INTRODUCTION OF TEXTILE INDUSTRY
Textiles are an important source of reference for the cultural studies because of their universality. Textiles have always draped the body whether human, deities, animal, floor and furniture. Unlike stone, clay, metal etc. textiles were traditionally made from biodegradable materials. Cotton) silk wool was three main materials for textiles apart from best and leaf fibers. Initially very simple technologies were used for making the textiles. The most basic skill involved spinning the fiber into yarn and then changes it to fabric by a process called weaving. The implements used for weaving and spinning were and in many parts of India still continue to be of biodegradable materials like wood .There is exist a very scant reference of the fabric making skills in the archaeological excavations. Along with the tools of their manufacture, fabric materials have long degraded in our tropical climate. Textiles consist of fibers yarns fabrics and finishes. Each of these stages has a variety of processes involved to reach the next stage. Hand and feet have even today remained the tools for various processes supported by materials like wood, terracotta, metal, yarns, beads, semiprecious stones, colors etc. The concept of the Indian textile technologies is intricately related to both, the manufacture and decoration. This may therefore be researched in a chronological framework starting from archaeological past to the contemporary times. Regional developments have been very typical to certain styles of manufacture and decorations in textiles.
The Multi-Fiber Agreement, that had governed the extent of textile trade between nations since 1962, expired on 1 January, 2005. It is expected that, post-MFA, most tariff distortions would gradually disappear and firms with robust capabilities will gain in the global trade of textile and apparel.
The prize is the $360 is market which is expected to grow to about $600 bn by the year 2010 - barely five years after the expiry of MFA. An important question facing Indian firms is whether their capabilities and their diverse supply chain are aligned to benefit from the opening up of global textile market?
The history of textiles in India dates back to the use of mordant dyes and printing blocks around 3000 BC.
The diversity of fibres found in India, intricate weaving on its state-of-art manual looms and its organic dyes attracted buyers from all over the world for centuries.
The British colonization of India and its industrial policies destroyed the innovative eco-system and left it technologically impoverished. Independent India saw the building up of textile capabilities, diversification of its product base, and its emergence, once again, as an important global player. Today, the textile and apparel sector employs 35.0 mn people (and is the 2nd largest employer), generates 1/5th of the total export earnings and contributes 4 per cent to the GDP thereby making it the largest industrial sector of the country. This textile economy is worth US $37 bn and its share of the global market is about 5.90 per cent. The sector aspires to grow its revenue to US $85bn, its export value to US $50bn and employment to 12 million by the year 2010 (Texmin 2005).
THE TTILE AND APPREL SUPPLY CHAIN
The Textile and Apparel Supply Chain comprises diverse raw material sectors, ginning facilities, spinning and extrusion processes, processing sector, weaving and knitting factories and garment (and other stitched and non-stitched) manufacturing that supply an extensive distribution channel (see Figure 1). This supply chain is perhaps one of the most diverse in terms of the raw materials used, technologies deployed and products produced.
This supply chain supplies about 70 per cent by value of its production to the domestic market. The distribution channel comprises wholesalers, distributors and a large number of small retailers selling garments and textiles. It is only recently that large retail formats are emerging thereby increasing variety as well as volume on display at a single location. Another feature of the distribution channel is the strong presence of ‘agents' who secure and consolidate orders for producers. Exports are traditionally executed through Export Houses or procurement/commissioning offices of large global apparel retailers.
It is estimated that there exist 65,000 garment units in the organized sector, of which about 88 per cent are for woven cloth while the remaining are for knits. However, only 30-40 units are large in size (as a result of long years of reservation of non-exporting garment units for the small scale sectors - a regulation that was removed recently). While these firms are spread all over the country, there are clusters emerging in the National Capital Region (NCR), Mumbai, Bangalore, Tirupur/Coimbatore, and Ludhiana employing about 3.5 mn people. According to our estimate, the total value of production in the garment sector is around Rs.1, 050-1,100 bn of which about 81 per cent comes from the domestic market. The value of Indian garments (eg. saree, dhoti, salwar kurta, etc.) is around Rs.200-250 bn. About 40 per cent of fabric for garment production is imported - a figure that is expected to rise in coming years.
The weaving and knits sector lies at the heart of the industry. In 2004-05, of the total production from the weaving sector, about 46 per cent was cotton cloth, 41 per cent was 100% non-cotton including khadi, wool and silk and 13 per cent was blended cloth. Three distinctive technologies are used in the sector - handlooms, powerlooms and knitting machines. They also represent very distinctive supply chains. The handloom sector (including khadi, silk and some wool) serves the low and the high ends of the value chain - both mass consumption products for use in rural India as well as niche products for urban & exports markets. It produces, chiefly, textiles with geographical characterization (e.g., cotton and silk sarees in Pochampally or Varanasi) and in small batches. Handloom production in 2003-04 was around 5493 mn.sq.meters of which about 82 per cent was using cotton fibre. Handloom production is mostly rural (employing about 10 million, mostly, household weavers) and revolves around master-weavers who provide designs, raw material and often the loom.
Weaving, using powerlooms was traditionally done by composite mills that combined it with spinning and processing operations. Over the years, government incentives and demand for low cost, high volume, standard products (especially sarees and grey cloth) moved the production towards powerloom factories and away from composite mills (that were essentially full line variety producers). While some like Arvind Mills or Ashima transformed themselves into competitive units, others gradually closed down. In 2003-04, there remained 223 composite mills that produced 1434 mn. sq. mts. of cloth.
Most of these mills are located in Gujarat and Maharashtra. Most of the woven cloth comes from the powerlooms (chiefly at Surat, Bhiwandi, NCR, Chennai). In 2005, there were 425,792 registered powerloom units that produced 26,947 mn. Sq. mts of cloth and employed about 4,757,383 workers. Weaving sector is predominantly small scale, has on an average 4.5 power looms per unit, suffers from outdated technology, and incurs high co-ordination costs. Knits have been more successful especially in export channels. Strong production clusters like Tirupur and Ludhiana have led to growth of accessories sector as well, albeit slowly. The hosiery sector, on the other hand, has largely a domestic focus and is growing rapidly.
The spinning sector is perhaps most competitive globally in terms of variety, unit prices and production quantity. Though cotton is the fibre of preference, man-made fibre (polyster fibre and polyster filament yarn) is also produced by about 100 large and medium size producers.
Spinning is done by 1566 mills and 1170 Small and Medium Enterprises (SME). Mills, chiefly located in North India, deploy 34.24 mn. Spindles and 0.385 mn rotors while the SME units produce their yarn on 3.29 mn spindles and 0.119 mn. Rotors producing 2270 mn kg of cotton yarn, 950 mn kg of blended yarn and about 1106 mn kg of man-made filament yarn every year. Worsted and non-worsted spindles (producing woolen yarn) have also progressively grown to 0.604 mn and 0.437 mn respectively. Spinning sector is technology intensive and productivity is affected by the quality of cotton and the cleaning process used during ginning.
The processing sector, i.e., dyeing, finishing and printing is mostly small in scale. The largest amongst these would dye and finish about 5000 m/day. The remaining are independent process houses (or part of composite mills) that use automated large batch or continuous processing and have an average scale of about 20,000 m of cloth daily. About 82.5 per cent or 10,397 units are hand processors who dye cloth or yarn manually and dry in open sunshine. Of the remaining (and these use automated and semi-automated equipment), 2076 are independent process houses.
Cotton remains the most significant raw material for the Indian textile industry. In 2003-04, 3009 mn kg of cotton was grown over 7.785 mn acres. Other fibres produced are silk (15742 tonnes), jute (10985000 bales), wool (50.7 mn kg) and man-made fibres (1100.65 mn kg).
Cotton grows mostly in western and central India, silk in southern India, jute in eastern and wool in northern India. Significant qualities of cotton, silk and wool fibres are also imported by the spinning and knitting sectors. (Except for garments, all data in this section was obtained from OTC 2004 and Texmin 2005.)
Managing such a complex supply chain requires coordination through excellent managerial practices, technology and facilitating policies.
COMPETITIVEMESS OF INDIA TEXTILE &APPAREL INDUSTRY
India is one of the few countries that own the complete supply chain in close proximity from diverse fibres to a large market. It is capable of delivering packaged products to customers comprising a variety of fibres, diverse count sizes, cloths of different weight and weave, and panoply of finishes. This permits the supply chain to mix and match variety in different segments to deliver new products and applications. This advantage is further accentuated by cost based advantages and diverse traditions in textiles.
Indian strength in spinning is now well established - on unit costs on ring yarn, open-ended (OE) yarn as well as textured yarn, Indian firms are ahead of their global competitors including China. Same is true on some woven OE yarn fabric categories (especially grey fabrics) but is not true for other woven segments. India contributes about 23 per cent of world spindles and 6 per cent of world rotors (second highest in the world after China). Fifty five per cent of total investment in technology in the last decade has been made in the spinning sector. Its share in global shuttleless loom, however, is only about 2.8 per cent of world looms (and is ranked 9th in the world). The competitiveness in the weaving sector is adversely affected by low penetration of shuttleless looms (i.e., 1.69 % of Indian looms), the unorganized nature of the sector (i.e., fragmented, small and, often, un-registered units, low investment in technology & practices especially in the powerloom, processing, handloom and knits) and higher power tariffs. There is, however, a recent trend of investment in setting up hi-tech, stand-alone mid-size weaving companies focusing on export markets. India also has the highest deployment of handlooms in the world (handlooms are low on productivity but produce specialized fabric).
While production and export of man-made fibre (and filament yarn) has increased over the years, Indian industry still lags significantly behind US, China, Europe, and Taiwan etc. (Texmin, 2005.)
Indian textile industry has suffered in the past from low productivity at both ends of the supply chain - low farm yields affecting cotton production and inefficiency in garment sector due to restriction of size and reservation. Add to this, contamination of cotton with consequent increase in cost (as it affects quality and requires installation of additional process to clean and open cotton fibres before carding operations), poor ginning (most equipment dates back to 1940s), high average defect rates in production process (which also leads to increase in effective labour and power costs), hank yarn requirement, etc. and its competitiveness gets compromised severely. Similarly, processing technology is primarily manual and small batch oriented with visual colour matching and sun drying. This leads to inconsistency in conformance quality. Lead times across the sector continue to be affected by variability in the supply chain - defect rates average over 5%, average % of orders on time is about 80%, variance in order size across firms is high (e.g., the coefficient of variability of average order size for spinning firms is about 2.6), and on an average, 16 days of sales as work-in-process inventory (the highest for garment firms) and an average of 30 days of sales in raw material inventory (the highest for spinning firms) (Chandra 2004). Some of the hurdles (eg., reservation in the garment sectors) including tariff distortions between the organized and unorganized sectors have now been systematically removed by policy initiatives of Government of India and have opened avenues for firms to compete on the basis of their capabilities.
Trade data of post-MFA performance reveals some interesting trends - Indian firms registered a 27 per cent growth in exports to US (against China's 52 per cent) during the Jan-April 2005 time period. Most of this growth has been in textiles while apparels show marginal gains. Apparels & accessories constituted 78% of global exports to USA (FICCI 2005). (India is still a relatively small yet growing player in the global apparel market.) It is expected that India will soon replace Mexico as the second largest apparel supplier to the US.
Challenges facing Indian Textile and Apparel Industry
Textile supply chains compete on low cost, high quality, accurate delivery and flexibility in variety and volume. Several challenges stand in the way of Indian firms before they can own a larger share of the global market:
Except for spinning, all other sectors suffer from the problem of scale. Indian firms are typically smaller than their Chinese or Thai counterparts and there are fewer large firms in India. Some of the Chinese large firms have 1.5 times higher spinning capacity, 1.25 times denim (and 2 times gray fabric) capacity and about 6 times more revenue in garment than their counterparts in India thereby affecting the cost structure as well as ability to attract customers with large orders. The central tendency is to add capacity once the order has been won rather than ahead of the demand. Customers go where they see both capacity and capabilities. Large capacity typically goes with standardized products. These firms need to develop the managerial capabilities required to manage large work force and design an appropriate supply chain. For the size of the Indian economy, it will have to have bigger firms producing standard products in large volumes as well as small and mid size firms producing large variety in small to mid size batches (the tension between the organized and un-organized sectors will have to be addressed first, though). Then there is the need for emergence of specialist firms that will consolidate orders, book capacities, manage warehouses and logistics of order delivery.
Three issues must be mentioned here : (a) there is a paucity of technical manpower - there exist barely 30 programmes at graduate engineering (including diploma) levels graduating about 1000 students - this is insufficient for bringing about technological change in the sector; (b) Indian firms invest very little in training its existing workforce and the skills are limited to existing proceses (Chandra 1998) (c) there is an acute shortage of trained operators and supervisors in India. It is expected that Indian firms will have to invest close to Rs. 1400 bn by year 2010 to increase its global trade to $ 50 bn. This kind of investment would require, by our calculations, about 70,000 supervisors and 1.05mn operators in the textile sector and at least 112,000 supervisors and 2.8mn operators in the apparel sector (assuming an 80:20 ratio of investment between textiles and apparel). The real bottleneck to growth is going to be availability of skilled manpower.
Cycle time is the key to competitiveness of a firm as it affects both price and delivery schedule. Cycle time reduction is strongly correlated with high first pass yield, high throughput times, and low variability in process times, low WIP and consequently cost. Indian firms have to dramatically reduce cycle times across the entire supply chain which is currently quite high (Chandra, 2004). Customs must provide a turnaround time of ½ day for an order before Indian firms can they expect to become part of larger global supply chains. Indian firms need a strong deployment of industrial engineering with particular emphasis on cellular manufacturing, JIT and statistical process control to reduce lead times on shop floors. Penetration of IT for improving productivity is particularly low in this sector.
Innovation & Technology:
A review of the products imported from China to USA during January-April 2005 reveals that the top three products in terms of percentage increase in imports were Tire Cords & Tire Fabrics (843.4% increase over the previous year), Non-woven fabrics (284.1% increase) and Textile/Fabric Finishing Mill Products (197.2% increase) (FICCI, 2005). None of these items, however, figure in the list of imports from India that have gained in these early days of post-MFA. Entry into newer application domains of industrial textiles, nano-textiles, home furnishings etc. becomes imperative if we are to grow beyond 5-6% of global market share as these are areas that are projected to grow significantly. Synthetic textiles comprise about 50 per cent of the global textile market. Indian synthetic industry, however, is not well entrenched. The Technology Upgradation Fund of the government is being used to stimulate investment in new processes. However, there is little evidence that this deployment in technology has accompanied changes in the managerial regimes - a necessary condition for increasing productivity and order winning ability.
The Indian domestic market for all textile and apparel products is estimated at $26 bn and growing. While the market is very competitive at the low end of the value chain, the mid or higher ranges are over priced (i.e., ‘dollar pricing').
Firms are not taking advantage of the large domestic market in generating economies of scale to deliver cost advantage in export markets. The Free Trade Agreement with Singapore and Thailand will allow overseas producers to meet the aspirations of domestic buyers with quality and prices that are competitive in the domestic market. Ignoring the domestic market, in the long run, will peril the export markets for domestic producers. In addition, high retail property prices and high channel margins in India will restrict growth of this market. Firms need to make their supply chain leaner in order to overcome these disadvantages.
Institutional Support: Textile policy has come long ways in reducing impediments for the industry - sometimes driven by global competition and, at other times, by international trade regulations. However, few areas of policy weakness stand out - labour reforms (which is hindering movement towards higher scale of operations by Indian firms), power availability and its quality, customs clearance and shipment operations from ports, credit for large scale investments that are needed for upgradation of technology, and development of manpower for the industry. These are problems facing several sectors of industry in India and not by this sector alone.
In conclusion, competitive strategies are developed by sector level firms and its their individual and collective initiatives that secure higher market share in global trade. While one has to be ever vigilant of non-tariff barriers in the post MFA world, the new market will be won on the basis of capabilities across the supply chain. Policy will need to facilitate this building of capabilities at the firm level and the flexible strategies that firms will need to devise periodically.
POLITICAL ENVIRONMENT ANALYSIS
Political events often influence the environment in which firms and industries operates. The rise and fall of European empires, especially the British empire, had profound implications for development of global textile industry. Many of links between government policy and fortunes of a particular industry are indirect. The most common form of direct interference in textile sector is granting of protection against imports. Textile lobbyists tend to emphasize tariffs and import controls. This distinguishes textiles from such sectors as aircraft and armaments, where lobbying often focuses on subsidies and state procurement.
Ø The central and state government and textile ministry are very supportive of sector and is willing to walk a fair distance provided the industry is willing to pick up gauntlet and commit itself to investing intelligently but aggressively.
Ø Expropriation is an extreme from of political action. it may occur for a no. of reasons, including the desire to retain national assets . other government activity which affect capital investment including joint venturing insistence and repatriation of funds.
ECONOMIC ENVIORNMENT ANALYSIS
The government is committed to a strong and vibrant textile industry which would contribute significantly to production and employment and thirty economic growth . production would entail the competitiveness both in price & quality in work of the liberalization of textile grade globally. The Indian textile industry has to consolidate its strength, overcome its weakness and be well equipped to not only face the onslaught of imports but also carve a niche for itself in the world market. Policies and programmers have been formulated to enable the textile industry to rise to global standards.
Much strike activity in textile is linked to general economic cycle workers fight for wage increases during upswing and attempt to prevent reduction during downswing. Exchange rates ought not be consider in isolation from other economic variables. The level of exchange rate reflect overall prosperity of an economy countries with high exchange rate are likely to enjoy other attribute of prosperity such as high income and these condition react upon competitiveness of textile and clothing sector.
SOCIAL ENVIRONMENT ANALYSIS
Textile Industries often cause a great deal of damage to environment through the release of both toxic and no hazardous wastes. As the damaging effect of chemicals becomes more apparent, our society is demanding cleaner and more efficient Production methods.
(A) POLLUTION OUTPUTS:-
Wastewater is one of largest sources of waste produced by Textile industries. It is produced in manufacturing Processes such as desizing dyeing, rinsing, printing bleaching, finishing Cleaning. It also releases waste in form of air emissions. Waste water and air emissions generally receive the most attention from politicians And consumers due to their hazardous nature.
(B) CHILD LABOUR:-
Child labor is one of leading social concern for textile industries. The increased minimum wages level and increased import cost make it increasingly difficult for Americans to compete with overseas firms . children do not need to be paid as much as adult , they are more easily manipulated , school is not always an option and it is tradition in many nation.
(C) LABLE :-
Information on labels is far more likely to be looked at than information on company websites because the content are available immediately when looking at a product labels.
TECHNOLOGICAL ENVIRONMENT ANALYSIS
In a progressively IT driven important and necessary to promote and facilitate adoption of IT in textile industry and trade also to help this industry to remain in national/international competitive market. Computer information systems for production planning and control are aimed at equipping management with accurate information for making sound decisions. A use of such systems in unit shows that it helps them to be far ahead of their competitors in tem of capacity utilization, cost control and market share.
This is a challenging time and an exciting time for textile industries. The contraction from manufacturing exit in economics and cultural environment where consumers are demanding better products fwhit more features .this means that specifications and qualities control criteria are ever more important and features that offer the marketing edge for product differentiation better margin maintaining product line or corporate image and are cost effect have an important place in every companies strategies.
Value enhancing finish technology can be developed around fads fashion trends but most enduring are designed to improve fabric performance and function. Now a days antimicrobial a new technology. Antimicrobial treatment is used by textile industries to control bacteria, fungi, mildew microorganisms.
The Government has strengthened and augmented the Technology Up gradation Fund Scheme. The allocation for the subsidy component of TUFS was enhanced from Rs.249.00 cores in 2004-05 to Rs. 485.00 cores in 2005-06, registering an increase of 95%. This has been further increased to Rs.835 cores in 2006-07, an increase of 91% over 2005-06. Till 31.10.2006, the Scheme has attracted 6142 applications, involving an investment of Rs 53,003.00 cores. Out of this 5882 applications with a project cost of Rs. 47,580 core have been sanctioned. As such, this Scheme has created such a great momentum that has resulted into an investment of around Rs. 50,000 core from the textile industry only under this Scheme. Owing to TUFS only the textile sector is still in an upbeat mood to modernize itself so that it may take on the global competition with confidence.
Today, Indian industry is extremely fragmented. India will gain market shares in the European Union, the United States and Canada to a significant extent, but the expected surge in market share may be less than anticipated, as proximity to major markets assumes increasing economic significance and tariffs are increasingly restraining trade due to the fact that products cross borders several times. Furthermore, other developing countries are catching up with China in terms of unit labour costs in the textile and clothing sector and China has of yet not shown competitive strength in the design and fashion segments of the markets.