Made in india textile and garments industry

International EconomicsGroup 4 (Amit, Anoop, Bhavia, Rahul and Vivek)

PGDM Executive 2014-15

To understand the factors

influencing the purchase intention of branded Perfumes

Introduction

Advantage India

Key Facts

Strategies Adopted

Growth Drivers

1

2

3

4

5

Policy Support

FDI in Textiles & Garments

Opportunities

Conclusion

7

8

9

10

AGENDA

US, Canada Europe

ASEAN

China

South Asia

Over The Years, Production Has Converged Towards Asia From Western Countries

Production Hubs

Consumption Centres

CAFTA / CBI

South Asia

Japan

China

INTRODUCTION

CountryTrade Value in

2000(US$ mn)

CAGR since 2000

Korea Republic 5027 -12%

Dominican Republic 2555 -10%

USA 8629 -8%

Mexico 8631 -7%

Canada 328 -6%

CountryTrade Value in

2000 (US$ mn)

CAGR since 2000

Vietnam 1821 22%

Cambodia 970 18%

China 36071 16%

Bangladesh 5067 10%

India 5960 8%

Pakistan 2144 8%

Declining Apparel Exports of Western / Developed Countries

Growing Apparel Exports of Asian Countries

INTRODUCTION

TEXTILES AND APPARELEXECUTIVE SUMMARY … (1/2)

Rising per capita income,favourable demographics and a

shift in preference to brandedproducts to boost demand

Favourable trade policies andsuperior quality to drive textile

exports

Increase in domestic demandset to boost cloth production

CAGR: 11.2% 141

100

67

2014 2017E 2021E

2014 2017E 2021E

CAGR: 10.8%82

6540

2014 2017E 2021E

2014 2017E 2021E

CAGR: 20.8% 112

63.5

33

The domestic textile andapparel industry in India is

estimated to reach USD 141billion by 2021 and USD 100billion by 2017 from USD 67

billion in 2014

Textile and apparel exportsfrom India is expected to

increase to USD 82 billion by2021 and to USD 65 billion by2017 from USD 40 billion in

2014

Total cloth production in India isexpected to grow to 112 billion

square metres by FY17 from63.5 billion square metres in

FY14

2014 2015(P)* 2017E

Source: Ministry of Textiles, Make in India

INDIA SNAPSHOT

TEXTILES AND APPARELEXECUTIVE SUMMARY … (2/2)

Rising government focus andfavourable policies to support

the industry

CAGR: 1.7% 4.25

4.18

11th plan outlay Proposed 12th planoutlay

In the 12th Five Year Plan, theGovernment plans to provide abudgetary support to textiles ofUSD 4.25 billion against USD

4.18 billion in the 11th Five YearPlan

USD (billions)

Source: Ministry of Textiles

INDIA SNAPSHOT

TEXTILES AND APPAREL

2014•

MarketValue:

USD99billion

•

•

•

Robust demandIncreased penetration of organized •

retail, favorable demographics, andrising income levels to drive textiledemand

Growth in building and constructionwill continue to drive demand for non-clothing textiles

AdvantageIndia

Competitiveadvantage •

Abundant availability of raw materialssuch as cotton, wool, silk and jute

•

India enjoys a comparative advantagein terms of skilled manpower and incost of production relative to major

textile producers •

Increasing investmentsHuge investments are being made byGovernment under Scheme forIntegrated Textile Parks (SITP)-(USD 184.98 Million) and TechnologyUp gradation Fund Scheme (TUFS)-(term loan sanctioned in Feb,2015-USD 2198.45 Million) to encouragemore private equity and to train

workforce.

Policy support100 per cent FDI (automatic route) isallowed in the Indian textile sector

Under Union Budget 2015-16,government has allocated USD 39.81

million for integrated parks in India

Free trade with ASEAN countries andproposed agreement with EuropeanUnion will boost exports

2023F

MarketValue:

USD226billion

Source: Federation of Indian Chambers of Commerce and Industry

ADVANTAGE INDIA


The textile and apparel industry can be broadly divided into two segments:

Yarn and fibre (include natural and man-made)

Processed fabrics (including woolen textiles, silk textiles, jute textiles, cotton textiles and technical textiles),Readymade Garments (RMGs) and apparel

Key segments of the textile industry

Process

Output

Rawmaterial

Cotton,jute, silk,

wool

Ginning Spinning

Fibre* Yarn

Weaving/knitting

Fabric

Processing

Processedfabric

Garment/apparel

production

Finalgarment/Apparel

Yarn and fibre segment Woollen textiles

Silk textiles

Jute textiles Technical textiles

TEXTILE AND APPAREL SECTOR


The fundamental strength of the textile industry in India is its strong production base of wide range of fibre/yarns from naturalfibres like cotton, jute, silk and wool to synthetic /man-made fibres like polyester, viscose, nylon and acrylic

According to UN Comtrade data released in June, 2014

India was announced as the world’s second largest exporter of textiles and clothing in the world

And 6th largest exporter of clothing only

India accounts 63 per cent of the market share of textiles and garments

India is the 2nd biggest producer of silk and cotton

Indian textile industry accounts for about 24 per cent of the world’s spindle capacity and 8 per cent of global rotor capacity

India has the highest loom capacity (including hand looms) with 63 per cent of the world’s market share

India accounts for about 14 per cent of the world’s production of textile fibres and yarns (largest producer of jute, secondlargest producer of silk and cotton; and third largest in cellulosic fibre)

Source: Textile Ministry, Make in India

KEY FACTS


Textile plays a major role in the Indian economy

It contributes 14 per cent to industrial production and4 per cent to GDP

With over 45 million people, the industry is one ofthe largest source of employment generation in the

country

The industry accounts for nearly 13 per cent of totalexports

The size of India’s textile market in 2014 was USD 99.0billion which is expected to touch USD 226 billion market by

2023 at a CAGR of 8.7 per cent between 2009-23E

India's textile market size (USD billion)

226

CAGR: 8.7%

89 9970 78

2009 2010 2011 2014 2023E


GROWTH OVER THE YEARS


Exports have been a core feature of India’s textile andapparel sector, a fact corroborated by trade figures

Exports grew to USD 35.4 billion in FY14 from USD 17.6billion in FY06, implying a CAGR of 9.1 per cent

Exports during FY15 (between April-November) touchedUSD 14.6 billion

However, in FY14 India’s Textile Exports crossed the markof FY12 also and touched USD 35.4 Billion.

India's textile trade (USD billion)

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14* FY15*

Exports Imports


GROWTH OVER THE YEARS……


Readymade garments was the largest contributor to totaltextile and apparel exports from India in FY15 the segmenthad a share of 40 per cent

Cotton and man-made textiles were the major contributorswith shares of 31 per cent and 16 per cent, respectively

Shares in India’s textile exports (FY15)

Ready Made Garments

3%10%

16% 40%

31%

Cotton Textiles

Man Made Textiles

Handicrafts (Carpet,Handloom, Coir,

Handicrafts excludingcarpets)

Others (Silk, Wool,Jute)


EXPORTS DISRTIBUTION


Company Business areas

Welspun India Ltd Home textiles, bathrobes, terry towels

Vardhman Group Yarn, fabric, sewing threads, acrylic fiber

Alok Industries Ltd

Raymond Ltd

Arvind Mills Ltd

Home textiles, woven and knitted apparel fabric,garments and polyester yarn

Worsted suiting, tailored clothing, denim, shirting,woollen outerwear

Spinning, weaving, processing and garmentproduction (denims, shirting, khakis and knitwear)

Bombay Dyeing & Manufacturing Bed linen, towels, furnishings, fabric for suits, shirts,Company Ltd dresses and saris in cotton and polyester blends

Garden Silk Mills Ltd Dyed and printed fabric

KEY PLAYERS


• Ministry of Textiles is encouraging investments through increasing focus on schemes suchIncreasing investment in

TUFS

Multi-Fibre Arrangement(MFA)

Public-PrivatePartnership (PPP)

Technical textiles

as Technology Up-gradation Fund Scheme (TUFS) and cluster development activities• TUFS for the textile sector to continue in the 12th Five Year plan with an investment target

of USD 24.8 billion

• With the expiry of MFA in January 2005, cotton prices in India are now fully integrated with international rates. In 2014, the government has cleared 13 proposal of new textile parks

in different states.

• The Ministry of Textiles commenced an initiative to establish institutes under the Public- Private Partnership (PPP) model to encourage private sector participation in the

development of the industry

• Technical textiles, which has been growing at around twice the rate of textiles for clothing applications over the past few years, is now expected to post a CAGR of 20 per cent over

FY11-17• USD 70.83 million has been allocated to promote the use of Geotechnical textiles in the

North East states. In FY14


TRENDS IN INDIA’S TEXTILE SECTOR


Focus on high growthdomestic market

Focus on backwardintegration

Focus on forwardintegration

Diversification

• Welspun India is currently focusing on setting up a shop-in-shop strategy, where it will open shops in large retail stores, curtailing capex and risk, to focus on the domestic

market

• Welspun India plans to increase its internal supply of yarn and greige from ~35 per cent in February 2014 to 70-75 per cent by June 2014, through its backward integration strategy

• Vardhman Textiles Ltd has entered into garment manufacturing business through a collaboration with Nisshinbo, a Japanese manufacturer of yarns

• Raymond group under its group company J.K.Helene Curtis is looking to ramp up male grooming segment by unleashing new variants of shampoos and deos

STRATEGIES ADOPTED

GROWTH DRIVERS

Growing demand

Rising demand inexports

Inviting

Increasing demandin domestic market

due to changingtaste and

preferences

Growing populationdriving demand for

textiles

Policy support

100 per cent FDI intextile sector

Government settingup SITPs and Mega

Cluster Zones

Increasing loansunder TUFS

Increasing investments

Growing domesticand foreign

i

nvestments

Resulting in

Commitment ofUSD140 billion of

foreign investments

Governmentinvestment

schemes (TCIDSand APES)

Source: Ministry of TextilesNotes: TCIDS - Textile Center Infrastructure Development Scheme, APES - Apparel Park for Exports Scheme

GROWTH DRIVERS

CONTINUED SUPPORT TO TEXTILE SECTOR BY THE GOVERNMENT IN FY16 BUDGET

• USD 252 million has been allocated forTUFS scheme

•

•

USD 24.8 million has been allocated forNational Handloom Development

ProgramUSD 33.34 million has been allocated forHuman Resource Development

Stress onmechanisation

•

Union BudgetAllocation of USD 39.8million for apparel parks

Some of the key tax reliefsin Budget FY16:

• Zero excise duty for the Tax sops andcotton products financial

• Structure of the excise packageduty on Man-Made Fibrehas been same

•

Infrastructuresupport

•

under SITPUSD 26.05 million havebeen allocated for NERTextile Promotion

SchemeUSD 1.33 million hasbeen allocated to Trade

Facilitation Centre andCraft Museum

Source: Union Budget FY15-16, Ministry of TextileNotes: SITP - Scheme for Integrated Textile Parks,TUFS - Technology Up gradation Fund Scheme, NER - North East Region

CONTINUED SUPPORT …..


By 2014, India’s population had almost doubled comparedto figures 30 years before

The IMF expects India’s population to touch 1.34

India‘s population in billions

CAGR: 1.8%

1.261.34

billion by end-2019 as compared to 1.34 billion in2014

India’s growing population has been a key driver of textileconsumption growth in the country

Moreover, according to World Bank, urban populationaccounts for 32 per cent of the total population of India.This also works as demand driver due to changing taste

and preferences in the urban part of India

It has been complemented by a young population which isgrowing and at the same time is exposed to changing tastesand fashion

Complementing this factor is rising female workforceparticipation in the country

1.03

0.85

0.69

1980 1990 2000

1.2

2010 2014 2019F

Source: World Bank

CHANGING DEMOGRAPHICS…..


Capacity built over years has led to low cost of productionper unit in India’s textile industry; this has lent a strongcompetitive advantage to the country’s textile exportersrelative to key global peers

Growing Textile and Clothing Exports from India(USD billion)

35.4CAGR: 9.13% 33.3

The sector has also witnessed increasing outsourcing overthe years as Indian players moved up the value chain frombeing mere converters to vendor partners of global retailgiants

The strong performance of textile exports is reflected in thevalue of exports from the sector over the years. Textileexports grew by 11.7 per cent to USD 35.4 billion in FY14.

However, there is a growth (CAGR) of 9.13 per cent overthe period of FY07 to FY14

22.219.2

21.1

31.7

27.8

24.122.4

In the coming decades, Africa and Latin America could verywell turn out to be key markets for Indian textiles

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15*

Source: Ministry of Textiles, Budget 2015

(*data shown for FY15 is from April to November only)

STRONG GLOBAL DEMAND


Technology Up-gradation Fund Scheme

(TUFS)

National Textile Policy -2000

Foreign DirectInvestment

Scheme for IntegratedTextiles Parks (SITP)

Technical textileindustry

• TUFS for the textile sector to continue in the 12th Five Year Plan with an investment targetof USD 24.8 billion

• Investment was made to promote modernisation and up-gradation of the textile industry byproviding credit at reduced rates

• The policy was introduced for the overall development of textile industry• Key areas of focus include technological upgrades, enhancement of productivity, product

diversification and financing arrangements

• FDI of up to 100 per cent is allowed in the textile sector through the automatic route

• SITP was set up in 2005 to provide necessary infrastructure to new textile units; under SITP, 40 projects (worth USD900 million) have been sanctioned• The planned outlay for the textiles and apparel sector under the 11th Five Year Plan (20012-17) was USD 2.9 billion

• Government of India has planned an increase in the fund outlay for technical textiles industry to more than USD 117 million during the current 12th Five Year Plan (2012-17)

POLICY SUPPORT


•

•

North: Kashmir, Ludhiana andPanipat account for 80 per cent

of woollens in India

West: Ahmedabad, Mumbai,Surat, Rajkot, Indore and

Vadodara are the key places forcotton industry

• East: Bihar for jute, parts of UttarPradesh for woollen and Bengal

for cotton and jute industry

Major textile andapparel zones

• South: Tirpur,Coimabtore andMadurai for hosiery.

• Bengaluru, Mysore and Chennaifor silk

KEY TEXTILES AND APPAREL ZONES IN INDIA

100 per cent FDI is approved in the sector

Indian Textile industry experienced noticeable growth in theFY15, as FDI increased to USD 1587.83 million in FY15from USD 1424.92 million in FY14. In addition, till May’15FDI inflow in Textile industry stood at USD 1647.09 million.

During FY10-15, FDI in textiles and apparel industry grew ata CAGR of 14.21 per cent

The textiles industry in India is experiencing a significantincrease in collaboration between global majors anddomestic companies

International apparel giants, such as Hugo Boss, LizClaiborne, Diesel and Kanz, have already startedoperations in India

Trends of FDI in Textile Industry (USD million)

1,647.091587.83

1424.92

1226.021122.17

956.97817.26

FY10 FY11 FY12 FY13 FY14 FY15 FY16*

Source: Ministry of Commerce and Industry

FOREIGN INVESTMENTS INTO THE SECTOR


Immense growth potential

• The Indian textile industry is setfor strong growth, buoyed by

both strong domesticconsumption as well as exportdemand

• The sector is expected to bereached to USD 226 billion by

FY2023

• Population is expected to reachto 1.34 billion by FY2019

• Urbanisation is expected tosupport higher growth due tochange in fashion and trends

Private sector participation in silkproduction

• The Central Silk Board setstargets for raw silk productionand encourages farmers andprivate players to grow silk

• To achieve these targets,alliances with the private sector,

especially major agro-basedindustries in pre-cocoon and

post-cocoon segments has beenencouraged

Proposed FDI in multi-brand retail

• For the textile industry, theproposed hike in FDI limit in

multi-brand retail will bring inmore players, thereby providingmore options to consumers

• It will also bring in greaterinvestments along the entire

value chain - from agriculturalproduction to final manufacturedgoods

• With global retail brands assuredof a domestic foothold,

outsourcing will also risesignificantly

OPPURTUNITIES


Retail sector offers growthpotential

• With consumerism anddisposable income on the rise,

the retail sector has experienceda rapid growth in the pastdecade with several internationalplayers like Marks & Spencer,Guess and Next having enteredIndian market

• The organised apparel segmentis expected to grow at a

Compound Annual Growth Rate(CAGR) of more than 13 per cent

over a 10-year period

Centers of Excellence (CoE) forresearch and technical training

• The CoEs are aimed at creatingtesting and evaluation facilitiesas well as developing resourcecentres and training facilities

• Existing four CoEs, BTRA forGeotech, SITRA for Meditech,NITRA for Protech andSASMIRA for Agrotech, wouldbe upgraded in terms ofdevelopment of incubationcentre and support for

development of prototypes

• Fund support would be providedfor appointing experts to develop

these facilities

Foreign investments

• The government is takinginitiatives to attract foreign

investments in the textile sectorthrough promotional visits to

countries such as Japan,Germany, Italy and France

Notes: BTRA - The Bombay Textile Research Association, SITRA - South India Textile Research Association,NITRA - Northern India Textile Research Association, SASMIRA - Synthetic & Art Silk Mills Research Association

OPPURTUNITIES

TEXTILES AND APPARELALOK INDUSTRIES: INTEGRATED TEXTILE SOLUTIONS

Focus on specialityfabrics; plans to

Polyester yarn

Home textile

Garments - woven &knitted

Embroidery

Apparel fabric

Cotton andblended yarn

Tie-ups WithGlobal Retail

GiantsAcquisition of

QS to gain retailholding in the

UK -2007

Organic growthin textiles 1995*

Financial andtechnical

collaborationthrough JV

enter in technicaltextiles

JV with NTC - FY152008 ~USD4.01

billionturnover

2007 ISO 9001,2000 and three

other internationalaccreditations

FY05USD272

millionturnover

1986 1988 1990 1992 1993 1995 2003 2004 2006 2007 2008 2010 2011 2012 2013 2014 2015

Source: Company Annual Reports and Presentation,

ALOK INDUSTRIES


The city has more than 5,000 garment manufacturing and job work units, and is one of the most organized processing andfinishing garment clusters in India

Its hosiery hub became the first textile cluster in India to comply with zero liquid discharge guidelines

Exports from Tirupur (USD billion)• The textiles industry in Tirupur contributes about 80 per cent to India’s hosiery exports and around 3 Percent in tot export trade

• Exports from Tirupur increased at a CAGR of 8.3per cent from USD 1.4 billion in FY05 to USD 3

billion in FY 14

• The Government of India granted the city the statusof Town of Export Excellence

• To diversify from cotton, firms in Tirupur isevaluating the process to manufacture swim wear

and sports wear

2.52.4

1.9

1.4

FY05 FY06 FY07 FY08

CAGR: 8.3%

2.72.5 2.4

FY09 FY10 FY11

3.0

2.62.4

FY12 FY13 FY14


TIRUPUR: TEXTILES HUB OF INDIA

THANK YOU

Made in india textile and garments industry

Economy & Finance

Transcript of Made in india textile and garments industry