Increasing Textile Exports

8/2/2019 Increasing Textile Exports

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Boosting exports in Apparels and Garments sectors

Overview of Indian textile industry

India Textile Industry is one of the leading textile industries in the world. Though was

predominantly unorganized industry even a few years back, but the scenario started changing

after the economic liberalization of Indian economy in 1991. The opening up of economy gave

the much-needed thrust to the Indian textile industry, which has now successfully become one of

the largest in the world. India textile industry largely depends upon the textile manufacturing and

export. It also plays a major role in the economy of the country. India earns about 27% of its

total foreign exchange through textile exports. Further, the textile industry of India alsocontributes nearly 14% of the total industrial production of the country. It also contributes

around 3% to the GDP of the country. India textile industry is also the largest in the country in

terms of employment generation. It not only generates jobs in its own industry, but also opens up

scopes for the other ancillary sectors. India textile industry currently generates employment to

more than 35 million people.

Indian textile industry can be divided into several segments, some of which can be listed as

below:

Cotton Textiles

Silk Textiles

Woolen Textiles

Readymade Garments

Hand-crafted Textiles

Jute and Coir


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Current Scenario

The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to

the country's gross domestic product (GDP) and 17 per cent to the countrys export earnings. The

industry provides direct employment to over 35 million people and is the second largest provider

of employment after agriculture. Fabric production rose to 60,996 million sq meters in FY 2011

from 52,665 million sq meters in FY 2007.

Production of raw cotton grew to 32.5 million bales in FY11 from 28 million bales in FY07,

while production of man-made fiber rose to 1,281 million kgs in FY11 from 1139 million kgs in

FY07. Production of yarn grew to 6,233 million kgs in FY11 from 5,183 million kgs in FY07.

India has the potential to increase its textile and apparel share in the world trade from the current

level of 4.5 per cent to 8 per cent and reach US$ 80 billion by 2020.Exports of textile grew to

USD26.8 billion in FY10 from USD 17.6 billion in FY06. Indias textile trade is dominated by

exports with a CAGR of 6.3 per cent during the same period.


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STRATEGIES TO BOOST EXPORT

Boosting garment exports needs to combine the tactics for winning a short distance race

as well as strategies for winning the long distance run. This indeed is a tall order. The macro

strategies shall revolve around extricating India from the 'stuck in the middle' position. India's

advantage is undoubtedly in its own 'package programme' using Indian cotton, silk, linen, jute,

wool and synthetic fabrics, rather than using only imported fabrics based on CMT. India's major

strength also emanates from its variety of handcrafted skills, design inspiration and creativity of

its professionals and workers. The ability to print, work with small quantities and ensure rapid

product development are essential ingredients of the current value chain. It has become

abundantly clear that if these areas are upgraded and strengthened, India has the potential to

develop competitive advantage. The key to such upgradation is in treating India's entire 'textile

complex' of yarn, fabrics, processing facilities and garment making as part of an overall system

and integrating the technology levels, product mix options etc. with value added garment

marketing. The essential micro and macro level strategies are now discussed.

Micro Level Strategies

a) Backward integration: Because of the lack of modernisation and technological advancementin the fabric sector, the inherent strengths of a versatile fabric base have not moved into

building a long-term favourable position. Fabric quality and availability, being pointed out as

major dissatisfiers, are arising out of outdated technology in weaving, lack of modernisation

of processing and finishing technology including building in necessary eco-friendliness and

international quality standards. Limited quantities ordered in frequent spells are going to be

more the order of the day in garment imports by major destination markets. Here, modern

processing and finishing technology supported by quick response manufacturing, whichhelps a number of companies to project unique selling propositions based on the same have

become most important for garment exporters. These processes include high quality

bleaching, washing, continuous dyeing, variety of finishes, coatings, zero-zero shrinkage and

width control. There is a case for large garment exporters or a consortium of small and

medium garment exporters to integrate backwards in order to reduce turn-around time,


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maintain secrecy of processing recipes, for ensuring consistency and cost control. A number

of companies are now examining the feasibility of backward integration though some

exporters hold the view that all these operations brought under the umbrella of a garment

exporter could make it huge and bureaucratic reducing the speed and efficiency in the long-

run.

b) Fabric quality assurance: As fabric constitutes a lion's share of the unit cost of garments, agreat deal of attention has to be paid for quality control at the fabric level. While that the

garment exporters ensure in process quality control for garments and finished garments

inspection, a proper quality assurance system for garment exports should go backward and

initiate the quality control, at least from the weaving and processing stage to garmenting.

Offering this integrated value is going to help in using fabric element as a source of

differential advantage.

c) Manufacturing and product quality assurance: A large number of problems in manufacturingand product quality arise from problems in patterns and specific problems in certain kind of

products, owing to lack of technical understanding. CAD-CAM systems would become part

of every garment exporter's operating environment. Another area which affects

manufacturing quality is lack of sufficient supervision at the floor level. As revealed through

discussions with companies abroad, supervisor-worker ratio need to be improved in India to

reach international standards. Supervisory training is a key ingredient in upgrading

manufacturing and for achieving productivity and quality. Systems and practices are other

major areas which need attention. One of the major problem areas is the control of

information and material flows on the production floor. From the research findings it is clear

that the competitors have moved to 'long-term favourable position' mainly because of

superior manufacturing and product quality. Upgradation of technology on a continous basis

is essential in today's times. Quality is a multi-dimensional construct and, therefore, from

quality of design to quality of presentation and all such intrinsic and extrinsic quality

elements ultimately build up the manufacturing and product quality levels.

d) Management of lead time. Lead time is a major deterrent in dealing with India for manyimporter segments. The exporters have to make efforts to reduce the lead time in a planned

manner, from the stage of order placement to delivery. Every exporter shall undertake a

delivery and process analysis for benchmarking operations and for reducing delays. The


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aspect of time in order management offers considerable opportunity for developing

competitiveness, especially because of the propensity of the buyer to order close to the

season and during the progress of the season.

e) Product diversification: Building competitive advantage also envisages productdiversification to move from particular season to all seasons and budget/discount and mass

merchandising stores to brand manufacturer importers like Liz, Levis, etc., and better

department stores and speciality chains. Structured garments, outerwear, nightwear,

workwear, protective wear, corporate and institutional wear, lingerie, higher gsm knits, and

specialised knits offer new areas of growth.

f) Channel selection and specialization: Channels constitute one of the most important aspectsof the marketing variables and most often the exporters fail to make a perfect match with

their proposed distribution and retail channels. As was established by the research, there is

neither any specialisation shown in 'fashion' or 'basic' garments nor any specific match shown

with department stores, speciality chains etc. Channel selection, relationship marketing with

the buyers, and a complete high level service package are essential ingredients for developing

,competitive advantage. The exporters also heed to specialise in some specific channels in

order to gain sustainable long-term advantage.

g) Design advantage and product development support: Indian yarn-dyed fabric designs andmulti-structured fabrics have caught the fancies of many manufacturers and retailers around

the world. The multi-coloured prints from India are also favourites. The summer collections

are not considered complete by many companies unless Indian yarn-dyed wovens are

included. A well thought-out strategy has to be initiated to preserve this and convert this as a

'marketing advantage'. There are many alternatives' as to how this can be achieved. One

alternative is for Indian exporters to work in close collaboration with designers to promote

collections using Indian fabrics. Alternatively, strategic alliances with designer groups

abroad may help. Yet another approach is using 'piggyback' riding on famous designers by

motivating them to use Indian fabrics in their collections. Indian design advantage and

inexpensive product development support can be used as elements of advantage effectively.


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h) Market-fashion information and computer network for tracking: Improving the level ofinformation availability is part of building competitive advantage. Information and

knowledge are now considered major assets in developing competitive advantage. While the

exporters require timely fashion and market information, importers require considerable

information about Indian fabrics, accessories, costs, productivity, etc. There is also need for

continuous information flow on tracking of purchase orders, production scheduling, progress

of raw material sourcing and several other related elements which today need the support of

computer networking for online information systems and management. The exporters shall

incorporate the modem information technology in their working systems and practices,

including MIS, e-mail, internet etc.

i) Branding. As a 'creative marketer of quality apparel', the Indian garment exporter needs toexplore the most important value adding element of marketing, namely 'branding'. Both

wholesale and retail branding permit better unit value realisation and premium for creativity.

A number of Indian exporters have attempted to take this route and have met with

considerable appreciation in unit value realisation apart from brand loyalty which brings

premium prices as well as upgradation of quality. Acquiring brands and building them in

target markets or even creating new brands where possible are strategies to achieve value

added marketing, helping in the pursuit of competitive advantage.

j) Technological upgradation. In order to occupy the slots being vacated by the South EastAsian countries, there needs to be a considerably higher level of investment in garment

manufacturing technology in tandem with the wage levels, productivity requirements and

cost-benefit. Investment in manufacturing facilities and modernisation are going to be critical

ingredients for success in the post-MFA scenario. Upgrading skill and technical expertise.

Though the Indian labour is abundant, their skill level on high speed machines has been

found to be insufficient. Intensive training to upgrade skill in tune with technologicaladvancement is a must for competitive advantage. Every exporter needs to strengthen the on-

the-job training facilities in the export units. Enterprise oriented in-house training

programmes shall become part of every large enterprise.


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Macro Level Strategies

a) Strategic gaps and strategic fit: Abundant labour and plentiful cotton are not enoughanymore to achieve competitive advantage in garment exports. A study by the Zurich

based International Textile Manufacturers' Association (ITMA) points towards the

conclusion that India would just remain as a cotton fibre source for the mills and fabric

producers in the least developed countries on completion of the MFA phase-out, if the

transition period is not used to develop competitive advantage. Cost leadership is

susceptible to price pressure and without quality and timely delivery, it has no meaning.

The new positioning has to be aimed at moving from comparative advantage to

competitive advantage, where fabric quality, delivery, speed, productivity of labour and

competitive prices will become the elements of the value chain and that too of the entire

textile complex to match that of importers leading to sustainable competitive advantage.

There are a number of positioning distances that have to be bridged before the route to

competitive advantage can be achieved. The current 'Q namely 'quota' driven mentality,

has to be replaced by another 'Q namely, 'quality'. The quality has to be consistent every

time. On-time delivery has to come on top of the mind as a major factor. Necessary

manufacturing capacity and productivity have to be built in. 'Speed' is going to be of

crucial importance in the times ahead.

b) Communication of fibre to fashion approach: It is necessary to highlight the successstories of Indian garment exporters in the destination markets through a well coordinated

publicity and advertising campaign. Owing to poor communication in general about the

impressive strides India is making in textile and clothing, there is hardly any appreciation

of India's higher potential and value especially at international for a where garment

leaders meet. There is no documented research, on Indian garment companies to look up

to, for reassurance in the overseas importing community, especially considering the small

scale nature of the industry. The new strategy for competitive advantage should

communicate the changed image, through pictures of manufacturing facilities, successful

designs from India, modern textile factories and processing houses, etc., without which

the image of the 1970s and 1980s might persist. The idea shall be to market the power


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house of the textile complex in India from fibre to fashion. Launching of an advertising

campaign projecting 20 to 25 top garment exporters, their factories and strategies could

help in bringing about substantial perceptual change in target markets, if persisted over a

period of time. In the same communication campaign, the potential of the domestic

market can also be highlighted for driving home the message of twin advantages: a

competitive country to source from and a large domestic market to expand their brand

reach.

c) Development of powerloom fabric sector: The Indian garment export industry's extremedependence on the powerloom sector is likely to continue in the absence of a viable

alternative. The powerloom sector is seen as cost effective mainly because of absence of

duties and other financial obligations of the organised mill sector. On the one hand, if the

structure and modus of the powerloom sector is drastically changed, the competitiveness

of the garment sector may suffer. On the other hand, without effecting a radical change in

the quality level of the powerloom sector, there cannot be substantial improvement in

garment exports. Quality from the point of view of yarn, cone-dyeing, printing etc. needs

to be considerably improved through appropriate financing schemes for the powerloom

sector as well as by establishing common facilities. Today, because of the dependence of

the powerloom on non-banking channels for finance and in the absence of proper dyeing

facilities, there are many problems in the consistency and acceptability of fabric quality.

The price is also highly inflated because of the interest burden and high rejection rates of

fabrics. Development and modernisation of the powerloom sector forms a pre-condition

for the success of the garment export efforts. In the long-term, the powerlooms need to be

organised as modern loom clusters with a centralised hub of various support facilities in a

mono-product zone format.

d) Apparel fabrics from organised mill sector: The fabric requirements of the garmentexport sector have been mainly met from the powerloom fabric sector. However, the

advantages of powerloom fabric production mainly emanate from the lack of financial

obligations, as faced by the organised mill sector. With the limited fabric range produced

by the powerloom sector and the inherent quality problems, the garment sector cannot

improve its performance either in terms of unit value realisation or in terms of

diversification of products. The mill sector should be made to work in tandem with the


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garment export sector, thus orchestrating a 'partnership' approach in value added

marketing. A comprehensive approach needs to be formulated, incorporating the

organised mill sector into the overall garment export strategy so that upgradation in

quality, higher unit value realisation and product diversification could be accelerated.

e) Modernisation of garment export industry and backward integration: There is no doubtthat modernisation of the garment manufacturing units, powerloom fabric producers and

fabric processors is critical for the quantum jump of the garment sector, in terms of

quality and growth. Fabric processing, finishing, washes, lamination, coatings etc. have

become essential in the whole value chain of garment manufacturing and marketing.

However, the thrust area is better needles, machinery and special purpose machines as

well as improving production systems and practices to enhance functional quality and

productivity. The specific areas of backward integration would envisage for knit fabrics,

compacting, washing, and printing equipment. In the case of woven garments, dyeing

facilities washing plants, fabric brushing, coating facilities etc. need to be considered as

part of backward integration. The remarkable benefits of vertical integration in the

knitwear sector need not be over emphasised. In the case of the woven garment sector,

the integration needs to be mainly with fabric processing, fInishing and such other value

adding activities.

f) Infrastructure: The infrastructure of many of the garment clusters leaves much to bedesired. For instance, Okhla Industrial Estate in New Delhi, which has a high

concentration of garment units in Delhi has very poor infrastructure of roads and electric

supply. Similar problems exist in a number of places. One good example to emulate is

that of the Jabel Ali Export Processing Zone in Dubai, which has one of the best port

facilities in the world is well recognised, for the excellent export infrastructure. From

India, garments have to be often airlifted because of delays which are associated with

infrastructure. This leads to high incidence of costs and erosion of profitability, through

delays. As the garment manufacturing centres in India have acquired: a certain level of

specialisation, it is desirable to develop infrastructure in each of the production centres

related to the, specialisation of the production centres.


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g) Export promotion. The export promotion of the apparel sector in the hands of the AEPChas been mainly focusing on quota, administration, buyer-seller meets and India Garment

Fair. Such export promotion has limited scope in influencing fashion cues. A new

approach has to be formulated. The fairs should have both 'fabrics for garments' and

'garment stalls' under the same roof, as marketing of garments is inextricably linked to

fabrics from India. Product based garment fairs need to be organised, for example,

'sportswear in Bangalore' or 'men's wear in Madras' and 'women's wear in Delhi or

Bombay'. In such fairs, manufacturers of relevant fabrics shall also be given stalls. It has

to be emphasised that India's main strength is the availability of fabrics within India and

the abundance of inexpensive labour. Both these essential aspects have to be combined to

make a comprehensive marketing effort. With only imported fabrics, India will become a

CM (cut-make) country, depending entirely upon productivity. Combined groups of

'fabric manufacturers and garment exporters' have to together make presentations to

select overseas buyers for bringing sharp focus to India's capabilities.

Increasing Textile Exports

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