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IMPRESSIONS from a Cross-section

Mr. V.C. Gupte
Mr. V.C. Gupte
Head - Color Business
AGS

Company Details

Business Area:
Color matching systems
Clientele:
India (Domestic market)

 

Since you deal into colors and textile printing, you are in some way connected to the textile industry. Please share with us your overview about the Indian as well as Global Textile industry.

Colour is an integral part of the textile industry. The Indian textile industry is one of the leading industries in the world. Predominantly fragmented, the industry experienced changes post liberalization of the Indian economy in 1991. Currently the Indian textile industry boasts stable growth and experiences new technological innovations every year. The Indian textile industry plays a vital role in contributing growth to the economy. As of March 2012, India earns about 27% of its total foreign exchange through textile exports. Further, the textile industry contributes nearly 14% of the total industrial production of the country and contributes about 3% to the GDP of the country.

The Indian textile industry is also the largest in terms of employment generation where it generates employment for more than 35 million people. The industry opens new job opportunities for other ancillary sectors as well. 

In the last 10 years the industry experienced tremendous changes- especially due to the abolition of the quota system in 1995 and globalization. The abolition of the quota system, allowed many buying houses to set up their offices in India for sourcing textile materials- mainly garments and home textile products. Due to severe cotton price volatility in 2011, the entire textile industry experienced a slack post which RBI undertook a few actions in favor of the industry. The Finance Ministry allowed restructuring of loans worth Rs. 35,000 crore, which amounts to over 20% of the banks’ exposure to the textile sector. This move largely benefitted mills in Tamil Nadu and Gujarat. 

The suspension of Technology Upgradation Fund Scheme (TUFS) delayed new projects in the textile industry. This was in spite of the interest and custom duty subsidies given by the government. However, the Ministry of Textile (MoT) urged and appealed the Finance Ministry to continue TUFS, which might see a commencement soon. The growth of the textile industry is also affected by state run policies that are not uniform across the country. The Indian textile industry has not been able to bank on the short comings like- poor and uncertain qualities, rising costs and lack of deliveries from other competitive countries. 

(Contd.)

Since you deal into colors and textile printing, you are in some way connected to the textile industry. Please share with us your overview about the Indian as well as Global Textile industry.

Apart from those mentioned above, several factors affect the growth of Indian textile industry on the whole: 

-       Scarcity of resources like power and water along with their costs/tariffs  

-       Strict pollution control norms

-       Depreciation of the rupee

-       Increase in service tax in the apparel sector (as according the Union Budget 2012-13)

-       Domestic players facing competition from exporters

-       Severe shortage of labour impacting smooth functioning of the industry

-       Traditional HRM methods adopted in companies  to attract the best human capital

-       Growing competition from countries like Bangladesh, Vietnam, Sri Lanka, China and other emerging manufacturing economies

-       Intra state competition

The textile industry worldwide has undergone major changes in the past three to four years. Manufacturing activities in this sector have seen a global shift and moved across geographies - exploring global landscapes. Initially, textile manufacturing moved from US & Europe to China, India, Bangladesh, Pakistan, Sri Lanka & other Asian Countries, so- much- so, that Bangladesh overtook the Indian textile industry in terms of exports due to its special MFN (Most Favored Nation) status as well as cheap labour and government support. Manufacturing of textile further moved to African countries and now, Burma is becoming a hot destination for textile processing. 

Global textile industry has also undergone tremendous changes such as: 

-       Retail sales of apparels and consumer confidence in US has been picking up every month

-       Unemployment rate is falling, albeit slowly and inflation has been under control- pushing up buying power in the hands of consumers

-       European markets have seen a slack in production and expansion in the textile sector, due to the recent EU debt crisis

-       The other economics in EU, especially Italy and Germany are progressing-with foreign investments pouring in Italy’s textile sector and retail sales showing a strong uptrend in Germany

-       The Asian markets show tremendous increase in consumer confidence allowing an increase in retail sales and growth in apparel exports

The Indian textile sector too has a brighter side to it.  A large number of overseas countries are increasingly looking at India as a manufacturing hub for textile products. With the growth in the size of the domestic market due to an increase in population and rising incomes and also higher exports of textile products, the future of the Indian textile industry is certainly bright. The domestic machinery industry can also look forward to more propitious time in the years to come. 

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Published on: 11/07/2012

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.