INDUSTRY ANALYSIS-SWOT

INDUSTRY STRENGTHSRaw Material Base• High self sufficiency

particularly natural fibres

• World ‘s third largest cotton producer

Domestic Demand Natural demand drivers including:• rising income levels• increasing urbanisation• growth of the purchasing population

Labour• Inexpensive labour and strong• Entrepreneurial skills

Flexibility• Small sized manufacturing

units allow for greater flexibility to service smaller and specialized orders

Rich Heritage• Cultural diversity and

rich heritage of the country offers good inspiration base for designers

Government Support for Textile Sector Indian Government has initiated schemes to support textile sectorSome of these schemes are: a. Scheme for Integrated Textile Parks

(SITP) b. Restructured Technological

Upgradation Fund Scheme (RR TUFS)c. Integrated Skill Development Scheme

(ISDS) d. Swarnajayanti Gram Swarozgar

Yojana (SGSY)

INDUSTRY ANALYSIS-SWOT

INDUSTRY WEAKNESS

Lower efficiency Productivity levels in India are low compared to peers including China, Bangladesh, Turkey, etc.

Low focus on product & process development • Spending on research &

development by Indian textile and apparel firms very low

• Only few have actually good product development centres

Unorganized fabric manufacturing and processing sector

• Unorganized sector units suffer from lack of capacity and many of them use old technologies

• Scale as well as quality are key areas of concern for the unorganized sector units.

INDUSTRY ANALYSIS-SWOT

INDUSTRY OPPORTUNITIES

Opportunity in High Value ItemsIndia has the opportunity to increase its UVR’s (Unit Value Realization) through moving up the value chain by producing value added products and by producing more and more technologically superior products.

Emergence of retail Industry • Development of various malls provide huge

opportunities for the apparel segments

Integration of Information technology• ‘Supply Chain Management’ and ‘Information

Technology’, Availability of EDI (Electronic Data Interchange) has made communication fast, easy, transparent and reduces duplication

Market access through bilateral negotiationTrade is growing between regional trade blocs due to bilateral agreements between participating countries

China vacating space in International trade• Per capita spend on apparel in

China is expected to grow from US$ 122 in 2013 to US$ 377 by 2025

• On supply side, China is facing few challenges which will make it less competitive in international trade

• Overall China’s share in global trade is expected to reduce from current 40% level to 35% by 2025.

INDUSTRY ANALYSIS-SWOT

INDUSTRY THREATS

• Competition from other exporting countries Competitors like China, Bangladesh, Turkey, Sri Lanka, Germany, Italy, Vietnam etc. have developed their core strengths and established USPs in the global market

Phasing out of Quotas• India will have to open its protected domestic market for foreign

players thus domestic market will suffer• Pricing pressures due to removal of US and EU quotas on imports

from China• Fluctuations in the demand in exports due to the elimination of

quota regime

Higher borrowing cost which affects the profitability of the small and medium firms

Formation of Trading BlocksFormation of trading blocks like NAFTA, SAPTA, etc; has resulted in a change in the world trade scenario. Existence of bilateral agreements would result in significant disadvantage for Indian exports

APPAREL INDUSTRY-WAY FORWARDFrom an overall perspective Indian textile and apparel sector is in a position of good advantage. To buyers looking for alternate, large supply bases India offers a credible alternate. • India’s economic growth is also expected to be higher for next few years which will result in higher demand for textile

and apparel products in domestic front too

• Challenges. Our lack of focus on synthetic value chain, manpower challenge and duty disadvantage in major markets compared to our competing nations are main threats that can mar the anticipated growth at country level

• Need for Flexibility For manufacturers to take benefit of the domestic market growth story, the requirement will be to be flexible enough to tap opportunities appearing in various market segments. On one hand the manufacturers will need to cater large international brands and retailers, who will prefer sourcing locally; while there will be fast growing Indian brands too.

• Growing beyond Tier I and Tier II cities. Need of brands and retailers to develop lower cost business models will be key to enhance their presence in cities beyond Tier I and II. For this, e-commerce will become more important

• Strategic tie ups between such manufacturers and buyers will happen which will enhance stability and efficiency in the overall sector. For exports, establishment of larger, integrated set-ups will be required. It will also be important for Indian textile exporters to have business tie-ups with attractive export destinations countries like Bangladesh, Vietnam, Myanmar, etc.