textiles and apparel textile document

Source: Ministry of Textiles, Planning Commission, Technopak, Aranca Research Note: CAGR - Compound Annual Growth Rate Policy support Abundant raw material and increasing demand for e

Source: Ministry of Textiles, Planning Commission, Technopak, Aranca Research

Note: CAGR - Compound Annual Growth Rate

Total Cloth Production (million Sqr Mtr.)

Rising per capita income, favourable

demographics and a shift in preference to

branded products to boost demand

Favourable trade policies and superior

quality to drive textile exports

Increase in domestic demand set to boost

cloth production

The domestic textile and apparel industry

in India is estimated to reach USD141 billion by 2021 from USD58 billion in 2011

Textile and apparel exports from India is expected to increase to USD82 billion by

2021 from USD31 billion in 2011

Total cloth production in India is expected

to grow to 111.848 billion square metres

by FY17 from 61.811 billion square metres

in FY11

CAGR: 10.2%

CAGR: 9.3%

CAGR: 10.4%

Source: Ministry of Textiles, Planning Commission, Technopak, Aranca Research

Note: CAGR - Compound Annual Growth Rate

Policy support

Abundant raw material and increasing

demand for exports to boost fibre

production

Changing lifestyle and increasing demand

for quality products set to fuel demand for

apparel

Rising government focus and favourable

policies to support the industry

Total fibre production in India is expected

to increase to 9.886 billion kilogram by FY17 from 6.585 billion kilogram in FY11

Demand for apparel is likely to rise to USD122 billion by 2017 from USD65

billion in FY11

In the 12 th Five Year Plan, the Government

of India plans to spend USD9.1 billion against USD4 billion in the 11 th Five Year

Plan on textiles 4.0

• The engineering sector is delicensed;

100 per cent FDI is allowed in the sector

• Due to policy support, there was cumulative FDI of USD14.0 billion into the sector over April 2000 – February

2012, making up 8.6 per cent of total FDI into the country in that period Growing demand

Source: Technopak; Aranca Research

Notes: SITP - Scheme for Integrated Textile Park; FDI - Foreign Direct Investment,

2021 E - Estimated figure for 2020; ASEAN - Association of Southeast Asian Nations

Robust demand

• Increased penetration of organised retail, favourable demographics, and rising income levels to drive textile demand

• Growth in building and construction will continue to drive demand for non-clothing textiles

Policy support

• 100 per cent FDI (automatic route)

is allowed in the Indian textile sector

• SITP was approved in July 2005 to facilitate setting up of textiles parks with world class infrastructure

• Free trade with ASEAN countries and proposed agreement with European Union will boost exports

Competitive advantage

• Abundant availability of raw materials such as cotton, wool, silk and jute

• India enjoys a comparative advantage in terms of skilled manpower and in cost of production relative to major textile producers

Advantage India

Notes: NTP - National Textile Policy; NTC - National Textiles Corporation; ASEAN - Association of Southeast Asian Nations,

TUFS - Technology Upgradation Fund Scheme; TMC - Technology Mission on Cotton, EU - European Union

• The first cotton

in 1901 to 417 in

1945

• Out of 423 textile mills of the undivided India, India received 409 after partition and the remaining 14 went to Pakistan

• In 1999, TUFS was set up to provide easy access to capital for technological up gradation

• TMC was launched

to address issues related to low productivity and infrastructure

• In 2000, NTP was announced for the overall development

of the textile and apparel industry

appropriate support infrastructure

• After MFA cotton prices are aligned with global prices

• Technical textile industry will be a new growth avenue

• Free trade agreement with ASEAN countries and proposed

agreement with EU under discussion

Source: Aranca Research

Note: * Including cotton, jute, silk, wool and manmade fibres

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

Cotton, jute, silk, wool

fabric

Final garment/

Weaving/

Knitting

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

India is the world’s second largest producer of textiles and garments

Indian textile industry accounts for about 24 per cent of the world’s spindle capacity and eight 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, second largest producer of silk and cotton; and third largest in cellulosic fibre)

Source: Textile Ministry, Aranca Research

India's Textile Market Size (USD Billion) Textile plays major role in the Indian economy

It accounts for 27 per cent of foreign exchange

inflows

It contributes 14 per cent to industrial production and

4 per cent to GDP

With over 45 million people, the industry is one of

the largest source of employment generation in the

country

The industry accounts for nearly 11 per cent of total

exports

The size of India’s textile market in 2011 was USD89.0

billion; the market is expected to expand at a CAGR of 10.1

per cent over 2009–21 Note: CAGR - Compound Annual Growth Rate, E - Estimated Source: Technopak, Ministry of Textiles, Aranca Research

Shares in India’s Textile and Apparel Sector in 2012 Apparel constitute a large share in the overall sector

In 2012, apparel had a share of 69 per cent of the

overall market; textiles contributed the remaining 31

per cent

To improve technical skills in apparel industry

government established 75 apparel training and

design centres across India

National Institute of Fashion Technologies played

pioneering role in growth of apparel industry and

exports

To promote apparel exports 12 locations has been

approved by the government to set up apparel parks

Note: NIFT - National Institute of Fashion technology

69%

Textile

Production of raw cotton grew to 35.3 million bales in FY12,

up from about 28.0 million bales in FY07

During the same period, production expanded at a CAGR of

4.7 per cent; its annual growth was at 4.7 per cent in FY12

Of overall amount of raw cotton produced in the country,

domestic consumption totalled 25 million bales, while 8.5

million bales were exported

Production of Raw Cotton (Million Bales)

Source: Ministry of Textiles, Aranca Research

Note: CAGR - Compounded Annual Growth Rate

one Bale - 217.7 kilogram

• Raw cotton and man-made fibres are major segments in this category

• Raw wool and raw silk are other components – their production levels are much lower

Production of man-made fibre has also been on an upward

trend

Production stood at 1.231 million tonnes in FY12 with the

figure reinforcing a recovery from 2009 levels

During 9MFY13, production increased to 0.945 million

tonnes from 0.921 million tonnes in the same period last

year

Production of Man-made Fibre (Million Tonnes)

Source: Ministry of Textiles, Aranca Research

Source: Ministry of Textiles, Aranca Research

Note: P - Data for FY12 is provisional

Production of Yarn (Million Tonnes) Production of yarn grew to 5.8 million tonnes in FY12 from

5.2 million tonnes in FY07, implying a CAGR of 2.4 per cent

Cotton yarn accounts for the largest share in total yarn

production; in FY12, the segment’s share amounted to 53.6

1.522

1.549

1.463

1.162

Cotton Yarn Other Spun Yarn Manmade Filament Yarn

Source: Ministry of Textiles, Aranca Research

Notes: Sq Mtr is Square meter

Fabric Production (million sq mtr) Fabric production rose to 59,605 million square metres in

FY12 from 52,665 million square metres in FY07, implying a

CAGR of 2.5 per cent

The major segment is cotton yarn, which accounted for

more than 50 per cent in FY12

During 9MFY13, fabric production was 50,553 million

Cotton 100% Non Cotton Blended

Source: Ministry of Textiles, Aranca Research

Note: P - Data for FY12 is provisional

India's textile trade (USD billion) Exports have been a core feature of India’s textile and

apparel sector, a fact corroborated by trade figures

Exports grew to USD33.3 billion in FY12 from USD17.6

billion in FY06, implying a CAGR of 11.2 per cent

FY12 was a particularly good year for the sector, with

exports surging at an annual rate of 19.8 per cent 17.6 19.1

Source: Ministry of Textiles, Aranca Research

Note: Others include coir & coir manufacturers and jute,

P - Data for FY12 is provisional

Shares in India’s textile exports (FY12P) Readymade garments was the largest contributor to total

textile and apparel exports from India in FY12P; the

segment had a share of 39 per cent

Cotton and man-made textiles were the major contributors

with shares of 34 per cent and 17 per cent, respectively

Man-made Textiles Handicrafts

Silk & Handloom

Woolen &

Others

Source: Annual Reports, Aranca Research

Welspun India Ltd Home textiles, bathrobes, terry towels

Vardhman Group Yarn, fabric, sewing threads, acrylic fiber

Alok Industries Ltd Home textiles, woven and knitted apparel fabric,

garments and polyester yarn

Raymond Ltd Worsted suiting, tailored clothing, denim, shirting,

woollen outerwear

Arvind Mills Ltd Spinning, weaving, processing and garment

production (denims, shirting, khakis and knitwear)

Bombay Dyeing & Manufacturing

Company Ltd

Bed linen, towels, furnishings, fabric for suits, shirts, dresses and saris in cotton and polyester blends

Garden Silk Mills Ltd Dyed and printed fabric

Source: Ministry of Textiles, Aranca Research

Note: TUFS - Technology Upgradation Fund Scheme

public-Technical textiles

• 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

Rising demand in

exports

Increasing investments

Growing domestic and foreign investments

Commitment of USD140 billion of foreign investments

Government investment schemes (TCIDS and APES)

Source: Ministry of Textiles, Aranca Research

Note: TCIDS - Textile Center Infrastructure Development Scheme, APES - Apparel Park for Exports Scheme

FY14 Union Budget

Stress On Mechanisation

Infrastructure Support

Tax Sops and Financial Package

• Zero excise duty for the

cotton and man-made

sector at yarn, fabric and

garment stages

• Reduction in duty for

imported textile

machinery and parts

(to 5.0 per cent from 7.5

per cent)

• Exemption on excise

duty for hand-made

carpets and textile floor

• Allocation of USD10.4 million for apparel parks under SITP

• A new Integrated Processing Development Scheme in the 12th Plan with an outlay of USD1041.5 million to address environmental concerns of the industry

• TUFS for the textile sector extended to

the 12th Five Year Plan, with an

investment target of USD2.9 billion

• Budget provides USD0.5 billion over

2013–14 for modernisation of the power

loom sector

Source: Budget FY14 - Government of India

Note: SITP - Scheme for Integrated Textile Parks, TUFS - Technology Upgradation Fund Scheme

Source: IMF, Aranca Research

Note: F - Forecasts

India‘s Population in billions

By 2010, India’s population had close to doubled compared

to figures 30 years before

The IMF expects India’s population to touch 1.31

billion by end-2017

India’s growing population has been a key driver of textile

consumption growth in the country

It has been complemented by a young population which is

growing and at the same time is exposed to changing tastes

and fashion

Complementing this factor is rising female workforce

participation in the country

Source: IMF, Mckinsey global institute April 2010, Aranca Research

Notes: E - Estimates, F - Forecasts

Trends in Per-capita Income in India (USD)

Rising incomes has been a key determinant of domestic demand for the sector; with incomes rising in the rural economy

as well, the upward push on demand from the income side is set to continue

Changing Economic Fortunes by Income

Million Household ,100%

Income segment

Source: Ministry of Textiles, Aranca Research

Growing Textile Exports from India

(USD Billion)

Capacity built over years has led to low cost of production

per unit in India’s textile industry; this has lent a strong

competitive advantage to the country’s textile exporters

relative to key global peers

The sector has also witnessed increasing outsourcing over

the years as Indian players moved up the value chain from

being mere converters to vendor partners of global retail

giants

The strong performance of textile exports is reflected in the

value of exports from the sector over the years; In FY12,

textile exports jumped by 19.4 per cent to USD33.3 billion

In the coming decades, Africa and Latin America could very

well turn out to be key markets for Indian textiles

Source: Ministry of Textiles, Techtextil, Aranca Research

Note: SME - Small and Medium Enterprises, E - Estimates

Technical Textile Industry (USD billion) The major service offerings of the technical textile industry

include thermal protection and blood-absorbing materials,

seatbelts and adhesive tapes

The technical textile industry is expected to expand at a

CAGR of 21.3 per cent during FY12–17 to USD31.3 billion

in FY17

Healthcare and infrastructure sectors are major drivers of

the technical textile industry

The government has supported the technical textile industry

with an allotment of USD1 billion for SMEs and an

exemption in custom duty for raw materials used by the

sector

Government plans to launch a USD44.2 million mission for

the promotion of technical textiles, and cleared plans to set

up a new research centre for the industry

11.9

31.3

CAGR: 21.3%

Source: Ministry of Textiles, Technopak, Aranca Research

Note: SME - Small and Medium Enterprises, E - Estimates

Indian Home Textile Industry (USD billion) India’s home textile industry is expected to expand at a

CAGR of 8.3 per cent during 2011–21 to USD8.2 billion in

2021 from USD3.7 billion in 2011

India accounts for 7 per cent of global home textiles trade

Superior quality makes companies in India a leader in the

US and the UK, contributing two-third to their exports

Indian products has gained a significant market share in

5.5

8.2

CAGR: 8.3%