Textiles Industry
A Trariti Group Case Study by Aakash Malik
One of India's oldest businesses is textile and garment manufacturing. “The tight relationship of the textile industry to agriculture (for raw materials such as cotton) and the country's historic history and traditions in terms of textiles make the Indian textiles sector distinctive in contrast to other countries,” according to the Indian Brand Equity Foundation (IBEF). The industry is highly diverse, ranging from hand-spun and handwoven textiles to capital-intensive complex mills on the opposite end of the spectrum. The textiles sector is dominated by the decentralised power looms/hosiery and knitting sector. In 2018-19, India's textiles sector generated 7% of total industry production (by value). In 2019-20, India's textile and garment exports accounted for 11% of all mercantile shipments. Around 4.5 crore people are involved in the textile sector, with 35.22 lakh of them working on handlooms.
Textiles in India
Advantages:
Raw materials such as cotton, wool, silk, and jute are readily available.In comparison to other major textile producers, India has a competitive edge in terms of trained labour and manufacturing costs. Minister of Textiles Smriti Irani said in March 2021 that India will be completely self-sufficient in silk manufacturing within the next two years.
Demand:
Textile demand will be fueled by increased organised retail penetration, favourable demographics, and growing income levels.Increased awareness of goods and increasing disposable incomes are projected to propel the Indian technical textiles industry to INR 173 crores by 2027. Furthermore, the pandemic has raised demand for technical textiles in the form of personal protective equipment (PPE) suits and equipment. The government is assisting the industry by providing cash and machinery sponsorship.
Policy:
In the Indian textile sector, 100% FDI (automated route) is permitted. A National Technical Textiles Mission is planned in the Union Budget 2020-21 for the period 2020-21 to 2023-24, with a budget of Rs. 1,480 crores. Over a five-year period, a Rs. 10,683 crore Production-linked Incentive (PLI) Scheme for manufactured fibre and technological textiles would be implemented. Over the course of three years, the ‘Mega Integrated Textile Region and Apparel (MITRA) Park' project would create seven textile parks.
Investments:
The government created numerous schemes such as the Program for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS), and Mega Integrated Textile Region and Apparel (MITRA) Park scheme in order to attract private equity (PE) and employ more people.In January 2020, 15 Industrial Entrepreneur Memorandums (IEMS) worth Rs. 1,241 crore were submitted in the textiles business.
Notable Trends in Textile Industry
Textile Parks:
Since 2014, 59 textile park projects have been approved under the SITP and PPP programmes, with the government contributing 40% of the cost up to Rs. 40 crore. As of December 2019, 22 of these textile parks were active. Finance Minister Nirmala Sitharaman announced the commencement of the ‘Mega Integrated Textile Region and Apparel (MITRA) Park' project in the Union Budget 2021-22, which would see seven textile parks with state-of-the-art infrastructure, shared utilities, and an R&D lab built over a three-year period.
Incubation in Manufacturing:
The goal was to encourage entrepreneurs in the garment manufacturing industry by providing them with an integrated workplace and lowering the operational and financial costs of starting and expanding a new company.As of July 2019, the government had approved three projects, one each in Madhya Pradesh, Odisha, and Haryana.
Public Private Partnership (PPP):
The Ministry of Textiles has started a project to build PPP institutions to promote private sector engagement in the industry's growth.
Khadi Promotion:
The Indo–Tibetan Border Police (ITBP) and the Khadi and Village Industries Commission (KVIC) inked an agreement in January 2021 to supply 1.72 lakh cotton khadi durries to the Central Armed Police Forces every year (CAPF).KVIC opened the first-of-its-kind Silk Training and Production Center in the tribal community of Chullyu in Arunachal Pradesh on August 10, 2020.
Textile innovations for a more sustainable future:
Tourists flock to India for its diverse cultural heritage. Temples, magnificent forts, pleasure gardens, religious structures, museums, art galleries, and urban and rural locations all bear witness to the country's rich past.
Notable Trends in Textile Industry
GHCL, a prominent Indian chemical and textile business, has introduced Erthology, a line of decomposable CVC textiles manufactured from renewable resources and dyed with vegetable colours.
Diversification:
The Raymond Group, through its subsidiary J.K.Helene Curtis, is attempting to boost the male grooming market by releasing new versions of existing products.Shampoos and deodorants are two examples of personal care products. Aditya Birla Fashion and Retail Limited authorised the issue of equity shares to Flipkart Investments Private Limited on a preferential basis for Rs. 1500 crore in October 2020. In addition, the firm signed a commercial arrangement for the selling and distribution of its different brands. The Ministry of Textiles advised textile businesses to reposition and diversify their manufacturing skills meet global demand in the aftermath of the coronavirus pandemic in May 2020.
Scaling-up organic cotton industry:
Despite being the world's top cotton grower, India produces just 2% of the total amount of cotton produced. Inditex collaborated with DBS Bank in Singapore to start a pilot initiative in March 2021 that would fund over 2,000 Indian farmers to cultivate and manufacture organic cotton.
Prioritize domestic markets with high growth rates:
In conjunction with the Indian Mission, the Synthetic and Rayon Textile Export Promotion Council (SRTEPC) organised a roadshow in 2019. To promote Make in India and local production, the Indian government increased the basic custom tax on 501 textile goods from 10% to 20%. Gorakhpur is on the verge of becoming a major garment manufacturing hub, bolstering the economy of eastern Uttar Pradesh.
Growth Aided by Strong Fundamentals and Policy Assistance.
Amended Technology Up-gradation Fund Scheme (A-TUFS):
By offering loans at discounted rates, an investment was made to encourage the textile industry's modernization and up-grading. Between FY16 and FY20, a subsidy of Rs 6,717.18 crore was provided under this scheme.
SAATHI Scheme:
For revitalising India's power loom industry, the Union Ministry of Textiles, in collaboration with Energy Efficiency Services Ltd. (EESL), has developed SAATHI (Sustainable and Accelerated Adoption of Efficient Textile Technologies to Help Small Industries).
Government Subsidies:
The Department of Promotion of Industry and Internal Trade (DPIIT) suggested incentives for the textiles industry to diversify the top 40 clothing and home textile items and the top 10 technical textile goods traded internationally in August 2020. Long-term, a Rs. 40,000 crore textile fund is proposed to promote investments in the specified textile industries. Furthermore, the government think tank NITI Aayog has proposed bringing direct benefit transfer for cotton producers.
Market Players
Sutlej Textiles & Industries Ltd (STIL) is India's largest manufacturer of value-added yarns. Since the beginning. The firm has made a commitment to achieve rapid growth by developing specialist goods to satisfy the industry's more complex expectations. In the quarter ending December 2020, sales totaled Rs. 549.44 crore. In the quarter ending December 2020, net profit was Rs. 11.52 crore. Spun-dyed, cotton blended, and cotton melange dyed yarns.
The completed textiles and garments are Arvind Limited's main products/services. Textiles, branding, retail, and other areas are among the company's divisions. Fabric, yarn, and clothing fall within the textiles category. Branded clothes, apparels, and textiles are sold through the brands and retail division. In the third quarter of FY21, revenues totaled Rs. 1,514 crore. Its brand portfolio includes worldwide names such as Arrow, US Polo, Izod, Elle, and Cherokee, and it is the country's largest fire protection fabric maker. MEGAMART clothing value retail shops are also owned by firm.
Vardhman Textiles Limited is a full-service textile company. Cotton yarn, synthetic yarn, woven fabric, sewing thread, acrylic fibre, tow, and clothing are all manufactured by the firm. In the third quarter of FY21, net sales were Rs. 1,750.10 crore. The firm made a net profit of Rs. 170.52 crore in the third quarter of FY21. India's second-largest manufacturer of sewing threads.
Growth opportunities
Immense growth potential:
The Indian textile sector is poised for rapid expansion, backed by strong local as well as foreign demand. By FY23, the industry is anticipated to be worth $226 billion. Because of changes in fashion and trends, urbanisation is likely to encourage stronger growth.
FDI in multi-brand retail:
The proposed increase in the FDI limit in multi-brand retail will attract more players, giving customers with additional alternatives. It will also increase investment across the whole value chain, from agricultural production to finished commodities. With global retail brands guaranteed of a domestic presence, outsourcing will skyrocket.
Participation of the private sector in silk manufacturing:
The Central Silk Board establishes raw silk production targets and encourages farmers and private players to cultivate silk. Alliances with the business sector, particularly significant agro-based companies in the pre-cocoon and post-cocoon segments, are encouraged to attain these goals. Despite COVID-19, overall raw silk output rose by 1% (35,820 MT) in FY20 compared to FY19 (35,468 MT).
The Indian textile industry's future is bright, backed by robust local consumption as well as export demand. With rising consumerism and disposable money, the retail industry has witnessed tremendous development in the last decade, thanks to the arrival of numerous foreign firms into the Indian market, including Marks & Spencer, Guess, and Next. Increased discretionary income has resulted from rapid economic expansion. This has resulted in an increase in product demand, resulting in a massive domestic market.