INTRODUCTION

A textile is any kind of woven, knitted, knotted or tufted

cloth, or a non-woven fabric (a cloth made of fibers that
have been bonded into a fabric). Textile also refers to
the yarns, threads and wools that can be spun, woven,
tufted, tied and otherwise used to manufacture cloth.

The Textile industry (also known in the United kingdom

and Australia as the Rag Trade) is a term used for
industries primarily concerned with the design or
manufacture of clothing as well as the distribution and
use of textiles.
India textile industry

SOME FACTS -

India contributes to about 25% share in the

world trade of cotton yarn.

India, the world’s third-largest producer of

cotton and second-largest producer of cotton
yarns and textiles, is poised to play an
increasingly important role in global cotton and
textile markets

The ready made garment sector is the biggest

segment in the India’s textile export basket
contributing over 46% of the total textile
Exports have grown at an average of 9.47%
p.a over the last decade.

It is a major foreign exchange earner after

agriculture and it is a largest employer with a
total workforce of 35 mn.

It contributes 20 percent of industrial

production, 9 percent of excise collections, 18
percent of employment in the industrial sector,
nearly 20 percent to the countries total export
earning and 4 percent to the Gross Domestic
Product.
 FINANCIAL YEAR-WISE BREAK-UP OF INFLOW OF FOREIGN DIRECT
INVESTMENT (FDI) IN INDIA FROM AUGUST 2001 To JULY 2008
(Amount in billion)
IN FLOW OF FDI IN INDIA
Financial Year

TOTAL ALL SECTOR TEXTILE

 In Rs in US$   in Rs In US $ % age of FDI In Textile in US$

2000-01 103.68 2.38 0.09 0.00 0.09

2001-02 184.86 4.03 0.24 0.01 0.13

2002-03 128.71 2.70 2.58 0.05 2.00

2003-04 100.64 2.19 0.43 0.01 0.43

2004-05 146.53 3.22 1.97 0.04 1.34

2005-06 245.84 5.54 4.15 0.09 1.70

2006-07 563.90 12.49 5.61 0.13 1.00

2007-08 986.42 24.58 7.48 0.19 0.76

April- July 2008 514.40 12.32 1.60 0.04 0.31

 
GRAND TOTAL 3581.03 86.14 32.43 .80 .93
 
Source: Department of Industrial Policy & Promotion, Ministry of Commerce
REASON BEHIND CHANGES
IN FDI OVER THE YEAR IN
INDIA
Total FDI in all sector increase rapidly. because with adopting
a new liberal policy and relaxation in norms..India able to
attract more foreign investor .
In 02-03 decline is represent in overall FDI investment but
investment in textile had been increase, because Up to 100%
FDI allowed in textile industry, with approval of the FIPB, and
Companies free to set up fully-owned sourcing (liaison) offices,
as well as marketing operations.
After decline in 03-04,then 2005-08 we see growth of FDI in
textile industry. because- 1)Large raw material
base,2)Positive developments in the Textile Policy,3)Flexibility
in production,4)Product development and design capabilities.
The investment increase but not rapidly because
1)Technological Obsolescence 2)Fragmented industry 3)
Lower Productivity and Cost Competitiveness.
ECB IN INDIA
External Commercial Borrowings (ECBs) are defined to
include commercial bank loans, buyers’ credit, suppliers’
credit, securitised instruments such as floating rate notes and
fixed rate bonds etc
ECB IN INDIA-The government is exploring options to ease
norms for external commercial borrowings - to enable firms go
for faster capacity building,
ECBs, were governed by the Ministry of Finance, Government
had issued consolidated guidelines on policies and procedures
for ECBs in July, 1999. The Central Government had last
revised these guidelines on 19th January, 2004.
As per its directive, ECB money could be used for rupee
expenditure only up to $20 million and only after RBI's
permission.
The $20 million restriction was later relaxed to $100 million for
infrastructure companies and $50 million for other firms
ECB IN INDIA
ECB IN INDIA
YEAR ECB IN INDIA
2004 112.156661 M.US $

2005 87.969985 M.US $

2006 88.600263 M.US $

2007 141.552945 M.US $

2008 145.825745 M.US $

OVERVIEW OF ECB IN INDIA
 If we see the trend of ECB in textile industry we found that, in
year 04-05 there is a fall in ECB in textile industry afterwards
there is a study growth in ECB. Because govt. give some
relaxation to those industry that take the path of ECB.

 It is generally used for Modernization, Rupee Expenditure ,

Acquisition, New Project, Import of Capital Goods, Working
Capital.
FII INFLOWS IN TEXTILE INDUSTRIES DURING FINANCIAL YEAR 2003-04 TO 2008-09

Amount US $ Million
Financial Year (April- FDI Inflow %age Growth over
March) Previous year
2003-04 322
2004-05 551 (+) 71
2005-06 861 (+) 56
2006-07 779 (-) 9
2007-08 875 (+) 12
2008-09 (April- 831 -
October)

SOURCES: RBI’s Bulletin November 2008

INVESTMENT IN TEXTILE
INDUSTRY
REASON OF CHANGES IN FII
FROM 2003-08
03-04:This sector was performing well
04-05:Even complexity of investment procedure good
inflow of FII is received
05-06India emerged second most favored invest
destination after china according to unctad.
06-07: As Japanese banks were giving more rate of
interest, FII goes down.
07-08:Company raised funds through FII.
Problems in the industry

Fragmented industry
Effect of historical government policies
Technological obsolescence
Indian companies need to focus on
product development
Competition in domestic market
Need to improve the working conditions of
the people.
Tackle Chinese aggression over the
international market
FRAGMENTED INDUSTRY
In fabric, large section of the industry is in the power loom and
hand loom sectors.
Global buyers prefer to source their entire requirements from
two to three vendors, and Indian garments find it difficult to
fulfill the capacity requirements.

TECNOLOGICAL OBSOLESCENCE
Large portion of the processing capacity is obsolete.
While state of the art integrated textiles mills exist, majority of
the capacity lies with the power loom sector.
This has also resulted in low value addition in the industry
HISTORIC REGULATIONS
The industry continues to be affected by several historic
regulations. Eg. Absence of a viable exit option for industry
players.

These regulations resulted in a complex industry structure,

which is currently an impediment. eg.
- pre-2000, garmenting was reserved for SSI sector, which has
resulted in most units being set-up with small capacities.
- knitted garments continues to be reserved for SSI sector.

On the other hand, in some cases the industry too has not
taken full advantage of government initiative.
LOWER COST
COMPETITIVENESS
Labour force in India has a much lower productivity as
compared to the competing countries like China, Sri Lanka etc.

The Indian industry lacks adequate economies of scale and is

terefore unable to compete with China, and other countries
etc.

Costs like indirect taxes, power and interests are relatively

high
CHANGES IN TEXTILE INDUSTRY
ACCORDING TO ENVIORNMENT

The Multi-Fibre Agreement (MFA)

National Textile Policy 2000
Export Promotion Capital Goods (EPCG) Scheme
The Agreement on Textiles and Clothing (ATC)
Scheme for Integrated Textile Parks (SITP)
Cotton Corporation Of India Ltd. (CCI)
Powerloom development and export promotion
council
Cotton Textile Export Promotion Council
(TEXPROCIL)
National Textile Policy 2000
 To deal with new challenges and opportunities in a changing
global trade environment
 Aims to improve the competitiveness of the Indian textile
industry
 Opens the country's apparel sector to large firms and allows
up to 100 percent FDI in the sector

Export Promotion Capital Goods

Scheme

 To promote modernization of Indian industry

 permits a firm importing new or Secondhand capital goods at
preferential tariffs
The agreement on textile
and clothing
 Promises abolition of all quota restrictions in international
trade in textiles and clothing by the year 2005
 Provides tremendous scope for export expansion from
developing countries.

Duty Entitlement Passbook Scheme

(DEPS)

Available to Indian export companies and traders on a pre-

and post-export basis
pre-export credit requires that the beneficiary firm has
exported during the preceding 3-year period.
Post-export credit is a transferable credit that exporters of
finished goods can use to pay or offset customs duties on
subsequent imports of any unrestricted products.
Power loom Development
promotion council
Exploration of overseas market.
Identification of items with export potential.
Market survey and up-to-date market intelligence
Advice on international marketing.
Display of selected product groups.

Cotton Textile Export Promotion

Council (TEXPROCIL):
 promotion of cotton fabrics, cotton yarn and cotton made-ups.
 include market studies for individual products, circulation of
trade enquiries, participation in exhibitions, fairs and seminars
at home and abroad
Schemes for integrated
textile parks
 For Providing world class infrastructure facilities
 by merging the Scheme for Apparel Parks for Exports (APE)
and Textile Centre Infrastructure Development Scheme
(TCIDS).
 Based on public private partnership.
 The Ministry of Textiles (MOT) would implement the Scheme
through Special Purpose Vehicles (SPVs).

Cotton Corporation Of India Ltd. (CCI)

profit-making Public Sector Undertaking under the Ministry of
Textiles
engaged in commercial trading of cotton
undertakes Minimum Support Price Operation (MSP) on behalf
of the Government of India.
Strategies for growth

Setting up textile industries oriented SEZs. Like projected

textile parks at Mundra (Gujarat), Visakhapatnam, Perundurai
(Tamil Nadu)
Starting up new courses such as Textile Manufacturing and
Textile Technology at universities and engineering institutes.
like National Institute of Fashion Technology (NIFT) run textile
engineering pro.
Liberalised labour laws, tax and other benefits of a Special
Economic Zone need to be implemented
Textile firms should lay emphasis on positioning and building
brands to survive, command a price premium and achieve
long term stability in the global markets. like Arvind Mills with
the ‘Ruff and Tuff’ brand.
As a de-risking strategy and as a measure of expanding the
market Indian textile firms should explore new markets in
Asia, Africa and the Americas.
majority of global customers look for big exporters with they
THANKS