India

India is emerging rapidly as a competitor to China in terms of quality of manufactured goods. The Indian textiles industry is set for strong growth, buoyed by strong domestic consumption as well as export demand.

Market Size

Fabric production by the mill sector registered a growth of six per cent during April 2013-July 2014. Fabric production hosiery sector increased by eight per cent during April-July 2014. Total cloth production grew by two per cent during April-July 2014.

With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with several international players like Marks & Spencer, Guess and Next having entered the Indian market. The organised apparel segment is expected to grow at a compound annual growth rate (CAGR) of more than 13 per cent over a 10-year period.

The potential size of the Indian textiles and apparel industry is expected to reach US$223 billion by 2021, according to a report by Technopak Advisors.

Opportunities

India has witnessed an average GDP growth of approximately 7 per cent in the past decade and forms one of the largest emerging economies of the world. The majority stakeholder in this growth is the mass consuming population of the country. Consumers today are much more evolved and their demands and needs are very different from those of consumers a decade ago.

Apart from the demographic and economic changes, there have been many other transformational changes that lead to a growth in the aspirations and wants of an average consumer:

  • Young population: The median age of the Indian consumer is 26 years with maximum population lying in the age bracket of 15-60 years. It is expected that India will add another 140 million people in this consuming age group by 2020. This is one of the lowest median ages among the developing countries. This population has more aspiration, is more aware and has a higher spending power and will consume a greater number of categories than their parents.
  • Higher disposable income: According to the Indian census report, the number of households with an annual income of US$7000 or more is going to treble from about 30 million today to 100 million by 2020. There will be approximately 400 million individuals in the middle to high income bracket by 2020.
  • Growing media influence/exposure: The role of technology has changed the way people receive/share information. From social networking sites to electronic channels, information travels at the speed of light. The changing lifestyle and “western” culture has also influenced consumer demands and aspirations. People are willing to consume and develop a lifestyle akin to a developed world’s consumer.
  • Rising Eve power: With the growing importance given to a girl’s education and financial independence, there has been a rise in the total number of working women. An estimated 40-50 million working women, in the age group.
    Source: Technopak Advisors

Investments

The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted foreign direct investment (FDI) worth US$1,495.07 million during April 2000 to September 2014.

Government Initiatives

The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector and retail sector for single brands under the automatic route.
Some of initiatives taken by the government to further promote the industry are:

  • The Ministry of Textiles will implement the scheme for in-situ upgradation of plain powerlooms for SSI sector in Surat and Ahmedabad powerloom clusters in Gujarat.
  • The government has taken a number of initiatives for the welfare and development of the weavers and the handloom sector. Under revival, reform and restructuring (RRR) package, financial assistance to the tune of Rs 1,019 crore (US$164.72 million) has been approved and the Indian government has released Rs 741 crore (US$119.78 million).
  • Encouraged by the turnaround in textiles exports, the Government of India plans to set up a US$60 billion target for the current financial year, a jump of over 30 per cent from the previous financial year.
  • The Cabinet Committee on Economic Affairs (CCEA) has approved an Integrated Processing Development Scheme (IPDS) with a corpus of Rs 500 crore (US$80.82 million) to make textiles processing units more environment-friendly and globally competitive.
    Source: Ministry of textiles, India

The global textile and apparel industry at present is divided into distinct production and consumption hubs. Production has been shifting from developed western countries to China, India, Bangladesh, Pakistan, Turkey and other Southeast Asian countries. The US, European Union and Japan contribute the most to total textiles and apparel consumption of the world.

Consumption in India and China is also rising. Bilateral and multilateral trade agreements will increasingly play an important role in shaping up global industry structure. With change in business dynamics and global market environment the industry is witnessing more inorganic growth. In order to address changing consumer purchase behaviour, more value retailers and e-tailing players are entering the industry.

India has always been a strong player in the global textiles and apparel industry. With an integrated supply chain, political and economic stability, vast resource of skilled manpower and entrepreneurial spirit, India is expected to make its presence stronger among textiles and apparel exporting countries.

Growing domestic market and increasing opportunities in global trade will create enormous scope for Indian players. In addition to favourable demographic dividend and relatively stable economic conditions, increasing disposable income, greater media influence, higher brand consciousness is acting as growth drivers for India’s domestic market. Kidswear, innerwear, workwear & uniforms, online apparel retailing and home textiles are evolving as promising segments for Indian players. To tap the above opportunities and sustain businesses in this changing consumption scenario, companies will need to align themselves with the market requirements and develop required competencies. Without a doubt, there are ample opportunities that exist in the textile and apparel space.