OVERVIEW OF GLOBAL FASHION INDUSTRY

AN ASSIGNMENT ON TREND ANALYSIS OF GARMENT TRADE FROM INDIA TO US AND EU

Submitted To Netravathi Assistant Professor Dept. Of FMS NIFT, Bangalore

Submitted By Vinita Kumari MFM (2011-2013) Dept. Of FMS NIFT, Bangalore

NATIONAL INSTITUTE OF FASHION TECHNOLOGY,BANGALORE

CONTENTS 1. INTRODUCTION: INDIAN TEXTILE INDUSTRY, ITS EXPORTS AND IMPORTS 2. INDIAN TEXTILE INDUSTRY:OPPORTUNITY FOR SOURCING AND COLLABORATION 3. TREND ANALYSIS OF GARMENT TRADE FROM INDIA TO US AND EU 4. LEADING EXPORTERS AND IMPORTERS 5. INDIAN RETAIL MARKET

TEXTILE AND APPAREL INDUSTRY OF INDIA

The Textile and Clothing sector in India booming, especially after the elimination of global quota system. Currently, India exports and supplies of garment more than 100 countries including U.S., EU, Latin America, Canada and the Middle East. Last year, exports of clothing were nearly 5 billion U.S. dollars. The main competitors of India are countries like China, South Korea, Pakistan, Bangladesh and Sri Lanka.

The Indian garment industry is gaining ground on the world at a dizzying pace, but still had its maximum. While resources are abundant with a strong base of textile and spinning in the sector. The main factors for this low technological development, decreased production, reduction of competition in the throat, the high cost of raw materials, lower infrastructure, productivity traditional negative regulatory policies and the impact globalization. However, there is only a list of manufacturers, suppliers and exporters who are fully recognized regulatory policies and procedures, international marketing policies and procedures. The only concern is the performance of their productivity initiatives, and meets the deadlines for ordering. India's textiles and clothing industry is one of the mainstays of the national economy. It is also one of the largest contributing sectors of India's exports worldwide. The Vision Statement for the textiles industry for the 11th Five Year Plan (2007-12), inter-alia, envisages India securing a 7% share in the global textiles trade by 2012. At current prices the Indian textiles industry is pegged at US$ 55 billion, 64% of which services domestic demand. The textiles industry accounts for 14% of industrial production; employs35 million people and accounts for nearly 12% share of the country's total exports basket. Market size The Vision Statement for the textiles industry for the 11th Five Year Plan (2007-12) sees India securing a 7 per cent share in the global textiles trade by 2012. At current prices, the Indian textiles industry is valued at US$ 55 billion, 64 per cent of which caters to domestic demand.

The export of textiles and clothing (T&C) aggregated to US$ 22.42 billion in 2009-10. The Government fixed the target for 2010-11 at US$ 25.48 billion. So far during the period AprilSeptember 2010, exports of T&C have been achieved at US$ 11.26 billion. Production During February 2011, total cloth production rose by 5.8 per cent year-on-year (y-o-y). During April- February 2011 cloth production increased by 4.5 per cent y-o-y. Export Total textile exports during April-December 2010 registered an increase of 16.54 per cent in rupee terms at Rs 87,582.83 crore as against Rs 75,149.98 crore during the corresponding period of the previous year, according to the latest data released by DGCI&S, Kolkata. The same were valued at US$ 19,217.12 million as against US$ 15,695.07 million during the corresponding period of the previous year, registering an increase of 22.44 per cent. The share of textile exports in total exports was 11.29 per cent during April-December 2010 as against 12.34 per cent during April- December 2009. Technical Textile Segment The technical textiles segment is expected to grow by 11 per cent per annum till 2012-13 and is likely to grow at 6-8 per cent per annum till 2020 without any policy interventions. If the government intervenes by way of regulatory push, the growth of technical textiles industry can be estimated at 12-15 per cent per annum till 2020, according to Rita Menon, Secretary, Union Ministry of Textiles. She added that the technical textiles segment in India has the potential to attract investment and create additional employment opportunities in coming years. She further said that investments of US$ 1.1 billion are expected by 2012 and employment is expected to increase to 1.2 million by 2012.

INDIAS TEXTILE AND APPAREL INDUSTRY: OPPORTUNITY FOR SOURCING AND COLLABORATION

India ranks among the top target countries for any company sourcing textiles and apparel. Indeed, apart from China, no other country can match the size, spread, depth, and competitiveness of the Indian textile and apparel industry. Moreover, the global elimination of quotas at the end of 2004 has greatly enhanced the opportunities for sourcing from India.

This special report focuses on the opportunities which India now offers as a source of textiles and apparel. Based on a detailed examination of the performance of a large number of apparel and home textile products in the US and EU markets in 2005, the report identifies those which offer the greatest scope for sourcing from India.

The report includes profiles of Indian textile and apparel companies which are potential partners for sourcing or collaboration. It also examines the competitiveness of Indias yarn and fabrics industry, identifies opportunities for foreign collaboration, and provides a wealth of statistical data.

INDIA : A GROWING SOURCE

India supplies over US$13 billion worth of textiles and apparel to the worlds markets. And exports are growing rapidly as more and more buyers around the world turn to India as an alternative to China. In 2005 spurred by the global elimination of quotas shipments to the EU soared by 30% and those to the USA shot up by 34%. These increases are remarkable, given that EU imports from all sources rose by only 8% while US import growth was just 6%. Growing International Competitiveness-The reasons for Indias success are not hard to

find. Apart from China, no other country can match the size, depth, spread and competitiveness of the Indian textile and apparel industry. India has a complete supply chain from a vast raw material supply to high quality finished products. Labour costs are among the lowest in the world. Indian firms offer experience, entrepreneurship and design skills which Chinese firms find hard to match. The industry is also highly versatile: smaller firms offer the flexibility needed for smaller orders while giant firms have the capacity to service

the worlds biggest buyers. Government policies have changed too. As the Indian economy opens up to the outside world, foreign investment opportunities are being transformed. Expanded Capacities, New Technology Since the elimination of quotas, Indian firms have been gearing up to meet fast growing foreign demand for their products. New capacities are being built, and competitiveness is improving as new technology is installed at a dramatic rate. Well known names benefit from Indias strengths

Leading foreign retailers and apparel brands are taking advantage of Indias strengths as an alternative to China and other countries. Well known names include Carrefour, Decathlon, Gap, H&M, JC Penney, Levi Strauss, Marks & Spencer, Metro Group, Nike, Reebok, Target, Tesco, Tommy Hilfiger and Wal-Mart. In the post-quota era, these and new players will turn increasingly to India for their sourcing requirements.

Collaboration And Joint Ventures India is opening up to the outside world. With economic liberalisation, there are new opportunities for creating joint ventures aimed at supplying international markets. But there is also scope for selling foreign brands in Indias huge domestic market. Indias Textile and Apparel Industry: Opportunities for Sourcing and Collaboration examines all these issues and more! In particular, it will help you to identify: Who your competitors are, and the strategies they are adopting for future growth; - Where geographically to establish manufacturing operations, including special economic zones and apparel parks; - The best manufacturers and exporters to approach when outsourcing whether in yarns, fabrics, home textiles or apparel; - The best products to buy and where to buy them based on Indias performance in the major consumer markets; and - The best ways in which to collaborate with Indian companies to ensure future success. India's Apparel Exports: Strategic Responses to Slower Growth Indian apparel exports have proved disappointing in recent years. The deterioration stems partly from weaker overall demand in the two main markets for Indian apparel exporters, the

USA and the EU, and partly from the appreciation of the rupee. In 2003-04 experts predicted that India, along with China, would do well from the global elimination of quotas at the end of 2004. Sales to the US market did indeed soar by 34% in 2005 but this was followed by a disappointing 7.1% increase in 2006 and a 0.5% fall in 2007. By contrast, China achieved growth rates of 70%, 22% and 23% respectively. In the EU, Indias success continued into 2006 with a 16% growth rate. But this came after a 27% rise in 2005 and was followed by a minimal 0.8% increase in 2007. Again China did much better than India through most of this period, having achieved growth rates of 44% in 2005, 11% in 2006 and 14% in 2007. In the first four months of 2008, Indias fortunes revived. While US apparel imports as a whole were down by 3.7%, those from India picked up. Furthermore, India did better than its chief competitor, China, whose sales fell by 6.8%. Indias competitiveness has improved since 2007 thanks to a reversal of the rupees appreciation against the dollar. Nonetheless, China has continued to make massive gainsand new competitors such as Vietnam have appeared. Companies have been adopting various strategies to cope with the new business climate. Celebrity Fashions, Orient Craft, Royal Classic Group, SP Apparels and Texport Syndicate have placed more emphasis on Indias fast growing domestic apparel marketwhere there is scope for achieving higher margins by saving on transportation costs and customs duties, where quality requirements are lower and where it is easier to do business. Gokaldas Exports, Indias largest apparel exporter, has responded to the US slowdown by placing more emphasis on Europe, as well as increasing its sales in India.

For the future, India may be forced to focus on a narrower range of products where it is more competitive. Data for 2008 suggest that such products include: mens and boys cotton knitted shirts; mens and boys cotton trousers; womens and girls cotton trousers; and cotton underwear. However, such a focus could force the Indian government to downgrade its ambitious expansion plans for the apparel sector

TREND ANALYSIS OF GARMENT TRADE FROM INDIA TO US AND EU

Bangladesh's textile and apparel exporters are giving a tough competition to their Indian counterparts in both the United States and European Union. A report by the Federation of Indian Chambers of Commerce and Industries (FICCI) showed that India's textile exporters were experiencing harder competitions from those from Bangladesh in the US market. It revealed that Bangladesh's apparel exporters were doing better than Indians in the EU markets and the gap had widened. Bangladesh witnessed a positive growth of 3.6 percent in its apparel exports to the EU market in 2009, while all its major competitors like China, Turkey and India experienced negative growth. The EU and US are the major destinations of textiles from both Bangladesh and India. They together account for around two thirds of the textiles and apparel exports from India. The FICCI, a national organisation of trade bodies from across India, released a report analysing the country's textiles and apparel exports to the US and EU markets. The report revealed that Indian textiles and apparel exports to US and EU had slowed down at almost the same rate in 2009, but competition seemed to be harder for Indian textile exporters in US market as compared to EU market. It noted that Bangladesh in addition to China, Indonesia and Vietnam had managed to perform better than India in US market despite recession in 2009. India's textile minister Dayanidhi Maran said that the government would lay special emphasis on modernising technology to make the country able to meet the challenges in the global textile and apparel markets. "Modernising technology and production processes is the key to remain competitive in the globalised textile industry and trade environment," said Maran, after inaugurating an Indian Rupees 250 crore Integrated Textile Park in Dodballapur near southern Indian city of Bangalore.

The FICCI analysis had noted that India's exports of textiles and apparel had witnessed a negative growth of around 11 percent to US and EU in 2009, but still managed to increase its share by 0.17 percent in both the markets. However, the FICCI observed that imports of textiles from Bangladesh and other countries like Indonesia and Vietnam had witnessed smaller decline than India in the US market. Bangladesh, Vietnam and Indonesia had seen slightly higher increase in their shares in US textiles and clothing market in the recession year 2009 over 2008.

According to the FICCI report; the share of Bangladesh, Indonesia, Vietnam and China increased by 0.5, 0.4, 0.67 and 4.3 percentage points respectively in US imports in 2009 as compared to 0.17 percentage points for India. In fact, in 2009, Vietnam managed to surpass India in terms of share in US imports of textiles and apparels.

The apex trade body observed that India's textiles and apparel exports to the US grew by 4.2 percent per annum between 2004 and 2009; while those of Bangladesh witnessed a growth of 11.5 percent. China, Vietnam and Indonesia registered a growth of 15.3 percent, 14.5 percent and 8.9 percent respectively in textile and apparel exports to the US. India's share in EU market of apparel increased from 6.8 percent to 7.2 percent while that of Bangladesh increased from 7.5 percent to 8.9 percent. China's share in EU's apparel imports from third countries increased from 42.7 percent to 44.7 percent but that of Turkey fell slightly from 12.7 percent to 12.2 percent.

In textiles, India's exports to EU witnessed higher fall than that from countries like China, Turkey and Pakistan. India's textiles exports to EU fell by 15.7 percent as compared to 12.9 percent, 15.3 percent and 9.8 percent fall witnessed by China, Turkey, and Pakistan's textiles exports to EU in 2009 as compared to 2008, noted FICCI. While Pakistan's share in EU textile market increased slightly but share of India, China and Turkey decreased in 2009 compared with 2008.

The FICCI analysis revealed that the share of Bangladesh in EU's imports of apparels in 2005 had been almost equal to that of India (around 6.2 percent). In 2008, the share of Bangladesh had been 7.5 percent and India's share had been 6.8 percent in EU's imports of apparels a difference of just 0.7 percentage points.

But, in 2009, the gap had further widened with the share of Bangladesh being 8.9 percent and that of India 7.2% - a difference of 1.7 percentage points, the report stated. The Indian government's Scheme for Integrated Textile Parks (SITP) is intended to assist the textiles industry in the development of need-based and self-sufficient infrastructure. Under the SITP scheme, the government had sanctioned 40 parks throughout the country and the one Maran inaugurated in Dodballapur was one of them.

"Twenty one parks are operational and the remaining will start production soon, he said. On completion, all these parks will have an investment of Rs 20,000 crore. There has been a huge demand for these parks and the government is now actively considering setting up few more shortly," said Maran

Trends in World Textile and Clothing Trade, 2010/11

LEADING EXPORTERS AND IMPORTERS Textile and clothing output fell sharply in the EU in the first six months of 2009, and declined at double digit rates in almost all member states for which data are available. The falls reflected declining export demand for EU-made goods as well as falling domestic sales as a result of the global economic crisis and recession in many countries. Total exports to countries outside the EU were 17.9% lower, with sales of textiles down by 20.4% and clothing by 14.9%. Within the EU, Italy was the largest textile exporter, followed closely by Germany. The largest destination for EU textile exports was the USA, followed by Tunisia and Turkey. Italy was also the biggest exporter of clothing, followed at some distance by Germany and France. The largest destination for EU clothing exports was Switzerland, followed by Russia and the USA. Imports also fell significantly as EU consumer spending weakened, and retailers and distributors cut back on inventories. The fall also reflected weaker demand for raw materials as activity in the textile and clothing industry was curtailed. Total EU textile and clothing

imports were down by 8.5% in value, reflecting a 12.7% fall in internal trade, although imports from outside the EU were down by only 3.5%. Of the total, textile imports from outside the EU fell in value by 18.2%. Clothing imports from outside the EU, on the other hand, rose in value by 2.3% but fell in volume by 7.7%, reflecting a rise in the average import price. The leading external supplier of textiles was China, followed by Turkey and India. In clothing, the leading supplier was China followed by Turkey, Bangladesh and India. Many suppliers increased their prices in order to maintain or raise their revenues in the face of falling order volumes. Only two of the EUs 20 leading clothing suppliers increased their deliveries in volume termsnamely India and the USAbut nine increased their value. .

Global Apparel Market 1st Quarter of 2011 US imports from China considerably declined in a large number of cotton apparel categories in the second quarter. Other origins did not significantly take advantage of China's retreat, with US imports of Chinese man-made fiber apparel even strongly resisting, according to just released preliminary data in volume terms. In licensing news, International Legwear Group (ILG) has signed a deal to manufacture socks and hosiery under the Haggar brand. Jones Jeanswear Division will make its foray into the men's wear market after signing a licensing agreement with G-III Apparel, which will provide Jones Jeanswear Division with the rights to design, market and distribute men's jeanswear under several G-III Apparel brand names. Liz Claiborne and Future Fashions have signed a licensing agreement relating to the Liz Claiborne brand in Canada, and Active Brands has signed a deal to manufacture swimwear and apparel unde the O'Neill brand r name. Billabong International has entered into an agreement to acquire Becker Surf and Sport, including its five retail stores and its online business, while Fast Retailing and DNP Clothing have set up a joint venture company, called Uniqlo (Malaysia), in Malaysia. All companies whose financial reports are featured in this report have posted increases in net sales, including Abercrombie & Fitch (up by 14%), Asos (up by 35%), Benetton Group (up by 2%), Gap (up by 6%), Gildan Activewear (up by 34%), H&M (up by 4%), Inditex (up by

14%), JC Penney (up by 1%), Levi Strauss & Co (up by 9%), Marks and Spencer (up by 3%) and TJX Companies (up by 15%). New stores have been opened by Diesel and Zara in India, and by Juicy Couture in Canada. Gap is planning to open its first stores in China, while Iconix China has announced plans to open Candie's stores in the country. American Eagle Outfitters will open its first stores in China, Hong Kong and Israel, and H&M is planning to open its first store in Turkey.

In other news, Anvil Knitwear has become the first company in the world to receive the WRAPe certificate for adopting environmentally friendly business practices at its textile mill in Honduras. Brandix Lanka has officially opened Brandix India Apparel City (BIAC) and H&M has published its sustainability report for 2009. Marcel Fashion Group has won a trademark infringement lawsuit against Liz Claiborne and Lucky Brand Dungarees. A group of US congressman has introduced the Textile Enforcement and Security Act of 2010 in order to combat fraud in US textile and apparel imports, and China and Taiwan have signed the Economic Cooperation Framework Agreement (ECFA). Meanwhile, more than 400 delegates attended the fifth edition of Prime Source Forum.

World Textile And Apparel Trade And Production Trends: The EU Reports
Textile and clothing output fell sharply in the EU in the first six months of 2009, and declined at double digit rates in almost all member states for which data are available. The falls reflected declining export demand for EU-made goods as well as falling domestic sales as a result of the global economic crisis and recession in many countries. Total exports to countries outside the EU were 17.9% lower, with sales of textiles down by 20.4% and clothing by 14.9%. Within the EU, Italy was the largest textile exporter, followed closely by Germany. The largest destination for EU textile exports was the USA, followed by Tunisia and Turkey. Italy was also the biggest exporter of clothing, followed at some distance by Germany and France. The largest destination for EU clothing exports was Switzerland, followed by Russia and the USA. Imports also fell significantly as EU consumer spending weakened, and retailers and distributors cut back on inventories. The fall also reflected weaker demand for raw materials as activity in the textile and clothing industry was curtailed. Total EU textile and clothing imports were down by 8.5% in value, reflecting a 12.7% fall in

internal trade, although imports from outside the EU were down by only 3.5%. Of the total, textile imports from outside the EU fell in value by 18.2%. Clothing imports from outside the EU, on the other hand, rose in value by 2.3% but fell in volume by 7.7%, reflecting a rise in the average import price. The leading external supplier of textiles was China, followed by Turkey and India. In clothing, the leading supplier was China followed by Turkey, Bangladesh and India. Many suppliers increased their prices in order to maintain or raise their revenues in the face of falling order volumes. Only two of the EU's 20 leading clothing suppliers increased their deliveries in volume termsnamely India and the USAbut nine increased their value. PRODUCT EXPORTED AND IMPORTED This report analyzes the worldwide markets for Womens and Girls Clothing in Billions of US$. The specific product segments analyzed are Womens & Girls Dresses, Womens & Girls Suits & Coats, Womens & Girls Blouses & Shirts, Womens & Girls Slacks & Trousers, and Womens & Girls Underwear and Night Wear. The report provides separate comprehensive analytics for the US, Canada, Japan, Europe, Asia-Pacific (excluding Japan), Latin America, and Rest of World. Annual forecasts are provided for each region and product segment for the period of 2001 through 2010. A ten-year historic analysis is also provided for these markets with annual market analytics.

The report profiles 1136 companies including many key and niche players worldwide such as Adidas Salomon AG, Ann & Hope, Bealls, Berkshire Hathaway, Fruit of the Loom, Benetton Group SpA, Calvin Klein, Charming Shoppes, Chicos FAS, Inc., Coldwater Creek, Inc., Danskin, Delta Galil Industries Ltd., Donna Karan International Inc., DonnKenny Inc., Embryform, Escada, Esprit International, FUBU, Gap Inc., Great River International, Guess?, Inc., Gymboree Corp, Hallmark Garments Manufacturing Ltd, Hugo Boss AG, J. Crew Group, J. Jill Group, Inc., Jockey International, Joe Boxer Corp, Jones Apparel Group Inc., Kanebo Co Ltd, Kasper A.S.L., Limited, Kellwood Company, Kingspass Company Limited, Lands End, Levi Strauss & Co., Limited Brands, Intimate Brands, Victorias Secret, Liz Claiborne Inc., Mothers Work Inc., M.R Simak Ltd, Nike Inc., Onward Kashiyama Co Ltd., Oshkosh BGosh Inc., Oxford Industries Inc., Picadilly Fashions, Polo Ralph Lauren, Reebok International, Sanyo Shokai Ltd, Sara Lee Corporation, Sears Holdings Corp, Stein Mart, Syms Corporation, Talbots, Inc., Target Corp, TJX Companies, The Athletic Sportshow Inc., The Childrens Place Retail Stores., The Limited, Inc., The May

Department Stores Company, Tommy Hilfiger Corporation, Triumph International AG, VF Corporation, Wacoal Corp, Wacoal America Inc., Wal-Mart Stores, Warnaco Inc., and World Co. Ltd. This report analyzes the worldwide markets for Knit Underwear & Nightwear in Millions of US$. The specific product segments analyzed are Womens Knit Underwear & Nightwear, Mens Knit Underwear & Nightwear, and Childrens Knit Underwear & Nightwear. The report provides separate comprehensive analytics for the US, Canada, Japan, Europe, AsiaPacific, Latin America, and Rest of World. Annual forecasts are provided for each region for the period of 2001 through 2015. A ten-year historic analysis is also provided for these markets with annual market analytics. The report profiles 313 companies including many key and niche players worldwide such as Benetton Group S.P.A., Bella Di Notte,S.L, Berkshire Hathaway, Fruit of the Loom, Inc., Cia Hering, Calvin Klein, Inc., Delta Galil Industries Ltd., Donna Karan International, Inc., Everlast Worldwide Inc., Formfit, Gunze Ltd., Jockey International, Inc. Joe Boxer, Maidenform Brands Inc, Perry Ellis International Inc., PT Great River International Tbk, Parisa AFR Apparel International Inc., Berlei, The Bali Company, Stanfields Limited, Triumph International, Tefron Ltd., Warnaco Group Inc., Wacoal Holdings Corp., and Wacoal America Inc. Market data and analytics are derived from primary and secondary research.

Indian Retail MARKET

Private Consumption & Retail The countrys dynamic retail landscape presents a grand opportunity to investors from across the globe, to use India as a strategic business hub. With the changing face of retail, the Indian consumer is in for a rapid transformation. With retail spending growing at double digit, Private Final Consumption Expenditure (PFCE) at current prices was estimated at Rs. 26,07,584 crore in 2007-08 as against Rs. 23,12,105 crore in 2006-07. As per the Images F&R Research estimates for India Retail Report the Indian Retail market stood at Rs.1,330,000 crore in 2007 with annual growth of about 10.8 per cent. Of this, the share of organised Retail in 2007 was estimated to be only 5.9 per cent, which was Rs.78,300 crore. But this modern retail segment grew at the rate of 42.4 per cent in 2007, and is expected to maintain a faster growth rate over the next three years, especially in view of the fact that major global players and Indian corporate houses are seen entering the fray in a big way. Even at the going rate, organised retail is expected to touch

Rs.2,30,000 cr (at constant prices) by 2010, constituting roughly 13 per cent of the total retail market. The consumer spending is ultimately pushing the economy into a growth-and-liberalisation mode. The Indian market is becoming bolder by the day, with the economy now expected to maintain its growth at over 8-9 per cent and average salaries being hiked by about 15 per cent, there will be lot more consumption.

Shopping Centers Currently, there are about 280 operational shopping centres in various formats and sizes (including some partly operational), and this number is expected to rise to almost 500 by end2010. Of the new malls coming up, 40 per cent are concentrated in the smaller cities. Shopping centre business alone is estimated to become a Rs 40,000 crore business by 201011. By 2011 India will have an additional 280 hypermarkets, 3,200 supermarkets, 400 department stores, and approximately 1,200 mega speciality stores & category killers and 20,000 exclusive brand outlets across the various retail categories. Malls alone will provide an additional 200 million square feet of gross leasable quality retail space (GLA) by year 2011.