1 Cotton & Textile Industry of India & Development prospects for the future. Presented By : Mohit D....
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Transcript of 1 Cotton & Textile Industry of India & Development prospects for the future. Presented By : Mohit D....
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Cotton & Textile Industry of India & Cotton & Textile Industry of India & Development prospects for the future.Development prospects for the future.
Presented By :Presented By : Mohit D. Shah Mohit D. Shah
DirectorDirector
Sept 17, 2007(Full Version)
Gill & Company Pvt Ltd.
Mumbai, India
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StructureStructure
Indian Textile Industry – at a glance
Share of cotton v/s MMF Indian raw cotton scenario “ Future Trends”
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Indian Textile IndustryIndian Textile Industry- at a glance- at a glance
Directly employs approximately 35 mn people
14% share in India’s total exports earnings 14% share in national industrial production 5.5% contribution to the GDP 4% share in the global textile trade 3% share in the global apparel market 25 % share in world trade of cotton yarn Thus making it the second largest exporter
of cotton yarn in the world after Pakistan
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On the Raw Cotton FrontOn the Raw Cotton Front
Approximately 9.5 mn hectares of area under cotton cultivation largest in the world & is approx 27% of the world area under cotton
2nd largest producer of raw cotton 2nd largest consumer of raw cotton Poised to become 2nd largest exporter of
raw cotton after USA
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Mills And Installed Capacity In Mills And Installed Capacity In Organised SectorOrganised Sector
Year 2005-06
No Of Mills 2953Spindles Installed (MN)
37.51Rotors (000) 395Shuttle Looms (000) 73Shuttle Less Looms 9788
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ReasonsReasons MFA that had governed textile trade between nations
since 1974 expired on 31st Dec 2004 Economic liberalisation in the last decade made the
industry globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital expenditure for modernisation and expansion under Technology Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery
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SummarySummary India has a high scope of producing
quality yarn and fabric A tremendous future growth potential
lies due to : Strong raw cotton base Strong entrepreneurial class Flexibility in production of small order lots Adequate labour supply at relatively
competitive wages Cultural comfort with US and Europe Growing domestic market Buyers preference for India after China English speaking population a language
advantage India will continue to be a major and
dominant player in textiles
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Share of Cotton Share of Cotton v/s v/s
Man Made FibersMan Made Fibers
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Consumption of Textile FibersConsumption of Textile Fibers (in ‘000 Tons)(in ‘000 Tons)
Cotton Non – Cotton
Total Percentage Share
Cotton MMF
( Thousand Tons)
2001-2002 2701 1833 4534 60 40
2002-2003 2699 2003 4702 57 43
2003-2004 2652 2092 4744 56 44
2004-2005 2886 2133 5019 58 42
2005-2006 3222 2136 5358 60 40
2006-2007 3580 2341 5921 60 40
2011-2012 5914 5914 11828 50 50
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Footnote
Share of MMF & Cotton has remained around 40% & 60% in 2006-2007
However it is expected that share of MMF will increase to 50% by 2011-2012
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Reasons Reasons In absolute terms, cotton consumption will rise but its
share in the total fibre/filament basket decline Consumption of MMF will rise on account of consumer
preference due to easy-care properties, durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than cotton
Infact prices of MMF (mainly polyester) have been lower than comparable cottons
Productivity of manufacturing units is higher when MMF is blended with cotton or when 100% of MMF is used
Easy and adequate availability of MMF all year round
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Summary Summary
Despite the increasing trend of MMF vis-a-vis cotton, India will still continue to be one of the largest and major consumer of raw cotton in the years to come
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Indian raw cotton scenarioIndian raw cotton scenario
Area Yield Production and Consumption Exports & Imports Cotton balance sheet
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Area Area ( in mn hectares )( in mn hectares )
0
2
4
6
8
10
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
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Reasons Reasons
Steadily rising over the last three years from 8.79 mn hectares in 2004-05 to 9.16 mn hectares in 2006-07
Will increase to 9.5 mn hectares in 2007-2008
Cotton prices have been generally remunerative for farmers in comparison to other cash crops such as rice, wheat, chilies, ground nut, soyabean and tobacco
Large portion of area, where farmers have no alternative but to plant cotton
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Yield Yield ( in kg. / hec. )( in kg. / hec. )
0
100
200
300
400
500
600
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
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Reasons Reasons Dramatic increase From 399 kgs per hectare in 2003-2004 to
521kgs per hectare in 2006-2007 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008 Although still much lower compared to the world
average of 740 kgs/ hecter
Reasons for increased yields. Phenomenal spread of hybrid and Bt. Cottons Nearly 70 % under bt cotton in 2007-2008 Adoption of scientific agronomic practices by
farmers Increase in area under irrigated cotton Augmented development of good quality seeds by
private sector Development efforts by Technology Mission on
Cotton, East India Cotton Association and other NGOs
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Production & Consumption Production & Consumption ( in mn bales of 480 lbs )( in mn bales of 480 lbs )
0
5
10
15
20
25
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
production consumption
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Reasons Reasons
Production Has posted sharp increase during the last three
years From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales 2007 – 08
Reason for sharp Favourable climatic conditions Increased area under cotton cultivation Dramatic improvement in productivity from bt
cotton Better seed management
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Consumption Also increased significantly From
16.88 mn bales in 2003 – 04 to 23.5 mn bales in 2006 – 07
Forecasted at 25.5 mn bales 2007 – 08
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Imports and Exports of Indian CottonImports and Exports of Indian Cotton
Over Last Five YearsOver Last Five Years (in mn bales of 480 lbs)(in mn bales of 480 lbs)
0
2
4
6
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Imports Exports
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ReasonsReasons New paradigm shift From being a net importer to a net exporter (second
largest in the world) Large exportable surplus to continue in the years to come India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s 82% of the total crop is Rollar Ginned Modernisation of Ginning & Pressing Factories / Market
Yards under TMC schemes Spinning value of Indian cotton fibre is far better because
of manual harvesting and gentle processing which minimises the damage to fibre
Geographical proximity leading to advantage in transit cost and transit time
Indian varieties well established in all major consuming markets like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
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Cotton Balance SheetCotton Balance Sheet ( in mn bales of 480 lbs each ) ( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)
2003-04
(Oct.–Sept)
2004-05
(Oct.-Sept)
2005-06
(Oct.-Sept)
2006-07
(Oct.-Sept)
2007-08
(Oct.-Sept)
% world World
2007-08
Supply:
Opening Stock as on 1st October
3.125 1.875 1.640 5.625 4.062 3.804 56.79
Estimated Crop 10.625 13.828 18.984 18.828 21.875 24.576 20.9% 117.18
Imports 1.380 0.507 0.950 0.390 0.429 0.546 40.08
Total Availability 15.130 16.211 21.575 24.843 26.367 28.928 214.65
Demand:
Consumption :
By Mills 11.126 11.738 12.811 14.062 15.625 17.187 13.5% 127.78
Non-Mill user 1.154 0.781 1.131 1.484 1.562 1.171
Small Scale Units 0.908 1.015 1.294 1.562 1.171 1.562
Exports 0.065 10.351 0.714 3.671 4.296 4.687 11.8% 39.7
Total Off-take 13.255 14.570 15.950 20.781 22.656 24.609 167.48
Carry over as on 30th September
1.875 1.640 5.625 4.062 3.711 4.320 8.4% 51.56
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SummarySummary The cotton balance sheet reveals
The is a large carry over for last three years is declining
India has been a major exporter of cotton due large surplus
In 2007-2008 India’s % share in World production will be 20.9%, consumption13.5% , exports11.8% and ending stocks 8.4% repectively
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Future TrendsFuture Trends
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FutureTrends In Cotton Production And FutureTrends In Cotton Production And Consumption Consumption (in mn bales of 480 lbs)(in mn bales of 480 lbs)
0
5
10
15
20
25
30
35
2007-08 2008-09 2009-10 2010-11 2011-12
Production Consumption
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ReasonsReasons Production forecasted to increase from
24.2 mn bales in 2007-2008 to 32.00 mn bales in 2011-2012
Consumption forecasted to increase from 19.90 mn bales in 2007-2008 to 31.00 mn bales reducing thus wide gap between production & consumption
Momentum gained by Indian cotton sector in recent years will be maintained with continued focus on further improvement in quality and sustained increase in productivity atleast to the world average by the year 2010
In short term, i.e. in next 3 years, India is likely to have surplus cotton available for exports
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Future Trend of India in the Future Trend of India in the Global Textile & Clothing MarketGlobal Textile & Clothing Market
Current global textiles and clothing industries a $480 billion is expected to grow to about $700 billion by the year 2012
Based on 9% economy growth India’s Textile & Apparel sector in the global
textile export trade likely to grow from 4% in 2005 to 7% in 2012
India’s textile exports is likely to grow from $20 billion in 2006-07 to $50 billion in 2011-12
Increase in per capita fiber consumption in the country as disposal incomes rise in the middle class the size of the domestic market estimated to grow from $30 billion in 2006-2007 to $43billion by 2011-2012
Employment likely to grow from 35 mn in 2006 to 40 mn in 2012
Total spindles likely to increase from 37.00 mn in 2006 to 48 mn spindles in 2012
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Homework to be done & Areas of Homework to be done & Areas of concernconcern
Improvement required in the Govt labour policy High transaction & power cost Fabric/ Processing still to gear to meet
international standards Rupee appreciation against the dollar over last
two months by about 10%. Among our major competitors Sri Lanka, Bangladesh & Vietnam witnessed depreciation of their currencies and countries like China & Indonesia had negligible currency appreciation
Rising interest rates Possible rise in Inflation Competition from other emerging markets such
as Brazil, Russia, China, Pakistan & Bangladesh India’s dependence on monsoons for cotton
crop
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Thank youThank you