation through better design, technology, diversity of production etc. in the production process. Since design is a critical ingredient in the fast changing textile fashion technology, the existing textile design centers need to be strengthened and more such institutes need to be opened, especially for the support of textiles and garments sector.
Page No.
Besides the above, there are few grey areas where the attention of concerned Ministries, Departments, State Government need to be focused such as reducing the transit time and cost at the international check points to make Indian textile products more competitive, Liberalization in export /import Policies, Development of products and designs through R&D efforts need to be strengthened and made available to manufacturing units. Government should promote and encourage lean manufacturing and cost reduction measures in the textile and garments manufacturing. From the field survey, it was found that export taxes are hindering the export of textile products. There is need for improving the export tax structure for making the sector more competitive.
Page No.
vi
Chapter I Introduction
1.1. Background In the recent years manufacturing has been playing a dominant role on account of an increase in volume of global trade as a result of globalization and dismantling of trade barriers under the World Trade Organization. Prime Ministers Group constituted for Evolving measures for ensuring sustained growth of the Indian Manufacturing Sector noted that manufacturing is not only the backbone of the economy, but is also the muscle behind the national security (NMCC, 2008). It has been estimated that manufacturing value added by India is merely 1.36 percent of worlds manufacturing value added which is very insignificant. Despite very spectacular successes in the field of Space and Atomic Energy, Indias standing is low in terms of strength in the technology area. This indicates that there is ample scope to increase its share through appropriate actions in the area of price competitiveness as well as quality improvement of the manufacturing products. Primary sector (agriculture, forestry and fishing) share in Indias GDP has declined from 44% in 1970-71 to 18% by 2007-08 while secondary sector (including manufacturing) has increased its share from 15% to 19% and the tertiary sector share increased from 40% to 63% during the same period. Thus, the share of manufacturing in Indias GDP remained on a narrow range during the last four decades reveals the potential for manufacturing to drive Indias GDP growth in an increasingly global world. The highlight of the recent growth up-tick in the Indian economy has been the result of sterling performance achieved by the manufacturing sector, which has consistently improved its growth performance ever since 2002-03. In 2005-06, the manufacturing sector grew at an impressive 9 per cent and the momentum continued as the sector grew at 11 percent during 2006-07. However, the turn of events in 2007-08 adversely affected the manufacturing growth in India as it declined to 8 percent. This dip in manufacturing growth has been on account of a number of adverse factors such as rupee appreciation against dollar, increase in inflation rates, rising fuel prices, infrastructure constraints, restrictive labour laws, global economic slowdown etc. The improvement in the growth scenario of the manufacturing sector has been significant due to the improvement in the performance with regard to exports. During 1994-95 to 1996-97, when the manufacturing sector was growing over 10 per cent a year, the manufacturing exports grew at a slightly higher rate of 14 per cent supported by a massive devaluation of the rupee. In the following five years, both output and exports in the manufacturing sector fell sharply. In the recent up-tick in manufacturing from 2002-03 to 2006-07, manufacturing exports grew at over 20 per cent a year, almost thrice the rate of growth of manufacturing production in spite of the fact that the rupee, in fact, appreciated from 48.4 (Re/ $) to 45 between 2002-03 and 2005-06. During the financial year 2007-08 rupee further appreciated against dollar to about Rs.39 per dollar. However, during the recent global economic slowdown phase experienced an increase in dollar value and rupee is pegged about Rs.48 per dollar in 2009.
| Page No.
NMCC (2008) points out that despite the fact that all the reforms undertaken were conducive to rapid GDP growth in the range of 6 percent during 1991 to 2006 and 9 percent during the last two years, Indian firms in general, barring a few exceptions, have not been adequately successful in measuring up to the world standards. The scale at which such improvements are needed has not occurred. Considering the employment aspects of the Textile and Garments sector, which is phenomenally high, the important determinant of competitiveness could be its labour productivity. Textile and garments sector is one of the important sectors among the various constituents of the manufacturing sector in India, mainly due to its contribution towards employment. It is the second largest employment provider after agriculture, both direct and indirect employment put together. The textiles and garments sector alone employed 20% of the workforce in the organized manufacturing sector. Further, the share of textiles and garments sector in total workforce and number of enterprises is higher in the unorganized manufacturing sector as compared to the organized manufacturing sector which indicates that labour intensive small and medium enterprises dominate this industry as compared to other manufacturing sectors. The share of textiles and garments in total workforce in unorganised manufacturing sector is estimated at 34% of the total workforce in the unorganised sector. Textiles and garments sector contribution in total GDP is estimated at 1.9% while that of manufacturing is estimated at 14% during 2007-08. The share of the textiles and garments in total exports has been reported at 15% during 2007-08. The present study on Productivity and Competitiveness of Indian Manufacturing: Textiles & Garments Sector has been undertaken by National Productivity Council (NPC) to study the sector based on both direct and indirect data sources and formulate policy directions to make the sector more productive and export competitive. For identifying the problems of the manufacturing units, a detailed field survey has also been carried out across major textile producing clusters. The field study focuses on productivity and export competitiveness of the Textiles & Garments sector, which has both value addition and export potential. 1.2. Methodology Two pronged methodology has been adopted for the study. One approach is based on secondary sources of data and review of literature, while second approach includes an indepth field survey of the manufacturing units through structured questionnaires and discussions. The field survey has been carried out among middle and top executives of Textiles & Garments manufacturing units located at various textile clusters across the country. In line with Terms of Reference, NPC carried out a primary survey of the textile manufacturing units based o n a structured questionnaire (Annexure 1). The field survey was undertaken ensuring the representation of all types of manufacturing units viz large, medium and small manufacturing units. The responding manufacturing units were drawn from various industrial clusters in different states to derive conclusions that are pertinent to the nation as a whole. The details of responding manufacturing units included in the primary survey across various clusters has been provided in Annexure 2.
| Page No.
Apart from these field surveys, views of leading experts such as management specialists, technologists, economists, policy makers etc., have also been sought on a host of qualitative information about the Textiles & Garments sector. Hence, the present study is focused on the assessment of the productivity and competitiveness of Indian textile and garment sector during the post liberalization period. Apart from the assessment of productivity and competitiveness, the present study also reviews global scenario of the textile and clothing trade, in general, and the Indian textile and garments sector, in particular. The study has been divided into six Chapters. The first chapter provides an introduction of the sector. Third chapter provides an insight into the world trade in textile and clothing products. The third Chapter analyses overall growth of Indian textile and garments sector. Fourth Chapter deals with assessment of productivity and competitiveness of Indian textile and garments sector. Fifth Chapter analyses the findings from the field survey of Textile and Garments manufacturing units selected from various textile and garments production clusters in India. Sixth Chapter provides the recommendations emerging from the present study. 1.3. Limitations & Constraints Keeping in view the initially set scope of work which was mainly to focus the study on secondary data sources, which has its own inherent limitations as a result of reliability of data in working out the projections. In order to substantiate the secondary data field evidences have been also included through a primary survey later on. Due to the limited resources available in terms of finance, the unit level data survey coverage had to be undertaken with limited scope and coverage. The outcome of the study and the recommendations thereof are generic in nature. However, efforts have been made to minimize such constraints through analyzing various data sources available to arrive at broad recommendations for the development of the sector. The recommendation have been formulated which are implementable in nature.
| Page No.
Chapter II Textile and Garments Sector Global Scenario

2.1. Background Textile and garments sector occupies significant position in total volume of merchandise trade across countries. World trade in textiles and clothing amounts to US $ 400 billion and is growing constantly. Developing countries are the major exporters and they account for little over two-third of world exports in textiles and clothing. The global textile and clothing industry is one of those sectors that were integrated to the multilateral trading system in 2005. The integration has been possible with the removal of the Multi-Fibre Agreement (MFA) through the Agreement on Textile and Clothing (ATC). The Multi-Fibre Agreement (MFA), that governed the extent of textile trade between nations since 1974, expired on 1 January 2005. The MFA enabled developed nations, mainly USA, European Union and Canada to restrict imports from developing countries through a system of quotas. The ATC mandated progressive phase out of import quotas established under MFA, and the integration of textiles and clothing into the multilateral trading system before January 2005. ATC was a transitory regime between the MFA and the integration of trading in textiles and clothing in the multilateral trading system. The ATC provided for a stage-wise integration process to be completed within a period of ten years (1995-2004). A study by McKinsey suggests that by the year 2010 the volume of global textile trade will grow to US $ 650 billion (www.euitymaster.com). India is now a fast emerging market with more than 250 million middle income population with good purchasing power. All these factors are good for the Indian textile industry in the long run. Even though the global economic crisis has already affected the export oriented sector such as textiles & clothing, as long as Indian economy is growing, textile industry would grow provided it takes competition and innovation seriously. Recent trends in competing countries, particularly China, in the area of mass and labour intensive areas such as Textiles and Garments, Leather etc., show that due to the wage increases as well as other policy changes in those countries the investors are looking for alternate locations (NMCC 2008). This development provides an excellent opportunity for India to attract companies which are looking for alternate source. Coordinated efforts to attract these investments need to be put in place for attracting the importing countries. 2.2. Structure of Global Textile & Clothing Market In the global textile market the major importers are USA, European Union and Canada. Asia has been the principal sourcing region for imports of textiles and clothing by both USA and European Union. The next important sourcing region for imports of textile and clothing by USA has been Latin American region while the same for European Union have been Central and East European countries. Interestingly for Canada the principal
| Page No.
sourcing region for import has been USA while Asia occupies the second largest position. This certainly indicates that there has been a great deal of re-exports from USA. As far as the position of individual countries in all these markets are concerned, the countries like China, Mexico, Turkey and India occupy the dominant positions. India is one of the leading suppliers of readymade garments in USA. In the EU market also, India is a leading supplier for many of the textile products. It is estimated that Turkey would emerge as a biggest competitor for both India and China. Countries like Mexico, Caribbean Basin Initiative (CBI) countries, many of the African countries and Bangladesh emerged as exporters of readymade garments without having much of textile base, utilizing the preferential tariff arrangement under the quota regime. But in the post quota regime they may loose their market share. As maintained earlier, the structure of the world trade in the post integration period will solely be dictated by the comparative cost advantages. It may be said that countries like China, USA, India, Pakistan, Uzbekistan and Turkey have resource based advantages in cotton; China, India, Vietnam and Brazil have resource based advantages in silk; Australia, China, New Zealand and India have resource based advantages in wool; China, India, Indonesia, Taiwan, Turkey, USA, Korea and few CIS countries have resource based advantages in manmade fibers. In addition, China, India, Pakistan, USA and Indonesia have capacity based advantages in the textile spinning and weaving. However, india hasnt been able to make Optimal capacity utilization due to lack of Knowledge, training, TPM & TQM, Disguised Unemployment and Lack of professional management. China is cost competitive with regard to manufacture of textured yarn, knitted yarn fabric and woven textured fabric. Brazil is cost competitive with regard to manufacture of woven ring yarn. India is cost competitive with regard to manufacture of ring-yarn, O-E yarn and woven O-E yarn fabric, knitted ring yarn fabric and knitted O-E yarn fabric. According to Werner Management Consultants, USA, the hourly wage costs in textile industry is very high for many of the developed countries. Even in developing economies like Argentina, Brazil, Mexico, Turkey and Mauritius, the hourly wage is higher as compared to India, China, Pakistan, Bangladesh and Indonesia. From the above analysis, it may be concluded that China, India, Pakistan, Taiwan, Hong Kong, Brazil, Indonesia, Turkey and Egypt would emerge as winners in the post quota regime. The market losers in the short term (1-2 years) would include Caribbean Basin Initiative (CBI) countries, many of the sub-Saharan African countries, Asian countries like Bangladesh and Sri Lanka. The market losers in the long term (by 2014) would include high cost producers, like EU, USA, Canada, Mexico, Japan and many east Asian countries. In the long run, there are possibilities of contraction in intra-EU trade in textile and garments, reduction of market share of Turkey in EU and market share of Mexico and Canada in USA, and thus provide more opportunities for developing countries like India. It is estimated that India would have a market share of 13.5 percent in textiles and 8 percent in garments in the USA market. With regard to EU, it is estimated that the benefits are mainly in the garments sector, with China taking a major share of 30 percent and India
| Page No.
gaining a market share of 8 percent. The potential gain in the textile sector is limited in the EU market considering the proposed further enlargement of EU. It is estimated that India would have a market share of 8 percent in EU textiles market as against the Chinas market share of 12 percent. The study by Nordas (2005) suggests that the distance from the major markets is going to act as a major constraint in the form of transaction cost. The study also suggests that countries close to the major markets are likely to be less affected by competition from India and China than has been anticipated in previous studies. Mexico, the Caribbean, Eastern Europe and North Africa are therefore likely to remain important exporters to the US and the EU respectively and possibly maintain their market shares. The countries that are most likely to lose market shares are those located far from the major markets and which have had either tariff or quota-free access to the United States and EU markets, or which have had non-binding quotas. These countries will undoubtedly face adjustment challenges. Also local producers in EU, the United States and Canada are likely to loose market shares. 2.3. Impact of Global Meltdown on Indian Economy The global financial crisis has significantly slowed down the growth of the world economy in the interim period, with the global GDP growth falling to 3.7 per cent and 2.2 per cent in 2008 and 2009, respectively, from 5 per cent in 2007. The downward GDP growth eased the demand side pressures on inflation due to a fall in commodity prices, a trend that is already visible. Due to greater integration with world economy, India though having a robust domestic demand is also affected by the recent global financial crisis. However, strong domestic demand, which has been a key growth driver for the Indian economy, has provided a buffer against global turbulence. However, it should be noted that even before the onset of the global crisis, the Indian economy had started slowing down on account of proactive monetary tightening policy adopted by RBI during the first half of 2008, aimed at controlling domestic price inflation. As a result of the combined effect of global and domestic slowdown, GDP growth declined to moderate to 6.5-7.0 per cent in 2008-09 (CRISIL-NMCC, (March 2009). To reinforce the monetary measures announced on December 6, 2008, the Government of India unveiled a multi-dimensional fiscal stimulus package on December 7, 2008 that is expected to stimulate growth across sectors and fuel consumption. The Government of India affected an across-the-board cut of 4 percentage points in the ad-valorem CENVAT for the remainder of the current fiscal (2008-09) on all products other than petroleum and those where the existing rate was below 4 per cent. The across the board reduction of 4 per cent in excise duty will apply to machinery, man-made fibres, dyes and chemicals and other products where excise duty is currently being paid in the textiles and garments industry. The measures announced include: Additional funds of Rs. 14 billion have been allocated to clear the Technology Upgradation Fund Schemes (TUFS) backlog.
| Page No.
For exporters, the government has given 2 per cent (till March 2009, subject to a minimum of 7 per cent) interest subvention on both pre and post shipment credit for labour intensive export sectors.
The steps taken by Government are in the right direction and have reduced the adverse impact of the global slow-down on these industries. Further, the lower cost of debt for export oriented industries like textiles and garments marginally improved their competitiveness vis--vis global players. The benefit of lower CENVAT is likely to be beneficial for the textiles and garments, sector as it would support demand. Though domestic demand generation insulates industries, the quest for higher levels of competitiveness in the export oriented segments of textiles and garments need to be supported actively as global buyers become more price sensitive. In a sense, the current global economic scenario represents both a challenge and an opportunity for Indian exporters. In the second stimulus package announced on January 2, 2009, the Duty Entitlement Passbook (DEPB) scheme has been extended till December 31, 2009 which will benefit the exporters in the textiles and garments industry. The duty drawback benefits has also been increased on certain items of textiles and garments industry like cotton knitted fabrics, manmade fabrics, woolen knitted fabrics, etc., which will provide more incentives to the exporters in the industry. While the cumulative growth rate of manufacturing sector during the first half of this fiscal stands at 5.2 per cent, the figures for mining and electricity for the same period are 3.9 and 2.6 per cent, respectively. As the US financial turmoil and its ripple effects are still being faced globally, Industrial growth during current fiscal estimated in the range of 5.56.0 per cent for 2008-09. The year on year growth in secondary sector for the period from April to September for the financial year 2008 and for the financial year 2009 is provided in Table 2.1. Table 2.1: Year on Year Growth in Secondary Sector Details Apr-Sep, Financial Year 2008 10.0 5.1 7.7 9.5 Apr-Sep, Financial Year 2009 5.2 3.9 2.6 4.9
Manufacturing Mining Electricity Secondary Sector Source: CRISIL-NMCC, March 2009
The manufacturing industries which have performed relatively better during the first six months of this fiscal (FY2008-09) are beverages (23.3%), transport equipment (12.8%) and machinery and equipment (9.8%). Eight industries have posted negative growth during the first 6 months of this fiscal as compared to just one industry during the same period last fiscal (FY2007-08). In the textiles and garments industry, the textiles segment has posted negative growth in a) cotton textiles segment and b) jute and other vegetable fibre textiles segment. The textile products segment including wearing apparel has posted
| Page No.
a high growth rate of 3.8% in first six months of FY 2008-09 as compared to 3.3% in corresponding period in FY2007-08 (CRISIL-NMCC, March 2009). 2.4. Prospects for Indian Textiles and Garments sector Although China is likely to become the 'supplier of choice', other low cost producers like India would also benefit as the overseas importers would try to mitigate their risk of sourcing from only one country. The two-fold increase in global textile trade is also likely to drive India's exports growth. India's textile export (at US$ 15 billion in 2005) is expected to grow to US$ 40 billion, capturing a market share of close to 8% by 2010. India, in particular, is likely to benefit from the rising demand in the home textiles and apparels segment, wherein it has competitive edge against its neighbours. India enjoys a significant lead in terms of labour cost per hour (US$ 0.6 in 2004), over developed countries like US (US$ 15.1) and newly industrialized economies like Hong Kong (US$ 5.1), Taiwan (US$ 7.1), South Korea (US$ 5.7) and China (US$ 0.9). Also, India is rich in traditional workers adept at value-adding tasks, which could give Indian companies significant margin advantage. India is the third largest producer of cotton in the world after China and US and has the largest area under cultivation. Cotton, a key raw material in the textile and garment industry, accounts for about 30% of the fabric cost and 13% of the garment cost. India has an abundant supply of locally grown long staple cotton, which lends it a cost advantage in the home textile and apparels segments. 2.5. The Changing Scenario Though the MFA has expired with effect from 1st January 2005, certain provisions of quota policy were extended initially for a period of one year; again it was extended till 31st December 2006. Hence, the changing scenario definitely indicates that the future of Indian textile and clothing industry is bright. It has been recently reported that textile exports in 2009-10 period will be equal or could be even lower than the one achieved in 2008-09. In this global financial meltdown situation, it is an immediate task for all stake holders to note takes a note of situation and takes stock of the difficulties and chart plans for sustainability and growth of the Indian textile industry.
| Page No.
Chapter III Indian Textile & Garments Sector A Review

3.1. Background The history of textiles in India dates back to the use of mordant dyes and printing blocks around 3000 BC. The diversity of fibres found in India, intricate weaving on its state-ofart manual looms and its organic dyes attracted buyers from all over the world for centuries. The British colonization of India and its industrial policies destroyed the innovative eco-system and left it technologically impoverished. Independent India saw the building up of textile capabilities, diversification of its product base, and its emergence, once again, as an important global player. Today the textile and garments industry plays a significant role in the economy. It is one of the largest and the most important sectors of Indian economy in terms of output, foreign exchange earnings and employment. The sector employs 35 million persons. Of this, textile segment alone accounts for 29 million and the clothing industry accounts for the remaining 6 million people (www.texprocil.com). In fact it is the second largest employer in the economy after agriculture. It contributes 4 percent to GDP and 14 percent to value addition in manufacturing. It also contributes 20 per cent of industrial production, 9 per cent of excise collections, 18 percent of employment in industrial sector, nearly 20 per cent to the countrys total export earnings. The total size of textiles and clothing industry in India was USD 47 billion in 2005-06 of which USD 17 billion (36%) was accounted by exports market and USD 30 billion (64%) by domestic market. Textile and garments sector has a unique 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. Its vast potential for creation of employment opportunities in the agricultural, industrial, organised and decentralised sectors & rural and urban areas, particularly for women and the disadvantaged is noteworthy. Thus, the growth and all round development of this sector has a direct bearing on the development of the economy. In India, the textile industry is spread throughout the country. However, pockets of concentration may vary according to availability of raw material. While the Jute textiles industry is mainly concentrated in West Bengal, the Silk textiles industry finds concentration in Andhra Pradesh, Karnataka and Tamil Nadu. Cotton textiles units can be seen in all parts of the country, while the Synthetic and Woollen textiles industries are mainly concentrated in Maharashtra, Gujarat, Punjab, Haryana, Madhya Pradesh and Uttar Pradesh. India produces a variety of textiles and clothing items. It is a result of diverse cultural influences, climatic conditions, geographical factors and trade. One of the most renowned textiles of India- the brocade of Varanasi, comes from Uttar Pradesh. Uttar Pradesh is also famous for the delicate Chikan work embroidery. On the other hand, Gujarat and Kutch are known for their mirror work embroidery and for the rich and vibrant colours. Also, one cannot ignore the intricate bandhej (tie-dyed fabric) from Gujarat (Jamnagar, Mandavi and
| Page No.
Bhuj). Moreover, Tamil Nadu is known for Kanchipuram saries, while Phulkari or Bagh embroidery work of Punjab can be found in every part of India in various forms. India accounts for 22 per cent of the world installed capacity of spindles and are one of the largest exporters of yarns in the international market. The industry contributes about 25 per cent share in cotton yarn trade in the world. Indian textile industry contributes about 6 per cent to the world rotor capacity installed. It has second highest spindleage in the world after China. Indian textile has the highest loomage (including handlooms) in the world and contributes about 61 per cent to the world loomage. It contributes about 12 per cent to the world production of textile fibres and yarns (including jute). It is the largest producer of jute, second largest producer of silk, third largest producer of cotton and cellulose fibre/yarn and fifth largest producer of synthetic fibres/yarns. The textile sector also has a direct link with the rural economy and performance of major fibre crops and crafts such as cotton, wool, silk, handicrafts and handlooms, which employ millions of farmers and crafts persons in rural and semi-urban areas. It was estimated that one out of every six households in the country depends directly or indirectly on textile sector (Davos, 2006). Moreover, Indias advantages in the textile sector emanates from abundant availability of raw material and cheap labour. It is the second largest player in the world cotton trade. 3.2. Structure of Indian Textile Industry The structure of Indian textile industry is quite unique. Indias textile industry comprises mostly of small-scale, non-integrated spinning, weaving, finishing, and apparel-making enterprises. Such a structure arose due to the policies on tax, labour and other regulations that favoured small scale, labour intensive enterprises, while discriminating against large scale, capital intensive operations. There is a modern mill sector on the one hand and handloom and powerloom sectors on the other. Small scale unorganized players dominate the industry, where the regulations are less stringent (Table 3.1). Most of the units are located in handloom sector where employment is also the highest. On an average around 2 workers work in each unit, thus making handloom sector mostly home-based. Table 3.1: Structure of Indian textile Industry Sector Organized Textile Mills Powerlooms Handloom Units 1789 0.4 million 3.5 million Volume (2004-05) (million sq.mts) 1,526 37437 5722 Employment (Million) 1.0 4.8 6.5
Source: Textile Commissioner, Mumbai. The installed capacity is the highest for spindles category. In the case of looms, installed capacity is more for handloom and powerloom sector while looms in organized sector have comparatively very low capacity with negative growth rates due to low levels of employment (Table 3.2). Among different categories, powerloom has exhibited the highest annual growth rate in terms of installed capacity. This shows the dualistic characteristics of Indian textile industry.
| Page No.
10
Table 3.2: Installed Capacity: Textile and Garments Sector ITEMS Spindles (SSI + Non-SSI) Rotors (SSI + Non-SSI) Looms (Organize d sector)
Powerloom
UNITS Million No. Lakh No. Lakh No. Lakh No. Lakh No.
200102 38.33
2002- 200303 04 39.03 37.03
2004- 200505 06 37.47 37.51 (P) 5.20
200607 39.50
200708 39.07
Trend Growth Rate (%) 0.26
4.8
4.68
4.82
5.00
6.01
6.21
1.95
1.23
1.19
0.88
1.03
0.92
0.88
0.71
-5.97
16.66 38.91
16.93 38.91
18.37 38.91
19.03 38.91
19.44 38.91
19.90 38.91
21.06 38.91
2.58 0
Handloom
Source: Textile Commissioner, Mumbai The power loom sector alone accounts for 61% of the total cloth production in 2007-08 (Table 3.3). However, the organized sector accounted for only 3% of the total cloth production and the quantity of cloth produced by it is continuously declining. The share of both handloom and mill sector has almost halved in the past decade. The rise in cloth production is due to positive growth observed in the production of cloth by power loom and hosiery sectors. This indicates the diminishing importance of handlooms in competition to power looms. The handloom sector is increasingly getting marginalized.
| Page No.
11
Table 3.3: Sector-wise Production of Cloth (millions sq. meters.) Financial Year Mill Sector Qty. 1995-1996 1998-1999 2001-2002 2004-2005 2005-2006 2006-2007 2007-2008 Trend Growth Rate (%) 2019 1785 1546 1526 1656 1746 1744 -1.21 % Share 6.42 4.94 3.68 3.36 3.34 3.27 3.03 Handloom Sector Qty. 7202 6792 7585 5722 6263 6536 7074 -0.15 % Share 22.89 18.81 18.04 12.61 12.64 12.24 12.30 Powerloom Sector Qty. 17201 20689 25192 28325 30626 32876 35304 6.18 % Shar e 54.68 57.31 59.93 62.42 Hosiery Sector Qty. 5038 6276 7068 9112 % Shar e 16.01 17.38 16.81 20.08 20.98 21.55 21.99 Total Qty.
31460 36102 42034 45378 49542 53389 57491 5.15
61.82 10393 61.58 11504 61.41 12645 7.97
Source: Textile Commissioner, Mumbai The textiles and clothing industry is mainly based on cotton (Table 3.3). India is one among a few countries that have a presence of entrepreneur units within the country across the entire value chain in textile and clothing business starting from fibre production, spinning, weaving/ knitting, processing to garment manufacturing. It has been the policy to develop a fully integrated industry from the cotton field to the ready-made garment, encouraging local production of cotton and textiles for low cost manufacture of garments, while discouraging the use of man-made fibre. India is the second largest producer of cotton and the second largest producer of cotton yarn. Removal on import barriers on synthetic fibres have resulted in the increase in the production of man-made fibres in recent years.
| Page No.
12
Table 3.4: Production of Fibres and Yarn

ITEMS UNITS 19992000 200001 200102 200203 200304 200405 200506 200607 200708 Trend Growth Rate (%)
Production of Fibers
Raw cotton Lakh bales of 170 kg each Million kg. Million kg. Million kg.
156
140
158
136
179
243
241
280
315
7.74
ManMade Fibres Raw Wool Raw Silk
835 47.9
904 49.2
834
914
953
1022
968
1139
1244 45.20 18.31
2.49 -0.93 2.18
49.50 50.50 48.50 44.60 44.90 45.10
15.21 15.86 17.35 16.32 15.74 16.50 17.31 18.76
Production of Yarn
Cotton yarn Other spun yarn Manmade filament yarn Million kg. Million kg.
2204 842
2267 953
2212 889
2177 904
2121 931
2272 951
2521 937
2823 990
2948 1055
2.26 1.80
Million kg.
894
920
962
1100
1118
1109
1179
1370
1509
4.72
Source: Textile Commissioner, Mumbai Further the share of cotton cloth in the Indian cloth production was as high as 60% in 1995-96, though over the years its share declined gradually to 46% in 2004-05. However, the years 2006-07 and 2007-08 have shown an increase in cotton cloth production (Table 3.5). Non-cotton cloth has risen in importance growing at almost twice the pace at which total cloth production till 2004-05, however, during the last year (2007-08) we notice a marginal improvement in its share.
| Page No.
13
Table 3.5: Production of Cloth (millions sq. mtrs) Financial Year Cotton Cloth Qty. 18900 17949 19769 20655 23873 26225 27205 % Share 60 50 48 46 49 50 49 Blended Cloth Qty. 4024 5699 6288 6832 6298 6882 6888 4.58 % Share 13 16 15 13 13 13 12 100% Non Cotton Cloth % Qty. Share 8536 27 11896 33 15334 37 17998 41 18637 38 19582 37 21183 38 7.87 Total Qty. 31460 35543 41390 44685 48808 52689 55276 4.81
1995-1996 1998-1999 2001-2002 2004-2005 2005-2006 2006-2007 2007-2008 Compound Annual 3.08 Growth Rate (%) Source: Textile Commissioner, Mumbai 3.3. Indias Textile & Garments Trade
As discussed in chapter II, the external trade is a major determining factor behind the growth of Indian textile and garments sector. It is thus, worthwhile to assess the export and import scenario for Indian textile and garments. 3.3.1. Indias Textile Exports Indian textile and clothing industry was generally inward looking till 1980s. The Textile Policy of 1985 heralded a new beginning for the textile industry by focusing on the deeprooted structural weaknesses. The reforms initiated in 1990s further boosted the textile industry. The textile industry was delicensed and reforms on fiscal and external front were pursued. As a result, Indias Textile export during the financial year 2007-08 reached Rs. 923940 million from Rs.154836 million in 1992-93 marking an annual growth of 12.91 per cent per annum. Though the volume and value of textile exporters increased over the years, in relative terms this period also witnessed drastic decline in the share of textile export in Indias total exports as it declined from 28.84% of total exports in 1992-93 to 15.16% in 2007-08 (Table 3.6). Textile exports play a dominant role in the total exports of the country. In India, 15% of the countrys total export earnings are textile exports. Indias share in the global textile market and apparel market is 4% and 2.8% respectively.
| Page No.
14
Table 3.6: Textile Exports (Rs. millions)

Item Cotton Textiles Manmade Textiles Silk Wool Yarn, Fabrics & Made-up Ready Made Garments Handicrafts Jute Coir & Coir Manufactures Total Textiles Exports % Textile Exports to total Total Exports 1992-93 40931 11414 4014 1136 69307 23578 3551 905 154836 28.84 536883 1995-96 88222 25819 4454 2089 122947 33359 6211 2103 285204 26.82 1063533 1998-99 118684 30276 7497 3139 183636 49502 5816 3166 401716 28.74 1397518 2001-02 146980 51912 13635 2490 238776 50514 6119 2946 513372 24.56 2090180 2004-05 159244 92142 1819 3135 294812 45553 12412 4742 613859 16.35 3753400 2005-06 203692 90299 19150 3775 381537 58198 13116 5903 775670 16.99 4564180 2006-07 248195 106841 19556 3792 393429 56976 11652 7076 847517 14.82 5717790 2007-08 286064 132579 27446 3873 378478 60578 13614 6687 923940 15.16 6801248
Source: Annual Report, Ministry of Textiles, Govt. of India, Various Issues. Thus, the export growth, though slow in comparison to China, is still impressive because it occurred despite the persistence of many factors that observers have cited as shackling Indian productivity in textiles and apparel such as technological obsolescence, fragmented capacities, low scales of operation, lack of an exit policy, and rigid labor laws. 3.3.2. The Composition of Indian Textile Exports The Textiles exports basket consists of Ready-made garments, Cotton textiles, Textiles made from man-made fibre, Wool and Woollen goods, Silk, Handicrafts, Coir, and Jute. Further, the export basket consists of variety of items: cotton yarn and fabrics, wool and silk fabrics, man-made yarn and fabrics, etc., of which man-made textiles and silk showed the highest growth rate. The major export earner is ready-made garments followed by cotton textile and man-made fabrics in April-Oct 2008. All the textile items are growing impressively. During April Oct. 2007-08, except the three items (i.e. Cotton Textiles, Silk, Ready Made Garments and Handicrafts) the exports of all the items have grown impressively during the four time periods between 2005 and 2008 (Table 3.7).
| Page No.
15
Table 3.7: Textile Exports (value in US $ millions) Item April-Oct 2005 2349.33 1144.66 April-Oct 2006 2816.98 1328.54 395.36 271.27 4643.64 803.80 80.47 10340.06 Compound Annual April-Oct April-Oct 2007 2008 Growth (20052008) (%) 2816.26 1689.93 384.78 377.45 4413.89 719.21 92.23 10493.75 3765.05 2582.28 522.92 78.16 6812.19 857.94 108.95 15270.13 17.02 31.15 9.74 -35.69 16.70 4.31 11.50 17.96
Cotton Textiles Manmade Textiles
Silk 395.71 Wool Yarn, Fabrics 293.90 & Made-up Ready Made 4286.12 Garments Handicrafts 755.95 Coir & Coir 78.60 Manufactures Total Textiles 9304.27 Exports Source: DGCI&S (2009). 3.3.3. Direction of Trade
The China PRC has emerged as the fastest growing, single largest destination for Indian textile and apparel in recent years (Table 3.8). However, USA still remains as the biggest importer of Indian textile items as it procured about 40% of Indias textile exports in 200708. Apart from the US, UK, Germany, UAE, Italy, Bangladesh etc. are the major trade partners of India. Export of textile products to Bangladesh almost doubled in 2007-08 as compared to previous year (Table 3.8).
| Page No.
16
Table 3.8: Country-wise Export of Textile Items by India (Value: Rs. in Lakh at current prices) Country USA UK U Arab Emts German F Rep France Italy Canada Korea Rp Bangladesh Hong Kong Singapore Sri Lanka Compound Annual 1997-98 2000-01 2004-05 2005-06 2006-07 2007-08 Growth Rate (%) 763689 1316482 1553320 2097720 2151960 1895800 10.63 271461 165787 268813 147110 143234 86415 49637 114750 126626 0 32304 344242 389366 311071 222381 198325 153772 67822 113061 122253 44822 60831 474600 504960 371140 294720 299070 166100 87720 125740 66140 76310 -55250 607210 442560 506170 369480 361190 181190 111910 169640 77050 97080 -241260 634630 483270 503700 382730 411880 183750 -155660 --104720 --673060 550200 559570 393220 356130 156120 -293710 -106500 --10.62 14.26 8.49 11.54 10.65 6.79 -11.01 -14.17
Australia 54148 59313 China PRC --Source: DGCI & S (2009)
83.24
3.3.4. Indias share in World Textile Trade Overall, Indias share in the US$ 685 billion world textile and clothing market, though small is rising steadily. Indias textile export share increased from 3.27% in 1996 to 3.96% in 2007. Similarly, Indias export share in clothing increased from 2.57% in 1996 to 2.79% in 2007 (Table 3.9).
| Page No.
17
Table 3.9: India's Share in World Export of Textile and Clothing (Billion US $) Textiles India's Share Year World India's in World World Export Export Export % Export 1996 151.06 4.94 3.27 164.14 1997 157.73 5.24 3.32 182.28 1998 151.31 4.56 3.01 183.33 1999 147.92 5.09 3.44 186.03 2000 157.46 5.90 3.74 198.94 2001 147.00 5.38 3.66 195.03 2002 152.20 6.03 3.96 200.85 2003 169.40 6.51 3.84 225.94 2004 194.70 6.85 4.00 258.10 2005 203.00 7.85 3.90 276.00 2006 217.992 8.837 4.05 309.593 2007 238.126 9.446 3.96 345.39 Source: Annual Report 2002-03 (ICMF) & 2007-08 (CITI) 3.3.5. Indias Textile Imports One of the important aspects of Indias textile sector is that it has relatively low import content as compared to other export oriented sectors. As far as imports are concerned, textiles accounted for only 2 to 3% of the total import bill (Table 3.10). During 1990s woolen yarn and fabrics, silk yarn, and cotton yarn and fabrics were not imported but from 2000 onwards their imports began, that too at a very rapid pace. This might be due to decrease in production of yarn, as seen in case of cotton yarn (Table 3.10). All other textile products imports have grown at an annual average rate of 15-20%. However, the import-export ratio doubled during the period from 8.7% in 1992-93 to 16.6% in 2007-08. Textiles imports have risen much faster than the textile exports implying that the cost of exports in terms of imports doubled during this period. Thus, globalization seems to affect Indian textile trade through increased competition. Clothing India's Share in World India's Export % Export 4.22 2.57 4.34 2.38 4.78 2.61 5.15 2.77 6.03 3.03 5.48 2.81 6.04 3.01 6.46 2.86 6.62 2.80 8.29 3.00 9.465 3.05 9.655 2.79
| Page No.
18
Table 3.10: Item wise Textile Imports by India (Rs. million) Item
Woollen Yarn & Fabrics Cotton Yarn & Fabrics Man made filament/ spun yarn (inc. waste) Made-up Textiles Articles Other Textile Yarn, Fabrics & Made-up Articles Readymade Garments (Woven & Knit) Raw Jute Raw Silk Raw Wool Synthetic & Regenerated Fibres Silk yarn & fabrics Woollen and Cotton Rags etc. Cotton Raw & Waste Textile Yarn, Fabrics & Made-up Articles
Total Textiles imports Overall Imports % of Textile Imports to total Net Textile Exports (Exports Imports)
1992-93 0 0 0 0 0 0 0 2233 3152 710 0 859 2165 4307 13426 633745 2.1 141410
1995-96 1998-99 0 0 0 0 0 0 479 3028 4858 5021 0 1255 5212 11997 31850 0 0 0 0 0 0 864 2594 4903 2909 0 1032 3811 19219 35332
2001-02 178 2323 13898 1719 14075 1725 957 6247 6236 2721 1730 1071 20536 ** 73416
2006-07 1446 14414 25134 3213 40797 3347 1062 6208 9939 4049 8302 1534 10996 ** 89887 8405060 1.07 757630
2007-08 1971 13324 26702 4293 43838 4712 1673 7615 11298 4625 8640 901 9456 ** 139140 6820880 2.04 784800
1226781 1783317 2451997 2.6 1.98 2.99 439956
253354 366384
Source: DGCI & S (2009) Major markets for the import of textiles and clothing can be identified as Chinese Republic (48.86%), USA, Nepal etc. (Table 3.11). Higher share of Chinese Republic in imports of textiles and clothing product by India implies that India is facing tough competition from China. Import of textiles and clothing products from China has been
| Page No.
19
found growing at an annual compound growth of 56.23 percent during 2001-02 to 20072008 period. Table 3.11: Country-wise Import of Textile and Clothing by India (2001-02 and 2007-08) Country 2001-02 2006-07 2007-08 (US $ Million) 1365.51 56.23 97.37 29.14 33.05 32.11 46.92 146.5 88 100.63 81.84 67.2 56.37 464.26 92.04 97.28 95.86 160.81 133.12 --0.93 22.25 19.42 30.80 18.98 25.95 Compound Annual Growth (%)
(US $ Million) (US $ Million) Chinese P RP Korea RP Hong Kong Thailand USA Nepal Others 93.91 819.96
Source: Annual Report 2002-03 (ICFM) & 2007-08 (CITI) Undoubtedly, the global textile and clothing industry has been growing significantly in the post quota regime. The extent to which Indian textile and clothing industry can improve its position in the global market depends on the extent to which it can improve its competitiveness. The major determinants of competitiveness could be cost, quality and timely review of the global market conditions on Indian textiles and clothing sector. In fact, productivity improvement could go a long way in enhancing the competitiveness of Indian textile and clothing industry.
| Page No.
20
Chapter IV Performance of Indian Textile & Garments Sector

4.1. Introduction One of the important aspects of the textile and garments industry is its contribution to employment. If at all it is believed that Indian textile and garments industry will grow by leaps and bounds during the post quota regime it is precisely because of its advantages in terms of labour productivity and prevailing low wage rates. Labour productivity is one for the major ingredients of the overall competitiveness. Hence, it is essential to assess the growth of labour productivity in Indian textile and garments industry. Indian textile and garment industry has a dualistic structure. The main three pillars of the textile and garments industry are the organized mill sector, the power loom and the handloom sectors. Among these three pillars, the power loom sector occupies a dominant position followed by the handloom and the organized mills sector. Among the three major subsectors of the Textile and Garments sector only Powerlooms Sector has been growing at a very high annual growth rate equivalent to or more than GDP growth rate of the country during the period from 1995-96 to 2007-08 and both Handloom and mill sector production has been declining during the same period. The Powerloom sector production is growing at a very high rate of 6.18 per cent per annum, the future employment generation would be in the Powerloom sector. As far as the labour productivity in these three sectors is concerned, it was the least for handlooms sector at 877 sq.mtrs. per worker during 2004-05 as compared to powerlooms sector at 5896 sq.mtrs. and organized mill sector at 1500 sq.mtrs. Thus, it is quite apparent that though the handloom sector provides the largest employment among the three sector, has the lowest labour productivity. If we contrast the productivity figure against the export figures, it may be safely asserted that the handloom sector is not going to benefit much from globalisation. Because, the exports from the handloom sector constitutes a negligible portion of the total textile exports from India, at about 2.23 % in 2004-05. In fact, this share has declined to 3% from 5.23% in 1995-96. Hence, the handloom sector may not be the major genesis of globalisation though it occupies a significant position in terms of generating employment, flexibility of small production, uniqueness, innovation and adaptability. Thus in the interest of the Indian textile industry it is highly important that support measures are provided for the development and growth of the handloom sector. 4.2. Textile and Garments Sector: A Profile Textiles and Garments sector comprise of both organized and unorganized segments of the industry. Organized segment comprises of manufacturing units registered under the factories act of 19481* while the unorganized segment comprises of un-registered manufacturing units.
1
*(Factory is one that is registered under sections 2m (i) and 2m (ii) of the Factories Act, 1948. The sections 2m (i) and 2m (ii) refer to any premises including the precincts thereof (a) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on; or (b) whereon twenty or more workers are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on). | Page No. 21
4.2.1. Textiles and Garments Clusters in India There are more than 70 textiles and clothing clusters in India comprising about 80% of total production. There are 39 power loom clusters and 13 readymade garment clusters in India. Bhiwandi and Malegaon are the two largest power loom clusters. The major readymade garments clusters are located in Delhi, Mumbai, Gurgaon, Nagpur, Madurai and Salem with annual turnover for more than Rs. 1000 crore in 2003. The state of Maharashtra has10 textile clusters. The other major states in terms of number of clusters are Tamil Nadu, Andhra Pradesh, Karnataka, Kerala and Uttar Pradesh having 7 clusters each. 4.3. Textile and Garments Sector: The Organized Factory Sector The organized factory sector occupies an important position in the entire scenario of the textile and garments production in India. Though it does not occupy the top most position, its importance cannot be undermined from the structural point of view. Structurally, the organized factory sector mainly consists of large-scale enterprises. If it can be accepted that under normal circumstances all the structural constituents of the textile and garments sector move in tandem, it will not be wrong to consider the organized factory sector as a representative of the entire textile and garments sector in India and consider the implication of globalization for the sector. Moreover, the developments in the organized factory sector can be easily visible and the implications of government policy both domestic and global are easily assessed since the time series data pertaining to this sector are available. Hence, considering these facts an attempt has been made to have a broad view of the organized factory sector with regard to the textile and garments sector in India. Table 4.1: Textile and Garments Sector: Registered Manufacturing (All India) (Value in Rs. Lakhs, Others in Numbers) Indicators Number of Factories 1980-81 11197 1990-91 1995-96 10912 19838 2000-01 16935 2004-05 16917 2005-06 17459
Total Persons Engaged 1376040 1150098 1855997 1619617 1714601 1878855 Gross Value Added (Constant Prices 1993- 645676 1018459 1135826 1730374 1809421 2290536 94=100) Value of Output (Constant Prices 1993- 2379186 4203280 5005354 8962758 9914056 12030010 94=100) Fixed Capital (Constant Prices 1993- 442172 952184 2541362 3749166 3541447 4133933 94=100) Source: Computed from ASI, summary results for the Factory Sector, Various years.
| Page No.
22
Textiles and garments sector (registered manufacturing) at the all India level shows that gross value added, gross value of output and the amount of fixed capital employed have increased considerably during the last two and a half decades. Over the years the gross value added has increased by 3.54 times while the value of output at constant prices has increased by 5 times. And the fixed capital employed has also increased by 9.5 times over the years. On the contrary the numbers of factories and the total persons engaged have been declining since 1995-96. However, the last year under the study (2005-06) has shown an increase in the number of factories and the total persons engaged (Table 4.1). There are indications that the capital intensity (Capital Employed per Worker) in the textile and garments sector (registered manufacturing) has increased over the years. However, a period wise growth analysis may give a better picture. An analysis of growth suggests that the gross value added growth in the textile and garments sector (registered manufacturing) in India has been declining continuously but it has increased during the period 2000-01 to 2005-06. In the recent years, there has been an increase in the number of persons engaged in the sector. The number of persons engaged increased during 1990-91 to 2005-06. The number of factories also increased during the second and third period but the growth was much lower during 2000-01 to 2005-06 (Table 4.2). Table 4.2: Textile & Garments: Registered Manufacturing (All India) Period III: Period II: Period I: (2000-01 to (1990-91 to (1980-81 to 2005-06) 2000-01) 1990-91) Compound Annual Growth Rate (%) 5.77 4.66 5.44 -0.25 -1.78 4.49 3.48 0.61 3.01
Indicators Gross Value Added (At Constant Prices) Number of Factories (Nos) Total Persons Engaged(Nos)
Source: Computed from ASI, summary results for the Factory Sector, Various years.
4.3.1. Textile and Garments Sector Share in Total Manufacturing There exists wide variation in the relative importance of the textile and garments sector when its importance is compared as against total manufacturing-. Table 4.3 provides a comparative picture of textile and garments sector vis a vis total manufacturing at all India level. For example, in terms of its share in total employment in the manufacturing sector is 20.62 per cent whereas the same with regard to the net value added is nearly 7.61 per cent. Similarly, its share in the number of factories and fixed capital employed in the registered factory sector at the all India level are 12.46 per cent and 10.24 per cent respectively during 2005-06 (Table 4.3).
| Page No.
23
Table 4.3: Share of Textile & Garments Sector in Total Manufacturing in India Net Value Years Factories Fixed Capital Total persons Engaged Added 1995-96 2001-02 2005-06 14.49 12.32 8.17 9.82 18.16 19.34 8.77 9.35
12.46 10.22 20.62 7.61 Source: Computed from ASI, summary results for the Factory Sector, Various years. 4.3.2.: State Level Distribution of Textile and Garments Sector An assessment of the relative importance of the states in the textile and garments sector suggests that by any criterion under consideration, Tamil Nadu occupies the top most position (Table 4.4). It also reveals that among the major states in terms of number of factories, fixed capital, number of workers, value added and gross fixed capital formation (GFCF) Tamil Nadu, Gujarat, Maharashtra, West Bengal and Rajasthan are the most important ones in their share. This implies that there exists a high degree of correlation between the various indicators considered. The concentration of textile and garments industries mainly to a few states are mainly due to location aspect and primary stages of the value added since all these states are closer to the cotton belt. Table 4.4: State wise Share of Textile and Garments Sector (2004-05) States Andhra Pradesh Assam Bihar Gujarat Haryana Himachal Pradesh Jammu and Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal Other States All India Number of Factories 3.18 0.24 0.20 14.21 3.86 0.35 0.24 2.03 2.48 1.52 11.27 0.26 4.24 11.33 35.25 3.49 2.38 3.46 100.00 Fixed Capital 5.91 0.08 0.10 18.02 1.93 2.98 0.30 2.86 1.12 5.75 14.38 0.08 5.70 5.97 18.69 4.77 4.48 6.90 100.00 Number of Net Value Workers Added Percentage Share 4.86 0.26 0.35 12.92 1.70 1.08 0.68 2.20 1.75 3.28 10.76 0.27 4.50 6.84 23.23 2.92 19.84 2.55 100.00 4.23 0.07 0.04 15.90 2.05 1.44 0.38 3.10 1.07 7.46 12.35 0.08 5.63 5.07 21.39 1.28 13.10 5.37 100.00 GFCF
3.32 0.01 0.01 15.27 1.97 2.58 0.52 4.47 0.27 3.30 6.01 0.09 5.17 11.47 29.07 5.86 2.19 8.41 100.00
Source: Computed from ASI, summary results for the Factory Sector, Various years.
| Page No.
24
Interestingly, the only exception as far as the major states in the textile and garments sector is concerned is that West Bengal. In terms of number of workers employed West Bengal ranks second, Net Value Added share third while in terms of Number of Factories, Fixed Capital, Gross Fixed Capital Formation West Bengal ranks much lower among Indian states. This might be because of the fact that the production of Jute textile that is mainly concentrated in West Bemgal is more labour intensive in comparison to the other segments of the textile sector. The concentration of jute textile in West Bengal is mainly due to the availability of raw materials. A comparative picture on the growth of textile and garments sector during 1993-94 and 2004-05 across major textile manufacturing states are given in table 4.5. A view of changing share over the years suggests that the share of major states in comparison to others has increased over the years in almost all aspects (Table 4.5). This certainly suggests that over the years the growth and concentration of textile sector is raw material source specific. Table 4.5: The Change in Share of Major States in the Textile & Garments Sector States Total Persons Net Value GFCF Engaged Added Year 1993-94 2004-05 1993-942004-051993-942004-051993-94 2004-05 1993-942004-05 Gujarat 13.78 10.34 15.23 15.28 14.35 9.74 12.34 10.69 18.25 10.53 Maharashtra 14.46 11.39 17.87 13.72 16.39 8.16 17.54 9.33 18.36 10.93 Tamil Nadu 23.50 35.09 16.01 22.65 16.77 27.5 20.66 24.93 16.08 37.31 West Bengal 2.29 1.96 4.17 3.44 14.66 11.1 7.92 7.24 2.65 1.57 Other States 45.97 41.22 46.73 44.91 37.83 43.5 41.53 47.81 44.67 39.66 100 100 100 100 100 100 100 100 100 100 All India Source: Computed from ASI, summary results for the Factory Sector, Various years. No. of Factories Fixed Capital Among the major textile and garments producing states, Tamil Nadu improved its share in terms of other three major states. In number of persons engaged in the textile and garments sector in India, the share of Gujarat has declined from 14.35 per cent in 1993-94 to 9.74 percent in 2004-05. Among the major state the most unfortunate development has occurred in case of Maharashtra. In case of Maharashtra, the share in textile and garments sector measured by any criterion including employment has declined over the year. In fact the decline has been more in case of employment in comparison to the fixed capital (Table 4.5). The decline in employment share in case of Gujarat and Maharashtra certainly implies that the organized manufacturing of textile and garments by the factory sector in western India has become increasingly capital intensive. 4.3.3 Labour Productivity in the Organized Factory Sector: A State level Study The Annual Survey of Industries data published by Central Statistical Organisation provides time series data on the registered manufacturing segment of the textile and garments sector. This data set has been considered for the estimation of productivity levels in the textile and garments sector. The ASI data has been analysed for the period
| Page No.
25
1980-81 to 2005-06. However, before proceeding on the analytical aspects it is essential to discuss the data and methodology used for the present study. Data: Gross value added (net value added + depreciation) has been considered as the output variable GVA is used for the estimation of labour productivity ratios. Over the years the price are rising along with the output. Hence, in order to eliminate the price effect, the gross value added figures have been deflated by using whole-sale price index (WPI). WPI at 1993-94 prices for the textiles (Broad category) has been used as the price deflator. Labour input has been considered as the number of persons engaged in the manufacturing of textile and garments. Gross Value Added at constant prices has been divided by the number of workers to estimate labour productivity or the value added per worker. The labour productivity growth has been estimated from the year to year labour productivity. Table 4.6.: Labour Productivity Growth (%) Compound Annual Growth Rate (CAGR) of Labour Productivity Period III Period II Period I (2000-01 to (1990-91 to (1980-81 to 2004-05) 2000-01) 1989-90) Andhra Pradesh 7.72 8.60
2.06
Assam 6.61 -0.28 10.23 Bihar -2.29 -6.90 15.72 Gujarat 5.65 5.63 2.97 Haryana 7.89 3.27 0.89 Himachal Pradesh 36.63 6.18 4.52 Jammu And Kashmir 12.43 -10.17 10.50 Karnataka 7.02 8.83 3.88 Kerala 5.05 1.45 0.71 Madhya Pradesh 6.78 8.28 3.75 Maharashtra 5.81 1.98 -0.82 Orissa 6.30 -12.08 41.09 Punjab 14.20 2.73 4.51 Rajasthan 4.83 -4.21 0.94 Tamil Nadu 8.19 0.21 1.75 Uttar Pradesh 4.38 4.16 -0.70 West Bengal 3.77 4.40 1.81 Jharkhand N.A. N.A. 1.41 Chattisgarh N.A. N.A. 7.51 Uttaranchal N.A. N.A. 84.94 All India 6.39 3.59 1.05 Source: Computed from Annual Survey of Industries Summary result for Factory Sector, Various issues The labour productivity growth rates estimated for the textile and garments sector at the state level as well as for All India for three different time periods has been found declining
| Page No.
26
continuously over the years (Table 4.6). If we look at the growth rates during the third period (from 2000-01 to 2004-05) the states growth reported the highest labour productivity growth have been Uttaranchal, Orissa, Bihar, Jammu & Kashmir, Assam etc. On the contrary, the states, those have not done well with regard to the growth of labour productivity in the recent years are Maharashtra, Uttar Pradesh, Kerala, Haryana etc. 4.3.4. Estimation of Partial Productivity and Total Factor Productivity Growth: Textile and Garments Sector All India In this section we estimate partial labour and capital and total factor productivity growth rates for textiles and garments sector at all India level for the period 1995-96 to 2005-06. As explained in the earlier section, Gross Value Added (GVA) is considered as the proxy variable for output. It is assumed that there are only two major factors of production such as labour and capital. Labour is the total persons engaged in manufacturing or production process of textiles and garments products while capital is the real value of capital investment (at constant 1993-94 prices) in the manufacturing process. Detailed methodology used for the construction of variables in the estimation and the estimation procedure adopted is given in Annexure 3. Table 4.7 provides partial productivity estimates (Gross Value Added per unit of input) for both capital and labour. It may be noted that the capital productivity ratios exhibit consistent growth during 1995-96 to 2005-06. Labour productivity also exhibits similar trends. For example, capital productivity increased from Rs. 0.38 per unit of every rupee invested during 1995-96. It increased to Rs. 0.78 by 2005-06. Table 4.7: Partial Productivity Estimates for Labour and Capital inputs Year 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 Source: Annual Survey of Industries Capital productivity (at Per Rupee Invested) 0.38 0.44 0.44 0.45 0.41 0.46 0.53 0.63 0.63 0.69 0.78 Labour Productivity (at Per Person Employed) 61198 78929 81797 96669 106329 106838 101708 111188 101919 105530 121911
| Page No.
27
Similarly, labour productivity increased from Rs. 61198 per person engaged in 1995-96 to Rs. 121911 per person engaged in 2005-06. Both capital and labour productivity doubled during the reference period. Table 4.8 provides the growth rate estimations for labour and capital productivity along with Total Factor Productivity Growth. Growth rate estimations reveal considerable fluctuations across the year 1995-96 to 2005-06. Average growth rate computed for this time period such as 1995-96 to 2000-01 shows positive trends for all Capital, Labour as well as Total Factor productivity measures. During the second period also (2000-01 to 2005-06) all the productivity measures shows positive trend. This indicates that the technological contribution in productivity of garments sector is positive mainly due to the decline in capital investment during the study period. Table 4.8: Labour, Capital, and Total Factor Productivity Growth Year Capital Productivity Growth Labour Productivity Growth TotalFactor Productivity Growth 4.45 13.03 15.25 7.57 3.89 10.60 0.40 0.69 5.04 10.53
199596 199697 28.97 14.45 199798 3.63 1.50 199899 18.18 1.86 199900 9.99 9.91 200001 0.48 13.70 200102 4.80 15.34 200203 9.32 18.08 200304 8.34 0.48 200405 3.54 8.85 200506 15.52 12.79 Averageforthe Period199596to 200001 12.25 4.32 Averageforthe Period200102to 200506 3.05 11.11 Source: Annual Survey of Industries (Various years)
1.18
1.05
Table 4.9 depicts the productivity growth rates of labour, capital and total factor productivity in an index. It may be seen that though capital productivity and labour productivity have increased substantially, total factor productivity remained relatively static during the study period. This is an aspect of worry for the textile and garments sector in India since the contribution of technology in productivity is quite low.
| Page No.
28
Table 4.9: Index of Labour, Capital and Total Factor Productivity Growth Year Capital Productivity GrowthIndex Labour Productivity GrowthIndex 100.00 114.45 115.95 117.81 107.89 121.60 136.94 155.02 155.50 164.35 177.13 Totalfactor Productivity GrowthIndex 100.00 104.45 117.48 102.23 109.80 105.92 95.31 94.92 95.61 100.65 111.18
1995-96 100.00 1996-97 128.97 1997-98 132.61 1998-99 150.79 1999-00 160.78 2000-01 161.26 2001-02 156.46 2002-03 165.78 2003-04 157.44 2004-05 160.99 2005-06 176.51 Source: Annual Survey of Industries
Fig. No.3: Labour, Capital and Total Factor Productivity Growth Indices
| Page No.
29
Chapter V Field Survey Findings

5.1. Profile of Textile Manufacturing units National Productivity Council (NPC) has carried out a nationwide survey across major Textile Manufacturing clusters during March-April 2008in order to identify major constraints that hinder growth and competitiveness of the sector. The field survey has brought out a number of critical factors that would help to frame future policy directions for the textile. For understanding the unit specific issues related to Textile Manufacturing an extensive field survey was conducted across the country with a structured questionnaire (Annexure 1). The field survey covered aspects such as turnover, employment, domestic and foreign trade, product descriptions, cost related information, factors affecting productivity, factors responsible for competitiveness at unit level. Besides this discussions have also been carried out with unit representatives and also with various stakeholders concerned with the sector. Based on the concentration of the manufacturing units, locations were selected randomly from major textile and garments producing clusters, representing almost all the regions of the country. The sample was drawn in such a way that the representation of manufacturing and trading is included; however, the focus was on manufacturing sector. More than 500 manufacturing units were requested for the information, however, the cooperation was received from about 20 percent i.e. 93 textile manufacturing units drawn from 10 states in India participated in the field survey (Annexure 2) Figure 1:
Distribution of Te xtile M anufacturing Units - NPC Fie ld Surv e y
West Bengal 2% Uttar Pradesh 13% Tamil Nadu 6% P unjab 10%
Delhi/NCR 12% Gujarat 3% Himachal P radesh 12% Maharashtra 2%
Rajasthan 18%
Karnataka 22%
More than fifty percent manufacturing units surveyed are from the textile clusters located at various regions of the country. The year of establishment of the units range from 1962 to 2007 for the entire sample units studied. The representation of various category of units in the sample are in the ratio of 84% in manufacturing, 13% in trading company and the remaining 3% units from other categories.
| Page No.
30
Further, analysis of the sample shows that 51% units belong to Small, 27% medium, 19% large and 3% other categories. 5.2 Implementation of ISO Its impact on Business Figure 2: About 35% units have obtained quality accreditations such as ISO 9000, 9001, SA 8000 etc. Size of the firm and quality accreditations are directly related as about 94% large units have acquired quality accreditations while only 20% small units got quality accreditations. Among the respondents 72% of them opined that quality accreditations boosted their business. (Table No.5.1)
Fig 2: Category of Manufacturing Units
Large 19%
Others 3%
Small 51% Medium 27%
Table 5.1 Relationship between Size and Quality Accreditation Category Small Medium Large Quality Accreditation % Yes No 20 80 39 61 94 6 Total 100 100 100
5.3. Turnover of Textile Manufacturing Units Though the average annual turnover for the manufacturing units at all India level exhibited increasing trend till 2006-07, data for 2007-08 reported a decline (Table 5.2). Five out of ten states reported a dip in average annual turnover during the year. One explanation for this decline in average annual turnover during 2007-08 could be attributed to rising rupee phenomenon coupled with the on set of global economic recssion that started adversely affecting the export demand for a number of textile manufacturing units. Table 5.2: Annual Turnover of Textile Manufacturing Units: State wise Average (Rs. Lakhs) State 2003-04 2004-05 2005-06 Delhi/NCR 1183 1088 1022 Gujarat 113 153 181 H.P. 4786 3847 3973 Maharashtra 53667 61438 71451 Karnataka 428 485 463 Rajasthan 5819 6304 6142 Punjab 13027 14805 16694 Tamil Nadu 1446 1654 1671 U.P 277 314 370 WB 575 801 1009 All India 6216 6503 6783 Source: NPC Field Survey March-April 2008
2006-07 1053 225 3577 91593 512 6827 23311 2019 321 506 7832
2007-08 1064 260 3094 108089 519 5233 15026 1752 262 1015 7330 | Page No. 31
5.4. Profitability of the Manufacturing Units The textile-manufacturing units have been interviewed on trends in average profitability (profit after tax) during two time periods such as 1991-2000 and 2000-2008. Among the responding manufacturing units 70 percent reported an increase in profitability while 22 percent reported decrease and 8% reported no change (table 5.3). In the case of profitability after 2000, 69% respondents reported an increase while 24% reported a decline and 7% reported no change. This shows that the profitability remained more or less the same during the study period. Table 5.3: Average Profitability of the Manufacturing Units (1991-2000 period) Trends in Profitability Increased Decreased No Change Total 1991-2000 (Response %) 70 22 8 100 After 2000 (Response %) 69 24 7 100
Source: NPC Field Survey March-April 2008
The profitability analysis for the two time periods reveals that the profitability during the two time periods is more or less the same. The respondents were further interviewed on the extent of increase or decrease in profitability after 2000 (Table 5.4). Among the respondents who reported an increase in profitability, nearly 30 percent reported an increase in the range 0-5% and 44% reported an income in the range 5-10 percent. Among the respondents who reported decrease in profitability, 16 % reported a decrease in the range 0-5% while 60% respondents reported a decline in the range 5-10%. This indicates that the decrease in profitability was on a higher percentage range than of the increase.
| Page No.
32
Table 5.4: Average on Profitability of the Manufacturing units (2000-2008) Range (%) 0-5 5-10 10-25 25& above Increase % 30 44 19 7 Decrease % 16 60 16 8 100
Total 100 Source: NPC Field Survey March-April 2008 5.5. FDI and ICT Usage
NPC Field survey reveals that the Textile and Garments sector is plagued with low technology & ICT Usage. FDI inflows to the Textiles as reported from the Statement of Sector wise FDI inflows from April 2000 to June 2009 for the textiles (including dyed, printed) is Rs.30,752 million and that is 0.76% of the total FDi inflows into the country. Among various sectors, textiles rank 22nd in the case of FDI inflows to the country. Service sector (23%), Computer Software& Hardware (10%), telecommunication (8%) and Housing & Real Estate (7%) together comprise of nearly 50% of the total FDI Inflows to the country. Further, the FDI intake and the usage of ICT in the sector is low because of small size of the firms, low return on investments, proprietorship , High rate of Interest, manual operations etc. It may be noted that the textile sector in India is primarily traditional in nature e.g. Handlooms & handicrafts. Off late Powerloom emerged as the dominant segment of the industry. ICT utilization is found to exist in hitech manufacturing that are very few in the textile sector. As far as Foreign Direct Investments (FDI) are concerned, only 15% manufacturing units reported exposure. Maximum level of exposure reported is less than 10%. The manufacturing units were also asked about usage of Information Communication Technology (ICT) in firms operations. Among all the three categories of manufacturing, 38% units reported use of ICT at various levels (Table 5.5). Majority units (62%) do not use ICT in firms operations. Table 5.5: Extent of ICT usage in firms operation/production Percentage Range Category 0-5 5-10 10-25 25-50 2.86 0.00 6.67 2.82 50 & above 5.71 4.76 40.00 12.68 NA 65.71 71.43 40.00 61.97 Total 100.00 100.00 100.00 100.00
Small 8.57 2.86 14.29 Medium 0.00 19.05 4.76 Large 13.33 0.00 0.00 Total 7.04 7.04 8.45 Source: NPC Field Survey March-April 2008
| Page No.
33
As far as research activities are concerned, 25% units reported positively. However, only 8% units received any product patent during the last five years. In the case of product innovation, many manufacturing units (23%) reported affirmatively. The action that needs to be taken up for increasing the FDI intake and the usage of ICT in the sector are through technological upgradation of the existing units through Research and Development and Design Centres. Figure 3: 5.6. Employment Profile Fig. 3: Average Employment
578 580 It is seen from Fig 3 that the average employment across 560 539 manufacturing units steadily increased from 502 528 540 520 employees during 2003-04 to 565 employees during 502 500 2007-08. Except during the last year, average 480 460 employment across units exhibited consistent increase. 2003-04 2004-05 2005-06 2006-07 The decline in employment reported during the last year Years indicates that the sector is facing problems due to the increasing competition and adverse effects on export from rising rupee against dollar and decline in global export demand. Employment (Nos) 600
Figure 7:
565
2007-08
Among the respondents, 31% units reported that casualisation of labour increased during the last five years. Figure 4: 5.7. Trade Related Information
100 Fig 4: Textile Units engaged in Export 94 77 48 52 23 6 Small Medium Category of Unit Large Export No Export
A very high percentage (65%) of textile manufacturing units reported that a sizable portion of sales revenue comes through export. Only 35% manufacturing units reported of no export. A very high percentage (94%) of large manufacturing units are engaged in exports as compared to 48% small units.
80 Percentages 60 40 20 0
Among the exporting textile manufacturing units about 35% units export more than 75% of their total sales volume while 16% units export 50-75 % total sales (Table 26). Table 5.6: Share of Exports earnings to Total Sales Number of Manufacturing Units (%) 1-10 19.3 10-25 12.3 25-50 17.5 50-75 15.8 75 & above 35.1 Total 100.0 Source: NPC Field Survey March-April 2008 Range (%)
| Page No.
34
5.7.1. Comparison with other countries in the export Market Major textile products exported by the manufacturing units are identified as Fabrics, Cushion and Bed Covers, Curtain, Silk Fabric, Garments, Home Furnishing &Made ups, Shirts, Frock, Skirts, Saree, Cotton Yarn, Acrylic Yarn, Hosiery Garments, 100% cotton fabric, Handloom fabrics, Ladies Garments, embroidery, Jute Cloth etc. These products are mainly exported to USA, Germany, Hong Kong, Japan, Saudi Arabia, Egypt, Bangladesh, Europe, Africa, Korea, Canada etc. Major Competitors of India in the international market have been identified as China, Thailand, Vietnam, Pakistan, Bangladesh etc. From the manufacturers survey it has been found that India is having an edge over its competitors mainly in terms of cost of production (Table 5.7). Technology has been rated as weak area for India as compared to its competitors. Table 5.7: Competitive advantage of India in the Export Market
Categories Cost of product Latest Technology Quality of product Total
Manufacturing Units Response (%) 45.45 18.18 36.36 100.00
The textile manufacturing units have been further interviewed about the import component of finished products in the manufacturing. More than 83 percent of the manufacturing units reported that import of finished products is in the range of 0-10 percent only (Table 5.8). Table 5.8: Import of finished products Percentage Range 0-10% 25-50% 75 & above Total Manufacturing Units Response (%) 83.33 11.11 5.56 100.00
The respondents were interviewed about the major factors hindering the export of the products. More than 54% respondents have cited export taxes as the major factor negatively affecting the export of textile products from India (Table 5.9).
| Page No.
35
Table 5.9: Factors hindering Export of textile products (%) Factors hindering exports Export taxes Export quantitative restrictions Certification State trading administration Dual Pricing scheme & Non Trade Barriers Any other Total Manufacturing Units Response (%) 54.2 10.4 4.2 2.1 8.3 20.8 100.0
In the case of imports majority respondents (68%) reported that they do not import any textile products such as raw materials, finished products etc., while the remaining 32% respondents reported that they are involved in imports. Major countries from where the finished products are imported are namely, Germany, Japan, Netherlands, USA, Europe, Thailand, Malaysia, Korea, China and Hong-Kong. Factors hindering the quantity of imports have been analyzed in table 5.10. Non trade barriers have been cited as the factors that hinder the import by majority units. The other major factors are import pricing scheme, quantitative safeguard measures etc. Table 5.10: Factors hindering the quantity of imports (%) Factors hindering Import Import Pricing Scheme Import Licenses Quantitative safeguard measures Export Restraint arrangements Non-trade barriers Any other Total Source: NPC Field Survey March-April 2008 5.8. Domestic Market The manufacturing units were interviewed about their domestic market share. About 61% units have reported that their market share is in the range of 1-5%. Only 15% units have reported to command domestic market share of 15% and above (table 5.11). Manufacturing Units Response (%) 25.0 8.3 16.7 4.2 29.2 16.7 100.0
| Page No.
36
Table 5.11: Domestic Market share of the Textile units (%) Domestic Market share (%) 1-5 5-10 10-25 25 & above Total Manufacturing Units Response (%) 61.2 14.9 9.0 14.9 100.0
Source: NPC Field Survey March-April 2008 The manufacturing units were also asked about the domestic share to total sales and it has been reported that about 35% of the units it is in the range of above 75% (table 5.12). Table 5.12: Share of Domestic sales to Total sales for the Manufacturing units Share of Domestic Sales to Total Sales Manufacturing Units (%) (% range) 1-10 15.7 10-25 15.7 25-50 20.0 50-75 12.9 Above 75 35.7 Total 100.0 Source: NPC Field Survey March-April 2008 More than 83% units reported an increase of domestic demand for the textile products during the last five years. About 38% units recorded the growth in domestic demand for textile products in the range of 5-10 % while 33% units reported the growth in the range of 10-25%. Extent of competition in the domestic market has been reported to be intense by 59.4% of the respondents (table 5.13). Table 5.13: Nature of Competition in the Domestic Market Nature of Competition in Domestic Market Intense (More than 20 players) Medium (10-20 players) Low (0-10 players) No Competition Total
Manufacturing Units (%) 59.4 25.0 14.1 1.6 100.0 | Page No. 37
5.9. Manufacturing Cost Related Details More than 63% manufacturing units reported that the cost competitiveness increased during the last five years (Table 5.14). However, 31% manufacturing units reported that the cost competitiveness decreased. The range of increase in cost competitiveness has been reported of in the range of 10-25% by 55% units (Table 5.15). About 38% manufacturing units reported that the range of increase in cost competitiveness is in the range 1-10 %. Manufacturing units were further asked about the contribution of various components of cost in total cost of production. The responses received from the units with respect to various cost components have been summarized in table 5.16. Majority of the respondents reported an increase of various cost components in the range of 1-10% for almost all components of cost except raw materials and taxes. Table 5.14: Cost competitiveness of the firm during the last five years Categories Increased Decreased No Change Total Manufacturing Units (%) 63.4 31.7 4.9 100.0
Table 5.15: Range of increase in Cost Competitiveness Percent Range 1-10 10-25 25-50 Total Manufacturing Units (%) 37.7 54.7 7.5 100.0
Table 5.16: Ratio of various Cost Components in Total Cost of Production Response %
Cost Range (%) 1-10 10-25 25-50 50& Above Total Wages & Salaries 44.2 36.4 18.2 1.3 100.0 Other Labour Related Cost 54.8 32.9 9.6 2.7 100.0
Raw Materials 7.6 21.5 38.0 32.9 100.0
Fuel Cost 48.0 40.0 12.0 -100.0
Interest 64.0 34.7 1.3 -100.0
Security 76.8 18.8 2.9 1.4 100.0
Taxes 42.7 46.7 9.3 1.3 100.0
Others 77.6 19.4 3.0 -100.0
| Page No.
38
5.10. Price related Factors Textile Manufacturing units have been interviewed about the price competitiveness of their unit during the last five years. More than 64% units reported that the price competitiveness increased during the last five years. Only 28.9% units reported that the price competitiveness decreased while 6.6% reported that there is no change. The increase of price competitiveness have been reported in the range of 1-10% by 50% units while 44% reported that the price increase was in the range of 10-25% range. The remaining 6 percent units reported an increase in the range of 25-50%. About 55% manufacturing units reported that there was an increase in the price of the product due to the increase in the import of raw materials during the last five years. An overwhelming majority of responding units (71.9%) were of the opinion that the prices have declined during the last five years due to increase in imports of finished goods. 5.11. Factors affecting Productivity Majority of the textile-manufacturing units interviewed (58%) reported that labour productivity during the last five years has increased (Table 5.17). Only 21.6% units reported that the labour productivity decreased while another 20.3% reported that there is no change. Table 5.17: Labour productivity of the unit during the last five years Category Increased Decreased No Change Total Manufacturing Units (%) 58.1 21.6 20.3 100.0
As far as increase in labour productivity is concerned, about 67% units reported that the labour productivity of the units increased in the range of 5-10%. In the case of total factor productivity (Output Growth minus input growth) or technology progress nearly 60% manufacturing units reported an increase while 17% units reported decrease and another 24% units reported no change in total factor productivity during the last five years. The reasons for this could be small size of the firms, low investment potentials, proprietorship , high rates of interest etc. 5.12. Factors responsible for Competitiveness of the sector Manufacturing units were interviewed about the competitiveness of the company during the last five years, an overwhelming 85% manufacturing unit reported that the competitiveness of the units increased while the remaining 15% units were of the view
| Page No.
39
that the competitiveness decreased. As regards to the availability of raw materials, more than 60% units reported that the it is available within the country, another 22% reported that the raw material is available within the region or state. Only 18% units reported that they are importing the raw materials for production. In the case of the availability of quality human resources during the last five years, the units have given mixed responses as 44% each reported that it increased as well as decreased during the last five years another 12% units reported of no change. As regards to the quality of the present educational system for catering to the requirements of the industry, 56% units are satisfied whereas 44% units are not. Nearly 60% units reported that the labour relations in the states are productive. Only 40% units are not satisfied with labour relations in the states. About 86% manufacturing units are not satisfied with the quality of infrastructure (both social and physical) in the state. Only 14% units are satisfied with the infrastructure available in the state. In the case of physical infrastructure, the order of priority as given by the units for special attention for development and maintenance is: Power (40%), Road (30%), Rail (18%), Port (10%) and Airport (2%). In the case of social infrastructure, the order of priority as reported by the units for special attention for development and maintenance is: Technical institutions (56%), Higher education (26%), Special medical centers (12%), General hospital (5%) and Schools (1%). As far as Government interface with business/private sector is concerned, about 68% respondents are not satisfied while 32% units reported that they are satisfied. The units are further interviewed whether state government is friendly towards investors while 52% said yes while 48% said no. Similarly, the extent of computerization of government records again the responses were mixes as 56% units reported their satisfaction while 44% were not satisfied. In the case of corruption level in the government, overwhelming 69% units reported that it increased during the last five years. Only 6% units reported that it decreased while 25% reported of no change in corruption levels. Similarly, 72% units are not satisfied with transparency in the government. 5.13. Measures adopted by the Industry for improving competitiveness in domestic and export market Take part in trade Exhibition and meet foreign delegates Adopt new and modern designs and employ skilled manpower/technicians Expansion of spinning and Dye house with the help of imports. This resulted in 25% increase in production More designs and wider market penetration at cheaper rates through better quality products. ISO 9001 certifications helped to improve quality For countering appreciating Rupees many textile units introduced high tech machines to Improve product quality Try to adopt new and modern design to sustain in market Better marking environment at the units
| Page No.
40
Increase the production capacity by installation of new state of the art technology and developing vertically integrated textile unit right from sourcing of cotton yam to manufacturing and marketing Stringent quality controls Providing the technical knowledge for the staff Own transportation and distribution Competitive pricing to market requirements Retraining of staff Continuous Training of Workers to improve their attitudes and functional skills Providing Hostel facilities, transportation, good work environment to employees Trying to set max production within the normal working hours Organize training, workshop etc., to get innovative ideas and attitude for employees, proper health care facility etc. Reducing overhead expenses
5.14. Requirements for enhancing Productivity & Competitiveness Power and water supply to be improved Training of Manpower is required to upgrade their skills Subsidy on textile machines or removal of excise duty Improvement in product quality, technology, training, new designs Flexible labour laws, better infrastructure Labour laws must be simplified Removal of Bureaucratic hurdles and transparency in Govt. Price of raw material need to be reduced Infrastructure facility is lagging Hassles at inter-state tax barrier (Octroi) is also affecting the growth of the sector. Government procedures need to be simplified The price factor is to be compared to market conditions
5.15. Region-wise findings of major Problems faced by the Textile Sector Major problems faced by the textile manufacturing units across different regions of India (North, West, South, Central and East) are summarized form the field survey is given below: North A large number of small players operate in the textile sector. Migration of labor from textile sector to construction sector is taking place due to the availability of better wages. Alternate jobs available in other new growing sectors attract skilled labor hence there is a shortage of skilled labor. Automation and technological up-gradation is required for improving the present situation. Cost of machine interface in the manufacture of readymade garments. Fluctuations in rupee dollar exchange rate are adversely affecting the export competitiveness of the sector. Undue delays in transit time on rail, road, sea etc., are causing to cost escalations. Cost of the basic inputs and infrastructure such as raw materials, power, labor, transportation etc., are more expensive than other countries. Lending rates and taxes in India are one amongst the highest in the world. Due to
| Page No.
41
increasing labour problems many units are opting for more automation which is capital intensive but in the long run economical. There is not much of improvement in technology& infrastructure facilities available in India. Non availability of accommodation near industrial areas is causing a lot of inconvenience to workers. Power outages and poor water supply. Statuary liabilities like ESI, CPF and other labor laws should not be made applicable on the traders who are only marketing their product. Enforcement of entry tax such as octroi etc., at state boarders are making the transportation of raw material and finished product very costly. West India has the advantage of bulk production as compared to neighboring countries. China is the major competitor in the textile sector. Manufacturers reported that the government departments are corrupt eg., for exporting the consignment at every stage money is asked for clearing. Power supply is inadequate. Local competition is faced from illegal sale. Many units are facing problems to meet on time delivery because of shortage of raw materials. Most of the units complain of too much paper work on sales Tax & Excise duties. South Many units reported that they provide good facilities to the employees; hence the cost per worker is high. They face stiff competition from Chinese products due to higher raw materials cost. Electricity cost is quite high. Due to high taxes, major share of the profit goes to the Govt. Sector. Manufacturing units demand reduction of taxes. Many units reported shortage of quality work force and technicians. Though raw material cost increased, selling price has not increased. Poor stature of infrastructure is another area of concern. . Central Since last 5 years, many units are facing problems due to the implementation of Value Added Tax. Raw material prices increased while the selling prices stagnated or declined. There is an improvement in internet services and trains and transport services during the last five years. East There is a need to adopt Modern Technology for reducing the cost. Rising input costs like fuel, power and raw material are eroding the cost competitiveness of the sector. China is dominating in the market today. Taxes on raw materials are quite high at present. There is a shortage of skilled labor.
| Page No.
42
Chapter IV Recommendations
Keeping in view of scope of work outlined in the initial stage of the study, focus of the study was primarily on the secondary data for working out futuristic scenarios which had its own limitation in terms of reliability and time lag. Accordingly, in order to arrive at measures to be followed at the micro level a comprehensive field level data compilation is required. To cope up with the data limitations and to comprehend the ground realities, an exercise for data enumeration at primary level was also undertaken. However, due to limitations in terms of availability of resources under the project head, the unit level data coverage was undertaken with a limited scope and coverage. The outcome of the study and the recommendations are derived by taking a legitimate view on the aforesaid limitations encountered during the conduct of the study. The recommendations thus arrived have been formulated keeping in view of its implementation at the sectoral levels. Infrastructure Development It has been found that one of the major cost components in the production is the energy consumed during the production process that offsets the competitiveness of the sector. It is therefore suggested that the option of subsidizing unit rates of power or encourage the use of other viable options such as non conventional energy sources. Ministry of Power, Power Grid Corporation of India, NTPC, NHPC, State Electricity Boards, etc. can ensure uninterrupted power supply which is a necessary prerequisite for the mechanical operation of any manufacturing firm. There is a need to strengthen the availability of energy/power for the manufacturing units since the power outages are quite frequent. In view of such bottlenecks there is need for developing dedicated/captive power generating sources specifically for the major textile clusters. This necessitates the involvement of state level agencies, private partners, etc., to work out initially as a viable project on pilot basis for replication at large scale. Other options could be to bring in other alternate sources of power supply systems such as renewable energy etc. Various financial incentive schemes are currently available for such applications. The initiative may be undertaken by Ministry of New and Renewable Energy in association with the Ministry of Textiles to promote the usage of Non Conventional energy sources in the manufacturing process, wherever possible. There is an immediate requirement for reduction in the transit time and cost at the international check points to make Indian textile products more competitive, Liberalization in export/import Policies also needs to be given due consideration for the development of the sector. The initiative may be undertaken by Ministry of Surface Transport, Ministry of Commerce and Industry and State governments for addressing the problem. | Page No. 43
Competition emanating from Other Countries Though textiles and garments sector is already getting the benefit of various developmental schemes specifically in the SME sector, it is facing major threat from other competing countries such as China, Bangladesh, etc., there is a need to further support the textile and garments sector. Ministry of Textiles and Ministry of Micro, small and Medium Enterprises along with NMCC and Industry Associations can work out special packages and strategies for the sector in this regard.
Skilled Manpower Requirement Since the future of the textile and garments sector is based on the production and export of Apparels, there is a need to focus on the development and growth of this segment of the sector. Vocational training through ITIs, Textile Design & Management Institutions specially in the area of Apparel Manufacturing, Quality Control and Designing needs to be encouraged so that skilled work force is available. Ministry of HRD along with AICTE and Industry Associations in tandem can develop special modules for ITIs and other educational institutions for addressing the current needs and future requirements of the sector.
Refund Mechanism of Technology Up gradation Fund Since the manufacturing units are working on thinly spread margins and the cash flow is a major constraint for majority of the manufacturing units, there is need to work out time bound refund mechanisms from Technology Up gradation Fund (TUF) provided by Government for the modernization of the units. Further, the small size of the firms, low investment potentials, proprietorship, high rates of interest etc complicates the situation. Ministry of textiles in consultation with the NMCC and Industry Associations need to develop appropriate system for ensuring time bound refund from Technology Up gradation Fund (TUF) for the units.
Fluctuation in Exchange Rates It has been found that textile and garments exports have been negatively affected by fluctuations in exchange rates in the recent years. In order to offset the loss of international competitiveness of the Indian Textile and garments sector due to the exchange rate fluctuations, Government needs to evolve reimbursement schemes such as duty drawback, market development assistance etc., on a continuous basis. Ministry of Commerce & Industry in consultations with the Industry Associations can work out appropriate measures to be taken up for the sector.
International Exposure for Indian manufacturers Existing support measures available to textile garments manufacturers and traders for attending, showcasing and publicizing Indian textile and garments at the international trade fares and exhibitions needs to be strengthened. Manufacturers/traders need to be encouraged to facilitate and participate in such events on a regular basis. Ministry of Textiles and Ministry of Commerce & | Page No. 44
Industry in consultations with the Industry Associations can organize B2B meets to facilitate better International Exposure for Indian manufacturers. Raw material Availability and Management Regulatory function of the concerned government Ministries, Departments, State Government need to be focused on controlling raw material exports with a view to ensure stable yarn prices in the country and to make the sector more competitive and productive. The initiative may be undertaken by Ministry of Textiles along with Ministry of Commerce & Industry.
Quality of Product Quality and cost of production are the key factors for sustaining in the Post liberalization and free trade regime. Technology is critical, therefore modernization of the units and up gradation of technology is imperative. Both advanced as well as indigenous technology needs to be integrated in the system. Quality Council of India and BIS can provide sufficient support for identifying and establishing quality standards for the Textile industry.
Research and Development Initiatives Since Total Factor Productivity (TFP) contribution is stagnant there is a need to encourage more of technical innovation through better design etc. in the production process. Design is a critical ingredient in the fast changing textile fashion technology, the existing textile design centers need to be strengthened and more such institutes need to be opened, especially for the support of textiles and garments sector. Development of products and designs through R&D efforts need to be strengthened and made available to manufacturing units. Government should promote and encourage lean manufacturing and cost reduction measures in the textile and garments manufacturing. Ministry of Textiles, Ministry of HRD along with AICTE and Industry Associations in tandem can develop special industry centric modules for National Institute of Fashion Technology, National Institute of Design, IITs, ITIs and other educational institutions for addressing the current needs of the sector
Fiscal Incentives Currently the prevailing interest rates for the loans in India are much higher than the interest rates in competing countries such as China. Therefore, there is a need for rationalizing the existing interest rates for making available working capital as well as fixed capital investments. The existing requirement of Collateral security for getting bank loans is also a major problem for the small and the medium sized manufacturing units. Ministry of Finance and Ministry of Textiles together can evolve strategies and schemes for providing Fiscal Incentives to the Manufacturing units of Textiles and Garments Sector.
| Page No.
45
Streamlining of Taxation Procedures Taxes in India are one amongst the highest in the world. Inter-state tax regime has to be simplified for textile goods movement as truck waiting time at each barrier is too long due to entry tax etc, increasing transit time which ultimately results in avoidable additional costs and burden to the buyer/ consumer. Uniform taxation structure need to be implemented throughout the country. Most of the manufacturing units taken up for NPC Field study complain of too much paper work on Sales Tax & Excise Duties. There is an immediate need to introduce uniform tax rates in all states avoiding multiplicity of taxes at different stages. Systems and procedures may be simplified. The need for documentation/paperwork at multiple checks posts and in different states, customs formalities, needs to be reduced as far as possible. From the field survey, it was found that export taxes are hindering the export of textile products. There is need for improving the export tax structure for making the sector more competitive. Ministry of Commerce & Industry , Ministry of MSME, Ministry of Finance along with State Governments can evolve strategies to streamline and rationalize the taxation structure at both Central and State levels. .
| Page No.
46
REFERENCES Chandra P (2006), The Textile and Apparel Industry in India, IIM-A, Ahmedabad, India. CII (2006) State of Economy, January. Compendium of Textile Statistics 2003 & 2006 Office of the Textile Commissioner, Ministry of Textiles, Govt. of India. Confederation of Indian Textile Industry (CITI) (2007-08) Annual Report 2007-08. CRISIL-NMCC (March 2009) Enhancing Competitiveness of Indian Manufacturing Industry: Assistance in Policy Making, Final Report submitted to National Manufacturing Competitiveness Council. CSO Annual Survey of Industries, Summary Result for the Factory Sector, Various issues. CSO National Account Statistics (various years). FICCI (2005) Ending of MFA and Indian Textile Industry New Delhi. DGCI&S (2006) Foreign Trade Statistics of India (PC&C), Kolkatta. National Manufacturing Competitiveness Council, September (2008) Report of the Prime Ministers Group, Measures for Ensuring Sustained Growth of the Indian Manufacturing Sector, V.Krishnamurthy, Chairman of the Committee. Indian Cotton Manufacturers Federation (ICMF) (2002-03) Annual Report 200203. ILO (2000) Labour Practices in the Footwear, Leather, Textiles and Clothing Industries Report for discussion at the Tripartite Meeting on Labour Practices in the Footwear, Leather, Textiles and Clothing Industries (ILO Sectoral Activities Programme, Geneva. J ane Korinek (2005) Trade and Gender: Issues and Interactions (OECD Trade Policy Working Paper No. 24). Kelegama S (2005) Ready Made Garments Industry in Srilanka: Preparing to Face the Global Challenges, Asia Pacific Trade & Investment Review, Vol. 1, No1.. Maurice Landes, Stephen MacDonald, Santosh K. Singh and Thomas Vollrath(2005) Growth Prospects of Indias Cotton and Textile Industry. Working Group for Textile and Jute industry for the Eleventh Plan (2007-12)
| Page No.
47
Websites: 1. Renana Jhabvala (SEWA) and Shalini Sinha: Worker (http:/ www.sewa.org) Liberalisation and the Women
2. Neil Kearney (General Secretary, International Textiles, Garment and Leather Workers Federation): Trade in Textiles and Clothing after 2005 (http:/ www.ers.usda.gov) 3. Profile of the Indian Cotton Textile Industry, Cotton Textile Export Promotion Council (http:/ www.texprocil.com) 4. K. Rajendran Nair: Indias Handloom Sector @ http:/ www.pib.nic.in 5. Davos 2006 (Report by KPMG for IBEF-India Brand Equity Foundation) @ http:/ www.kpmg.com 6. Mc Kinsey report on world trade in textile and garments. (www.euitymaster.com). 7. www.bharattextile.com/features/research-brief/
| Page No.
48
Annexure 1
Survey Questionnaire: Company/Manufacturing Unit National Productivity Council is carrying out a Nationwide survey across four Manufacturing Sectors (Food Processing, Textile & Clothing, Leather & Leather Products and Electronics & IT hardware) on behalf of National Manufacturing Competitiveness Council (NMCC), DIPP, Ministry of Commerce and Industry, GoI. The objective of this stakeholder survey is to identify and understand major constraints that are hindering the growth of manufacturing sector in the path of productivity growth and export competitiveness and to suggest Sector Specific recommendations to NMCC with a view to enhance sectoral/manufacturing productivity and export competitiveness. (Please fill as per instructions given with each question. Write codes/ values in the box provided at the right hand side) 1.0 2.0 Sector (1= Food Processing, 2 = Textile & Clothing, 3 = Leather & Leather Products, 4 = Electronics & IT Hardware) State (1 = AP, 2 = Delhi & NCR, 3= Gujarat, 4 = Himachal Pradesh, 5=Maharashtra, 6=Karnataka, 7 = Kerala, 8 = North East, 9 = Rajasthan, 10 = Punjab, 11 = Tamil Nadu, 12 = UP, 13= West Bengal) Location (1= Industry Centre, 2 = Cluster, 3 = EPZ, 4 = SEZ, 5=Others Factory/Unit/Organisation specific information Company Name & Address: ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Website if any:---------------------------------------------------------------Contact Persons Name----------------------------------------------------------------Telephone if any: ---------------e-mail address if any: ---------------------------------------------------Year of Establishment What is the Primary Business of your company ? (1=Manufacturing, 2=Trading Company, 3= Multinational company, 4=Others, _______________________________________________ What is the nature of your company? (1= Small Scale Sector, 2=Informal Sector, 3= Registered Manufacturing, 4= Others) 4.4 What is the category of your company? The primary Business (1= Small, 2=Medium, 3=Large, 4=Other,)
3.0 4.0
4.1 4.2
4.3
| Page No.
49
4.5 4.5.1
Does Your organization has Quality Accreditation like ISO 9000, HACCP etc? (1= yes, 2=No) If yes, please specify the name of the accreditation:
If yes, please specify whether the accreditation has helped in boosting business growth? (1= yes, 2=No) 4.6 Annual turnover of your organization/Company/Enterprise (Rs lakhs) 2003-04 2004-05 2005-06 2006-07 2007-08 4.7 Average profitability (Profit After Tax) of your enterprise during 1991 to 2000 (considering 1991 as base year) (1= Increased, 2= Decreased, 3=No Change) 4.8 Average profitability (Profit After Tax) of your enterprise after 2000 (keeping 2000 as base year) (1 = Increased, 2= Decreased, 3=No Change) 4.8.1 What was the extent of increase in profitability after 2000 (keeping 2000 as base year) (1=0-5%, 2=5-10%, 3=10-25%, 4=25% & above) 4.8.2 What was the extent of decrease in profitability after 2000 (keeping 2000 as base year) (1=0-5%, 2=5-10%, 3=10-25%, 4=25% & above) 4.9 Share of Foreign Direct Investment in your Enterprise (1=0-5%, 2=5-10%, 3=10-25%, 4=25-50%, 5= Above 50%, 6=Not Applicable) 4.10 What is the extent of foreign ownership of your company? 1=No foreign ownership, 2=Foreign partner(s) have less than or equal to 50% ownership, 3=Foreign partner(s) have more than 50% ownership, 4=Other) 4.11 Did your organization acquire any firm in other countries? (1=No acquisition, 2= Full ownership, 3=less than or equal to 50% ownership, 4=more than 50% ownership,) 4.12 Extent of Usage of ICT in firms operation/production. (1=0-5%, 2=5-10%, 3=10-25%, 4=25-50%, 5= Above 50%, 6=Not Applicable) 4.13 Did your Organisation conduct/commission any Research & Development (R &D) during the last five years? (1= yes, 2=No,) 4.14 Did your Organisation get any product patented during the last five years? (1= yes, 2=No,) 4.14.1 If yes, please mention the number & name of the product 4.5.2 Did your Organisation introduced any product innovations during the last five years? (1= yes, 2=No,)
4.15
| Page No.
50
4.15.1 If yes, please mention the number & name the innovation 5.0 5.0 Employment Related Information Total Number of Employees in your organization (Nos) 2003-04 2004-05 2005-06 2006-07 2007-08 Employment growth in the organization during the last five years. (1= Increased, 2= Decreased, 3=No Change,) If Increased, please specify the range of increase in employment during the last five years? (1=0-5%, 2=5-10%, 3=10-25%, 4=25% & above) If decreased, please specify the range of decrease in employment in your organisation in the last five years? (0=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) (specify) The casualisation of labour during the last five years has (1=Increased, 2=decreased, 3=No change, 4=Dont know) Growth in wages/salary in the organization after 2000 (with 2000 as base) (1= Increased, 2= Decreased, 3=No Change,) If Increased, please specify the range of increase in wages/salary in your organisation in the last five years? (1=0-5%, 2=5-10%, 3=10-25%, 4=25% & above) If decreased, please specify the range of decrease in wages/salary in your organisation in the last five years? (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) Trade Related Information Is your organization engaged in Exports (1=Yes, 2= No) If yes, what is the percentage of Export to Total Sales (1=1-10%, 2=10-25%, 3=25-50%, 4=50-75% 5=Above 75%) Growth in export during the last five years. (1= Increased, 2= Decreased, 3=No Change,) If Increased, please specify the range of increase in export during the last five years? (1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above) If decreased, please specify the range of decrease in export in during in the last five years? (1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above) Is your organization engaged in Imports (1=Yes, 2= No) If yes, what is the percentage of Import to Total Sales (1=1-10%, 2=10-25%, 3=25-50%, 4=50-75% 5=Above 75%) If yes, the level of import of raw material for your companys production requirement. (1=0-10%, 2=10-25%, 3=25-50%, 4=50-75% 5= 75 & above) | Page No. 51
5.1 5.1.1
5.1.2
5.2 5.3 5.4
5.5 6.0
6.1 6.2 6.2.1
6.2.2
6.3 6.3.1 6.4
6.5
The level of import of finished products by your company? (1=0-10%, 2=10-25%, 3=25-50%, 4=50-75% 5= 75 & above) Please specify the major country from where you are importing finished products. ___________________________________________ Please mention your export destinations Product Description Countries you were trading in the past
6.5.1
6.6 6.6.1
6.6.2
Product Description
Countries you are Currently Please mention the trading with (Country Name) name of competing Countries Also specify the Competitive Advantage of that Country: (1=Cost of Product, 2= Latest Technology, 3=Quality of product, 4=Other)
6.6.3
Product Description
Countries you are planning to trade in near future
6.7
6.8
7.0
7.1
The factor (s) hindering the quantity of imports (1= Import pricing Scheme,2= Import licenses, 3=Import quotas, 4=Import prohibition, 5=Quantitative safeguard measures, 6=Export restraint arrangement,7=Non trade Barriers, 8=Any other) The factor (s) affecting the export of your products (1=Export taxes, 2= Export quantitative restriction, 3=Certification, 4=Inspection fee, 5=State trading administration, 6=Dual pricing schemes, 6=Non trade barriers,7=Any other) Domestic Market Related Information What is the market share of your product? Please specify the range (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) What is the percentage of Domestic Sales to Total Sales (1=1-10%, 2=10-25%, 3=25-50%, 4=50-75% 5=Above 75%) | Page No. 52
7.2 7.2.1
7.2.2
7.7
8.0
8.1
8.2
8.3 8.3.1 8.3.2 8.3.3 8.3.4 8.3.5 8.3.6 8.3.7 8.3.8 8.4 8.4.1 8.4.2 8.4.3 8.4.4 8.4.5 8.4.6
Growth in the domestic demand of your products after 2000 during last five years. (1= Increased, 2= Decreased, 3=No Change) If Increased, please specify the range of increase in the domestic demand of your products in the last five years? (1=1-5%, 2=510%, 3=10-25%, 4=25% & above) If decreased, please specify the range of decrease in the domestic demand of your products in the last five years? (1=1-5%, 2=510%, 3=10-25%, 4=25% & above) Extent of competition in the domestic market from local companies? Please specify the range [1=Intense (>20 players), 2=Medium (10to 20 Players), 3=Low (0-10 Players), 4=No Competition] Cost Related Information The Cost competitiveness of your company during the last five years. (1= Increased, 2= Decreased, 3=No Change, 4=Other) If Increased, please specify the range of increase in cost competitiveness of your products in the last five years? (1=110%, 2=10-25%, 3=25-50%, 4=50% & above) If decreased, please specify the range of decrease in cost competitiveness of your products in the last five years? (1=110%, 2=10-25%, 3=25-50%, 4=50% & above) Please indicate the Current percentage (%) contribution of the following components to total cost of production Wages & Salaries (1=1-10%, 2=10-25%, 3=25-50%, 4=50% & above) Other labor related cost (1=1-10%, 2=10-25%, 3=25-50%, 4=Above 50%) Raw Materials (1=1-10%, 2=10-25%, 3=25-50%, 4=50% & above) Fuel and Energy (1=1-10%, 2=10-25%, 3=25-50%, 4=50% & above) Interest Charges (1=1-10%, 2=10-25%, 3=25-50%, 4=50% & above) Security (1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above) Taxes (1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above) Others(1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above) Please indicate the Change in contribution of the following components to total cost of production The share of wages and salaries in the cost of production over the last five years (1= Increased, 2= Decreased, 3=No Change) The share of Other labor related cost in the cost of production over the last five years,( 1= Increased, 2= Decreased, 3=No Change) The share of Raw Materials in the cost of production over the last five years, (1= Increased, 2= Decreased, 3=No Change The share of Interest Charges in the cost of production over the last five years, (1= Increased, 2= Decreased, 3=No Change) The share of Security in the cost of production over the last five years, (1= Increased, 2= Decreased, 3=No Change) The share of taxes in the cost of production over the last five years, (1= Increased, 2= Decreased, 3=No Change | Page No. 53
8.4.7
The share of other elements in the cost of production over the last five years, 1= Increased, 2= Decreased, 3=No Change) 8.5.1 Is there any increase in cost of production of your product in recent years due to increase in exports of raw materials. (1= Yes, 2=No) If yes, please specify the range (1=1-5%, 2=5-10%, 3=1025%, 4=25% & above) 8.6.1 Is there any increase in cost of production of your product in recent years due to decrease in imports of raw materials. . (1= Yes, 2=No). (1= Yes, 2=No)If yes, please specify the range (1=15%, 2=5-10%, 3=10-25%, 4=25% & above) 8.7.1 Is there any decrease in cost of production of your product in recent years due to increase in exports of raw materials? If yes, please specify the range (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) 8.8.1 Is there any decrease in cost of production of your product in recent years due to increase in imports of raw materials. . (1= Yes, 2=No) If yes, please specify the range (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) 9 Price Related Information The Price competitiveness of your products during the last five years. (1= Increased, 2= Decreased, 3=No Change) 9.1.1 If Increased, please specify the range of increase in Price competitiveness of your products in the last five years? (1=010%, 2=10-25%, 3=25-50%, 4=50% & above) 9.1.2 If decreased, please specify the range of decrease in Price competitiveness of your products in the last five years? (1=010%, 2=10-25%, 3=25-50%, 4=50% & above) 9.2.1 Is there any increase in Price of your product during the last five years due to increase in imports of raw materials? (1= Yes, 2=No) If yes, please specify (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) 9.3.1 Is there any increase in Price of your product in last five years due to increase in exports of raw materials. (1= Yes, 2=No) If yes, please specify the range (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) 9.4.1 Is there any decrease in Price of your product in last five years due to increase in imports of finished goods. (1= Yes, 2=No) If yes, please specify the range (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) 9.5.1 Is there any decrease in Price of your product in last five years due to decrease in exports of finished goods. (1= Yes, 2=No) If yes, please specify the range (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) 10.0 Factors Affecting Productivity 10.1 The Labour Productivity (out put produced relative to number of workers/employees used) of your firm during the last fiveyear (1= Increased, 2= Decreased, 3=No Change) 10.1.1 If Increased, please specify the range of increase in Labour Productivity in your enterprise in the last five years? (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above)
| Page No.
54
10.1.2 If decreased, please specify the range of decrease in Labour Productivity in your enterprise in the last five years? (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) 10.2 The Total Factor Productivity (i.e., output produced relative to all inputs used) of your enterprise during the last five-years (1= Increased, 2= Decreased, 3=No Change) 10.2.1 If Increased, please specify the range of increase in Total factor Productivity in your enterprise in the last five years? (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) 10.2.2 If decreased, please specify the range of decrease in Tota factor Productivity in your enterprise in the last five years? (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above) 10.3 Identify the main factors that have affected labour productivity in your Enterprise in the last five Years (Please mention five) 1. 2. 3. 4. 5. 10.4 Identify the main factors that have affected Total Factor productivity in your Enterprise in the last five Years (Please mention five) 1. 2. 3. 4. 5. Have you introduced any measures that have enhanced the labour productivity of your enterprise in the last five years? (1= yes, 2= No) 10.5.1 If yes, (Please Specify) 10.5
10.5.2 If No, Please indicate the reasons
| Page No.
55
Have you introduced any measures that have enhanced the Total Factor Productivity of your enterprise in the last five years? (1= yes, 2= No) 10.6.1 If yes, (Please Specify) 10.6
10.6.2 If No, Please indicate the reasons
11.0
Factors responsible for Competitiveness The competitiveness of your company during the last five years. (1= Increased, 2= Decreased, 3=No Change) 11.1 Availability of Raw materials for production? 1=Imported, 2=Within country, 3=Within Region/State, 4= Other (Please specify) 11.2 Availability of Quality Human Resource in the last five years (1= Increased, 2= Decreased, 3= No change) 11.3 Does the present Educational system in the country is catering to the industrys requirement? (1= yes, 2= No) 11.4 Labour relations in the state are productive? (1= yes, 2= No) 11.5 Are you satisfied with the quality of infrastructure (both Social and physical) available in your state? (1= yes, 2= No) 11.5.1 If No, Please specify the physical infrastructure that requires attention towards development and maintenance? (1= Road, 2= Rail, 3=Airport, 4= Port, 5= Power, 6= ICT, 7= Cold storages & warehouses, 8=Other) (Please Specify) 11.5.2 If No, Please specify the social infrastructure that requires an attention towards development and maintenance? (1=School, 2= Higher Education, 3=Technical Institution, 4= General Hospital, 5= Specialized Medical Centres, 5=Other) (Please Specify) 11.6 Are you satisfied with the Governments interface with business/private sector ? (1= yes, 2= No) 11.7 Is your State government is friendly towards investors? (1= yes, 2= No) 11.8 Are you satisfied with the extent of computerization of government records? (1= yes, 2= No) 11.9 Corruption level in the government during last five years. (1= Increased, 2= Decreased, 3=No Change) 11.10 Are you satisfied with the Transparency in your government? (1= yes, 2= No)
| Page No.
56
12.0 Identify the main factors that have affected the competitiveness of your industry in the last five Years (Please mention five) 1. 2. 3. 4. 5. 13.0 What measures have you taken over the past five years to boost Competitiveness in the domestic and export markets?
14.0 What are your views regarding the enhancement of Productivity and Competitiveness in India? (Please mention)
15. Policy Interventions that are urgently required from the Government for enhancing productivity and competitiveness of your sector (Please mention five) 1. 2. 3. 4. 5. 16.0. Any other comments : (Please specify )
Thank you Name of the Official/Investigator:-----------------------------------------------Signature : --------------------------------------------------------Place of Survey : ---------------------------Date: -----------------------
| Page No.
57
Annexure -2
List of Textile Manufacturing Units contacted for the NPC Field Survey
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Silk Fashion Creator, J.12/63-83, Bumkar Colony Matiimuvns, Varanasi, U.P. Ansari Nisa Collection, No. NH A17/74 A4-1, Pathani Tula Vns, Varanasi, U.P. Diamond Silk Coop.Soc. Ltd., J.11/63-101, Bunker Colony, NatiInli, Varanasi, U.P. Usman Gani Ltd. Over Nice Silk Manufacturing Coop Society Ltd. Milap Silk Industrial Coop Society Ltd., Sheena Enterprises, 412-D, Defence Colony, Kanpur 208 010 Gramin Bunkar Society, Near Thai Budish Temple, Sarnath, Varanasi 2211007 Lotus Handicrafts, 10/492, Khalasi Line, Kanpur, 208001, UP Ganesh Polytex Ltd., 113/216-B, Swaroop Nagar, Kanpur- 208002, U.P. Amitech Industries Ltd., B-20, UPSC, Industrial Area, Site 1, Kanpur 208 022 U.P. Motilal Dulichand (P) Ltd., 20, Industrial Estate, Kanpur 208012, U.P. Ravika Creations Pvt. Ltd., 62/4 Bommanahalli Village, Begur, Hobli, Bangalore 560068 JAL Exports 188 Agara Village, HSR Layout, Bangalore 34 Color Lines, MRRJ Complex, 839/1, Sector I, HSR Layout, Agara Post, Bangalore 560034 Devatha Silk Kendra, Niranjan Silk Place, Avenue Road, Banglore 02 Entity Garments 105, 2nd Floor, Robby House, JM Road, Avenue Cross, Bangalore 560 002 M.G. Creations, 9 Anekallappa Mata Lane, Narayana, Bangalore 560 002 Texport Overseas, 86D-1, Industrial Suburb, II Stage, Yeshwanthpur, Bangalore 560022 M/s R.N. Oswal Hosiery Factory, Circular Road, Shivpuri, Behind Ved Bhawan 104 Vardhman Spinning & General Mills, Chandigarh Road, Ludhiana M/s Mahavir Spinning Mills Ltd., Chandigarh Road, Ludhiana Nahar Spinning Mills Limited, 373, Industrial Area, Ludhiana M/s Venus Garments (India) Ltd., G.T. Road, Near Jalandhar by pass, LDH-141005 M/s Suyansh Knitt. Pvt. Ltd., H-7, Textile Colony, Indus. Area A Ldh. M/s Duke Fashions (India) Ltd., G.T. Road (West), Jalandhar by pass, Ldh. M/s Kansal Hosiery Exports, Industrial Area-A, Ldh-141 003 Coated Sales Co. P. Ltd., C-1304/14, GIDC III Phase, Near Gamma Colour, Vapi396 195 , Gujarat Alok Industries Ltd., Peninsula Tower, A Wing, G.K. Marg, Lower Parel, Mumbai 400013 Mekatronics Products Pvt. Ltd., 104, MG House Commercial Complex, Wazirpur Industrial Area, New Delhi 110052 Sahib Textiles, T-55, Balfit Nagar, West Patel Nagar, New Delhi 110001 Fab Knit Pvt. Ltd., 10/6781, D B Gupta Road, Dev Nagar, Karol Bag, New Delhi 110005 A S Silks, 1656/15, 1st Floor, Govindpuri, Kalka Ji, New Delhi 110019 Delhi Tirpal House, Agarwal Tower Plot. No. 3 Block C II, 3rd Floor 302Pitam Pura, New Delhi 88 Santogen Silk Mills Ltd., A-13, MIDC, Patalganga, Dist. Raigard Nahar Industrial Enterprises Ltd.,21st Mile Stone, Ambala, Chandigarh Road, PO
| Page No.
58
Dappar, Lalru, Punjab 37 Kiran Foot Comfort Pvt. Ltd., F-21, Malviya Industrial Area, Jaipur 302017 38 Sare Orginal, F 133, Sitapura Industrial Area, Jaipur 22 Rajasthan Syntex Ltd., A-27 Nawalakha Apt, Bharat Mata Path, DLB Marg, C 39 Scheme, Jaipur 40 BSL, Flat No. 11, 2nd Floor, Ankur Apt. 5-6 Jyoti Nager East, Jaipur- 302005 41 Jagjanan Textiles limited, S-25, Shyam nagar, Jaipur 42 Cheer Sagar,E-194, Industrial Area, Mansarover, Jaipur 43 Major Exports Ltd, E-258, Mansarover, Jaipur-20 44 Ratan Textile Pvt. Ltd, F-200-201, EPIP, Sitapura Industrial area , Jaipur -22 45 A & A Exporters, G1-156 EPIP, Riico Industrial Area, Jaipur-302022 46 Art & Craft Exclusies, G-108, RiicoWtrsal Area, Mansorover, Jaipur 47 Avon Creations, G-112, Mansarover Industrial Area, Jaipur 302020 48 Kandoi Impex Pvt. Ltd., F-128, Sitapura Industrial Area, Sitapura, Jaipur 302022 49 Arham Spinning Mills, 6th Milestone Tisaraacwar Road, Bhiwadi 301018 50 Shree Rajasthan Texchem , A-2 Nawalahkha Apt. Bharat Mata Path JLB Marg, Shree Shyam Filamens, A-2 Nawalakha Apts Bharat Mata Pata JLB Marg, Schem 51 Jaipur Gampaklal Gopaldas/Toppot Nxt-G, 4, Inreeram Industrial Polign, Vonna Magdpla 52 RD, Jurat 53 Vikram Kiniter (P) Ltd., , C-1/121, GIDC Pandersa, Surat, Gujarat 54 S.P. Garments, No. 11 Peranbur Hiesh Road, Chennai 12 55 Design Clasic Exports, AVV Koil Street, Chimmayanlages stage I, TN 56 Dignity Innovation, G-15, 1st Main Road, Ambattur Industry Estate, Chennai 600058 57 Aarveen International, 23&23A, Pulla Avenue,Shenoy Nagar, Chennai 30 58 Big Apple Exports Pvt. Ltd., 17, Mount Road, Saidapet, Chennai 600 015 59 Virgose Fashions, 6 Ram Kumar Rakshit Lane, 2nd Floor, Kolkata 7 60 Shree Balaji Export, FlatNo 505, 11 Clive Row, Kolkata GINI & JONY APPARELS P. LTD., 47 EPIP PHASE-I, JHANJHARI, HIMACHAL 61 PRADESH 62 Winsome Textdile Industries Ltd., Industrial Area, Baddi Solan, SCO 191-192, 34 A 63 Vardhman Textile Mills, 55, HPSIDC BADDI, HP 64 Gwaritex Industries, 79 Industrial Area Ph-II, Panchkula, Haryana 65 V.K. Textiles, Shop No. 147, Industrial Area Baddi - 173 205 Nalagarn Solan 66 Sobhagia Clothing Company, 6-8 EPIP-I Jharnagri H.P. 67 G&J Aprarew (P) Ltd., 2 D, EPPP Phase I 68 Golden Textiles, 155, Industrial Area, Baddi, HP 69 Janvi HosiERY Industry Ltd., GOI, Jamala Swarghat Road, Nalagan, HP 70 GPI Textile India Ltd., Bharatgast Road, Nalagarh, HP 71 Saluja Exim Manifacturing Ltd., 106 Industrial Area, HP 72 Birla Textiles Ltd., Bhatolikalan, SAI Road, Baddi 73 Jalan Suit and Sons, G06/3, Katra Asharfi, Chandni Chock, New Delhi 74 Jalan Suit & Saris, 506/3, Katra Asharfi, Channdni Chouk, New Delhi 75 Nandhari Tent Manufacturers, 115,9/54, DB Gupta Road Karol Bagh, New Delhi 76 Fancy Silk Expressions, 5493/9, Shyam Market, Nai Sarak Chandni Chowk, New Delhi 77 Prashad Textiles limited, 427-28,katra choubar, Chandni chowk , New Delhi-6 78 Wires & Fabriks (SA) Ltd., 63, Industrial Area, Jhotwara, Jaipth 302012 Usha Dyeing Works, 2, Prem Colony, Behind hanuman Tubewell , Tonk road, Jaipur79 11
| Page No.
59
80 United Exports, B-24, Mogappair Industrial Estate, Chennai 81 ZEUS International, No. 223/228, Agara Post, Sarjapur Road, Bangalore - 560 034 U.D.G. Pvt. Ltd., #428/6/1/12, First Floor, Hongosandra, Off. Begur Road, 82 Bommanahalli, Bangalore-560 068 Excel Synthetic Pvt. Ltd., Site No. 62/4, 13, 14, 15, Begur Road, 11th 'A' Cross, Ward 83 No. 12 Bommanahalli, Bangalore - 560 068 84 J.P. Kumar Socks, 18/19, 2nd Cross, Behind Essac Ind. Estate, Chikanahalli Road, Bommanahalli, Bangalore-68 85 IIMAGES CLOTHING CO. # 543/7, (Old No. 62/1), CMC Khata No. 229, Kodichikkanahalli Main Road, Bommanahalli, Begur Hobli, Bangalore-560 068 86 Venkatadatta Silks & Cottons, # 764, 9th Main, 34th Cross, 4th Block, Bangalore 87 Suchitra silk pvt. Ltd., 567/1, Burugal Mult Road, V.V. 88 Datta Silk. Exports(P) Ltd.,No.217/2, Cubbonpet Main Road, Bangalore 89 Indus.Garments(India) Private Limited, Unit-V, 78/1, Daddakannehalli Carmel/Rane Post Sarjapur Main Road, 90 Goodwill Fabrics Pvt Ltd., 250 Ring Road, Sarjapur, Bangalore 91 Zenith Koplavitch Exports Ltd., Bangalore 92 JaiShri Bhujanga 6, South Crossd Road, Basavana gudi,Bangalore 93 Orion, 20/1,9th Cross, Cubbonpet,
| Page No.
60
Annexure - 3 Methodology Adopted for Partial and Total Factor Productivity Estimations
Productivity can be measured in terms of both partial and total factor productivity methods. Most commonly used partial productivity measures are Labour Productivity and Capital Productivity estimations. The partial productivities are measured as a ratio of Gross Value Added per worker or per unit of capital invested. The partial productivity methodology is based on the premise ceteris paribus that only two factor inputs used in the production process such as labour and capital. Details regarding the data construction and estimation procedures are given as below. A. Labour Productivity Labour input is considered as the total number of persons engaged in the production process. The data has been compiled from Annual Survey of Industries summary results for factory sector data base for various years. The Gross Value Added data has been first deflated by the whole sale price index for the textiles(Broad Category). The formula for calculating the labour productivity can be given as follows:
Labour Productivity (LP) =
((Gross Value Added/Price Index) x 100) Number of Persons Engaged
Labour Productivity Growth Once the labour productivity has been calculated, we can estimate annual labour productivity growth using the growth rate estimation formula :
Labour Productivity Growth
Labour Productivity t Labour productivity t-1 Labour Productivity t-1
100
Labour Productivity Growth Index: To understand the trends in Labour Productivity Growth, we can construct year to year growth rates as an index of Labour Productivity Growth Rate. Initial value of the series is considered equal to 100 and the subsequent years Labour Productivity Growth Rates are added to it cumulatively. This will provide us an index of Labour Productivity Growth for the textile and garment sector for the years starting from 1995-96 to 2005-06.
| Page No.
61
B. Capital Productivity Since capital investment is given as the book value in the ASI data, we have to estimate the capital stock in operation for every year. The Capital stock estimation follows the procedure given below. Capital Stock Estimation
To calculate capital stock we have used Perpetual Inventory Method. Capital stock has been estimated from the book value of Gross Fixed Capital compiled from the ASI Database. Fixed capital data from ASI for the textiles and garments sector taken for the years 1995-2006. The book value of fixed capital at 1995-96 is multiplied by Gross net ratio of capital for getting initial year capital stock. Incremental capital during the year 1996-97 at constant prices (deflated with the machinery and machine tools prices at 1993-94 prices) is added to the initial year capital stock of 1995-96 for getting the capital stock for 1996-97at constant prices.
Incremental capital = ((Fixed capital 1996-97 - Fixed capital 1995-96) To calculate the capital productivity we have divided Gross Value Added at constant prices by the estimated fixed capital. The formula used to calculate the capital productivity is as follows:
Capital Productivity=
Gross Value Added at constant prices Capital stock at constant prices
Capital Productivity Growth Capital Productivity Growth Rate =
Capital Productivity t - Capital Productivity t-1 x 100 Capital Productivity t-1
Capital Productivity Growth Index As in the case of Labour Productivity Growth Index, Capital Productivity Growth Index is also constructed on a scale 100.
Gross Value Added Growth Rate =
GVAt GVA t-1 GVA t-1
x 100
| Page No.
62
Capital Productivity Growth Index: To make the index of Capital Productivity Growth Rate, first of all assume the initial value of series equal to 100 then add subsequent terms of the Capital Productivity Growth Rate cumulatively. This will give us the index value of Capital Productivity Growth Rate. C. Total-Factor Productivity Growth (TFPG) Total Factor productivity Growth has been estimated using the Divisia index method. Here, it is considered that Total Factor Productivity Growth is the result of technical progress. Technical progress or TFPG is estimated as a residue of the difference between output growth rates and input growth rates. o o
TFPG= GVA [WL x Labour Productivity Growth + WK x Capital Productivity Growth]
Where WL + WK = 1 and WL = Wage Share in Total Cost WK= Capital Share in Total Cost Total-Factor Productivity Growth Index As in the case of Labour and capital productivity , Total Factor Productivity Growth Index can also be constructed with the base 100 for the initial year and adding the subsequent growth rates cumulatively to it.
| Page No.
63

Textiles Clothing

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Textiles Clothing

Uploaded by

Copyright:

Available Formats

CONTENT

The Changing Scenario

4.2.1. Textiles and Garments Clusters in India

23-24 24-25 25-27 27-29

Region-wise findings of major Problems faced by the Textile Sector

49-57 58-60 61-63

5.5 5.6 5.7 5.8 5.9 5.10

5.13 5.14 5.15 5.16

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Chapter II Textile and Garments Sector Global Scenario

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Manufacturing Mining Electricity Secondary Sector Source: CRISIL-NMCC, March 2009

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Chapter III Indian Textile & Garments Sector A Review

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

2002- 200303 04 39.03 37.03

2004- 200505 06 37.47 37.51 (P) 5.20

Trend Growth Rate (%) 0.26

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

31460 36102 42034 45378 49542 53389 57491 5.15

61.82 10393 61.58 11504 61.41 12645 7.97

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Table 3.4: Production of Fibres and Yarn

ManMade Fibres Raw Wool Raw Silk

1244 45.20 18.31

2.49 -0.93 2.18

49.50 50.50 48.50 44.60 44.90 45.10

15.21 15.86 17.35 16.32 15.74 16.50 17.31 18.76

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Table 3.6: Textile Exports (Rs. millions)

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Cotton Textiles Manmade Textiles

National Productivity Council, New Delhi

Productivity & Competitiveness of Indian Manufacturing Textile & Garments Sector

Australia 54148 59313 China PRC --Source: DGCI & S (2009)