Factors

Affecting
Textile exports
(1991-2012)
 Acknowledgement
I take this opportunity to express my gratitude to all the people who have guided and helped

me in the course of completion of my project.

A successful project can never be done by an individual to whom the project is assigned, lest the

individual get the help and guardianship of a person.

I feel immense pleasure to express a deep sense of gratitude to Mr Durgesh Batra sir, Amity

Business School jaipur, who has given me an opportunity for doing Project

A deep sense of gratitude to Mrs Mammta (FACULTY GUIDE) .Her valuable suggestions and

helping hands has helped me to complete my project successfully.

 Abstract
Textile sector is India’s second largest manufacturing sector. The textile sector contributes about
4% to the gross domestic product; about 14% of the total industrial output; 21% of the workforce
and about 14% of the gross export earnings. But in the present scenario non conventional sectors
viz engineering, chemicals are replacing this sector especially in terms of export performance.

Textile sector, including apparel,

which was the largest export sector
and accounted for almost a quarter of
our exports has dropped to being
fifth in rank and less than half its
earlier share. This is despite
dismantling of the textile quota
regime in the developed markets
from 01.01.2005 as per the World
Trade Organization (WTO)
Agreement on Textiles and Clothing
(ATC).In this study, aim is to analyze
the export trend of textile sector since
2001-02 and would try to identify the possible reasons of falling exports of one of our key sectors.
On the basis of the study, we will make an effort to put certain suggestions to revive its export
growth which might contribute to growth of the Indian Economy.
 Introduction
Textile and Clothing sector is one of the most important sectors in the Indian economy. Apart
from providing one of the basic necessities of life the textile industry also plays a pivotal role
through its contribution to industrial output, employment generation and the export earnings of
the country. “Currently it contributes about 14% to industrial production,4 % to GDP and 17% to
the country’s export earnings. It provides direct employment to over 35 million people. The textile
sector is the second largest provider of employment after agriculture.”(Annual Report, 2010-11,
Ministry of Textiles).

The textile and clothing sector which carries utmost importance for the country had faced various
economical, political, natural and technological challenges during different period of time.
Sometimes economic policies of the government did not support the sector and sometimes
importing countries by imposing tariff and non tariff barriers created hurdles for its trade and
development. In addition to this natural calamities (drought, flood), political wars viz.world war
II, Indo China, Indo Pak war resulted unfavorable circumstances for this sector. In spite of above
difficulties, its level of production, contribution to employment exhibited upward trends
especially after Independence and its export performance experienced a remarkable shift in terms
of volume and contribution to the India’s and Global exports of textile products .

The sector which remained relatively neglected, discriminated emerged as a powerful source of
export earnings and attained the first rank for making the highest contribution to India’s total
exports in 1970s. This position remained the same for a very long period of time , we can say till
2003-04 but after that not only its growth is declining on year on year basis but its contribution to
the total exports has also been declining and gradually its position is also taken over by the other
commodities.

Therefore, in this study we will make an attempt to understand the growth pattern and export
performance of textile and clothing sector ; to identify the causes of its success and failure in
different period of time and ultimately to provide certain suggestions so as to revive the sector.
Objectives of the study :
1. To understand the growth pattern and export performance of textile and clothing sector

2. To identify the causes of success and failures, faced by thesector in different point of time

3. To put forward suggestions so as to maintain/revive the export performance of the sector

Importance of exports

Textile exports plays a crucial role in the overall exports from India.Throught export friendly
government policies and positive efforts by the exporting community, textile exports increased
substantially from US$ 5.07 billion in 1991-92 to US$ 12.10 billion during 2000-01. The textile
export basket contributing over 46 percent of total textile export. In world textile trade has risen to
3.1 percent in 1999-2000 as against 1.80 percent in early nineties. Exports have grown at an average
of 11 percent per annum over the last few years, while world textile trade has grown only about
5.4 per cent per annum in the same years. During the year 2000-01 India’s textile export was US$
12014.4 million. It was increased the year 2004-05 US$ 13038.64 million. The exports of textiles
(including handicrafts, jute, and coir) formed 24.6% of total exports in 2001-2002, however this
percentage decreased to 16.24% during 2004-2005. The textile exports recorded a growth of 15.3%
in 2002-2003 and 8.7% in 2003-2004. Textile exports during the period of April-February 2003-2004
amounted to $11,698.5 million. During 2004-05 textile exports were US$ 13,039.00 million,
recording a decline of 3.4% as compared to the corresponding period of previous year. However,
during April-November, 2005, the textile exports have shown growth of 8.2% as compare to the
corresponding period of previous year. Against a target of US$ 15,160 million during 2004-05, the
textile exports were of US$13039 million, registering a shortfall of 14% against the target. The
overall export target for 2005-06 has been fixed at US$ 15,565 million. In 2005 textile and garments
accounted for about 16% of export earnings.
Strategies for Indian Exports:

Quota free market means competition amongst firms and not nations. Quotas have frozen the
growth in market share. They encouraged the high cost domestic industry in many textile-
importing countries by freezing the market share. Even the high cost exporting countries (Hong
Kong, South Korea, Taiwan) continued to have high market share taking advantage of quotas.
Quotas also assured fixed market opportunities in early years to Indian garment industry and
textile industry despite low productivity, poor time delivery and quality.
Number of incentives was provided in India including Duty drawback and cash compensatory
support. Garment quotas are distributed by AEPC based on Government policy from time to time
regarding past performance, etc and quotas were traded in gray market for long time.

This is in sharp contrast to world-class manufacturing and supply chain tried by some units in
Europe and USA in online transmission of high sale garment designs in departmental stores and
replenishing the sold stocks quickly through a very low delivery cycle. Where as Indian domestic
market shall hot up by entry of both retailing chains in India (FDI has been now permitted up to
51% in single brand stores) and Outsourcing centers for International chains like Wal-Mart, the
Indian exporters will get on one hand newer opportunities to enter restrained markets, while on
other hand they will face stiff competition from countries like Turkey, Brazil, Mexico, Korea,
China, Tunisia, Romania, Bangladesh and Pakistan.

Quotas by restricting market supply have also kept the export prices artificially high. There is
bound to be a price war in post quota regime. Already it has started happening with Indian
exporters (at least for price elastic goods). Developed countries have relocated facilities offshore or
have shifted to high value products. Developing countries that were free from MFA restraints will
loose out due to fall in prices.

The Indian textile and clothing Industry except for cotton yarn sector should test waters within
domestic markets to establish their global competitiveness and consumer acceptance.

Developed countries and many other countries are trying to extend quotas up to end of 2007 as
evident from Istanbul declaration in March 2004.USA is developing a DNA marker system to trace
the fabric origin. The technology can identify the US produced cotton yarn and check illegal textile
imports.

Instead of criticizing, countries lie India should hold high vision as regards standards of health,
safety and child labor to conform to international standards and to avoid non-tariff barriers.
Technology Up gradation Fund (TUF) has to be better utilized and textile technology training
infrastructure has to be improved in country. The textile sector should take lead in this.

Global trade is expected to be in range of US $ 800 Billions in 2014 up from US $ 350 Billion in 2002
with share of textiles at 40% and clothing at 60%

According to some studies China and India will be major gainers. India could increase their share
from present 8 % in US textile market to 13.5% and from 3% to 8% in US Garment market. For EU
the projections are from 3.6 to 8% and 3% to 8 % in textiles and garment sectors.

As on date China has distinct advantage in terms of supply chain management, low cost and
better designs.

Whereas Morgan Stanley has projected India to be one of top three exporters of textile and
garments, another study by Indian Cotton Mills Federation has estimated Indian textile exports to
reach US $ 40 Billion by 2010.

GOI on other hand has projected exports to double from US $12 Billion to 25 Billion in next couple
of years and eventually to US $ 50 Billion by 2010.

Whereas new buying season starting Jan 2005 already has seen demands for 10-15% price
reduction by the importers.

China lacks capability in value addition and fashion design. India stands to gain in ladies blouses
because of strength in hand-works, like embroidery, sequins, printing etc. On the other hand
China has clear advantage in Nightwear due to large capacity and lower costs. Therefore, while
China will focus on low value high volume capabilities, India should gain through fashion
content. India will also be favorite destination as alternative source other than China for major
retailers globally. India can emerge as good outsourcing center for EU and US giants.
Major Textile Export Council Of India

The major export promotion councils of India are given as follows :

A) Apparel Export Promotion Council.

B) Cotton Textile Export Promotion Council
C) Handloom Export Promotion Council.
D) Indian Silk Export Promotion Council.

Apparel Export Promotion Council:

APEC is a nodal agency sponsored by the ministry of Textile, Govt. of India. It performs the
following functions:-

A) Monitors garment exports quotas and promotions of exports of readymade

garments of India.

B) Continuously involves in the task of promoting exports by organizing buyer-seller meets,

C) Leads trade delegations to potential markets globally.
D) Participates in specialized international fairs.
E) Organized the Indian International Garment Fair biannually.

Cotton Textile Export Promotion Council :

Since its inception in 1954, as an autonomous, nonprofit body dedicated to promotion of exports,
The Cotton Textiles Export Promotion Council, popularly known as TEXPROCIL™ has been the
international face of cotton textiles from India facilitating exports worldwide
It performs the following functions:
A) Organizing fairs, Buyer Seller Meets and Overseas Trade Delegations.
B) Giving information to overseas customers about Indian companies when asked.
C) Market information, trends and forecasts.
D) Organizing fairs, Buyer Seller Meets and Overseas Trade Delegations
E) Giving information to overseas customers about Indian companies when asked
F) Market information, trends and forecasts
G) Identification of potential new markets and seeding the export activity through delegations
H) Defending Indian exporters from non tariff barriers, anti subsidy investigations etc

Handloom Export Promotion Council:

Handloom Export Promotion Council (HEPC) is a statutory body constituted under The Ministry
of Textiles, Government of India to promote the exports of all handloom products like fabrics,
home furnishings, carpets and floor coverings, etc. HEPC was constituted in the year of 1965
It performs the following function

A)Arrange for the participation of member exporters in the important trade fairs,
organising buyer-seller meet (BSM), business missions.
 B) Provide financial grants to the exporters with market development assistance for under
taking sale-cum- study tours, participation in international fairs, publicity etc.

C)Popularise Indian Handloom products abroad through website publicity, advertisements

in commercial portals, trade magazines, conducting exclusive hand woven shows, and
through Council publications.

D)Dissemination of trade information like market studies, colour trends, design trends,
export trends, standards and specifications, Government policies, circulars etc. through
publications and news letters.
 Timeline (1991-2012)
Post Economic Reforms :
Textile Policy 1985 was an important step towards increasing and revival of textile exports but the
policy could not augment the textile exports substantially. This is after the major economic
reforms and various specific measures undertaken for Textile Sector after 1991, textile exports
started increasing remarkably. In this section we are making an attempt to highlights the major
economic reforms and its impact on the textile industry in terms of its export performance during
1991-2000

Economic Reforms:
1. The system of Advance License was initiated;
Procedure for import of Capital Goods in simplified

2. Export House, Trading House, Star Trading

House, EOU,EPZ, have been strengthened

3. Various items were shifted from SIL to OGL;

4. EPCG/Duty Drawback Scheme/ Duty Exemption

Schemes were more liberalized;

5. 100% FDI is permitted;

6. LERMS/Current Account Convertibility was

introduced

7. QRs were reduced on the import of various raw

material of producing textile products;

8. Initiation of WTO with phasing out the MFA by

2005.

9. Announcement of new Textile Policy 2000

Specific Measures
1. Dereservation of few sector from SSI category;

2. „Textile Package‟ including reduction in excise duty, custom duty , funds allocation for
Apparel Park was announced;

3. Removing the ceiling on the cotton yarn export and withdrawal of ban on the export of cotton
waste was also announced;

4. Construction of Apparel International Mart, Apparel Export House

5. Technology Up gradation Fund is launched to modernise the industry for five year w.e.f
1.4.1999-31.3.2004. This provides 5% interest reimbursement on loans. Scheme extended to the
year 2007

6. Setting up of modern laboratories to meet the international environmental standards, Creation

of Special Purpose Vehicle for improving infrastructure during 2004-05

7. Handloom and Handicrafts identified under special focus initiative scheme.

EXIM Policies:

Duty Entitlement Passbook Scheme: DEPS is available for Indian Export Companies and
Traders on a Pre-Export and Post-Export basis. Pre-Export credit requires the beneficiary
firm has exported during the preceding 3-year period. The Post-Export credit is a
transferable credit that exporters of finished goods can use to pay or offset custom duties on
imports of any unrestricted goods.

Export Promotion Capital Goods Scheme:

 This scheme is available to export companies and traders who provide the GOI with
information about which type of goods and what value of Capital Goods they will
import. And they also inform what will be the outcome of export they expect to produce
from those imports. Depending upon the export commitment GOI provides them a
license to import capital goods duty-free or preferential rates of duty.

Pre and Post Shipment Financing:

 The Reserve Bank of India provides Indian Exporters Pre-Shipment Financing through
commercial banks for purchasing raw materials and packaging materials by presenting
Letter of Credit. RBI also provides Post-Shipment Financing through commercial banks at
preferential rates by presenting export documents.

Export and Special Economic Zones:

Govt. of India has established Export Processing Zones (EPZs) and Special Economic Zones
(SEZs). In EPZs units can import goods free of custom duty. There is 5-year tax holiday to any
industrial unit in EPZs. Govt. has allowed 100% Fore3ign ownership of units under EPZs and
SEZs. The Govt. considers SEZs as foreign territory for trade and tariff purpose. Units under
SEZs may engage in Manufacturing, Trading and Services. Units are exempt from routine
checking of exports by customs, and they can sell in the domestic market on payment of duty
as applicable to imported goods.
Duty Drawback Scheme:
 The basic objective of this scheme is to reduce the indirect taxes on exports. Exporters can get
refund of the excise and import duty. Through this scheme they can be more competitive and
have more potential market.

India Textile Policy 2000

For the growth and development of Indian Textile Industry and to make it more vibrant, Govt.
of India passed National Textile Policy in 2000.

Objectives of Policy

 To produce and provide good quality cloth in affordable price to fulfill different needs of
customers.
 To increase the share of India in Global Textile Market.
 To increase the contribution for employment and economic growth of country.

 Facilitate the Textile Industry to attain and sustain a pre-eminent global standing in the
manufacture and export of clothing.
 Liberalization of controls and regulations for the market development of different

 Textile Segments and to make them stronger to perform in competitive

environment.
 Encourage FDI and R&D to improve the manufacturing capabilities and
 Infrastructure under the environmental standards.
 Facilitating financial support and arrangement to sector.
 SWOT Analysis of Indian Textile Industry

Strengths:

1. Indian Textile Industry is an Independent & Self-Reliant industry.

2. Abundant Raw Material availability that helps industry to control costs and reduces the lead-
time across the operation.

3. Availability of Low Cost and Skilled Manpower provides competitive advantage to industry.

4. Availability of large varieties of cotton fiber and has a fast growing synthetic fiber industry.

5. India has great advantage in Spinning Sector and has a presence in all process of operation and
value chain.

India is one of the largest exporters of Yarn in international market and contributes around 25%
share of the global trade in Cotton Yarn.

6. The Apparel Industry is one of largest foreign revenue contributor and holds 12% of the
country’s total export.

8. Industry has large and diversified segments that provide wide variety of products.

9. Growing Economy and Potential Domestic and International Market.

10. Industry has Manufacturing Flexibility that helps to increase the productivity.
Weaknesses:

1. Indian Textile Industry is highly Fragmented Industry.

2. Industry is highly dependent on Cotton.

3. Lower Productivity in various segments.

4. There is Declining in Mill Segment.

5. Lack of Technological Development that affect the productivity and other activities in whole
value chain.

6. Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and
transportation Time.

7. Unfavorable labor Laws.

8. Lack of Trade Membership, which restrict to tap other potential market.

9. Lacking to generate Economies of Scale.

10. Higher Indirect Taxes, Power and Interest Rates.

Opportunities:

1. Growth rate of Domestic Textile Industry is 6-8% per annum.

2. Large, Potential Domestic and International Market.

3. Product development and Diversification to cater global needs.

4. Elimination of Quota Restriction leads to greater Market Development.

5. Market is gradually shifting towards Branded Readymade Garment.

6. Increased Disposable Income and Purchasing Power of Indian Customer opens New Market
Development.

7. Emerging Retail Industry and Malls provide huge opportunities for the Apparel, Handicraft
and other segments of the industry.

8. Greater Investment and FDI opportunities are available.

Threats:

1. Competition from other developing countries, especially China.

2. Continuous Quality Improvement is need of the hour as there are different demand patterns
all over the world.

3. Elimination of Quota system will lead to fluctuations in Export Demand.

4. Threat for Traditional Market for Power loom and Handloom Products and forcing them for
product diversification.

5. Geographical Disadvantages.

6. International labor and Environmental Laws.

7. To balance the demand and supply.

8. To make balance between price and quality.

 Global factors influencing textile industry

The history of the textile and clothing industry has been replete with the use of various bilateral
quotas, protectionist policies, discriminatory tariffs, etc. by the developed world against the
developing countries. The result was a highly distorted structure, which imposed hidden costs on the
export sectors of the Third World. Despite the fact that GATT was established way back in 1947, the
textile industry, till 1994, remained largely out of its liberalization agreements. In fact, trade in this
sector, until the Uruguay Round, evolved in the opposite direction. Consequently, since 1974 global
trade in the textiles and clothing sector had been governed by the Multi-fibre agreement, which was
the sequel to an increasingly pervasive quota regime that began with the Short-term arrangement on
cotton products in 1962 and followed by the Long-Term arrangement. After the successful
conclusion of the Uruguay Round in 1994, the MFA was replaced by the Agreement on Textiles and
Clothing (ATC), which had the same MFA framework in the context of an agreed, ten year phasing
out of all quotas by the year 2005. The section that follows takes a brief look at the history of these
protectionist regimes as also a more detailed look at the MFA and the ATC.
 Multi–Fiber Agreement (MFA)
On January 1st, 1974, the Arrangement Regarding the International Trade in Textiles, otherwise
known as the MFA came into force. It superseded all existing arrangements that had been governing
trade in cotton textiles since 1961. The MFA sought to achieve the expansion of trade, the reduction
of barriers to trade and the progressive liberalization of world trade in textile products, while at the
same time ensuring the orderly and equitable development of this trade and avoidance of disruptive
effects in individual markets and on individual lines of production in both importing and exporting
countries. Though it was supposed to be a short-term arrangement to enable the adjustment of the
industry to a free trade regime, the MFA was extended in 1974, 1982, 1986, 1991, and 1992. Because of
the quotas allotted, the MFA resulted in a regular shift of production from quota restricted countries
to less restricted ones as soon as the quotas began to cause problems for the traders in importing
countries. The first three extensions of the MFA, instead of liberalizing the trade in textiles and
clothing, further intensified restrictions on imports, specifically affecting the developing country
exporters of the textile and clothing products. Increased usage of several MFA measures tended to
further erode the trust which developing countries had originally placed in the MFA.

The MFA set the terms and conditions for governing quantitative restrictions on textile and clothing
exports of developing countries either through negotiations or bilateral agreements or on a unilateral
basis. The bilateral agreements negotiated between importing and exporting country’s contained
provisions relating to the products traded but they differed in the details. The restraints under the
MFA were often negotiated, or unilaterally imposed at relatively short intervals, practically annually.
The quotas could be either by function or fibre

Under the MFA, product coverage was extended to include textiles and clothing made of wool and
man-made fibers (MMF), as well as cotton and blends thereof. With regard to applications of
safeguard measures, import restrictions could be imposed unilaterally in a situation of actual market
disruption in the absence of a mutually agreed situation. However, in situations involving a real risk
of market disruption only bilateral restraint agreements were possible. The Textile Surveillance Body
(TSB) was set up to monitor disputes regarding actions taken in response to market disruptions.

The MFA permitted certain flexibility in quota restrictions for the exporters so that they could adjust
to changing market conditions, export demands and their own capabilities. The MFA also provided
for higher quotas and liberal growth for developing countries whose exports were already restrained.
The MFA asked the participants to refrain from restraining the trade of small suppliers under normal
circumstances. In general, developed countries, under MFA, chose not to impose restrictions on
imports from other developed countries

The TSB ensured compliance by all parties to the obligations of bilateral agreements or unilateral
agreements. It called for notification of all restrictive measures. A Textiles Committee – established
as a management body consisting of all member countries – was the final arbiter under the MFA and
worked as a court of appeal for disputes that could not be resolved under TSB.
Unsatisfactory experience with several extension protocols of the MFA, retention clauses, such as
“good will”, “exceptional cases”, and “anti-surge” and other trade related factors led the developing
countries to press for the inclusion of the textile issue in the agenda of the GATT Ministerial meeting.

The eventual outcome of prolonged negotiations was the Agreement on Textiles and Clothing.
 Agreement on Textiles and Clothing (ATC)

The ATC calls for a progressive phasing out of all the MFA restrictions and other discriminatory
measures in a period of 10 years. In contrast to the MFA, the ATC is applicable to all members of
the WTO.

Four Steps over 10 YearsSteps Percentage of products How fast remaining

taken to be brought under quota should open up,
GATT (including if 1994 rate was 6%
removal of quotas)

Step 1 16 percent (minimum 6.96 percent

taking 1990 imports annually
1st Jan 1995 – 31st Dec 1997
as base)

Step 2 17 percent 8.70 percent

annually
1st Jan 1998 – 31st Dec 2002

Step 3 18 percent 11.05 percent

annually
1st Jan 2002 – 31st Dec 2004

Step 4 49 percent No quotas left

(maximum)
1st Jan 2005

Full integration into GATT and

final elimination of quotas , ATC
terminates
 Top 10 Exporters (Textile)

Country 1990 1997

Billion US$ % share Billion US$ % share

Hong Kong 7.99 7.68 14.6 9.42

China 7.10 6.82 13.83 8.92

South Korea 6.04 5.81 13.35 8.61

Germany 14.00 13.46 13.05 8.42

Italy 9.80 9.43 12.9 8.32

Taiwan 6.13 5.90 12.73 8.21

USA 5.03 4.83 9.19 5.93

France 7.21 4.65 5.86 5.64

Belgium-

Luxembourg
6.54 6.29 7.01 4.52

Japan 5.88 5.65 6.75 4.35

Total (Top 10) 74.36 71.5 110.62 71.37

World 104.00 100.00 155.00 100.00

Source: central information commission (CIC.IN)

 Top 10 Exporters (Apparel)

Country 1990 1997

Billion US$ % share Billion US$ % share

China 9.41 9.14 31.8 21.06

Hong Kong 15.37 14.92 23.11 15.30

Italy 12.07 11.72 14.85 9.83

USA 2.57 2.49 8.68 5.75

Germany 7.82 7.59 7.29 4.83

Turkey 3.44 3.34 6.7 4.44

France 4.65 4.51 5.34 3.54

UK 3.08 2.99 5.28 3.50

South Korea 8.11 7.87 4.19 2.77

Thailand 2.86 2.78 3.77 2.50

Total (top 10) 69.38 67.36 111.01 73.52

World 103.00 100.00 151.00 100.00

 EU Top Ten Suppliers of MFA Clothing: Rank Price

(AGR 1994-96)

1995 1996 Rank

Price

Ranks and Average Price Ranks and Average Price

CAGR

1994-96

Country Rank Rank in Avg. Rank in Rank in Avg. Price,

in Volume Price, Value Volume Ecu/Kg
Value Ecu/Kg

China 2 1 9 1 1 8 3

Turkey 1 2 2 2 2 6 7

Hong Kong 3 3 6 3 3 5 9

Tunisia 4 7 3 4 6 3 4

Morocco 5 6 5 5 7 4 2

Poland 6 8 2 6 8 1 8

India 7 5 7 7 5 9 10
Bangladesh 8 4 10 8 4 10 5

Romania 9 10 4 9 10 2 1

Indonesia 10 9 8 10 9 7 6
 Strategies To Boost Exports
Boosting garment exports needs to combine the tactics for winning a short distance raceas 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 programmed' 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 becomeabunda
ntly clear that if these areas are upgraded and strengthened, India has the potential todevelop
competitive advantage. The key to such up gradation is in treating India's entire 'textilecomplex' of
yarn, fabrics, processing facilities and garment making as part of an overall systemand 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
Backward integration:
Because of the lack of modernization and technological advancement in the fabric sector, the inherent
strengths of a versatile fabric base have not moved into building a long-term favorable position.
Fabric quality and availability,

being pointed out as major dissatisfies, are arising out of outdated technology in weaving, lack of
modernization 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, whichhelp
s 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, 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

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’s

Manufacturing and product quality assurance:

A large number of problems in manufacturing and 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 favorable position' mainly because of superior manufacturing and product
quality. Upgradation of technology on a continuous basisis 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

Management of lead time:

Lead time is a major deterrent in dealing with India for many importer 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 delivery and process analysis for benchmarking operations
and for reducing delays. The 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

Product diversification:
Building competitive advantage also envisages product diversification 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 specialty chains. Structured
garments, outerwear, nightwear,workwear, protective wear, corporate and institutional wear,
lingerie, higher gsm knits, and specialised knits offer new areas of growth.

Channel selection and specialization:

Channels constitute one of the most important aspects of 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 specialization shown in 'fashion' or 'basic' garments
nor any specific match shown with department stores, specialty 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 specialize in some
specific channels in order to gain sustainable long-term advantage.
Design advantage and product development support:
Indian yarn-dyed fabric designs and multi-structured fabrics have caught the fancies of many
manufacturers and retailers around the world. The multi-colored prints from India are also favorites.
The summer collections are not considered complete by many companies unless Indian yarn-dyed
woven’s 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 designer’s 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.

Market-fashion information and computer network for tracking:

Improving the level of information 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.

Branding:
As a 'creative marketer of quality apparel', the Indian garment exporter needs toexplore the most
important value adding element of marketing, namely 'branding'. Bothwholesale 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 withconsiderable appreciation in unit value realisation
apart from brand loyalty which
brings premium prices as well as upgradation of quality. Acquiring brands and building them intarg
et markets or even creating new brands where possible are strategies to achieve valueadded
marketing, helping in the pursuit of competitive advantage. j)
Technological upgradation:
In order to occupy the slots being vacated by the South East Asian 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
modernization are going to be critical ingredients for success in the post-MFA scenario. Upgrading
skill and technical expertise. Though the Indian labor is abundant, their skill level on high speed
machines has been found to be insufficient. Intensive training to upgrade skill in tune with
technological advancement 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.
Recommendations:

 Increase duty drawback rates

 Moratorium on Term Loans
 Interest Subvention
 Extension of Sunset Clause
 Custom and Excise Duty on Synthetics
 Technology Up-gradation Fund Scheme
 Exemption from Service Tax
 Excise Duty on Textile Machinery & Spares to be reduced
 Reduction of Custom Duty on Textile Machinery
 Exemption route to be extended to Export Oriented Units (EOUs)
 Fringe Benefit Tax under Sec 115 of the Income Tax Act
 Refund of State Taxes & Duties to Exporters
 Uniform rate of VAT on Industrial Inputs
 Reduction of Excise Duty on Man–Made fiber Products
 Conclusion

The Indian textile industry is currently one of the largest and most important sector in the economy
interms of output foreign exchange earnings and employment in India The Indian textile industry has
a significant presence in the Indian economy as well as in the international textile economy. The
Textile industry has the potential to scale new height in the globalized economy. The textile industry
in India has gone through significant charges in anticipation of increased international competition.
Its contribution to the Indian economy is manifested in terms of its contribution to the industrial
production, employment generation and foreign exchange earnings. The industry also contributes
significantly to the world production of textile fibres and yarns including jute. In the world textile
scenario, it is the largest producer of jute, second largest producer of silk, third largest producer of
cotton and cellulosic fibre\yarn and fifth largest producer of synthetic fibre\yarn. Textile Industry is
providing one of the most basic needs of people and the holds importance; maintaining sustained
growth for improving quality of life. The Government of India has also included new schemes in the
Annual Plan for 2010-11 to provide a boost to the textile sector. These include schemes for Foreign
Investment Promotion to attract foreign direct investment in textiles, clothing and machinery etc.

The industry is facing numerous problems and among them the most important once are those of
liquidity for many organized sector units, demand recession and insufficient price realization. The
long-range problems include the need for sufficient modernization and restructuring of the entire
industry to cater more effectively to the demands of the domestic and foreign markets for textiles as
per the needs of today and tomorrow.
References :
 www.google.com
 Research papers from IIM Indore
 Research papers from SSJMAR
 Micro-Economics for Dummies