INTERNATIONAL TRADE OPERATIONS

GROUP PROJECT REPORT:

Import Procedure and Strategy of Knitted or Crocheted Fabrics (60)
Submitted by: Group- (Class-B) ARITRA SENGUPTA 1OB BIBASWAN BANERJEE 16B OM PASHUPATI 31B PARTHA CHANDRA 32B RAJESH JADDU 38B

INDEX
1. Trends in Global Trade of Knitted and Crocheted Fabrics............................. 3

2. Production and Consumption Trends of Knitted or Crocheted Fabrics in India..................................................................................... 5 3. Major Exporters of Knitted or Crocheted Fabrics....................................................................... 4. Major Importers of Knitted or Crocheted Fabrics.......................................................................... 5. Policy and Procedure Governing Import of Knitted or Crocheted Fabrics........................................................................ 6. Import Planning of Knitted or Crocheted Fabrics for Indian Markets................................................................................ 7. Selling Knitted or Crocheted Fabrics in India: Operational Challenges.....................

11

13

16

17

References.

1
Trends in Global Trade of Knitted and Crotched Fabrics with respect to India

World Trade Atlas India - Imports from -- World -Millions of US Dollars January - December % Share % Change 2009 2010 - 10/09 100 100 36.14 0.06 0.07 47.08 11.26 2.14 0.63 2.95 39.65 43.37 5.85 0.99 0.66 3.17 44 45.4 -23.67 -32.12 56.02 57.94 63.11 53.84

HS 60 6001 6002 6003 6004 6005 6006

Description -- World -Knit,Crocheted Fabrics

2008 2009 2010 2008 321410.1022 257658.0057 350782.9754 100 154.541439 154.202726 226.804322 0.05 27.021585 7.951335 2.040403 9.676741 58.108392 49.742982 17.365379 3.303529 0.965796 4.546556 61.138721 66.88274 13.255679 2.24248 1.506859 7.180727 99.723129 102.895443 17.5 5.15 1.32 6.26 37.6 32.2

Pile Fabrics Oth Fabric,Knit/Croch Knit/Croh Fabs, Wd<30Cm, Nt Of Knit/Croct Fab. Wd>30 Cm,5%>El Warp Knit Fabrics, Other Than Knitted Or Crocheted Fabrics,

DGCI&S, Ministry of Commerce World Trade Atlas India - Exports to -- World -Millions of US Dollars January - December % Share % Change 2009 2010 - 10/09 100 100 34.94 0.07 0.07 30.56 23.84 6.96 2.81 3.41 5.97 57.01 15.2 5.98 1.73 3.62 2.37 71.2 -16.97 12.04 -19.91 38.44 -48.25 62.95

HS 60 6001 6002 6003 6004 6005 6006

Description -- World -Knit,Crocheted Fabrics

2008 2009 195069.9458 165201.6402 108.684719 110.170891 30.891688 7.691378 3.431377 5.431057 4.828957 56.41026 26.258831 7.67121 3.097222 3.760016 6.573961 62.809654

2010 2008 222922.225 100 143.834122 0.06 21.802795 8.594852 2.480574 5.205182 3.401789 102.348931 28.4 7.08 3.16 5 4.44 51.9

Pile Fabrics Oth Fabric,Knit/Croch Knit/Croh Fabs, Wd<30Cm, Nt Of Knit/Croct Fab. Wd>30 Cm,5%>El Warp Knit Fabrics, Other Than Knitted Or Crocheted Fabrics,

DGCI&S, Ministry of Commerce

World Trade Atlas India - Imports from -- World -Quantity January - December % Change 2008 2009 2010 - 10/09 0 0 0 131766308 KG 68057081 KG 87428469 KG 28.46 7630907 KG 5092655 KG 3609703 KG 1381856 KG 912298 KG 642592 KG 594790 KG 387454 KG 593967 KG 1519574 KG 1457404 KG 1674642 KG 104300997 KG 31784699 KG 38881113 KG 16338184 KG 28422571 KG 42026452 KG -29.12 -29.56 53.3 14.91 22.33 47.86

HS -- World -60 Knit,Crocheted Fabrics 6001 6002 6003 6004 6005 6006 DGCI&S, Ministry of Commerce

Description

Pile Fabrics Oth Fabric,Knit/Croch Knit/Croh Fabs, Wd<30Cm, Nt Of Knit/Croct Fab. Wd>30 Cm,5%>El Warp Knit Fabrics, Other Than Knitted Or Crocheted Fabrics,

World Trade Atlas India - Exports to -- World -Quantity January - December % Change 2008 2009 2010 - 10/09 0 0 0 56454684 KG 39037369 KG 33538047 KG -14.09 8439438 KG 8296821 KG 5949546 KG 28144586 KG 10519295 KG 1505081 KG 774411 KG 817941 KG 665439 KG 2939340 KG 859815 KG 852093 KG 1049309 KG 769715 KG 821228 KG 15107600 KG 17773782 KG 23744660 KG -28.29 -85.69 -18.64 -0.9 6.69 33.59

HS -- World -60 Knit,Crocheted Fabrics 6001 6002 6003 6004 6005 6006 DGCI&S, Ministry of Commerce

Description

Pile Fabrics Oth Fabric,Knit/Croch Knit/Croh Fabs, Wd<30Cm, Nt Of Knit/Croct Fab. Wd>30 Cm,5%>El Warp Knit Fabrics, Other Than Knitted Or Crocheted Fabrics,

Exports of HS 60 increased both times i.e.in 2009 and 2010over the previous year in terms in millions of US$. The increase in 2009 was 1.36% while that in 2010 was 15.31%. However, what is interesting to note is that in 2009 as compared to 2008, the volume exported actually decreased by almost 31% (in Kgs) before dropping even further, albeit by a lesser amount in 2010. This can be attributed to a fall in production and increased prices of Indian knitted and crocheted fabrics in the international markets in this time period. The biggest contributor to this occurrence has been the drop in export of HS 6004 i.e. knitted and crocheted fabrics with yarn width greater than 30cm and HS 6002. Indian imports (value in terms of US$)of HS 60 remained more or less constant in 2009 as compared to the previous year before posting a 33% increase in 2010. This could be attributed to a spurt in domestic consumption. The imports of HS 60 (in Kgs) support the above as we can see that in 2009, imports fall but recover strongly in 2010. The changes as mentioned were majorly contributed by HS 6005 and HS 6006.

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Production and Consumption Trends of Knitted and Crotched Fabrics in India
Power Looms: Production and Value Addition, Number of Units and Looms,
Employment
OAME, NDME, DME Small to Medium Small to Unorgan Medium ised ASI Medium

OAME

NDME

DME

Large

Total

Power loom, mill and hosiery sector No of units 3,79,103 59,508 41,775 % share in total units 74.3 11.7 8.2 Per unit looms 1 3.3 8 Installed looms and knitting machines 3,79,103 1,96,376 3,34,200 % share in total looms 24.4 12.7 21.5 Employment per unit 1.5 3.3 8

4,80,386 94.2

25,550 5 15 3,83,250 24.7 13 3,32,150 20.5 7,04,693 15,304 38.4 6.61 1,01,161 31.4

174 0 15 2,610 0.2 13 2262 0.1 7,04,69 3 104 0.3 6.61 689 0.2

1,474 0.3 32 47,168 3 25 36,850 2.3 15,50,325 2,057 5.2 5.46 11,229 3.5

2,315 0.5 90 2,08,350 13.4 63 1,45,845 9 43,20,000 9,501 23.8 4.58 43,513 13.5

50,899 100 15,51,0 57 100 16,16,3 38 100 75,66,4 64 39,893 100 3,22,49 1 100

9,09,679 58.6

Employment 5,68,655 1,96,376 3,34,200 10,99,231 % share in total employment 35.2 12.1 20.7 68 Production/unit/year in sqm 14,136 40,450 2,32,167 2,86,753 Total production (mnsqm) 3,483 1,685 7,759 12,927 % share in total production 8.7 4.2 19.4 32.4 Value added/sqm 7.42 10.5 15.77 Value added (million Rs) 25,846 17,692 1,22,360 1,65,898 % share in total value added 8 5.5 37.9 51.4

Fabrics Producing Units: It has been observed that the total number of woven and knitted units run manually in India is estimated at 11.29 lakh (handloom and hand-knitted units) and those run with power are estimated at 5.02 lakh (power loom/ mill and hand-knitted units), out of total 16.39 lakh cotton and synthetic fabrics producing units.8 The OAME units account for 14.35 lakh, out of which 10.57 lakh are run ning manually and 3.78 lakh are power-driven. The woven and knitted units, which should have been a part of ASI segment, but are listed in NSS unorganised manufacturing data, are estimated at 57,756. Among the woven units, handloom accounts for 11.24 lakh and power loom/mill 4.92 lakh out of total 16.16 lakh woven units. This is one crucial finding as there has been lots of controversy surrounding the exact number of handloom and power loom units existing in the country. The comparison of Statewise estimates of various types of units derived, using secondary sources (NSS data on unorganised manufacturing sector and ASI data), is quite matching with the information collected from the survey/primary sources and other second ary sources except in case of a few states. For example, in the case of Delhi, the power loom units are banned, but the data available from ASI and NSSO 62nd round shows the existence of power loom units in Delhi. Per Unit Ratios for Units Producing Fabrics Power loom, Hosiery and Mill Sector Units: The number of looms installed per unit varies from average size of 1 to 90 in units running with power and employment from 1.5 to 63. The weighted value added9 per square metre of fabrics is estimated at Rs 7.42 for OAME units, Rs 15.77 for DME unit and Rs 4.58 for large size. The weighted average production per unit on the basis of sample design is estimated and varies from 14,136 sqm for an OAME unit to 43.2 lakh for large size units. Thus, the production depends on the workers per unit, which in turn, depend upon the number of looms installed per units. Thus, an analysis of these units as per the size is very crucial for finding the exact number of looms, employment, production and value added estimates Handloom and Manual Knitting Units: The per unit estimates have been worked out on the basis of NCAER, 2008-09, field data. The per units loom installed varies from an average size of 1 to 94 in the units running without power, employment from 1.5 to 94, weighted value added per sqm of fabrics from Rs 9.80 for OAME units to Rs 21.30 for NDME units, annual production per units from 2,500 sqm in OAME units to 2, 93,233sqm for large size units (Table 2, p 64). As in case of Power Loom units, the profit margin taken varies in the range of 5% to 25% for various categories of units.

Hand Looms: Production and Value Addition, Number of Units and Looms,
Employment

OAME Handloom and hand-knitting sector No of units % share in total units No of loom per unit Number of looms and hand-knitting machines installed % share in total looms Employment per unit Employment % share in total employment Production/ unit/ year (sqm) Total production (mnsqm) % share in total production Value added/ sqm Value added (million Rs) % share in total value added

NDME

DME

OAME, NDME, DME

Small to Small to Medium Medium Unorganised ASI Medium Large

Total

10,53,750 93.3 1

48,419 4.3 3.5

17,428 11,19,597 1.5 7.5 99.1

6,256 0.6 17

222 0 17

1,753 0.2 34

1,715 11,29,543 0.2 94 100

10,53,750 62.5 1.5 15,80,625 71.5 2,500

1,69,466.50 1,30,710 13,53,927 10.1 7.8 80.4

1,06,352 6.3 17 1,06,352 4.8 89,384

3,774 0.2 17 3,774 0.2

59,602 1,61,210 16,84,865 3.5 9.6 100

3.5 7.5 1,69,467 1,30,710 18,80,802 7.7 20,568 5.9 45,052 85 68,120

34 94 59,602 1,61,210 22,11,740 2.7 7.3 100 7,36,766

89,384 1,96,645 2,93,233

1,054 30.5 9.8 10,327 23.2

498 14.4 21.3 10,606 23.8

628 18.2 14 8,794 19.8

2180 63

475 13.7 13.14

17 0.5 13.14 222 0.5

310 9 10.98 3,407 7.7

3,460 478 (3,145*) 13.8 10.24 4,892 11 44,493 100 100

29,727 66.8

6,246 14

Handloom and Manual Knitting Units: The per-unit estimates have been worked out on the basis of NCAER, 2008-09, field data. The per units loom installed varies from an average size of 1 to 94 in the units running without power, employment from 1.5 to 94, weighted value added per sqm of fabrics from Rs 9.80 for OAME units to Rs 21.30 for NDME units, annual production per units from 2,500 sqm in OAME units to 2,93,233sqm for large size units

Mill, Hosiery and Handloom Sector

OAME Total no of units Handloom and handknitted share Installed looms Handloom and handknitted share Employees engaged in these sectors in India Handloom and handknitted share Production in mnsqm Handloom and handknitted share Value added (million Rs) Handloom and handknitted share 14,32,853

NDME 1,07,927

DME 59,203

OAME, NDME, DME

Small to Small to Medium Medium Unorganised ASI Medium Large 396 3,227 4,030

Total 16,39,442

15,99,983 318,06

73.5 14,32,853

44.9

29.4

70 22,63,606

19.7 4,89,602

56.1

54.3

42.6

68.9 32,35,922

3,65,843 4,64,910

6,384 1,06,770 3,69,560

73.5

46.3

28.1

59.8

21.7

59.1

55.8

43.6

52.1

21,49,280

3,65,843 4,64,910

29,80,032

4,38,502

6036

96,452 3,07,055

38,28,077

73.5 4,537

46.3 2,183

28.1 8,387

63.1 15,107

24.3 15,779.50

62.5 121

61.8

52.5

57.8 43,353

2,367 9,978.50

23.2 36,173

22.8

7.5

14.4 1,95,625

3 1,07,406

13.9 911

13.1 14,636

4.8 48,406

8 3,66,983

28,298 1,31,154

28.5

37.5

6.7

15.2

5.8

24.3

23.3

10.1

12.1

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Major Exporters of Knitted or Crocheted Fabric
Exporters Value exported in 2010 (USD thousand) World China Republic of Korea Hong Kong, China Chinese Taipei Turkey Italy United States of America Germany Japan France Spain Thailand Belgium United Kingdom Austria Malaysia India Portugal Greece Israel Viet Nam Guatemala
10

Trade Indicators Annual Trade growth in balance in value 2010 (USD between thousand) 2006-2010 (%) 4752205 6321083 3598767 338693 2027174 894978 502648 282235 523535 574150 101106 75761 -139099 40928 -23973 57940 4718 -48236 33616 41389 50533 -2154887 -82430 3 15 5 -7 -1 11 -4 -14 -5 1 -5 -5 12 -3 -5 -3 6 19 22 5 173 24 148

Annual growth in value between 20092010 (%) 21 35 17 11 23 29 7 17 11 12 3 8 40 3 8 8 13 32 23 -6 15 33 32

Share in world exports (%)

26210936 8666501 3703810 2522289 2060057 1267134 1168080 1062242 977524 688615 502397 269985 260761 191118 176986 170427 153197 143794 131808 128259 112844 109862 102612

100 33.1 14.1 9.6 7.9 4.8 4.5 4.1 3.7 2.6 1.9 1 1 0.7 0.7 0.7 0.6 0.5 0.5 0.5 0.4 0.4 0.4

Singapore Indonesia Poland Czech Republic

95771 92776 91278 83175

-35298 -855293 -145915 1843

-10 0 0 14

13 21 18 3

0.4 0.4 0.3 0.3

Chart Title
Belgium
Spain Japan United States of

Exports for Chapter 60 Trade Balance

Turkey
Hong Kong, China China -2000000 0 2000000 4000000 6000000 8000000 10000000

Axis Title

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4
Major Importers of Knitted or Crocheted Fabric
Importers Value imported in 2010 (USD thousand) 21458731 2345418 2264749 2183596 1001396 948069 798449 780007 665432 522346 479675 453989 401291 399860 392087 391673 377968 372156 343771 325016 263581 262110 237193 216168 211618 205875 Trade Indicators Annual Annual Trade growth in growth in balance in value value 2010 (USD between between thousand) 200620092010 (%) 2010 (%) 4752205 1 19 6321083 1 10 -2154887 24 33 338693 -998770 -855293 -764156 282235 502648 -469735 -459049 523535 101106 -139099 -389270 -341659 -376592 894978 -330653 -314935 -259809 -241297 -145915 -187779 -206699 -161159 -8 8 109 -8 -8 6 54 2 -5 -3 -2 5 -8 23 16 -9 6 5 3 -5 3 -21 -20 5 36 51 23 12 25 54 15 13 -1 27 37 31 35 61 19 8 7 16 16 3 2 9 Share in world imports (%) 100 10.9 10.6 10.2 4.7 4.4 3.7 3.6 3.1 2.4 2.2 2.1 1.9 1.9 1.8 1.8 1.8 1.7 1.6 1.5 1.2 1.2 1.1 1 1 1 Average tariff (estimated) applied by the country (%) 20 13.8 0 6.9 9.5 7 10.8 2.1 24.9 0 2.1 2.1 5 25 9.4 13 3.6 0 17.5 4.7 2.1 2.1 2.1 8.2 9.5 World China Viet Nam Hong Kong, China Cambodia Indonesia Mexico United States of America Italy Brazil Sri Lanka Germany France Thailand Bangladesh El Salvador Russian Federation Turkey Jordan Morocco United Arab Emirates Romania Poland Bulgaria Philippines Honduras
12

United Kingdom Spain India Guatemala

200959 194224 192030 185042

-23973 75761 -48236 -82430

0 -2 16 154

45 11 18 -3

0.9 0.9 0.9 0.9

2.1 2.1 11.2 9.1

Imports Vs Average Tariff

2500000 30 25
20 1500000 15 1000000 10 500000 5 0

2000000

Imports in 1000s Average Tariff

-4000000 -2000000 Bangladesh Thailand France Germany Sri Lanka Brazil Italy United States of America Mexico Indonesia Cambodia Hong Kong, China Viet Nam China

2000000 4000000 6000000 8000000 10000000

Trade Balance Imports in 1000s

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5
Policy & Procedure governing import (export) of Knitted or Crocheted Fabric
1. 6001: PILE FABRICS, INCLUDING LONG PILE FABRICS AND TERRY
FABRICS, KNITTED OR CROCHETED
Tariff Item 6001 10 6001 10 10 6001 10 20 6001 10 90 ---6001 21 00 6001 22 00 6001 29 00 ---6001 91 00 Description of goods Long pile fabrics : Of cotton Of man-made fibres Of other textile materials Looped pile fabrics : Of cotton Of man-made fibres Of other textile materials Other : Of cotton Unit Kg. Kg. Kg. Kg. Kg. Kg. Kg. Standard Rate of duty 10% 10% 10% 10% 10% 10% 10%

6001 92 00 6001 99 6001 99 10 6001 99 90

Of man-made fibres Of other textile materials : Of wool or fine animal hair Other

Kg. Kg. Kg.

10% or- Rs. 100 per Kg., whichever is higher 10% 10%

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2. 6002 KNITTED OR CROCHETED FABRICS OF A WIDTH NOT EXCEEDING

30 CM, CONTAINING BY WEIGHT 5% OR MORE OF ELASTOMERIC YARN OR RUBBER THREAD, OTHER THAN THOSE OF HEADING 6001
Tariff Item 6002 40 00 6002 90 00 Description of goods Containing by weight 5% or more of elastomeric yarn but not containing rubber thread Other Unit Kg. Kg. Standard Rate of duty 10% 10%

3. 6003: KNITTED OR CROCHETED FABRICS OF A WIDTH NOT EXCEEDING

30 CM, OTHER THAN THOSE OF HEADING 6001 OR 6002
Tariff Item 6003 10 00 6003 20 00 6003 30 00 6003 40 00 6003 90 00 Description of goods Of wool or fine animal hair Of cotton Of synthetic fibres Of artificial fibres Other Unit Kg. Kg. Kg. Kg. Kg. Standard Rate of duty 10% 10% 10% 10% 10%

4. 6004 :KNITTED OR CROCHETED FABRICS OF A WIDTH EXCEEDING 30

CM, CONTAINING BY WEIGHT 5% OR MORE OF ELASTOMERIC YARN OR RUBBER THREAD, OTHER THAN THOSE OF HEADING 6001
Tariff Item 6004 10 00 6004 90 00 Description of goods Unit Containing by weight 5% or more of elastomeric yarn but not containing rubber thread Kg. Other Kg. Standard Rate of duty 10% 10%

5. 6005: WARP KNIT FABRICS (INCLUDING THOSE MADE ON GALLOON

KNITTING MACHINES), OTHER THAN THOSE OF HEADINGS 6001 TO 6004
Tariff Item --6005 21 00 15 Description of goods Of cotton : Unbleached or bleached Unit Kg. Standard Rate of duty 10%

6005 22 00 6005 23 00 6005 24 00 -6005 31 00 6005 32 00 6005 33 00 6005 34 00 --6005 41 00 6005 42 00 6005 43 00 6005 44 00 6005 90 00

Dyed Of yarns of different colours Printed Of synthetic fibres : Unbleached or bleached Dyed Of yarns of different colours Printed Of artificial fibres : Unbleached or bleached Dyed Of yarns of different colours Printed Other

Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg.

10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

6. 6006 OTHER KNITTED OR CROCHETED FABRICS

Tariff Item 6006 10 00 --6006 21 00 6006 22 00 6006 23 00 6006 24 00 --6006 31 00 6006 32 00 6006 33 00 6006 34 00 --6006 41 00 6006 42 00 6006 43 00 6006 44 00 6006 90 00 Description of goods Of wool or fine animal hair Of Cotton : Unbleached or bleached Dyed Of yarns of different colours Printed Of synthetic fibres : Unbleached or bleached Dyed Of yarns of different colours Printed Of artificial fibres : Unbleached or bleached Dyed Of yarns of different colours Printed Other Unit Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Kg. Standard Rate of duty 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Source: CBEC

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6
Import Planning of Knitted and Crocheted Fabrics for Indian Markets
In order to get started with the importing of Knitted and Crocheted Fabrics for marketing and sale in India, it is important to do suitable planning so as to complete the task successfully. Firstly, all the regulatory and licensing tasks as spelt out by Indian government regulations will have to be completed and one will have to become a licensed importer registered with a suitable body. Then the registered firm or individual will have to gauge the market carefully to find out if there is scope for importing Knitted or Crocheted Fabrics in India, and if there does, only then should the firm go ahead with the import. Also, the duty structures charged by government and the regulations will have to be considered all the while doing the importing procedure. All imports now fall into one of the following four categories: 1. Freely importable items; most capital goods fall into this category. Items in this category do not require import licences and may be freely imported by any individual or entity. 2. Licensed imports; certain items can be imported only with licences and only by actual users. The current "negative list" of items in this category includes several broad product groups that are classified as consumer goods; precious and semi precious stones; products related to safety and security; seeds, plants and animals; some insecticides, pharmaceuticals and chemicals; some electronic items; several items reserved for production by the s mall-scale sector; and 17 miscellaneous or special-category items. In April 1993 the government ended licensing requirements for several agricultural items, including prawns, shrimp and poultry feed. 3. Canalised items; Items under this category can be imported only by specified public sector agencies. These include petroleum products (to be imported only by the Indian Oil Corporation); nitrogenous phosphatic, potassic and complex chemical fertilizers (by the Minerals and Metals Trading Corporation) vitamin- A drugs (by the State Trading Corporation); oils and seeds (by the State Trading Corporation and Hindustan Vegetable Oils); and cereals (by the Food Corporation of India). 4. Prohibited items; only three items-tallow fat, animal rennet and unprocessed ivoryare completely banned from importation. Knitted and Crocheted Fabrics in India falls under the first category, i.e. freely importable items, whereby the importer can import of the good into the country in order to meet the shortfall in domestic production to satisfy the market supply.

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7
Selling Knitted and Crocheted Fabrics in India: Operational Challenges
The Indian textile and clothing industry continues to have an important place in the national economy as regards employment, income generation and export earnings. It is estimated to provide employment to more than 16.98 million workers as per the National Sample Survey (NSS) 61st round July 2004-June 2005 and 12.6 million as per the Annual Survey of Industries (ASI) and NSSO data on unorganised manufacturing sector, 62nd round, 2005-06, 1 contribute to 11.6% of manufacturing value added during 2006-07 (GoI 2008c), and 13.8% of total export earnings during 2007-08 (Compendium of Textile Statistics). The share of clothing in total expenditure of households is estimated at 6.65% in 2004-05 at the all-India level (365 days as reference period, NSS, 61st round), while the expenditure on clothing account for more than 4.02% of total private consumption expenditures during 2006-07 (GoI 2008c). The industry is dominated by small, fragmented, non-integrated units with the only exception being the spinning sector. The spinning is dominated by large units and major modernisation process in this sector goes back to the 1990s. The main factors which led to modernisation in spinning sector include lowering of custom du ties and other restrictions on imports of machinery and equipment and lowering of restrictions on imports and exports of raw cotton and yarn. However, the weaving, dyeing and garment sectors lag behind in the process. The reservation of small-scale sector for garment sector till recently was one main factor responsible for demand of fabrics in smaller lots, which was conducive for the production of fabrics in small-scale Power Loom sector and small-scale dyeing units. It is also true that the policies pursued till lately related to various taxes, labour and other regulations were favourable for the growth of small-scale, labour-intensive enterprises and discriminated against large-scale,2 capital-intensive firms3 in weaving, processing and garment sectors. Since weaving takes place primarily in the unorganised sector, the estimates of this sector are not properly accounted for. It is thus important to make an assessment of the contributions made by various size classes of units in the handloom, power loom/mill and knitting sectors to the ove rall employment, output, value addition, fabrics production, etc.

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Power loom Sector:

MARKETING
The power loom clusters are located in diverse geographical boundaries and are mainly the outgrowth of handlooms centres, where handlooms were unable to compete with the mill sector. Easy availability of raw material and skilled labour, proximity to dyeing, bleaching and processing kind of ancillary units are crucial in determining the location of the power loom clusters. Power loom units are not as labour-intensive as handloom, especially at the higher scale.

FINANCE
The profit margin taken is about 5% for OAME units as most of the benefits are enjoyed by intermediary, 10% for NDME, 20% for medium and 25% and for large size units

An average worker (a weaver or a helper or any other assistant) can operate one-loom/knitting machine in small units engaging less than 10 looms and 2-3 looms/knitting machines, simultaneously in the middle to large size units with modern technology. The wages are linked to the Piece production per worker/loom, skill and the quality of fabrics produced, scarcity of labour and the presence of trade unions in the cluster. The wage rates in Ichalkaranji and Malegaon (Maharashtra) Power Loom clusters are lower compared to Sircilla in Karimnagar district of Andhra Pradesh and Panipat in Haryana because of absence of trade unions. The wage cost to produce per square metre of a cotton saree in West Bengal is Rs 2.51 as the labour is unionised compared to Rs 1.10 in Tamil Nadu. The power rate and the kind of loom/knitting machine used are other important factors explaining the wide variations in these variables and overall cost per square metre of fabrics production across states The benefits enjoyed by the small and marginal unorganised sector include lower power cost per unit, lower labour cost (as several labour laws are not applicable), lower overhead costs, tax saving/evasions, etc. These led to the growth of small- and medium- sized Power Loom units. The average size of the surveyed units varies between three, four and six looms, respectively in Uttar Pradesh, West Bengal and Madhya Pradesh compared to around 40 looms in Tamil Nadu and Maharashtra. For other states, it varies between these two limits. Most of the Power Loom units operate round the clock throughout the year in two shifts of 12 hours each in the state of Tamil Nadu and Gujarat, and in Punjab, Uttar Pradesh and Orissa in one shift of around 12 hours a day. Profit margin/overhead costs vary in the range of 5% to 35% across clusters. This is subject to the market conditions and the order received from the buying party.

SUBSIDY
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Tamil Nadu, Andhra Pradesh, Karnataka and Gujarat provide power subsidy to small size units. It was noticed during the survey that a few big corporate houses run many small- and mediumsized Power Loom units in different work sheds and under different banners across the clusters to enjoy this benefit. In Tamil Nadu, the connection for lower horse power (up to 10 HP) is easy to get and is charged at Rs 2.30 per unit consumption compared to Rs 4.90 for connection higher than 10 HP. The Government of Andhra Pradesh follows similar power policy in 2001, and Rs 0.87 were charged per unit for connection up to 5 HP compared to Rs 1.74 for connection more than 5 HP.

CO-OPERATIVES
The cooperatives are running effectively in Tamil Nadu, Maharashtra, Madhya Pradesh and Kerala. In Tamil Nadu, the Power Loom weavers cooperative societies mainly produce the cloth required under the scheme of free supply of saris, dhoti sand uniforms to schoolchildren as per the directives of the state government. In Madhya Pradesh, the Power Loom cooperative societies have to supply bed sheets and other made-ups to state government hospitals and government offices. The handloom cooperatives operate on same lines and function well in Tamil Nadu and Kerala. The handloom cooperatives procure yarn from the National Handloom Development Corporation and a few other agencies. The marketing of this product and payment is ensured and made immediately. But in Orissa, the cooperatives are not functioning effectively and payment is a problem. The handloom owners in such states have to take recourse to local buyers or middlemen for making their needs. In clusters like Jabalpur (Madhya Pradesh), the supply of yarn units is entirely dependent on the Madhya Pradesh State Power loom Weavers Cooperative Federation. But the cooperative is not able to timely supply yarn to the units in adequate quantity and the alternative sources are very costly. In Seminar cluster of Coimbatore, the Power Loom units complain the non-availability of yarn in the local market at reasonable price due to excessive exports of yarn. The smaller size units suffer more due to lack of storing capacity. A large number of so-called handloom cooperative units in Delhi are actually managed by single individual/family owners. The other registered cooperative members remain dormant or work as labourers in the same unit under one shed, but units enjoy all the benefit of cooperatives. Some of these handloom units even own a showroom in which various items actually produced in the Power Loom sector are sold as handloom products.

Knitted and Hosiery Sector

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Hosiery broadly refers to the garments made from knitted fabrics. Most of the knitting and hosiery production activities take place in three clusters, namely, Tirupur, Ludhiana and Kanpur. The average size of the units is the highest in Tirupur, followed by Ludhiana and Kanpur. Most of the units in Tirupur and Ludhiana produce both knitted fabrics and garments, mainly on a job work basis, but units with entire value chain operation, from knitting to packaging of garments, are rare. A few integrated units exist with entire value chains, but even these are not homogeneous in terms of operation, size and scale.

LOCATIONS
Most of firms in Tirupur are either single proprietorship or partnership owned by people mainly from local or adjoining areas. Tirupur accounts for 80% of the countrys cotton hosiery exports, and Ludhiana 70% of the woollen garment exports. The Kanpur cluster is not well -developed, but concentrates on domestic markets with targets on lower end segment. Ninety per cent of units in Tirupur are export-oriented units. In Ludhiana, a handful of spinning mills supply yarn to knitting units often through their agents. Hosiery units frequently complain that prices are often raised and rates are even renegotiated during the period between placing order and delivery of yarn by the yarn mills depending upon the opportunity.

PROCUREMENT: In Kanpur, the grey hosiery yarn is imported from other states through traders/brokers and non-availability of yarn locally is a major constraint. OPERATIONS: In Tirupur and Ludhiana, most of the knitting is done on imported modern circular
and flat knitting machines with a large diameter. Knitting in these units is very capital -intensive and one worker can run up to three knitting machines simultaneously. The yarn wastage is low and knitting is done mostly in three shifts. In contrast to Tirupur and Ludhiana, in Kanpur, the units have old conventional knitting machines with low speed and productivity .

FINANCE: The average cost per kilogram of knitted cotton fabric is lowest in Kanpur at Rs 176.59
and the highest in Tirupur at Rs 182.78. The average yarn cost at Rs 151.72 in Tirupur is also the highest due to better quality of knitted fabric produced mainly for exports. Wages per kilogram of fabric is lower in Tirupur compare d to Ludhiana, but are higher than Kanpur. In contrast to knitting units, garment units work 10-12 hours a day and run only in one shift. Manual or semimechanised cutting operation is mainly performed in garment units. Fully mechanised cutting machines are used rarely. A worker with no previous work experience in this sector, first, has to work as a helper for a few years and then as a tailor or a supervisor.

OPERATIONS: Each piece goes through different stitching processes and to put accessories on
various power-aided stitching machines. The capacity utilisation of the machine is tricky. The single and multiple- needle machines can be fully utilised, while the utilisation of the over lock machine, cause machine, button machine, etc, depend upon the kind of fabrics produced.
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The medium and large garment units are mainly engaged in assembly line work such as the stitching of various garment parts together and fixing accessories on these, and hence, production per machine/labour is high in such units. The small units mainly perform slow labour-intensive work. All stitched clothes need to go through a checking process. Dyeing/printing and/or embroidery are done after stitching in some high value garments as per order. Labelling, ironing and packaging need to be undertaken on garments before dispatching them to the buying/export houses. Many large units have a separate designing department and get support from institutions like the National Institute Fashion Technology (NIFT). These larger units use Computer Aide d Design (CAD) and Computer Aided Manufacturing (CAM) to improve the quality of their garments. Some other units rely on internet for getting modern designs. Medium and small units mainly depend on buyers for supply of design. The average fabric cost in making a T-shirt is estimated at Rs 64 per piece in Tirupur compared to Rs 35 in Ludhiana. In case of undergarments, the average fabric cost is estimated at Rs 5 in Tirupur compared to Rs 10 per piece in Kanpur. In preparing a vest, the average fabric cost varies from Rs 6 in Tirupur to Rs 11 in Kanpur. The fabric cost of T-shirt is higher in Tirupur as most of the surveyed units are engaged in exports for which they need superior quality fabric. Fabric cost per piece depends on the quality and weight of the fabric

References
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www.cbec.gov.in www.trademap.org www.eximguru.com www.dgft.gov.in www.texmin.nic.in

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