A deeper look into all aspects of the textile and clothing industries of India

A deeper look into all aspects of the textile and clothing industries of India

As we are all aware, the textile and clothing industries are of importance to India and its economy and a major contributor to exports. We also know that the governmental Working Group initiated by the Planning Commission on boosting exports during the 12th Five Year Plan (2012-17) projects textiles and clothing exports at USD 64.41 billion by the end of March 2017

India’s textile industry accounts for 14 % of industrial production or 4 % of GDP Gross Domestic Product, employs 45 million people and generates almost 11 % to the country’s total exports.

The evolution 

It is worthwhile to look back at the evolution of India’s Textiles & Clothing (T&C), particularly after the liberation of worldwide quotas in 2004. India’s T&C exports had a robust growth of 25 % in 2005-06 or a growth of USD 3.5 billion as against 2004-05 in value terms, resulting in a total of USD 17.52 billion. Growth was continuing in 2006-07, and the two industries exports were up 9.28 % to USD 19.15 billion, to be followed by another uptrend of 15.7 % in 2007-08 but a decline of over 5 % in 2008-09 and totalled USD 21.22 billion, in 2009-10 the mark was set at USD 22.41 billion and in 2010-11 at USD 27.47 billion. According to the Government of India, Ministry of Textiles and its International Trade Section it grew further 20.05 % in 2011-12 to a total of USD 33.31 billion.  In the fiscal period of 2012-13 the growth rate was 4.82 % in USD and 8.10 % in local currency, and readymade garments accounted for almost 39 % of total textiles exports.

Apparel and cotton textiles products jointly contribute nearly 74 % of total textiles exports. The textile palette, including handlooms and handicrafts, are exported to almost 100 countries, but the USA and the EU account for around two thirds of India’s textiles exports. Other major export destinations are namely China, U.A.E., Sri Lanka, Saudi Arabia, Republic of Korea, Bangladesh, Turkey, Pakistan, Brazil, Hong Kong, Canada and Egypt, and others.

The development can be had also from Table 1, including India’s share in T&C world exports

Table 1 indian_textile_and_clothing_exports_intl_trade_section-3

 

 

In the global exports of Textiles, India ranked as third largest exporter, trailing EU27 and China (latest WTO data 2011) and in exports of clothing, India ranked as fifth largest exporter, trailing Bangladesh, Hong Kong, EU27 and China.

Table 2 gives the latest data by the WTO World Trade Secretariat of the ten major T&C exporters in 2012

 Table 2 textile_and_clothing_exports-India_2-3

 

Some more details on the two sectors

The provisional results of the fiscal period 2011-12 shows a surge in exports of handloom products of 68.51 %, Coir & Coir Manufactures (400000 artisans) 40.49 %, Cotton Textiles 37,23 %, manmade textiles 25.99 % and apparel ( RMG Ready Made Garments) 24.80 %, wool and woollen textiles 20.97 %, and last, but not least jute 4.72 %.

The trend during fiscal period 2012-13 total textile exports reached a value of around USD 31,71 billion (USD 33.31 billion), meaning a decline of 4.82 %, however in local currency there was an increase of 8.10 %. The targets were initially set at USD 38 billion and have been revised to USD 39.60 billion and the facts can be had from Table 3

Table-3_textile_and_clothing_exports_intl_trade_section-4

 

 

Since India is known as a major sourcing country, it is obvious that important retailers and brands do entertain sourcing and liaison offices in that country, such as Marks & Spencer, Haggar Clothing, Kellwood, Little Label, Boules Trading Company, Castle, Alster International, Quest Apparel Inc. 

Table 4 presents the top 20 destinations for the Indian T&C sectors exports in the past three years

Table-5-textile_and_clothing_exports_intl_trade_section-13

 

 

 

In 2012 exports to the EU dropped 13 %, resulting in a USD 1.3 billion shortfall of T&C exports, as against 2011. The details can be had from Table 5

Table-7-indian_textile_and_clothing_exports_intl_trade_section-15

 

The categories of the Indian textile exports can be had in details from Table 6

Table-4-textile_and_clothing_exports_intl_trade_section-12

 

 

Table 7 reflects in detail the categories of India’s textile imports between 2007 to 2011

 Table-6textile_and_clothing_exports_intl_trade_section-14

 

India’s  government sight

India’s authorities pledge at WTO World Trade Organisation level that a urgent realignment is required on behalf of the Indian apparel sector. They demand a duty drawback / incentives under Free Trade Agreements such as duty reductions in fabric/yarn imports. A most preferred sales plan is needed, and there were already two rounds of discussion. TUFS (Technology Upgrading Fund Scheme) committed liabilities and invited new sanctions. At the processing stage there is a need to provide technical and financial assistance to processing units to enable the industry to meet environmental sustainability without impeding to concur in the international markets. At the apparel stage, an amendment to labour laws is urgent, to permit longer hours of overtime with due compensation, and to allow flexi-hiring of labour, and in accordance to variations in orders. There is a need to adopt an IT model for the development of infrastructure of workers housing and workers dormitories, along with work spaces, to enable the expansion of scale. Further encouragement and support is needed for innovative start-up models, like hiring of built up work space for a move-in and begin strategy that does not require investment up front. In addition, India’s textiles sector is looking forward to the finalisation of the India EU BTIA that would open up trade in textiles with EU countries.

India’s official support to the textile sectors

The government of India praises the support given to textile exports through various initiatives to enable the sector to increase its global market share. The promotion measures form part of the Union Budget 2012-13, as well as in the Foreign Trade Policy 2009-14, including incentives under the focus of market scheme and product scheme, and by enhancing the coverage of market linked focus product scheme for textile products and extension of market linked focus on product scheme.

In the handloom sector the government has announced a financial package to allow – among other measures – a waiver of loans of handloom cooperatives, individual weavers, and for interest subsidy, margin money and credit guarantee for fresh loans. Further a debt restructuring package to help loss making textile mills, to be administered case by case by the banks within the prudential norms of the Reserve Bank of India.

The most recent measures in detail: 2 % interest subvention scheme on local currency export credit is available to certain specific export sectors, namely handicrafts, carpets, handloom and apparels Processed agriculture products, sports goods and toys. In addition SMEs in all sectors can make use of these provisions. The scheme ended March 31, 2013 and was extended to March 31, 2014.

Five new countries (New Zealand, Cayman Islands, Latvia, Lithuania and Bulgaria) were added under the focus market scheme, while Eritrea was added under the special focus market scheme.

Under FMS Duty, credit of 3 % interest is given on the FOB value of exports, while under the Duty Credit the rate is 4 %. Sixty new products have been incorporated under the market linked focus product scheme, including engineering, rubber, textiles, drugs and pharmaceutical products, and others, as well three countries (Taiwan, Thailand and Czech Republic) were newly incorporated. More than 100 new products were added under the focus product scheme, including engineering, textiles, chemicals, drugs, pharmaceuticals, paper, books, publication and printed material, all of these benefit from a two percent Duty Credit.

TUFS will continue in the 12th plan (2013-17) with an investment target of INR 1.51 trillion (around USD 27.6 billion), and with a focus on the modernisation of the power loom sector. The allocation for 2013-14 is INR 24 billion (USD 4390 million).

Further INR 500 million (USD 9.1 million) for the ongoing fiscal year are earmarked for environmental measures, including effluent treatment infrastructure. In addition the Ministry of Textile has been allocated the same amount as an incentive for setting up Apparel Parks to house apparel manufacturing units.

Working capital and term loans are granted at concessional interest of six percent in the handloom sector. Total budget allocation of INR 960 million (USD 17.6 million) for the interest subvention scheme for 150000 weavers and 1800 primary cooperative societies.

Custom Duty on raw silk will be increased from 5 % to 15 % to protect the domestic sericulture.  There is a total relief granted from excise duty for all handmade carpets, carpets and other textile floor coverings of coir and jute, whether or not handmade (Chapter 57).

Zero excise duty, prior to budget 2011-12, has been restored on readymade garments (branded, before 3.5 %) and made ups. Also cotton will enjoy this benefit at fibre stage, in case of spun yarn, there will be a duty of 12 % at the fibre stage.

 

 

 


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