TextilesClothing 03july2010

CONTENT
Chapters Particulars Page No.
EXECUTIVE SUMMARY i-vi
Chapter I Introduction
1.1. Background 1-2
1.2. Methodology 2-3
1.3. Limitations & Constraints 3
Chapter II Textile and Garments Sector – Global Scenario

2.1. Background 4
2.2. Structure of Global Textile & Clothing Market 4-6
2.3. Impact of Global Meltdown on Indian Economy 6-8
2.4. Prospects for Indian Textiles and Garments sector 8
2.5. The Changing Scenario 8
Chapter III Indian Textile & Garments Sector – A Review
3.1. Background 9-10

3.2. Structure of Indian Textile Industry 10-14
3.3. India’s Textile & Garments Trade 14
3.3.1. India’s Textile Exports 14-15
3.3.2. The Composition of Indian Textile Exports 15-16
3.3.3. Direction of Trade 16-17
3.3.4. India’s share in World Textile Trade 17-18
3.3.5. India’s Textile Imports 18-20
Chapter IV Performance of Indian Textile & Garments Sector

4.1. Introduction 21
4.2. Textile and Garments Sector: A Profile 21
4.2.1. Textiles and Garments Clusters in India 22
4.3. Textile and Garments Sector: The Organized 22-23
Factory Sector
I

4.3.1. Textile and Garments Sector Share in Total 23-24
Manufacturing
4.3.2. State Level Distribution of Textile and Garments 24-25
Sector
4.3.3. Labour Productivity in the Organized Factory 25-27
Sector: A State level Study
4.3.4. Estimation of Partial Productivity and Total Factor 27-29
Productivity Growth: Textile and Garments Sector -
All India Analysis
Chapter V Field Survey Findings
5.1. Profile of Textile Manufacturing units 30-31
5.2. Implementation of ISO – Its impact on Business 31
5.3. Turnover of Textile Manufacturing Units 31
5.4. Profitability of the Manufacturing Units 32-33
5.5. FDI and ICT Usage 33
5.6. Employment Profile 33-34
5.7. Trade Related Information 34
5.7.1. Comparison with other countries in the export 34-36

Market
5.8. Domestic Market 36-37
5.9. Manufacturing Cost Related Details 38
5.10. Price related Factors 39
5.11. Factors affecting Productivity 39
5.12. Factors responsible for Competitiveness of the sector 39-40
5.13. Measures adopted by the Industry for improving 40-41

competitiveness in domestic and export market
5.14. Requirements for enhancing Productivity & 41

Competitiveness
5.15. Region-wise findings of major Problems faced by the 41-42

Textile Sector
II

Chapter VI Recommendations 43-46
REFERENCES 47-48
Annexure Annexure - 1 : Survey Questionnaire 49-57
Annexure - 2 : List of Units Contacted for the Study 58-60
Annexure - 3 : (Methodology Adopted for Partial and Total 61-63

Factor Productivity Estimations)
III

LIST OF TABLES
Table Page
Particulars
No. No
2.1 Year on Year Growth in Secondary Sector 7
3.1 Structure of Indian textile Industry 10
3.2 Installed Capacity: Textile and Garments Sector 11
3.3 Sector-wise Production of Cloth (millions sq. meters.) 12
3.4 Production of Fibres and Yarn 13
3.5 Production of Cloth (millions sq. mtrs) 14
3.6 Textile Exports (Rs. millions) 15
3.7 Textile Exports (value in US $ millions) 16
3.8 Country-wise Export of Textile Items by India 17
3.9 India's Share in World Export of Textile and Clothing 18

(Billion US $)
3.10 Item wise Textile Imports by India (Rs. million) 19
3.11 Country-wise Import of Textile and Clothing by India 20

(2001-02 and 2007-08)
4.1 Textile and Garments Sector: Registered Manufacturing 22

(All India)
4.2 Textile & Garments: Registered Manufacturing (All India) 23
4.3 Share of Textile & Garments Sector in Total 24

Manufacturing in India
IV

4.4 State wise Share of Textile and Garments Sector (2004-05) 24
4.5 The Change in Share of Major States in the Textile & 25

Garments Sector
4.6 Labour Productivity Growth (%) 26
4.7 Partial Productivity Estimates for Labour and Capital 27

inputs
4.8 Labour, Capital, and Total Factor Productivity Growth 28
4.9 Index of Labour, Capital, and Total factor Productivity 29

Growth
5.1 Relationship between Size and Quality Accreditation 31
5.2 Annual Turnover of Textile Manufacturing Units : State 31

wise Average (Rs. Lakhs)
5.3 Average Profitability of the Manufacturing Units (1991- 32

2000 period)
5.4 Average on Profitability of the Manufacturing units (2000- 33

2008)
5.5 Extent of ICT usage in firm’s operation/production 33
5.6 Share of Exports earnings to Total Sales 34
5.7 Competitive advantage of India in the Export Market 35
5.8 Import of finished products 35
5.9 Factors hindering Export of textile products (%) 35
5.10 Factors hindering the quantity of imports (%) 36
V

5.11 Domestic Market share of the Textile units (%) 36
5.12 Share of Domestic sales to Total sales for the 37

Manufacturing units
5.13 Nature of Competition in the Domestic Market 37
5.14 Cost competitiveness of the firm during the last five years 38
5.15 Range of increase in Cost Competitiveness 38
5.16 Ratio of various Cost Components in Total Cost of 38

Production – Response %
5.17 Labour productivity of the unit during the last five years 39
VI

Productivity & Competitiveness of Indian Manufacturing – Textile & Garments Sector
EXECUTIVE SUMMARY
Introduction
The global textile and clothing industry occupies an important position in the total volume of
merchandise trade across countries. Developing countries account for little over two-third of
world exports in textiles and clothing. In the global textile market the major importers are
USA, European Union and Canada. Asia has been the principal sourcing region for imports
of textiles and clothing by both USA and European Union.
India accounts for 22 per cent of the world’s installed capacity of spindles and is one of the
largest exporters of yarn in international market. Indian industry contributes about 25 per
cent share in the world trade of cotton yarn. It has second highest spindleage in the world
after China. Indian textile has the highest loomage (including handlooms) in the world and
contributes about 61 per cent to the world loomage. The contribution of India is about 12 per
cent of the world production of textile fibres and yarns (including jute). India is the largest
producer of jute, second largest producer of silk, third largest producer of cotton and
cellulose fibre/yarn and fifth largest producer of synthetic fibres/yarns. The textile sector also
has a direct link with the rural economy and performance of major fibre crops and crafts such
as cotton, wool, silk, handicrafts and handlooms, which employ millions of farmers and crafts
persons in rural and semi-urban areas. India produces a variety of textiles and clothin items.
India is rich in traditional workers adept at value-adding tasks, which could give Indian
companies significant margin advantage. India has the largest area under cotton cultivation
and is the third largest production of cotton in the world after China and U.S. a key raw
material in the textile and garment industry, accounts for about 30% of the fabric cost and
13% of the garment cost. India has an abundant supply of locally grown long staple cotton,
which lends it a cost advantage in the home textile and apparels segments. India is still a
relatively small yet growing player in the global apparel market. Since the global economic
recession seems to be easing, and new economies are growing as those of India, textile
industry in India would grow provided it takes competition and innovation seriously.
Structure of Indian Textile Industry
Textile industry in India comprises mostly of small-scale, non-integrated spinning, weaving,

finishing, and apparel-making enterprises. Such a structure arose due to the policies on tax,
labour and other regulations that favoured small-scale, labour-intensive enterprises, while
discriminating against large-scale, capital-intensive operations. There is a modern mill sector
on the one hand and handloom and powerloom sectors on the other. Small-scale
“unorganized” players dominate the industry, where the regulations are less stringent. Most
of the units are in handloom sector and the employment is also the highest. On an average
around 2 workers work in each handloom unit, thus making handloom sector mostly home-
based.
Based on the latest data available for the period 2007-08, power loom sector alone accounted
for 62% of the total cloth production. However, the organized mill sector accounted for only
3% of the total cloth production during the same period and the quantity of cloth produced by
National Productivity Council, New Delhi | Page No. i

it is continuously declining. The share of both handloom and mill sector has almost halved in
the past decade. The rise in cloth production is due to positive growth rate in production of
cloth by power loom and hosiery. This indicates the diminishing importance of handlooms in
comparison to power looms. The handloom sector is continuously becoming marginalized.
Further the share of cotton cloth in Indian cloth production was as high as 60% in 1995-96,
though over the years its share declined gradually to 46% in 2004-05. However, the years
2005-06 and 2007-08 have shown an increase in cotton cloth production. This indicates that
in the recent years there is a renewed interest for cotton cloth production.
India’s Textile Exports
The Textiles exports basket consists of Ready-made garments, Cotton textiles, Textiles made
from man-made fibre, Wool and Woollen goods, Silk, Handicrafts, Coir, and Jute. Further,
the export basket consists of variety of items: cotton yarn and fabrics, wool and silk fabrics,
man-made yarn and fabrics, etc., of which man-made textiles and silk showed the highest
growth rate.
The Textile Policy of 1985 heralded a new beginning for the textile industry by focusing on
the deep-rooted structural weaknesses. The reforms in 1990s further boosted the textile
industry. The textile industry was de-licensed and reforms on fiscal and export front were
pursued. As a result, India’s Textile export during the financial year 2007-08 have reached
Rs.923940 million from Rs.154836 million in 1992-93 marking an annual growth of 13 per
cent per annum. This period also witnessed drastic decline in the share of textile export in
total exports as it declined from 29% of total exports in 1992-93 to 15% in 2007-08.
India’s Textile Imports
One of the significant aspects of India’s textile sector is that it has relatively negligible import
content. Textile imports increased from Rs.13426 million in 1992-93 to Rs.139140 million in
2007-08. Major markets for textile import, are Chinese Republic, China Taipei, Korea
Republic and middle and low-income countries, accounting for around 36% of imports in
textiles and clothing. Undoubtedly, the global textile and clothing industry is growing
significantly in the post quota regime. The extent to which Indian textile and clothing industry
can improve its position in the global market depends on its potential competitiveness.
Productivity –Growth in Textile and Garments Sector
One of the important aspects of the textile and garments industry is its contribution to
employment. If at all it is believed that Indian textile and garments industry will grow by
leaps and bounds during the post quota regime it is precisely because of its advantages in
terms of labour productivity in relation to the prevailing wage rate.
Among handloom, powerloom and mill sector, powerloom sector occupies a dominant
position followed by the handloom and organized mills sector. As far as the labour
productivity is concerned, it was the least for handlooms (877 sq.mtrs. per worker) as
compared to powerlooms (5896 sq.mtrs.) and organized mill sector (1500 sq.mtrs.). Thus, it
National Productivity Council, New Delhi | Page No. ii

is quite apparent that though the handloom sector provides the largest employment, it also
has the lowest labour productivity levels.
Exports from the handloom sector constitute a negligible 2% of the total textile exports from
India. In fact, this share has declined from 5% in 1995-96. If the production levels are not
improved, handloom sector may not be able to withstand the competition owing to
globalization though it occupies a significant position in terms of employment, flexibility of
small production, uniqueness, innovation and adaptability.
Labour Productivity in the Organized Factory Sector
Labour productivity (Gross Value Added per worker) growth estimated at 1993-94 prices for
the textile and garments sector at the all India level has shown a declining trend over the
years.
In the recent years the growth pattern of labour productivity across the states appears to be
skewed. In other words, the national growth in labour productivity in the textile sector is
dominated by a few States. The States such as Haryana, Karnataka, Madhya Pradesh, Orissa,
exhibit growth in labour productivity, which is higher than the national average in the recent
years. The interstate disparity in the labour productivity growth in the recent years is
certainly a concern. The States such as Andhra Pradesh, Haryana, J&K, Orissa, Rajasthan &
Tamil Nadu etc. have shown better labour productivity growth in the recent years in
comparison to earlier decades. This probably implies that the growth is concentrated in a few
regions where the textile sector has some advantages either in terms of raw material
availability or in terms of the availability of skilled manpower.
Capital Productivity growth and Total Factor productivity growth during the last decade
reveal secular growth trends with minor fluctuations at all India level.
Findings based on Field Investigations
From the field survey it is found that most of the manufacturing units (60%) have
implemented quality accreditations such as ISO 9000, 9001, SA 8000 etc. The implementation
has resulted in boosting their business. Turnover of the firms exhibited an increasing trend
between 2003-04 to 2006-07, however, in 2007-08 it declined. Such decline in average
annual turnover could be attributed to rising rupee phenomenon that dented the export
margins of the textile sector. Very few (Less than 10%) manufacturing units reported the
presence of Foreign Direct Investment (FDI). In the case of use of Information
Communication Technology (ICT) in the firm’s operations, only 29 percent respondents
confirmed to use it at various levels of operations. The average employment figures estimated
for the textile manufacturing units under survey have shown a steady increase from 502
employees per unit during 2003-04 to 565 employees per unit during 2007-08. Except during
the last year we notice consistent increase in employment across the units. The decline in
employment reported during the last year indicates that the sector is facing problems due to
increasing competition and the adverse effects on export from a rising rupee against dollar
National Productivity Council, New Delhi | Page No. iii

during the first half of 2008 and the subsequent global economic recession and decline in
global export demand during the second half of 2008.
Very high proportion of manufacturing units (65%) reported that they are engaged in exports
and the reported an increase in exports during the last five years. At the same time, only a
small segment (32%) of the manufacturers is engaged in importing finished products to India.
Major countries from where the finished products are imported are Germany, Japan,
Netherlands, USA, Europe, Thailand, Malaysia, Korea, China and Hongkong.
Cost competitiveness have been reported to increase by 63% manufacturing units during the
last five years. Wages and salaries constitute less than 10% of total cost. All components of
cost except raw materials and taxes were reported to increase in the range of 1-10% in the
recent years.
Quality of the present educational system for catering to the requirements of the industry
were reported to be satisfactory by 56% units, quality of infrastructure (both social and
physical) in the respective state was woefully short of the requirements. In the case of
physical infrastructure, availability of Power and Road need to be improved. As far as
Government interface with business/private sector is concerned, majority (68%) were not
satisfied with interface.
Recommendations
• It has been found that one of the major cost components in the production is the
energy consumed during the production process that offsets the competitiveness of
the sector. It is therefore suggested that the option of subsidizing unit rates of power
or encourage the use of other viable options such as non conventional energy
sources.
• There is a need to strengthen the availability of energy/power for the manufacturing
units since the power outages are quite frequent. In view of such bottlenecks there is
need for developing dedicated/captive power generating sources specifically for the
major textile clusters. This necessitates the involvement of state level agencies,
private partners, etc., to work out initially as a viable project on pilot basis for
replication at a large scale.
• Other options could be to bring in other alternate sources of power supply systems
such as renewable energy etc. Various financial incentive schemes are currently
available for such applications.
• Though textiles and garments sector are already getting the benefit of various
developmental schemes specifically in the SME sector, it is facing major threat from
other competing countries such as Bangladesh, China etc., there is a need to further
support the textile and garments sector.
• Vocational training through ITIs, Textile Design & Management Institutions
specially in the area of Apparel Manufacturing, Quality Control and Designing
needs to be encouraged so that skilled work force is available.
National Productivity Council, New Delhi | Page No. iv

• Inter-state tax regime has to be simplified for textile goods movement as truck
waiting time at each barrier is too long due to entry tax etc, increasing transit time
which ultimately results in avoidable additional costs and burden to the buyer/
consumer.
• Quality and cost of production are the key factors for sustaining in the Post
liberalization and free trade regime. Technology is critical, therefore, modernization
of the units and up gradation of technology is imperative. Both advanced as well as
indigenous technology needs to be integrated in the system.
• Since the manufacturing units are working on thinly spread margins and the cash
flow is a major constraint for majority of the manufacturing units, there is need to
work out time bound refund mechanisms from Technology Up gradation Fund
(TUF) provided by Government for the modernization of the units.
• In order to offset the loss of international competitiveness of the Indian Textile and
garments sector due to the exchange rate fluctuations, Government needs to carry
on with reimbursement schemes such as duty drawback, market development
assistance etc., on a continuous basis.
• Since the future of the textile and garments sector is based on the production and
export of Apparels, there is a need to focus on the development and growth of this
segment of the sector.
• Existing support measures available to textile garments manufacturers and traders

for attending, showcasing and publicizing Indian textile and garments at the
international trade fares and exhibitions needs to be strengthened.
• Regulatory function of the concerned government Ministries, Departments, State

Government need to be focused on controlling raw material exports with a view to
ensure stable yarn prices in the country and to make the sector more competitive
and productive.
• Since the handloom sector is a major employment and export earner, it is in the
interest of the Indian textile industry that support measures are urgently introduced
for the survival and growth of the handloom sector.
• Since Total Factor Productivity (TFP) contribution is relatively stagnant there is a

need to encourage more of technical innovation through better design, technology,
diversity of production etc. in the production process.
• Since design is a critical ingredient in the fast changing textile fashion technology,
the existing textile design centers need to be strengthened and more such institutes
need to be opened, especially for the support of textiles and garments sector.
National Productivity Council, New Delhi | Page No. v

• Besides the above, there are few grey areas where the attention of concerned
Ministries, Departments, State Government need to be focused such as reducing the
transit time and cost at the international check points to make Indian textile
products more competitive, Liberalization in export /import Policies, Development
of products and designs through R&D efforts need to be strengthened and made
available to manufacturing units.
• Government should promote and encourage lean manufacturing and cost reduction
measures in the textile and garments manufacturing.
• From the field survey, it was found that export taxes are hindering the export of
textile products. There is need for improving the export tax structure for making the
sector more competitive.
National Productivity Council, New Delhi | Page No. vi

Chapter I
Introduction
1.1. Background
In the recent years manufacturing has been playing a dominant role on account of an
increase in volume of global trade as a result of globalization and dismantling of trade
barriers under the World Trade Organization. Prime Minister’s Group constituted for
“Evolving measures for ensuring sustained growth of the Indian Manufacturing Sector”
noted that manufacturing is not only the backbone of the economy, but is also the muscle
behind the national security (NMCC, 2008).
It has been estimated that manufacturing value added by India is merely 1.36 percent of
world’s manufacturing value added which is very insignificant. Despite very spectacular
successes in the field of Space and Atomic Energy, India’s standing is low in terms of
strength in the technology area. This indicates that there is ample scope to increase its
share through appropriate actions in the area of price competitiveness as well as quality
improvement of the manufacturing products.
Primary sector (agriculture, forestry and fishing) share in India’s GDP has declined from
44% in 1970-71 to 18% by 2007-08 while secondary sector (including manufacturing) has
increased its share from 15% to 19% and the tertiary sector share increased from 40% to
63% during the same period. Thus, the share of manufacturing in India’s GDP remained
on a narrow range during the last four decades reveals the potential for manufacturing to
drive India’s GDP growth in an increasingly global world.
The highlight of the recent growth up-tick in the Indian economy has been the result of
sterling performance achieved by the manufacturing sector, which has consistently
improved its growth performance ever since 2002-03. In 2005-06, the manufacturing
sector grew at an impressive 9 per cent and the momentum continued as the sector grew at
11 percent during 2006-07. However, the turn of events in 2007-08 adversely affected the
manufacturing growth in India as it declined to 8 percent. This dip in manufacturing
growth has been on account of a number of adverse factors such as rupee appreciation
against dollar, increase in inflation rates, rising fuel prices, infrastructure constraints,
restrictive labour laws, global economic slowdown etc.
The improvement in the growth scenario of the manufacturing sector has been significant
due to the improvement in the performance with regard to exports. During 1994-95 to
1996-97, when the manufacturing sector was growing over 10 per cent a year, the
manufacturing exports grew at a slightly higher rate of 14 per cent supported by a massive
devaluation of the rupee. In the following five years, both output and exports in the
manufacturing sector fell sharply. In the recent up-tick in manufacturing from 2002-03 to
2006-07, manufacturing exports grew at over 20 per cent a year, almost thrice the rate of
growth of manufacturing production in spite of the fact that the rupee, in fact, appreciated
from 48.4 (Re/ $) to 45 between 2002-03 and 2005-06. During the financial year 2007-08
rupee further appreciated against dollar to about Rs.39 per dollar. However, during the
recent global economic slowdown phase experienced an increase in dollar value and rupee
is pegged about Rs.48 per dollar in 2009.
National Productivity Council, New Delhi | Page No. 1
NMCC (2008) points out that despite the fact that all the reforms undertaken were
conducive to rapid GDP growth in the range of 6 percent during 1991 to 2006 and 9
percent during the last two years, Indian firms in general, barring a few exceptions, have
not been adequately successful in measuring up to the world standards. The scale at which
such improvements are needed has not occurred.
Considering the employment aspects of the Textile and Garments sector, which is
phenomenally high, the important determinant of competitiveness could be its labour
productivity. Textile and garments sector is one of the important sectors among the
various constituents of the manufacturing sector in India, mainly due to its contribution
towards employment. It is the second largest employment provider after agriculture, both
direct and indirect employment put together. The textiles and garments sector alone
employed 20% of the workforce in the organized manufacturing sector. Further, the share
of textiles and garments sector in total workforce and number of enterprises is higher in
the unorganized manufacturing sector as compared to the organized manufacturing sector
which indicates that labour intensive small and medium enterprises dominate this industry
as compared to other manufacturing sectors. The share of textiles and garments in total
workforce in unorganised manufacturing sector is estimated at 34% of the total workforce
in the unorganised sector.
Textiles and garments sector contribution in total GDP is estimated at 1.9% while that of
manufacturing is estimated at 14% during 2007-08. The share of the textiles and garments
in total exports has been reported at 15% during 2007-08.
The present study on “Productivity and Competitiveness of Indian Manufacturing:

Textiles & Garments Sector” has been undertaken by National Productivity Council
(NPC) to study the sector based on both direct and indirect data sources and formulate
policy directions to make the sector more productive and export competitive. For
identifying the problems of the manufacturing units, a detailed field survey has also been
carried out across major textile producing clusters. The field study focuses on productivity
and export competitiveness of the Textiles & Garments sector, which has both value
addition and export potential.
1.2. Methodology
Two pronged methodology has been adopted for the study. One approach is based on
secondary sources of data and review of literature, while second approach includes an in-
depth field survey of the manufacturing units through structured questionnaires and
discussions. The field survey has been carried out among middle and top executives of
Textiles & Garments manufacturing units located at various textile clusters across the
country. In line with Terms of Reference, NPC carried out a primary survey of the textile
manufacturing units based o n a structured questionnaire (Annexure 1). The field survey
was undertaken ensuring the representation of all types of manufacturing units viz large,
medium and small manufacturing units. The responding manufacturing units were drawn
from various industrial clusters in different states to derive conclusions that are pertinent
to the nation as a whole. The details of responding manufacturing units included in the
primary survey across various clusters has been provided in Annexure 2.

Apart from these field surveys, views of leading experts such as management specialists,
technologists, economists, policy makers etc., have also been sought on a host of
qualitative information about the Textiles & Garments sector.
Hence, the present study is focused on the assessment of the productivity and
competitiveness of Indian textile and garment sector during the post liberalization period.
Apart from the assessment of productivity and competitiveness, the present study also
reviews global scenario of the textile and clothing trade, in general, and the Indian textile
and garments sector, in particular.
The study has been divided into six Chapters. The first chapter provides an introduction of
the sector. Third chapter provides an insight into the world trade in textile and clothing
products. The third Chapter analyses overall growth of Indian textile and garments sector.
Fourth Chapter deals with assessment of productivity and competitiveness of Indian textile
and garments sector. Fifth Chapter analyses the findings from the field survey of Textile
and Garments manufacturing units selected from various textile and garments production
clusters in India. Sixth Chapter provides the recommendations emerging from the present
study.
1.3. Limitations & Constraints
Keeping in view the initially set scope of work which was mainly to focus the study on
secondary data sources, which has its own inherent limitations as a result of reliability of
data in working out the projections. In order to substantiate the secondary data field
evidences have been also included through a primary survey later on.
Due to the limited resources available in terms of finance, the unit level data survey
coverage had to be undertaken with limited scope and coverage.
The outcome of the study and the recommendations thereof are generic in nature.
However, efforts have been made to minimize such constraints through analyzing various
data sources available to arrive at broad recommendations for the development of the
sector. The recommendation have been formulated which are implementable in nature.

Chapter II
Textile and Garments Sector – Global Scenario
2.1. Background
Textile and garments sector occupies significant position in total volume of merchandise
trade across countries. World trade in textiles and clothing amounts to US $ 400 billion
and is growing constantly. Developing countries are the major exporters and they account
for little over two-third of world exports in textiles and clothing.
The global textile and clothing industry is one of those sectors that were integrated to the
multilateral trading system in 2005. The integration has been possible with the removal of
the Multi-Fibre Agreement (MFA) through the Agreement on Textile and Clothing (ATC).
The Multi-Fibre Agreement (MFA), that governed the extent of textile trade between
nations since 1974, expired on 1 January 2005. The MFA enabled developed nations,
mainly USA, European Union and Canada to restrict imports from developing countries
through a system of quotas.
The ATC mandated progressive phase out of import quotas established under MFA, and
the integration of textiles and clothing into the multilateral trading system before January
2005. ATC was a transitory regime between the MFA and the integration of trading in
textiles and clothing in the multilateral trading system. The ATC provided for a stage-wise
integration process to be completed within a period of ten years (1995-2004).
A study by McKinsey suggests that by the year 2010 the volume of global textile trade
will grow to US $ 650 billion (www.euitymaster.com). India is now a fast emerging
market with more than 250 million middle income population with good purchasing
power. All these factors are good for the Indian textile industry in the long run. Even
though the global economic crisis has already affected the export oriented sector such as
textiles & clothing, as long as Indian economy is growing, textile industry would grow
provided it takes competition and innovation seriously.
Recent trends in competing countries, particularly China, in the area of mass and labour
intensive areas such as Textiles and Garments, Leather etc., show that due to the wage
increases as well as other policy changes in those countries the investors are looking for
alternate locations (NMCC 2008). This development provides an excellent opportunity for
India to attract companies which are looking for alternate source. Coordinated efforts to
attract these investments need to be put in place for attracting the importing countries.
2.2. Structure of Global Textile & Clothing Market
In the global textile market the major importers are USA, European Union and Canada.
Asia has been the principal sourcing region for imports of textiles and clothing by both
USA and European Union. The next important sourcing region for imports of textile and
clothing by USA has been Latin American region while the same for European Union
have been Central and East European countries. Interestingly for Canada the principal

sourcing region for import has been USA while Asia occupies the second largest position.
This certainly indicates that there has been a great deal of re-exports from USA.
As far as the position of individual countries in all these markets are concerned, the
countries like China, Mexico, Turkey and India occupy the dominant positions. India is
one of the leading suppliers of readymade garments in USA. In the EU market also, India
is a leading supplier for many of the textile products. It is estimated that Turkey would
emerge as a biggest competitor for both India and China.
Countries like Mexico, Caribbean Basin Initiative (CBI) countries, many of the African
countries and Bangladesh emerged as exporters of readymade garments without having
much of textile base, utilizing the preferential tariff arrangement under the quota regime.
But in the post quota regime they may loose their market share. As maintained earlier, the
structure of the world trade in the post integration period will solely be dictated by the
comparative cost advantages.
It may be said that countries like China, USA, India, Pakistan, Uzbekistan and Turkey
have resource based advantages in cotton; China, India, Vietnam and Brazil have resource
based advantages in silk; Australia, China, New Zealand and India have resource based
advantages in wool; China, India, Indonesia, Taiwan, Turkey, USA, Korea and few CIS
countries have resource based advantages in manmade fibers. In addition, China, India,
Pakistan, USA and Indonesia have capacity based advantages in the textile spinning and
weaving. However, india hasn’t been able to make Optimal capacity utilization due to lack
of Knowledge, training, TPM & TQM, Disguised Unemployment and Lack of
professional management.
China is cost competitive with regard to manufacture of textured yarn, knitted yarn fabric
and woven textured fabric. Brazil is cost competitive with regard to manufacture of woven
ring yarn. India is cost competitive with regard to manufacture of ring-yarn, O-E yarn and
woven O-E yarn fabric, knitted ring yarn fabric and knitted O-E yarn fabric. According to
Werner Management Consultants, USA, the hourly wage costs in textile industry is very
high for many of the developed countries. Even in developing economies like Argentina,
Brazil, Mexico, Turkey and Mauritius, the hourly wage is higher as compared to India,
China, Pakistan, Bangladesh and Indonesia.
From the above analysis, it may be concluded that China, India, Pakistan, Taiwan, Hong
Kong, Brazil, Indonesia, Turkey and Egypt would emerge as winners in the post quota
regime. The market losers in the short term (1-2 years) would include Caribbean Basin
Initiative (CBI) countries, many of the sub-Saharan African countries, Asian countries like
Bangladesh and Sri Lanka. The market losers in the long term (by 2014) would include
high cost producers, like EU, USA, Canada, Mexico, Japan and many east Asian
countries. In the long run, there are possibilities of contraction in intra-EU trade in textile
and garments, reduction of market share of Turkey in EU and market share of Mexico and
Canada in USA, and thus provide more opportunities for developing countries like India.
It is estimated that India would have a market share of 13.5 percent in textiles and 8
percent in garments in the USA market. With regard to EU, it is estimated that the benefits
are mainly in the garments sector, with China taking a major share of 30 percent and India

gaining a market share of 8 percent. The potential gain in the textile sector is limited in the
EU market considering the proposed further enlargement of EU. It is estimated that India
would have a market share of 8 percent in EU textiles market as against the Chinas market
share of 12 percent.
The study by Nordas (2005) suggests that the distance from the major markets is going to
act as a major constraint in the form of transaction cost. The study also suggests that
countries close to the major markets are likely to be less affected by competition from
India and China than has been anticipated in previous studies. Mexico, the Caribbean,
Eastern Europe and North Africa are therefore likely to remain important exporters to the
US and the EU respectively and possibly maintain their market shares. The countries that
are most likely to lose market shares are those located far from the major markets and
which have had either tariff or quota-free access to the United States and EU markets, or
which have had non-binding quotas. These countries will undoubtedly face adjustment
challenges. Also local producers in EU, the United States and Canada are likely to loose
market shares.
2.3. Impact of Global Meltdown on Indian Economy
The global financial crisis has significantly slowed down the growth of the world economy
in the interim period, with the global GDP growth falling to 3.7 per cent and 2.2 per cent
in 2008 and 2009, respectively, from 5 per cent in 2007. The downward GDP growth
eased the demand side pressures on inflation due to a fall in commodity prices, a trend that
is already visible.
Due to greater integration with world economy, India though having a robust domestic
demand is also affected by the recent global financial crisis. However, strong domestic
demand, which has been a key growth driver for the Indian economy, has provided a
buffer against global turbulence. However, it should be noted that even before the onset of
the global crisis, the Indian economy had started slowing down on account of proactive
monetary tightening policy adopted by RBI during the first half of 2008, aimed at
controlling domestic price inflation. As a result of the combined effect of global and
domestic slowdown, GDP growth declined to moderate to 6.5-7.0 per cent in 2008-09
(CRISIL-NMCC, (March 2009).
To reinforce the monetary measures announced on December 6, 2008, the Government of

India unveiled a multi-dimensional fiscal stimulus package on December 7, 2008 that is
expected to stimulate growth across sectors and fuel consumption. The Government of
India affected an across-the-board cut of 4 percentage points in the ad-valorem CENVAT
for the remainder of the current fiscal (2008-09) on all products other than petroleum and
those where the existing rate was below 4 per cent. The across the board reduction of 4 per
cent in excise duty will apply to machinery, man-made fibres, dyes and chemicals and
other products where excise duty is currently being paid in the textiles and garments
industry. The measures announced include:
• Additional funds of Rs. 14 billion have been allocated to clear the Technology
Upgradation Fund Schemes’ (TUFS) backlog.

• For exporters, the government has given 2 per cent (till March 2009, subject to a
minimum of 7 per cent) interest subvention on both pre and post shipment credit for
labour intensive export sectors.
The steps taken by Government are in the right direction and have reduced the adverse
impact of the global slow-down on these industries. Further, the lower cost of debt for
export oriented industries like textiles and garments marginally improved their
competitiveness vis-à-vis global players. The benefit of lower CENVAT is likely to be
beneficial for the textiles and garments, sector as it would support demand. Though
domestic demand generation insulates industries, the quest for higher levels of
competitiveness in the export oriented segments of textiles and garments need to be
supported actively as global buyers become more price sensitive. In a sense, the current
global economic scenario represents both a challenge and an opportunity for Indian
exporters.
In the second stimulus package announced on January 2, 2009, the Duty Entitlement
Passbook (DEPB) scheme has been extended till December 31, 2009 which will benefit
the exporters in the textiles and garments industry. The duty drawback benefits has also
been increased on certain items of textiles and garments industry like cotton knitted
fabrics, manmade fabrics, woolen knitted fabrics, etc., which will provide more incentives
to the exporters in the industry.
While the cumulative growth rate of manufacturing sector during the first half of this
fiscal stands at 5.2 per cent, the figures for mining and electricity for the same period are
3.9 and 2.6 per cent, respectively. As the US financial turmoil and its ripple effects are still
being faced globally, Industrial growth during current fiscal estimated in the range of 5.5-
6.0 per cent for 2008-09. The year on year growth in secondary sector for the period from
April to September for the financial year 2008 and for the financial year 2009 is provided
in Table 2.1.
Table 2.1: Year on Year Growth in Secondary Sector
Apr-Sep, Financial Year Apr-Sep, Financial Year

Details
2008 2009
Manufacturing 10.0 5.2
Mining 5.1 3.9
Electricity 7.7 2.6
Secondary Sector 9.5 4.9
Source: CRISIL-NMCC, March 2009
The manufacturing industries which have performed relatively better during the first six
months of this fiscal (FY2008-09) are beverages (23.3%), transport equipment (12.8%)
and machinery and equipment (9.8%). Eight industries have posted negative growth
during the first 6 months of this fiscal as compared to just one industry during the same
period last fiscal (FY2007-08). In the textiles and garments industry, the textiles segment
has posted negative growth in a) cotton textiles segment and b) jute and other vegetable
fibre textiles segment. The textile products segment including wearing apparel has posted

a high growth rate of 3.8% in first six months of FY 2008-09 as compared to 3.3% in
corresponding period in FY2007-08 (CRISIL-NMCC, March 2009).
2.4. Prospects for Indian Textiles and Garments sector
Although China is likely to become the 'supplier of choice', other low cost producers like
India would also benefit as the overseas importers would try to mitigate their risk of
sourcing from only one country. The two-fold increase in global textile trade is also likely
to drive India's exports growth. India's textile export (at US$ 15 billion in 2005) is
expected to grow to US$ 40 billion, capturing a market share of close to 8% by 2010.
India, in particular, is likely to benefit from the rising demand in the home textiles and
apparels segment, wherein it has competitive edge against its neighbours.
India enjoys a significant lead in terms of labour cost per hour (US$ 0.6 in 2004), over
developed countries like US (US$ 15.1) and newly industrialized economies like Hong
Kong (US$ 5.1), Taiwan (US$ 7.1), South Korea (US$ 5.7) and China (US$ 0.9). Also,
India is rich in traditional workers adept at value-adding tasks, which could give Indian
companies significant margin advantage.
India is the third largest producer of cotton in the world after China and US and has the
largest area under cultivation. Cotton, a key raw material in the textile and garment
industry, accounts for about 30% of the fabric cost and 13% of the garment cost. India has
an abundant supply of locally grown long staple cotton, which lends it a cost advantage in
the home textile and apparels segments.
2.5. The Changing Scenario
Though the MFA has expired with effect from 1st January 2005, certain provisions of
quota policy were extended initially for a period of one year; again it was extended till 31st
December 2006. Hence, the changing scenario definitely indicates that the future of Indian
textile and clothing industry is bright. It has been recently reported that textile exports in
2009-10 period will be equal or could be even lower than the one achieved in 2008-09. In
this global financial meltdown situation, it is an immediate task for all stake holders to
note takes a note of situation and takes stock of the difficulties and chart plans for
sustainability and growth of the Indian textile industry.

Chapter III
Indian Textile & Garments Sector – A Review
3.1. Background
The history of textiles in India dates back to the use of mordant dyes and printing blocks
around 3000 BC. The diversity of fibres found in India, intricate weaving on its state-of-
art manual looms and its organic dyes attracted buyers from all over the world for
centuries. The British colonization of India and its industrial policies destroyed the
innovative eco-system and left it technologically impoverished. Independent India saw the
building up of textile capabilities, diversification of its product base, and its emergence,
once again, as an important global player.
Today the textile and garments industry plays a significant role in the economy. It is one
of the largest and the most important sectors of Indian economy in terms of output, foreign
exchange earnings and employment. The sector employs 35 million persons. Of this,
textile segment alone accounts for 29 million and the clothing industry accounts for the
remaining 6 million people (www.texprocil.com). In fact it is the second largest employer
in the economy after agriculture. It contributes 4 percent to GDP and 14 percent to value
addition in manufacturing. It also contributes 20 per cent of industrial production, 9 per
cent of excise collections, 18 percent of employment in industrial sector, nearly 20 per
cent to the country’s total export earnings.
The total size of textiles and clothing industry in India was USD 47 billion in 2005-06 of
which USD 17 billion (36%) was accounted by exports market and USD 30 billion (64%)
by domestic market. Textile and garments sector has a unique position as a self-reliant
industry, from the production of raw materials to the delivery of finished products, with
substantial value-addition at each stage of processing. Its vast potential for creation of
employment opportunities in the agricultural, industrial, organised and decentralised
sectors & rural and urban areas, particularly for women and the disadvantaged is
noteworthy. Thus, the growth and all round development of this sector has a direct bearing
on the development of the economy.
In India, the textile industry is spread throughout the country. However, pockets of
concentration may vary according to availability of raw material. While the Jute textiles
industry is mainly concentrated in West Bengal, the Silk textiles industry finds
concentration in Andhra Pradesh, Karnataka and Tamil Nadu. Cotton textiles units can be
seen in all parts of the country, while the Synthetic and Woollen textiles industries are
mainly concentrated in Maharashtra, Gujarat, Punjab, Haryana, Madhya Pradesh and Uttar
Pradesh.
India produces a variety of textiles and clothing items. It is a result of diverse cultural
influences, climatic conditions, geographical factors and trade. One of the most renowned
textiles of India- the brocade of Varanasi, comes from Uttar Pradesh. Uttar Pradesh is also
famous for the delicate Chikan work embroidery. On the other hand, Gujarat and Kutch
are known for their mirror work embroidery and for the rich and vibrant colours. Also, one
cannot ignore the intricate bandhej (tie-dyed fabric) from Gujarat (Jamnagar, Mandavi and

Bhuj). Moreover, Tamil Nadu is known for Kanchipuram saries, while Phulkari or Bagh
embroidery work of Punjab can be found in every part of India in various forms.
India accounts for 22 per cent of the world installed capacity of spindles and are one of the
largest exporters of yarns in the international market. The industry contributes about 25
per cent share in cotton yarn trade in the world. Indian textile industry contributes about 6
per cent to the world rotor capacity installed. It has second highest spindleage in the world
after China. Indian textile has the highest loomage (including handlooms) in the world and
contributes about 61 per cent to the world loomage. It contributes about 12 per cent to the
world production of textile fibres and yarns (including jute). It is the largest producer of
jute, second largest producer of silk, third largest producer of cotton and cellulose
fibre/yarn and fifth largest producer of synthetic fibres/yarns.
The textile sector also has a direct link with the rural economy and performance of major
fibre crops and crafts such as cotton, wool, silk, handicrafts and handlooms, which employ
millions of farmers and crafts persons in rural and semi-urban areas. It was estimated that
one out of every six households in the country depends directly or indirectly on textile
sector (Davos, 2006). Moreover, India’s advantages in the textile sector emanates from
abundant availability of raw material and cheap labour. It is the second largest player in
the world cotton trade.
3.2. Structure of Indian Textile Industry
The structure of Indian textile industry is quite unique. India’s textile industry comprises
mostly of small-scale, non-integrated spinning, weaving, finishing, and apparel-making
enterprises. Such a structure arose due to the policies on tax, labour and other regulations
that favoured small scale, labour intensive enterprises, while discriminating against large
scale, capital intensive operations. There is a modern mill sector on the one hand and
handloom and powerloom sectors on the other. Small scale “unorganized” players
dominate the industry, where the regulations are less stringent (Table 3.1). Most of the
units are located in handloom sector where employment is also the highest. On an average
around 2 workers work in each unit, thus making handloom sector mostly home-based.
Table 3.1: Structure of Indian textile Industry

Volume (2004-05) Employment
Sector Units
(million sq.mts) (Million)
Organized Textile Mills 1789 1,526 1.0
Powerlooms 0.4 million 37437 4.8
Handloom 3.5 million 5722 6.5
Source: Textile Commissioner, Mumbai.
The installed capacity is the highest for spindles category. In the case of looms, installed
capacity is more for handloom and powerloom sector while looms in organized sector
have comparatively very low capacity with negative growth rates due to low levels of
employment (Table 3.2). Among different categories, powerloom has exhibited the
highest annual growth rate in terms of installed capacity. This shows the dualistic
characteristics of Indian textile industry.

Table 3.2: Installed Capacity: Textile and Garments Sector

Trend
2001- 2002- 2003- 2004- 2005- 2006- 2007-
ITEMS UNITS Growth
02 03 04 05 06 07 08
Rate (%)
Spindles
Million 37.51
(SSI + 38.33 39.03 37.03 37.47 39.50 39.07 0.26
No. (P)
Non-SSI)
Rotors
Lakh
(SSI + 4.8 4.68 4.82 5.00 5.20 6.01 6.21 1.95
No.
Non-SSI)
Looms
Lakh
(Organize 1.23 1.19 0.88 1.03 0.92 0.88 0.71 -5.97
No.
d sector)
Lakh
Powerloom 16.66 16.93 18.37 19.03 19.44 19.90 21.06 2.58
No.
Lakh
Handloom 38.91 38.91 38.91 38.91 38.91 38.91 38.91 0
No.
Source: Textile Commissioner, Mumbai
The power loom sector alone accounts for 61% of the total cloth production in 2007-08
(Table 3.3). However, the organized sector accounted for only 3% of the total cloth
production and the quantity of cloth produced by it is continuously declining. The share of
both handloom and mill sector has almost halved in the past decade. The rise in cloth
production is due to positive growth observed in the production of cloth by power loom
and hosiery sectors. This indicates the diminishing importance of handlooms in
competition to power looms. The handloom sector is increasingly getting marginalized.

Table 3.3: Sector-wise Production of Cloth (millions sq. meters.)
Handloom Powerloom Hosiery

Mill Sector
Financial Sector Sector Sector Total
Year % % Qty.
% %
Qty. Qty. Qty. Shar Qty. Shar
Share Share
e e
1995-1996 2019 6.42 7202 22.89 17201 54.68 5038 16.01 31460
1998-1999 1785 4.94 6792 18.81 20689 57.31 6276 17.38 36102
2001-2002 1546 3.68 7585 18.04 25192 59.93 7068 16.81 42034
2004-2005 1526 3.36 5722 12.61 28325 62.42 9112 20.08 45378
2005-2006 1656 3.34 6263 12.64 30626 61.82 10393 20.98 49542
2006-2007 1746 3.27 6536 12.24 32876 61.58 11504 21.55 53389
2007-2008
1744 3.03 7074 12.30 35304 61.41 12645 21.99 57491
Trend
Growth -1.21 -0.15 6.18 7.97 5.15
Rate (%)
The textiles and clothing industry is mainly based on cotton (Table 3.3). India is one
among a few countries that have a presence of entrepreneur units within the country across
the entire value chain in textile and clothing business starting from fibre production,
spinning, weaving/ knitting, processing to garment manufacturing. It has been the policy
to develop a fully integrated industry from the cotton field to the ready-made garment,
encouraging local production of cotton and textiles for low cost manufacture of garments,
while discouraging the use of man-made fibre. India is the second largest producer of
cotton and the second largest producer of cotton yarn. Removal on import barriers on
synthetic fibres have resulted in the increase in the production of man-made fibres in
recent years.

Table 3.4: Production of Fibres and Yarn

Trend
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- Growth
ITEMS UNITS
2000 01 02 03 04 05 06 07 08 Rate
(%)
Production of Fibers
Raw Lakh
cotton bales of
170 kg
156 140 158 136 179 243 241 280 315 7.74
each
Man-
Made Million 835 904 834 914 953 1022 968 1139 1244 2.49
Fibres kg.
Raw Million
47.9 49.2 49.50 50.50 48.50 44.60 44.90 45.10 45.20 -0.93
Wool kg.
Raw Million 15.21 15.86 17.35 16.32 15.74 16.50 17.31 18.76 18.31 2.18
Silk kg.
Production of Yarn
Cotton Million 2204 2267 2212 2177 2121 2272 2521 2823 2948 2.26
yarn kg.
Other
spun Million 842 953 889 904 931 951 937 990 1055 1.80
yarn kg.
Man-
made
894 920 962 1100 1118 1109 1179 1370 1509 4.72
filament Million
yarn kg.
Further the share of cotton cloth in the Indian cloth production was as high as 60% in
1995-96, though over the years its share declined gradually to 46% in 2004-05. However,
the years 2006-07 and 2007-08 have shown an increase in cotton cloth production (Table
3.5). Non-cotton cloth has risen in importance growing at almost twice the pace at which
total cloth production till 2004-05, however, during the last year (2007-08) we notice a
marginal improvement in its share.

Table 3.5: Production of Cloth (millions sq. mtrs)

100% Non Cotton
Cotton Cloth Blended Cloth
Financial Cloth Total
Year % % % Qty.
Qty. Share Qty. Share Qty. Share
1995-1996 18900 60 4024 13 8536 27 31460
1998-1999 17949 50 5699 16 11896 33 35543
2001-2002 19769 48 6288 15 15334 37 41390
2004-2005 20655 46 6832 13 17998 41 44685
2005-2006 23873 49 6298 13 18637 38 48808
2006-2007 26225 50 6882 13 19582 37 52689
2007-2008 27205 49 6888 12 21183 38 55276
Compound
Annual 3.08 4.58 7.87 4.81
Growth
Rate (%)
3.3. India’s Textile & Garments Trade
As discussed in chapter II, the external trade is a major determining factor behind the
growth of Indian textile and garments sector. It is thus, worthwhile to assess the export and
import scenario for Indian textile and garments.
3.3.1. India’s Textile Exports
Indian textile and clothing industry was generally inward looking till 1980s. The Textile
Policy of 1985 heralded a new beginning for the textile industry by focusing on the deep-
rooted structural weaknesses. The reforms initiated in 1990s further boosted the textile
industry. The textile industry was delicensed and reforms on fiscal and external front were
pursued. As a result, India’s Textile export during the financial year 2007-08 reached Rs.
923940 million from Rs.154836 million in 1992-93 marking an annual growth of 12.91
per cent per annum. Though the volume and value of textile exporters increased over the
years, in relative terms this period also witnessed drastic decline in the share of textile
export in India’s total exports as it declined from 28.84% of total exports in 1992-93 to
15.16% in 2007-08 (Table 3.6).
Textile exports play a dominant role in the total exports of the country. In India, 15% of
the country’s total export earnings are textile exports. India’s share in the global textile
market and apparel market is 4% and 2.8% respectively.

Table 3.6: Textile Exports (Rs. millions)

Item 1992-93 1995-96 1998-99 2001-02 2004-05 2005-06 2006-07 2007-08
Cotton Textiles 40931 88222 118684 146980 159244 203692 248195 286064
Manmade
11414 25819 30276 51912 92142 90299 106841 132579
Textiles
Silk 4014 4454 7497 13635 1819 19150 19556 27446
Wool Yarn,
Fabrics & 1136 2089 3139 2490 3135 3775 3792 3873
Made-up
Ready Made
69307 122947 183636 238776 294812 381537 393429 378478
Garments
Handicrafts 23578 33359 49502 50514 45553 58198 56976 60578
Jute 3551 6211 5816 6119 12412 13116 11652 13614
Coir & Coir
905 2103 3166 2946 4742 5903 7076 6687
Manufactures
Total Textiles
154836 285204 401716 513372 613859 775670 847517 923940
Exports
% Textile
Exports to 28.84 26.82 28.74 24.56 16.35 16.99 14.82 15.16
total
Total Exports 536883 1063533 1397518 2090180 3753400 4564180 5717790 6801248
Source: Annual Report, Ministry of Textiles, Govt. of India, Various Issues.
Thus, the export growth, though slow in comparison to China, is still impressive because it
occurred despite the persistence of many factors that observers have cited as shackling
Indian productivity in textiles and apparel such as technological obsolescence, fragmented
capacities, low scales of operation, lack of an exit policy, and rigid labor laws.
3.3.2. The Composition of Indian Textile Exports
The Textiles exports basket consists of Ready-made garments, Cotton textiles, Textiles
made from man-made fibre, Wool and Woollen goods, Silk, Handicrafts, Coir, and Jute.
Further, the export basket consists of variety of items: cotton yarn and fabrics, wool and
silk fabrics, man-made yarn and fabrics, etc., of which man-made textiles and silk showed
the highest growth rate.
The major export earner is ready-made garments followed by cotton textile and man-made
fabrics in April-Oct 2008. All the textile items are growing impressively. During April –
Oct. 2007-08, except the three items (i.e. Cotton Textiles, Silk, Ready Made Garments and
Handicrafts) the exports of all the items have grown impressively during the four time
periods between 2005 and 2008 (Table 3.7).

Table 3.7: Textile Exports (value in US $ millions)

Compound
April-Oct April-Oct April-Oct April-Oct Annual
Item
2005 2006 2007 2008 Growth (2005-
2008) (%)
Cotton Textiles 2349.33 2816.98 2816.26 3765.05 17.02
Manmade Textiles 1144.66 1328.54 1689.93 2582.28 31.15

Silk 395.71 395.36 384.78 522.92 9.74
Wool Yarn, Fabrics
293.90 271.27 377.45 78.16 -35.69
& Made-up
Ready Made
4286.12 4643.64 4413.89 6812.19 16.70
Garments
Handicrafts 755.95 803.80 719.21 857.94 4.31
Coir & Coir
78.60 80.47 92.23 108.95 11.50
Manufactures
Total Textiles
9304.27 10340.06 10493.75 15270.13 17.96
Exports
Source: DGCI&S (2009).
3.3.3. Direction of Trade
The China PRC has emerged as the fastest growing, single largest destination for Indian
textile and apparel in recent years (Table 3.8). However, USA still remains as the biggest
importer of Indian textile items as it procured about 40% of India’s textile exports in 2007-
08. Apart from the US, UK, Germany, UAE, Italy, Bangladesh etc. are the major trade
partners of India. Export of textile products to Bangladesh almost doubled in 2007-08 as
compared to previous year (Table 3.8).

Table 3.8: Country-wise Export of Textile Items by India

(Value: Rs. in Lakh at current prices)
Compound
Annual
Country 1997-98 2000-01 2004-05 2005-06 2006-07 2007-08
Growth Rate
(%)
USA 763689 1316482 1553320 2097720 2151960 1895800 10.63
UK 271461 344242 474600 607210 634630 673060 10.62
U Arab Emts 165787 389366 504960 442560 483270 550200 14.26
German F 268813 311071 371140 506170 503700 559570 8.49

Rep
France 147110 222381 294720 369480 382730 393220 11.54
Italy 143234 198325 299070 361190 411880 356130 10.65
Canada 86415 153772 166100 181190 183750 156120 6.79
Korea Rp 49637 67822 87720 111910 -- -- --

Bangladesh 114750 113061 125740 169640 155660 293710 11.01
Hong Kong 126626 122253 66140 77050 -- -- --

Singapore 0 44822 --
Sri Lanka 32304 60831 76310 97080 104720 106500 14.17
Australia 54148 59313 -- -- -- --

China PRC -- -- 55250 241260 -- -- 83.24
Source: DGCI & S (2009)
3.3.4. India’s share in World Textile Trade
Overall, India’s share in the US$ 685 billion world textile and clothing market, though
small is rising steadily. India’s textile export share increased from 3.27% in 1996 to 3.96%
in 2007. Similarly, India’s export share in clothing increased from 2.57% in 1996 to
2.79% in 2007 (Table 3.9).

Table 3.9: India's Share in World Export of Textile and Clothing

(Billion US $)
Textiles Clothing
India's Share India's Share
Year World India's
in World World India's in World
Export Export
Export % Export Export Export %
1996 151.06 4.94 3.27 164.14 4.22 2.57
1997 157.73 5.24 3.32 182.28 4.34 2.38
1998 151.31 4.56 3.01 183.33 4.78 2.61
1999 147.92 5.09 3.44 186.03 5.15 2.77
2000 157.46 5.90 3.74 198.94 6.03 3.03
2001 147.00 5.38 3.66 195.03 5.48 2.81
2002 152.20 6.03 3.96 200.85 6.04 3.01
2003 169.40 6.51 3.84 225.94 6.46 2.86
2004 194.70 6.85 4.00 258.10 6.62 2.80
2005 203.00 7.85 3.90 276.00 8.29 3.00
2006 217.992 8.837 4.05 309.593 9.465 3.05
2007 238.126 9.446 3.96 345.39 9.655 2.79
Source: Annual Report 2002-03 (ICMF) & 2007-08 (CITI)
3.3.5. India’s Textile Imports
One of the important aspects of India’s textile sector is that it has relatively low import
content as compared to other export oriented sectors. As far as imports are concerned,
textiles accounted for only 2 to 3% of the total import bill (Table 3.10). During 1990s
woolen yarn and fabrics, silk yarn, and cotton yarn and fabrics were not imported but from
2000 onwards their imports began, that too at a very rapid pace. This might be due to
decrease in production of yarn, as seen in case of cotton yarn (Table 3.10). All other
textile products imports have grown at an annual average rate of 15-20%. However, the
import-export ratio doubled during the period from 8.7% in 1992-93 to 16.6% in 2007-08.
Textiles imports have risen much faster than the textile exports implying that the cost of
exports in terms of imports doubled during this period. Thus, globalization seems to affect
Indian textile trade through increased competition.

Table 3.10: Item wise Textile Imports by India (Rs. million)
Item 1992-93 1995-96 1998-99 2001-02 2006-07 2007-08
Woollen Yarn & 0 0 0 178 1446 1971

Fabrics
Cotton Yarn &
0 0 0 2323 14414 13324
Fabrics
Man made
filament/ spun yarn 0 0 0 13898 25134 26702
(inc. waste)
Made-up Textiles
0 0 0 1719 3213 4293
Articles
Other Textile Yarn,
Fabrics & Made-up 0 0 0 14075 40797 43838
Articles
Readymade
Garments (Woven 0 0 0 1725 3347 4712
& Knit)
Raw Jute 0 479 864 957 1062 1673
Raw Silk 2233 3028 2594 6247 6208 7615
Raw Wool 3152 4858 4903 6236 9939 11298
Synthetic & 710 5021 2909 2721 4049 4625
Regenerated Fibres
0 0 0 1730 8302 8640
Silk yarn & fabrics
Woollen and 859 1255 1032 1071 1534 901

Cotton Rags etc.
Cotton Raw &
2165 5212 3811 20536 10996 9456
Waste
Textile Yarn,
Fabrics & Made-up 4307 11997 19219 ** ** **
Articles
Total Textiles
imports
13426 31850 35332 73416 89887 139140
Overall Imports 633745 1226781 1783317 2451997 8405060 6820880
% of Textile
Imports to total
2.1 2.6 1.98 2.99 1.07 2.04
Net Textile Exports
(Exports – Imports)
141410 253354 366384 439956 757630 784800
Source: DGCI & S (2009)
Major markets for the import of textiles and clothing can be identified as Chinese
Republic (48.86%), USA, Nepal etc. (Table 3.11). Higher share of Chinese Republic in
imports of textiles and clothing product by India implies that India is facing tough
competition from China. Import of textiles and clothing products from China has been

found growing at an annual compound growth of 56.23 percent during 2001-02 to 2007-
2008 period.
Table 3.11: Country-wise Import of Textile and Clothing by India

(2001-02 and 2007-08)
Country 2001-02 2006-07 Compound

2007-08
Annual
(US $ Million) (US $ Million) (US $ Million) Growth (%)
Chinese P
93.91 819.96 1365.51
RP
56.23
Korea RP 97.37 88 92.04
-0.93
Hong Kong 29.14 100.63 97.28
22.25
Thailand 33.05 81.84 95.86
19.42
USA 32.11 67.2 160.81
30.80
Nepal 46.92 56.37 133.12
18.98
25.95
Others 146.5 464.26 --
Source: Annual Report 2002-03 (ICFM) & 2007-08 (CITI)
Undoubtedly, the global textile and clothing industry has been growing significantly in the
post quota regime. The extent to which Indian textile and clothing industry can improve its
position in the global market depends on the extent to which it can improve its
competitiveness. The major determinants of competitiveness could be cost, quality and
timely review of the global market conditions on Indian textiles and clothing sector. In
fact, productivity improvement could go a long way in enhancing the competitiveness of
Indian textile and clothing industry.

Chapter IV
Performance of Indian Textile & Garments Sector

4.1. Introduction
One of the important aspects of the textile and garments industry is its contribution to
employment. If at all it is believed that Indian textile and garments industry will grow by
leaps and bounds during the post quota regime it is precisely because of its advantages in
terms of labour productivity and prevailing low wage rates. Labour productivity is one for
the major ingredients of the overall competitiveness. Hence, it is essential to assess the
growth of labour productivity in Indian textile and garments industry.
Indian textile and garment industry has a dualistic structure. The main three pillars of the
textile and garments industry are the organized mill sector, the power loom and the
handloom sectors. Among these three pillars, the power loom sector occupies a dominant
position followed by the handloom and the organized mills sector. Among the three major
subsectors of the Textile and Garments sector only Powerlooms Sector has been growing
at a very high annual growth rate equivalent to or more than GDP growth rate of the
country during the period from 1995-96 to 2007-08 and both Handloom and mill sector
production has been declining during the same period. The Powerloom sector production
is growing at a very high rate of 6.18 per cent per annum, the future employment
generation would be in the Powerloom sector.
As far as the labour productivity in these three sectors is concerned, it was the least for
handlooms sector at 877 sq.mtrs. per worker during 2004-05 as compared to powerlooms
sector at 5896 sq.mtrs. and organized mill sector at 1500 sq.mtrs. Thus, it is quite
apparent that though the handloom sector provides the largest employment among the
three sector, has the lowest labour productivity.
If we contrast the productivity figure against the export figures, it may be safely asserted
that the handloom sector is not going to benefit much from globalisation. Because, the
exports from the handloom sector constitutes a negligible portion of the total textile
exports from India, at about 2.23 % in 2004-05. In fact, this share has declined to 3% from
5.23% in 1995-96. Hence, the handloom sector may not be the major genesis of
globalisation though it occupies a significant position in terms of generating employment,
flexibility of small production, uniqueness, innovation and adaptability. Thus in the
interest of the Indian textile industry it is highly important that support measures are
provided for the development and growth of the handloom sector.
4.2. Textile and Garments Sector: A Profile
Textiles and Garments sector comprise of both organized and unorganized segments of the
industry. Organized segment comprises of manufacturing units registered under the
factories act of 19481* while the unorganized segment comprises of un-registered
manufacturing units.
1
*(Factory is one that is registered under sections 2m (i) and 2m (ii) of the Factories Act, 1948.
The sections 2m (i) and 2m (ii) refer to any premises including the precincts thereof (a) whereon
ten or more workers are working, or were working on any day of the preceding twelve months, and
in any part of which a manufacturing process is being carried on with the aid of power, or is
ordinarily so carried on; or (b) whereon twenty or more workers are working or were working on
any day of the preceding twelve months, and in any part of which a manufacturing process is being
carried on without the aid of power, or is ordinarily so carried on).

4.2.1. Textiles and Garments Clusters in India
There are more than 70 textiles and clothing clusters in India comprising about 80% of
total production. There are 39 power loom clusters and 13 readymade garment clusters in
India. Bhiwandi and Malegaon are the two largest power loom clusters. The major
readymade garments clusters are located in Delhi, Mumbai, Gurgaon, Nagpur, Madurai
and Salem with annual turnover for more than Rs. 1000 crore in 2003. The state of
Maharashtra has10 textile clusters. The other major states in terms of number of clusters
are Tamil Nadu, Andhra Pradesh, Karnataka, Kerala and Uttar Pradesh having 7 clusters
each.
4.3. Textile and Garments Sector: The Organized Factory Sector
The organized factory sector occupies an important position in the entire scenario of the
textile and garments production in India. Though it does not occupy the top most position,
its importance cannot be undermined from the structural point of view. Structurally, the
organized factory sector mainly consists of large-scale enterprises. If it can be accepted
that under normal circumstances all the structural constituents of the textile and garments
sector move in tandem, it will not be wrong to consider the organized factory sector as a
representative of the entire textile and garments sector in India and consider the
implication of globalization for the sector. Moreover, the developments in the organized
factory sector can be easily visible and the implications of government policy both
domestic and global are easily assessed since the time series data pertaining to this sector
are available. Hence, considering these facts an attempt has been made to have a broad
view of the organized factory sector with regard to the textile and garments sector in India.
Table 4.1: Textile and Garments Sector: Registered Manufacturing (All India)
(Value in Rs. Lakhs, Others in Numbers)
Indicators 1980-81 1990-91 1995-96 2000-01 2004-05 2005-06
Number of Factories 11197 10912 19838 16935 16917 17459
Total Persons Engaged 1376040 1150098 1855997 1619617 1714601 1878855

Gross Value Added
(Constant Prices 1993- 645676 1018459 1135826 1730374 1809421 2290536
94=100)
Value of Output
(Constant Prices 1993- 2379186 4203280 5005354 8962758 9914056 12030010
94=100)
Fixed Capital
(Constant Prices 1993- 442172 952184 2541362 3749166 3541447 4133933
94=100)
Source: Computed from ASI, summary results for the Factory Sector, Various years.

Textiles and garments sector (registered manufacturing) at the all India level shows that
gross value added, gross value of output and the amount of fixed capital employed have
increased considerably during the last two and a half decades. Over the years the gross
value added has increased by 3.54 times while the value of output at constant prices has
increased by 5 times. And the fixed capital employed has also increased by 9.5 times over
the years. On the contrary the numbers of factories and the total persons engaged have
been declining since 1995-96. However, the last year under the study (2005-06) has shown
an increase in the number of factories and the total persons engaged (Table 4.1). There are
indications that the capital intensity (Capital Employed per Worker) in the textile and
garments sector (registered manufacturing) has increased over the years. However, a
period wise growth analysis may give a better picture.
An analysis of growth suggests that the gross value added growth in the textile and
garments sector (registered manufacturing) in India has been declining continuously but it
has increased during the period 2000-01 to 2005-06. In the recent years, there has been an
increase in the number of persons engaged in the sector. The number of persons engaged
increased during 1990-91 to 2005-06. The number of factories also increased during the
second and third period but the growth was much lower during 2000-01 to 2005-06 (Table
4.2).
Table 4.2: Textile & Garments: Registered Manufacturing (All India)

Period I: Period II: Period III:
(1980-81 to (1990-91 to (2000-01 to
1990-91) 2000-01) 2005-06)
Indicators
Compound Annual Growth Rate (%)
Gross Value Added 5.77
4.66 5.44
(At Constant Prices)
Number of Factories (Nos) -0.25 4.49 0.61
Total Persons Engaged(Nos) -1.78 3.48 3.01
4.3.1. Textile and Garments Sector Share in Total Manufacturing
There exists wide variation in the relative importance of the textile and garments sector
when its importance is compared as against total manufacturing-. Table 4.3 provides a
comparative picture of textile and garments sector vis a vis total manufacturing at all India
level. For example, in terms of its share in total employment in the manufacturing sector is
20.62 per cent whereas the same with regard to the net value added is nearly 7.61 per cent.
Similarly, its share in the number of factories and fixed capital employed in the registered
factory sector at the all India level are 12.46 per cent and 10.24 per cent respectively
during 2005-06 (Table 4.3).

Table 4.3: Share of Textile & Garments Sector in Total Manufacturing in India
Net Value
Years Factories Fixed Capital Total persons Engaged
Added
1995-96 14.49 8.17 18.16 8.77
2001-02 12.32 9.82 19.34 9.35
2005-06 12.46 10.22 20.62 7.61
4.3.2.: State Level Distribution of Textile and Garments Sector
An assessment of the relative importance of the states in the textile and garments sector
suggests that by any criterion under consideration, Tamil Nadu occupies the top most
position (Table 4.4). It also reveals that among the major states in terms of number of
factories, fixed capital, number of workers, value added and gross fixed capital formation
(GFCF) Tamil Nadu, Gujarat, Maharashtra, West Bengal and Rajasthan are the most
important ones in their share. This implies that there exists a high degree of correlation
between the various indicators considered. The concentration of textile and garments
industries mainly to a few states are mainly due to location aspect and primary stages of
the value added since all these states are closer to the cotton belt.
Table 4.4: State wise Share of Textile and Garments Sector (2004-05)
Number
Fixed Number of Net Value
of GFCF
States Capital Workers Added
Factories
Percentage Share
Andhra Pradesh 3.18 5.91 4.86 4.23 3.32
Assam 0.24 0.08 0.26 0.07 0.01
Bihar 0.20 0.10 0.35 0.04 0.01
Gujarat 14.21 18.02 12.92 15.90 15.27
Haryana 3.86 1.93 1.70 2.05 1.97
Himachal Pradesh 0.35 2.98 1.08 1.44 2.58
Jammu and Kashmir 0.24 0.30 0.68 0.38 0.52
Karnataka 2.03 2.86 2.20 3.10 4.47
Kerala 2.48 1.12 1.75 1.07 0.27
Madhya Pradesh 1.52 5.75 3.28 7.46 3.30
Maharashtra 11.27 14.38 10.76 12.35 6.01
Orissa 0.26 0.08 0.27 0.08 0.09
Punjab 4.24 5.70 4.50 5.63 5.17
Rajasthan 11.33 5.97 6.84 5.07 11.47
Tamil Nadu 35.25 18.69 23.23 21.39 29.07
Uttar Pradesh 3.49 4.77 2.92 1.28 5.86
West Bengal 2.38 4.48 19.84 13.10 2.19
Other States 3.46 6.90 2.55 5.37 8.41
All India 100.00 100.00 100.00 100.00 100.00

Interestingly, the only exception as far as the major states in the textile and garments
sector is concerned is that West Bengal. In terms of number of workers employed West
Bengal ranks second, Net Value Added share third while in terms of Number of Factories,
Fixed Capital, Gross Fixed Capital Formation West Bengal ranks much lower among
Indian states. This might be because of the fact that the production of Jute textile that is
mainly concentrated in West Bemgal is more labour intensive in comparison to the other
segments of the textile sector. The concentration of jute textile in West Bengal is mainly
due to the availability of raw materials.
A comparative picture on the growth of textile and garments sector during 1993-94 and
2004-05 across major textile manufacturing states are given in table 4.5. A view of
changing share over the years suggests that the share of major states in comparison to
others has increased over the years in almost all aspects (Table 4.5). This certainly
suggests that over the years the growth and concentration of textile sector is raw material
source specific.
Table 4.5: The Change in Share of Major States in the Textile & Garments Sector
States Total Persons Net Value
No. of Factories Fixed Capital GFCF
Engaged Added
Year 1993-94 2004-05 1993-942004-051993-942004-051993-94 2004-05 1993-942004-05
Gujarat 13.78 10.34 15.23 15.28 14.35 9.74 12.34 10.69 18.25 10.53
Maharashtra 14.46 11.39 17.87 13.72 16.39 8.16 17.54 9.33 18.36 10.93
Tamil Nadu 23.50 35.09 16.01 22.65 16.77 27.5 20.66 24.93 16.08 37.31
West Bengal 2.29 1.96 4.17 3.44 14.66 11.1 7.92 7.24 2.65 1.57
Other States 45.97 41.22 46.73 44.91 37.83 43.5 41.53 47.81 44.67 39.66
All India 100 100 100 100 100 100 100 100 100 100
Among the major textile and garments producing states, Tamil Nadu improved its share in
terms of other three major states. In number of persons engaged in the textile and garments
sector in India, the share of Gujarat has declined from 14.35 per cent in 1993-94 to 9.74
percent in 2004-05. Among the major state the most unfortunate development has
occurred in case of Maharashtra. In case of Maharashtra, the share in textile and garments
sector measured by any criterion including employment has declined over the year. In fact
the decline has been more in case of employment in comparison to the fixed capital (Table
4.5). The decline in employment share in case of Gujarat and Maharashtra certainly
implies that the organized manufacturing of textile and garments by the factory sector in
western India has become increasingly capital intensive.
4.3.3 Labour Productivity in the Organized Factory Sector: A State level Study
The Annual Survey of Industries data published by Central Statistical Organisation

provides time series data on the registered manufacturing segment of the textile and
garments sector. This data set has been considered for the estimation of productivity
levels in the textile and garments sector. The ASI data has been analysed for the period

1980-81 to 2005-06. However, before proceeding on the analytical aspects it is essential to

discuss the data and methodology used for the present study.
Data: Gross value added (net value added + depreciation) has been considered as the
output variable GVA is used for the estimation of labour productivity ratios. Over the
years the price are rising along with the output. Hence, in order to eliminate the price
effect, the gross value added figures have been deflated by using whole-sale price index
(WPI). WPI at 1993-94 prices for the textiles (Broad category) has been used as the price
deflator.
Labour input has been considered as the number of persons engaged in the manufacturing
of textile and garments. Gross Value Added at constant prices has been divided by the
number of workers to estimate labour productivity or the value added per worker. The
labour productivity growth has been estimated from the year to year labour productivity.
Table 4.6.: Labour Productivity Growth (%)
Compound Annual Growth Rate (CAGR) of Labour Productivity

Period I Period II Period III
(1980-81 to (1990-91 to (2000-01 to
1989-90) 2000-01) 2004-05)
Andhra Pradesh 7.72 8.60
2.06
Assam 6.61 -0.28 10.23
Bihar -2.29 -6.90 15.72
Gujarat 5.65 5.63 2.97
Haryana 7.89 3.27 0.89
Himachal Pradesh 36.63 6.18 4.52
Jammu And Kashmir 12.43 -10.17 10.50
Karnataka 7.02 8.83 3.88
Kerala 5.05 1.45 0.71
Madhya Pradesh 6.78 8.28 3.75
Maharashtra 5.81 1.98 -0.82
Orissa 6.30 -12.08 41.09
Punjab 14.20 2.73 4.51
Rajasthan 4.83 -4.21 0.94
Tamil Nadu 8.19 0.21 1.75
Uttar Pradesh 4.38 4.16 -0.70
West Bengal 3.77 4.40 1.81
Jharkhand N.A. N.A. 1.41
Chattisgarh N.A. N.A. 7.51
Uttaranchal N.A. N.A. 84.94
All India 6.39 3.59 1.05
Source: Computed from Annual Survey of Industries Summary result for Factory
Sector, Various issues
The labour productivity growth rates estimated for the textile and garments sector at the
state level as well as for All India for three different time periods has been found declining

continuously over the years (Table 4.6). If we look at the growth rates during the third
period (from 2000-01 to 2004-05) the state’s growth reported the highest labour
productivity growth have been Uttaranchal, Orissa, Bihar, Jammu & Kashmir, Assam etc.
On the contrary, the states, those have not done well with regard to the growth of labour
productivity in the recent years are Maharashtra, Uttar Pradesh, Kerala, Haryana etc.
4.3.4. Estimation of Partial Productivity and Total Factor Productivity Growth:

Textile and Garments Sector – All India
In this section we estimate partial labour and capital and total factor productivity growth
rates for textiles and garments sector at all India level for the period 1995-96 to 2005-06.
As explained in the earlier section, Gross Value Added (GVA) is considered as the proxy
variable for output. It is assumed that there are only two major factors of production such
as labour and capital. Labour is the total persons engaged in manufacturing or production
process of textiles and garments products while capital is the real value of capital
investment (at constant 1993-94 prices) in the manufacturing process. Detailed
methodology used for the construction of variables in the estimation and the estimation
procedure adopted is given in Annexure 3.
Table 4.7 provides partial productivity estimates (Gross Value Added per unit of input)
for both capital and labour. It may be noted that the capital productivity ratios exhibit
consistent growth during 1995-96 to 2005-06. Labour productivity also exhibits similar
trends. For example, capital productivity increased from Rs. 0.38 per unit of every rupee
invested during 1995-96. It increased to Rs. 0.78 by 2005-06.
Table 4.7: Partial Productivity Estimates for Labour and Capital inputs
Capital productivity Labour Productivity
Year
(at Per Rupee Invested) (at Per Person Employed)
1995-96 0.38 61198
1996-97 0.44 78929
1997-98 0.44 81797
1998-99 0.45 96669
1999-00 0.41 106329
2000-01 0.46 106838
2001-02 0.53 101708
2002-03 0.63 111188
2003-04 0.63 101919
2004-05 0.69 105530
2005-06 0.78 121911
Source: Annual Survey of Industries

Similarly, labour productivity increased from Rs. 61198 per person engaged in 1995-96 to
Rs. 121911 per person engaged in 2005-06. Both capital and labour productivity doubled
during the reference period.
Table 4.8 provides the growth rate estimations for labour and capital productivity along
with Total Factor Productivity Growth. Growth rate estimations reveal considerable
fluctuations across the year 1995-96 to 2005-06. Average growth rate computed for this
time period such as 1995-96 to 2000-01 shows positive trends for all Capital, Labour as
well as Total Factor productivity measures. During the second period also (2000-01 to
2005-06) all the productivity measures shows positive trend. This indicates that the
technological contribution in productivity of garments sector is positive mainly due to the
decline in capital investment during the study period.
Table 4.8: Labour, Capital, and Total Factor Productivity Growth

Capital Labour Total Factor
Year Productivity Productivity Productivity
Growth Growth Growth
1995‐96 ‐‐ ‐‐ ‐
1996‐97 28.97 14.45 4.45
1997‐98 3.63 1.50 13.03
1998‐99 18.18 1.86 ‐15.25
1999‐00 9.99 ‐9.91 7.57
2000‐01 0.48 13.70 ‐3.89
2001‐02 ‐4.80 15.34 ‐10.60
2002‐03 9.32 18.08 ‐0.40
2003‐04 ‐8.34 0.48 0.69
2004‐05 3.54 8.85 5.04
2005‐06 15.52 12.79 10.53
Average for the
Period 1995‐96 to
2000‐01 12.25 4.32 1.18
Average for the
Period 2001‐02 to
2005‐06 3.05 11.11 1.05
Source: Annual Survey of Industries (Various years)
Table 4.9 depicts the productivity growth rates of labour, capital and total factor
productivity in an index. It may be seen that though capital productivity and labour
productivity have increased substantially, total factor productivity remained relatively
static during the study period. This is an aspect of worry for the textile and garments sector
in India since the contribution of technology in productivity is quite low.

Table 4.9: Index of Labour, Capital and Total Factor Productivity Growth
Capital Labour Total factor
Year Productivity Productivity Productivity
Growth Index Growth Index Growth Index
1995-96 100.00 100.00 100.00
1996-97 128.97 114.45 104.45
1997-98 132.61 115.95 117.48
1998-99 150.79 117.81 102.23
1999-00 160.78 107.89 109.80
2000-01 161.26 121.60 105.92
2001-02 156.46 136.94 95.31
2002-03 165.78 155.02 94.92
2003-04 157.44 155.50 95.61
2004-05 160.99 164.35 100.65
2005-06 176.51 177.13 111.18
Source: Annual Survey of Industries
Fig. No.3: Labour, Capital and Total Factor Productivity Growth Indices

Chapter V
Field Survey Findings
5.1. Profile of Textile Manufacturing units
National Productivity Council (NPC) has carried out a nationwide survey across major
Textile Manufacturing clusters during March-April 2008in order to identify major
constraints that hinder growth and competitiveness of the sector. The field survey has
brought out a number of critical factors that would help to frame future policy directions
for the textile.
For understanding the unit specific issues related to Textile Manufacturing an extensive
field survey was conducted across the country with a structured questionnaire (Annexure
1). The field survey covered aspects such as turnover, employment, domestic and foreign
trade, product descriptions, cost related information, factors affecting productivity, factors
responsible for competitiveness at unit level. Besides this discussions have also been
carried out with unit representatives and also with various stakeholders concerned with the
sector.
Based on the concentration of the manufacturing units, locations were selected randomly
from major textile and garments producing clusters, representing almost all the regions of
the country. The sample was drawn in such a way that the representation of manufacturing
and trading is included; however, the focus was on manufacturing sector. More than 500
manufacturing units were requested for the information, however, the cooperation was
received from about 20 percent i.e. 93 textile manufacturing units drawn from 10 states in
India participated in the field survey (Annexure 2)
Figure 1:
Distribution of Te xtile M anufacturing Units - NPC
Fie ld Surv e y
West Bengal
2%
Delhi/NCR
Uttar Pradesh 12%
Gujarat
13%
3%
Tamil Nadu
Himachal
6%
Pradesh
12%
Punjab
10% Maharashtra
2%
Rajasthan Karnataka
18% 22%
More than fifty percent manufacturing units surveyed are from the textile clusters located
at various regions of the country. The year of establishment of the units range from 1962
to 2007 for the entire sample units studied. The representation of various category of units
in the sample are in the ratio of 84% in manufacturing, 13% in trading company and the
remaining 3% units from other categories.

Further, analysis of the sample shows that 51% units belong to Small, 27% medium, 19%
large and 3% other categories.
5.2 Implementation of ISO – Its impact on Business

Figure 2:
About 35% units have obtained quality
Fig 2: Category of Manufacturing Units
accreditations such as ISO 9000, 9001, SA 8000
etc. Size of the firm and quality accreditations are Large
Others
3%
directly related as about 94% large units have 19%
acquired quality accreditations while only 20% Small

51%
small units got quality accreditations. Among the Medium
respondents 72% of them opined that quality 27%
accreditations boosted their business. (Table

No.5.1)
Table 5.1 Relationship between Size and Quality Accreditation
Quality Accreditation %
Category Total
Yes No
Small 20 80 100
Medium 39 61 100
Large 94 6 100
5.3. Turnover of Textile Manufacturing Units
Though the average annual turnover for the manufacturing units at all India level exhibited
increasing trend till 2006-07, data for 2007-08 reported a decline (Table 5.2). Five out of
ten states reported a dip in average annual turnover during the year. One explanation for
this decline in average annual turnover during 2007-08 could be attributed to rising rupee
phenomenon coupled with the on set of global economic recssion that started adversely
affecting the export demand for a number of textile manufacturing units.
Table 5.2: Annual Turnover of Textile Manufacturing Units:

State wise Average (Rs. Lakhs)
State 2003-04 2004-05 2005-06 2006-07 2007-08

Delhi/NCR 1183 1088 1022 1053 1064
Gujarat 113 153 181 225 260
H.P. 4786 3847 3973 3577 3094
Maharashtra 53667 61438 71451 91593 108089
Karnataka 428 485 463 512 519
Rajasthan 5819 6304 6142 6827 5233
Punjab 13027 14805 16694 23311 15026
Tamil Nadu 1446 1654 1671 2019 1752
U.P 277 314 370 321 262
WB 575 801 1009 506 1015
All India 6216 6503 6783 7832 7330
Source: NPC Field Survey March-April 2008
5.4. Profitability of the Manufacturing Units
The textile-manufacturing units have been interviewed on trends in average profitability

(profit after tax) during two time periods such as 1991-2000 and 2000-2008.
Among the responding manufacturing units 70 percent reported an increase in profitability

while 22 percent reported decrease and 8% reported no change (table 5.3). In the case of
profitability after 2000, 69% respondents reported an increase while 24% reported a
decline and 7% reported no change. This shows that the profitability remained more or
less the same during the study period.
Table 5.3: Average Profitability of the Manufacturing Units (1991-2000 period)
Trends in 1991-2000 After 2000

Profitability (Response %) (Response %)
Increased 70 69
Decreased 22 24
No Change 8 7
Total 100 100
The profitability analysis for the two time periods reveals that the profitability during the
two time periods is more or less the same.
The respondents were further interviewed on the extent of increase or decrease in

profitability after 2000 (Table 5.4). Among the respondents who reported an increase in
profitability, nearly 30 percent reported an increase in the range 0-5% and 44% reported
an income in the range 5-10 percent. Among the respondents who reported decrease in
profitability, 16 % reported a decrease in the range 0-5% while 60% respondents reported
a decline in the range 5-10%. This indicates that the decrease in profitability was on a
higher percentage range than of the increase.

Table 5.4: Average on Profitability of the Manufacturing units (2000-2008)
Increase
Range (%) Decrease %
%
0-5 30 16
5-10 44 60
10-25 19 16
25& above 7 8
Total 100 100
5.5. FDI and ICT Usage
NPC Field survey reveals that the Textile and Garments sector is plagued with low
technology & ICT Usage. FDI inflows to the Textiles as reported from the Statement of
Sector wise FDI inflows from April 2000 to June 2009 for the textiles (including dyed,
printed) is Rs.30,752 million and that is 0.76% of the total FDi inflows into the country.
Among various sectors, textiles rank 22nd in the case of FDI inflows to the country.
Service sector (23%), Computer Software& Hardware (10%), telecommunication (8%)
and Housing & Real Estate (7%) together comprise of nearly 50% of the total FDI Inflows
to the country. Further, the FDI intake and the usage of ICT in the sector is low because of
small size of the firms, low return on investments, proprietorship , High rate of Interest,
manual operations etc.
It may be noted that the textile sector in India is primarily traditional in nature e.g.
Handlooms & handicrafts. Off late Powerloom emerged as the dominant segment of the
industry. ICT utilization is found to exist in hitech manufacturing that are very few in the
textile sector.
As far as Foreign Direct Investments (FDI) are concerned, only 15% manufacturing units
reported exposure. Maximum level of exposure reported is less than 10%. The
manufacturing units were also asked about usage of Information Communication
Technology (ICT) in firm’s operations. Among all the three categories of manufacturing,
38% units reported use of ICT at various levels (Table 5.5). Majority units (62%) do not
use ICT in firm’s operations.
Table 5.5: Extent of ICT usage in firm’s operation/production
Percentage Range
Category 50 & Total
0-5 5-10 10-25 25-50 NA
above
Small 8.57 2.86 14.29 2.86 5.71 65.71 100.00
Medium 0.00 19.05 4.76 0.00 4.76 71.43 100.00
Large 13.33 0.00 0.00 6.67 40.00 40.00 100.00
Total 7.04 7.04 8.45 2.82 12.68 61.97 100.00

As far as research activities are concerned, 25% units reported positively. However, only
8% units received any product patent during the last five years. In the case of product
innovation, many manufacturing units (23%) reported affirmatively.
The action that needs to be taken up for increasing the FDI intake and the usage of ICT in
the sector are through technological upgradation of the existing units through Research
and Development and Design Centres.
Figure 3:
5.6. Employment Profile Fig. 3: Average Employment
600
Figure 7:
It is seen from Fig 3 that the average employment across 580
578
565
Employment (Nos)
560
manufacturing units steadily increased from 502 540 528
539
employees during 2003-04 to 565 employees during 520

502
500
2007-08. Except during the last year, average 480
employment across units exhibited consistent increase. 460

2003-04 2004-05 2005-06 2006-07 2007-08
The decline in employment reported during the last year Years
indicates that the sector is facing problems due to the

increasing competition and adverse effects on export from rising rupee against dollar and
decline in global export demand.
Among the respondents, 31% units reported that casualisation of labour increased during
the last five years.
Figure 4:
5.7. Trade Related Information Fig 4: Textile Units engaged in Export
100 94
77
80
A very high percentage (65%) of textile
Percentages
60 52
48 Export
manufacturing units reported that a sizable portion 40 No Export
of sales revenue comes through export. Only 35% 20
23
6
manufacturing units reported of no export. A very 0
high percentage (94%) of large manufacturing units Small Medium Large

Category of Unit
are engaged in exports as compared to 48% small
units.
Among the exporting textile manufacturing units about 35% units export more than 75%
of their total sales volume while 16% units export 50-75 % total sales (Table 26).
Table 5.6: Share of Exports earnings to Total Sales
Number of
Range (%)
Manufacturing Units (%)
1-10 19.3
10-25 12.3
25-50 17.5
50-75 15.8
75 & above 35.1
Total 100.0

5.7.1. Comparison with other countries in the export Market
Major textile products exported by the manufacturing units are identified as Fabrics,
Cushion and Bed Covers, Curtain, Silk Fabric, Garments, Home Furnishing &Made ups,
Shirts, Frock, Skirts, Saree, Cotton Yarn, Acrylic Yarn, Hosiery Garments, 100% cotton
fabric, Handloom fabrics, Ladies Garments, embroidery, Jute Cloth etc. These products
are mainly exported to USA, Germany, Hong Kong, Japan, Saudi Arabia, Egypt,
Bangladesh, Europe, Africa, Korea, Canada etc.
Major Competitors of India in the international market have been identified as China,
Thailand, Vietnam, Pakistan, Bangladesh etc. From the manufacturers survey it has been
found that India is having an edge over its competitors mainly in terms of cost of
production (Table 5.7). Technology has been rated as weak area for India as compared to
its competitors.
Table 5.7: Competitive advantage of India in the Export Market
Manufacturing Units Response

Categories
(%)
Cost of product 45.45

Latest Technology 18.18
Quality of product 36.36
Total 100.00
The textile manufacturing units have been further interviewed about the import component
of finished products in the manufacturing. More than 83 percent of the manufacturing
units reported that import of finished products is in the range of 0-10 percent only (Table
5.8).
Table 5.8: Import of finished products
Manufacturing Units
Percentage Range
Response (%)
0-10% 83.33
25-50% 11.11
75 & above 5.56
Total 100.00
The respondents were interviewed about the major factors hindering the export of the
products. More than 54% respondents have cited export taxes as the major factor
negatively affecting the export of textile products from India (Table 5.9).

Table 5.9: Factors hindering Export of textile products (%)
Factors hindering exports Manufacturing Units

Response (%)
Export taxes 54.2
Export quantitative restrictions 10.4
Certification 4.2
State trading administration 2.1
Dual Pricing scheme & Non Trade Barriers 8.3
Any other 20.8
Total 100.0
In the case of imports majority respondents (68%) reported that they do not import any
textile products such as raw materials, finished products etc., while the remaining 32%
respondents reported that they are involved in imports. Major countries from where the
finished products are imported are namely, Germany, Japan, Netherlands, USA, Europe,
Thailand, Malaysia, Korea, China and Hong-Kong.
Factors hindering the quantity of imports have been analyzed in table 5.10. Non trade
barriers have been cited as the factors that hinder the import by majority units. The other
major factors are import pricing scheme, quantitative safeguard measures etc.
Table 5.10: Factors hindering the quantity of imports (%)
Factors hindering Import Manufacturing Units

Response (%)
Import Pricing Scheme 25.0
Import Licenses 8.3
Quantitative safeguard measures 16.7
Export Restraint arrangements 4.2
Non-trade barriers 29.2
Any other 16.7
Total 100.0
5.8. Domestic Market

The manufacturing units were interviewed about their domestic market share. About 61%
units have reported that their market share is in the range of 1-5%. Only 15% units have
reported to command domestic market share of 15% and above (table 5.11).

Table 5.11: Domestic Market share of the Textile units (%)

Manufacturing Units Response
Domestic Market share (%)
(%)
1-5 61.2
5-10 14.9
10-25 9.0
25 & above 14.9
Total 100.0
The manufacturing units were also asked about the domestic share to total sales and it has
been reported that about 35% of the units it is in the range of above 75% (table 5.12).
Table 5.12: Share of Domestic sales to Total sales for the Manufacturing units
Share of Domestic Sales to

Total Sales Manufacturing Units (%)
(% range)
1-10 15.7
10-25 15.7
25-50 20.0
50-75 12.9
Above 75 35.7
Total 100.0
More than 83% units reported an increase of domestic demand for the textile products
during the last five years. About 38% units recorded the growth in domestic demand for
textile products in the range of 5-10 % while 33% units reported the growth in the range of
10-25%. Extent of competition in the domestic market has been reported to be intense by
59.4% of the respondents (table 5.13).
Table 5.13: Nature of Competition in the Domestic Market
Nature of Competition in Manufacturing

Domestic Market Units (%)
Intense (More than 20 players) 59.4
Medium (10-20 players) 25.0
Low (0-10 players) 14.1
No Competition 1.6
Total 100.0

5.9. Manufacturing Cost Related Details

More than 63% manufacturing units reported that the cost competitiveness increased
during the last five years (Table 5.14). However, 31% manufacturing units reported that
the cost competitiveness decreased. The range of increase in cost competitiveness has been
reported of in the range of 10-25% by 55% units (Table 5.15). About 38% manufacturing
units reported that the range of increase in cost competitiveness is in the range 1-10 %.
Manufacturing units were further asked about the contribution of various components of
cost in total cost of production. The responses received from the units with respect to
various cost components have been summarized in table 5.16. Majority of the respondents
reported an increase of various cost components in the range of 1-10% for almost all
components of cost except raw materials and taxes.
Table 5.14: Cost competitiveness of the firm during the last five years
Categories Manufacturing Units (%)

Increased 63.4
Decreased 31.7
No Change 4.9
Total 100.0
Table 5.15: Range of increase in Cost Competitiveness
Percent Range Manufacturing Units (%)

1-10 37.7
10-25 54.7
25-50 7.5
Total 100.0
Table 5.16: Ratio of various Cost Components in Total Cost of Production –

Response %
Other
Cost Wages
Labour Raw Fuel
Range & Interest Security Taxes Others
Related Materials Cost
(%) Salaries
Cost
1-10 44.2 54.8 7.6 48.0 64.0 76.8 42.7 77.6
10-25 36.4 32.9 21.5 40.0 34.7 18.8 46.7 19.4
25-50 18.2 9.6 38.0 12.0 1.3 2.9 9.3 3.0
50&
1.3 2.7 32.9 -- -- 1.4 1.3 --
Above
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

5.10. Price related Factors
Textile Manufacturing units have been interviewed about the price competitiveness of
their unit during the last five years. More than 64% units reported that the price
competitiveness increased during the last five years. Only 28.9% units reported that the
price competitiveness decreased while 6.6% reported that there is no change.
The increase of price competitiveness have been reported in the range of 1-10% by 50%
units while 44% reported that the price increase was in the range of 10-25% range. The
remaining 6 percent units reported an increase in the range of 25-50%.
About 55% manufacturing units reported that there was an increase in the price of the
product due to the increase in the import of raw materials during the last five years.
An overwhelming majority of responding units (71.9%) were of the opinion that the prices
have declined during the last five years due to increase in imports of finished goods.
5.11. Factors affecting Productivity
Majority of the textile-manufacturing units interviewed (58%) reported that labour

productivity during the last five years has increased (Table 5.17). Only 21.6% units
reported that the labour productivity decreased while another 20.3% reported that there is
no change.
Table 5.17: Labour productivity of the unit during the last five years
Manufacturing
Category
Units (%)
Increased 58.1
Decreased 21.6
No Change 20.3
Total 100.0
As far as increase in labour productivity is concerned, about 67% units reported that the
labour productivity of the units increased in the range of 5-10%.
In the case of total factor productivity (Output Growth minus input growth) or technology
progress nearly 60% manufacturing units reported an increase while 17% units reported
decrease and another 24% units reported no change in total factor productivity during the
last five years. The reasons for this could be small size of the firms, low investment
potentials, proprietorship , high rates of interest etc.
5.12. Factors responsible for Competitiveness of the sector
Manufacturing units were interviewed about the competitiveness of the company during
the last five years, an overwhelming 85% manufacturing unit reported that the
competitiveness of the units increased while the remaining 15% units were of the view
that the competitiveness decreased. As regards to the availability of raw materials, more
than 60% units reported that the it is available within the country, another 22% reported
that the raw material is available within the region or state. Only 18% units reported that
they are importing the raw materials for production.
In the case of the availability of quality human resources during the last five years, the
units have given mixed responses as 44% each reported that it increased as well as
decreased during the last five years another 12% units reported of no change.
As regards to the quality of the present educational system for catering to the requirements
of the industry, 56% units are satisfied whereas 44% units are not. Nearly 60% units
reported that the labour relations in the states are productive. Only 40% units are not
satisfied with labour relations in the states.
About 86% manufacturing units are not satisfied with the quality of infrastructure (both
social and physical) in the state. Only 14% units are satisfied with the infrastructure
available in the state. In the case of physical infrastructure, the order of priority as given
by the units for special attention for development and maintenance is: Power (40%), Road
(30%), Rail (18%), Port (10%) and Airport (2%). In the case of social infrastructure, the
order of priority as reported by the units for special attention for development and
maintenance is: Technical institutions (56%), Higher education (26%), Special medical
centers (12%), General hospital (5%) and Schools (1%).
As far as Government interface with business/private sector is concerned, about 68%

respondents are not satisfied while 32% units reported that they are satisfied. The units are
further interviewed whether state government is friendly towards investors while 52% said
yes while 48% said no. Similarly, the extent of computerization of government records
again the responses were mixes as 56% units reported their satisfaction while 44% were
not satisfied. In the case of corruption level in the government, overwhelming 69% units
reported that it increased during the last five years. Only 6% units reported that it
decreased while 25% reported of no change in corruption levels. Similarly, 72% units are
not satisfied with transparency in the government.
5.13. Measures adopted by the Industry for improving competitiveness in domestic

and export market
• Take part in trade Exhibition and meet foreign delegates

• Adopt new and modern designs and employ skilled manpower/technicians
• Expansion of spinning and Dye house with the help of imports. This resulted in
25% increase in production
• More designs and wider market penetration at cheaper rates through better quality
products.
• ISO 9001 certifications helped to improve quality
• For countering appreciating Rupees many textile units introduced high tech
machines to Improve product quality
• Try to adopt new and modern design to sustain in market
• Better marking environment at the units

• Increase the production capacity by installation of new state of the art technology
and developing vertically integrated textile unit right from sourcing of cotton yam
to manufacturing and marketing
• Stringent quality controls
• Providing the technical knowledge for the staff
• Own transportation and distribution
• Competitive pricing to market requirements
• Retraining of staff
• Continuous Training of Workers to improve their attitudes and functional skills
• Providing Hostel facilities, transportation, good work environment to employees
• Trying to set max production within the normal working hours
• Organize training, workshop etc., to get innovative ideas and attitude for
employees, proper health care facility etc.
• Reducing overhead expenses
5.14. Requirements for enhancing Productivity & Competitiveness
• Power and water supply to be improved

• Training of Manpower is required to upgrade their skills
• Subsidy on textile machines or removal of excise duty
• Improvement in product quality, technology, training, new designs
• Flexible labour laws, better infrastructure
• Labour laws must be simplified
• Removal of Bureaucratic hurdles and transparency in Govt.
• Price of raw material need to be reduced
• Infrastructure facility is lagging
• Hassles at inter-state tax barrier (Octroi) is also affecting the growth of the sector.
• Government procedures need to be simplified
• The price factor is to be compared to market conditions
5.15. Region-wise findings of major Problems faced by the Textile Sector
Major problems faced by the textile manufacturing units across different regions of India
(North, West, South, Central and East) are summarized form the field survey is given
below:
North
A large number of small players operate in the textile sector. Migration of labor from
textile sector to construction sector is taking place due to the availability of better wages.
Alternate jobs available in other new growing sectors attract skilled labor hence there is a
shortage of skilled labor. Automation and technological up-gradation is required for
improving the present situation. Cost of machine interface in the manufacture of
readymade garments. Fluctuations in rupee dollar exchange rate are adversely affecting
the export competitiveness of the sector. Undue delays in transit time on rail, road, sea
etc., are causing to cost escalations. Cost of the basic inputs and infrastructure such as raw
materials, power, labor, transportation etc., are more expensive than other countries.
Lending rates and taxes in India are one amongst the highest in the world. Due to

increasing labour problems many units are opting for more automation which is capital
intensive but in the long run economical.
There is not much of improvement in technology& infrastructure facilities available in

India. Non availability of accommodation near industrial areas is causing a lot of
inconvenience to workers. Power outages and poor water supply.
Statuary liabilities like ESI, CPF and other labor laws should not be made applicable on
the traders who are only marketing their product. Enforcement of entry tax such as octroi
etc., at state boarders are making the transportation of raw material and finished product
very costly.
West
India has the advantage of bulk production as compared to neighboring countries. China is
the major competitor in the textile sector. Manufacturers reported that the government
departments are corrupt eg., for exporting the consignment at every stage money is asked
for clearing. Power supply is inadequate. Local competition is faced from illegal sale.
Many units are facing problems to meet on time delivery because of shortage of raw
materials. Most of the units complain of too much paper work on sales Tax & Excise
duties.
South
Many units reported that they provide good facilities to the employees; hence the cost per
worker is high. They face stiff competition from Chinese products due to higher raw
materials cost. Electricity cost is quite high. Due to high taxes, major share of the profit
goes to the Govt. Sector. Manufacturing units demand reduction of taxes. Many units
reported shortage of quality work force and technicians. Though raw material cost
increased, selling price has not increased. Poor stature of infrastructure is another area of
concern. .
Central
Since last 5 years, many units are facing problems due to the implementation of Value
Added Tax. Raw material prices increased while the selling prices stagnated or declined.
There is an improvement in internet services and trains and transport services during the
last five years.
East
There is a need to adopt Modern Technology for reducing the cost. Rising input costs like
fuel, power and raw material are eroding the cost competitiveness of the sector. China is
dominating in the market today. Taxes on raw materials are quite high at present. There is
a shortage of skilled labor.

Chapter IV
Recommendations
Keeping in view of scope of work outlined in the initial stage of the study, focus of the
study was primarily on the secondary data for working out futuristic scenarios which had
its own limitation in terms of reliability and time lag. Accordingly, in order to arrive at
measures to be followed at the micro level a comprehensive field level data compilation is
required. To cope up with the data limitations and to comprehend the ground realities, an
exercise for data enumeration at primary level was also undertaken. However, due to
limitations in terms of availability of resources under the project head, the unit level data
coverage was undertaken with a limited scope and coverage.
The outcome of the study and the recommendations are derived by taking a legitimate
view on the aforesaid limitations encountered during the conduct of the study. The
recommendations thus arrived have been formulated keeping in view of its
implementation at the sectoral levels.
Infrastructure Development
• It has been found that one of the major cost components in the production is the
energy consumed during the production process that offsets the competitiveness of
the sector. It is therefore suggested that the option of subsidizing unit rates of
power or encourage the use of other viable options such as non conventional
energy sources. Ministry of Power, Power Grid Corporation of India, NTPC,
NHPC, State Electricity Boards, etc. can ensure uninterrupted power supply which
is a necessary prerequisite for the mechanical operation of any manufacturing firm.
• There is a need to strengthen the availability of energy/power for the

manufacturing units since the power outages are quite frequent. In view of such
bottlenecks there is need for developing dedicated/captive power generating
sources specifically for the major textile clusters. This necessitates the involvement
of state level agencies, private partners, etc., to work out initially as a viable
project on pilot basis for replication at large scale.
• Other options could be to bring in other alternate sources of power supply systems
such as renewable energy etc. Various financial incentive schemes are currently
available for such applications. The initiative may be undertaken by Ministry of
New and Renewable Energy in association with the Ministry of Textiles to
promote the usage of Non Conventional energy sources in the manufacturing
process, wherever possible.
• There is an immediate requirement for reduction in the transit time and cost at the
international check points to make Indian textile products more competitive,
Liberalization in export/import Policies also needs to be given due consideration
for the development of the sector. The initiative may be undertaken by Ministry of
Surface Transport, Ministry of Commerce and Industry and State governments for
addressing the problem.

Competition emanating from Other Countries
• Though textiles and garments sector is already getting the benefit of various
developmental schemes specifically in the SME sector, it is facing major threat
from other competing countries such as China, Bangladesh, etc., there is a need to
further support the textile and garments sector. Ministry of Textiles and Ministry of
Micro, small and Medium Enterprises along with NMCC and Industry
Associations can work out special packages and strategies for the sector in this
regard.
Skilled Manpower Requirement
• Since the future of the textile and garments sector is based on the production and
export of Apparels, there is a need to focus on the development and growth of this
segment of the sector. Vocational training through ITIs, Textile Design &
Management Institutions specially in the area of Apparel Manufacturing, Quality
Control and Designing needs to be encouraged so that skilled work force is
available. Ministry of HRD along with AICTE and Industry Associations in
tandem can develop special modules for ITIs and other educational institutions
for addressing the current needs and future requirements of the sector.
Refund Mechanism of Technology Up gradation Fund
• Since the manufacturing units are working on thinly spread margins and the cash
flow is a major constraint for majority of the manufacturing units, there is need to
work out time bound refund mechanisms from Technology Up gradation Fund
(TUF) provided by Government for the modernization of the units. Further, the
small size of the firms, low investment potentials, proprietorship, high rates of
interest etc complicates the situation. Ministry of textiles in consultation with the
NMCC and Industry Associations need to develop appropriate system for ensuring
time bound refund from Technology Up gradation Fund (TUF) for the units.
Fluctuation in Exchange Rates
• It has been found that textile and garments exports have been negatively affected
by fluctuations in exchange rates in the recent years. In order to offset the loss of
international competitiveness of the Indian Textile and garments sector due to the
exchange rate fluctuations, Government needs to evolve reimbursement schemes
such as duty drawback, market development assistance etc., on a continuous basis.
Ministry of Commerce & Industry in consultations with the Industry Associations
can work out appropriate measures to be taken up for the sector.
International Exposure for Indian manufacturers
• Existing support measures available to textile garments manufacturers and traders

for attending, showcasing and publicizing Indian textile and garments at the
international trade fares and exhibitions needs to be strengthened.
Manufacturers/traders need to be encouraged to facilitate and participate in such
events on a regular basis. Ministry of Textiles and Ministry of Commerce &

Industry in consultations with the Industry Associations can organize B2B meets
to facilitate better International Exposure for Indian manufacturers.
Raw material Availability and Management

• Regulatory function of the concerned government Ministries, Departments, State
Government need to be focused on controlling raw material exports with a view to
ensure stable yarn prices in the country and to make the sector more competitive
and productive. The initiative may be undertaken by Ministry of Textiles along
with Ministry of Commerce & Industry.
Quality of Product
• Quality and cost of production are the key factors for sustaining in the Post
liberalization and free trade regime. Technology is critical, therefore modernization
of the units and up gradation of technology is imperative. Both advanced as well as
indigenous technology needs to be integrated in the system. Quality Council of
India and BIS can provide sufficient support for identifying and establishing
quality standards for the Textile industry.
Research and Development Initiatives
• Since Total Factor Productivity (TFP) contribution is stagnant there is a need to

encourage more of technical innovation through better design etc. in the production
process. Design is a critical ingredient in the fast changing textile fashion
technology, the existing textile design centers need to be strengthened and more
such institutes need to be opened, especially for the support of textiles and
garments sector. Development of products and designs through R&D efforts need
to be strengthened and made available to manufacturing units. Government should
promote and encourage lean manufacturing and cost reduction measures in the
textile and garments manufacturing. Ministry of Textiles, Ministry of HRD along
with AICTE and Industry Associations in tandem can develop special industry
centric modules for National Institute of Fashion Technology, National Institute of
Design, IITs, ITIs and other educational institutions for addressing the current
needs of the sector
Fiscal Incentives
• Currently the prevailing interest rates for the loans in India are much higher than
the interest rates in competing countries such as China. Therefore, there is a need
for rationalizing the existing interest rates for making available working capital as
well as fixed capital investments. The existing requirement of Collateral security
for getting bank loans is also a major problem for the small and the medium sized
manufacturing units. Ministry of Finance and Ministry of Textiles together can
evolve strategies and schemes for providing Fiscal Incentives to the Manufacturing
units of Textiles and Garments Sector.

Streamlining of Taxation Procedures
• Taxes in India are one amongst the highest in the world. Inter-state tax regime has
to be simplified for textile goods movement as truck waiting time at each barrier is
too long due to entry tax etc, increasing transit time which ultimately results in
avoidable additional costs and burden to the buyer/ consumer. Uniform taxation
structure need to be implemented throughout the country. Most of the
manufacturing units taken up for NPC Field study complain of too much paper
work on Sales Tax & Excise Duties. There is an immediate need to introduce
uniform tax rates in all states avoiding multiplicity of taxes at different stages.
Systems and procedures may be simplified. The need for
documentation/paperwork at multiple checks posts and in different states, customs
formalities, needs to be reduced as far as possible. From the field survey, it was
found that export taxes are hindering the export of textile products. There is need
for improving the export tax structure for making the sector more competitive.
Ministry of Commerce & Industry , Ministry of MSME, Ministry of Finance along
with State Governments can evolve strategies to streamline and rationalize the
taxation structure at both Central and State levels.

REFERENCES
• Chandra P (2006), The Textile and Apparel Industry in India, IIM-A, Ahmedabad,
India.
• CII (2006) State of Economy, January.
• Compendium of Textile Statistics 2003 & 2006 Office of the Textile Commissioner,
Ministry of Textiles, Govt. of India.
• Confederation of Indian Textile Industry (CITI) (2007-08) Annual Report 2007-08.
• CRISIL-NMCC (March 2009) Enhancing Competitiveness of Indian

Manufacturing Industry: Assistance in Policy Making, Final Report submitted to
National Manufacturing Competitiveness Council.
• CSO Annual Survey of Industries, Summary Result for the Factory Sector, Various
issues.
• CSO National Account Statistics (various years).
• FICCI (2005) ‘Ending of MFA and Indian Textile Industry’ New Delhi.
• DGCI&S (2006) Foreign Trade Statistics of India (PC&C), Kolkatta.
• National Manufacturing Competitiveness Council, September (2008) Report of the

Prime Minister’s Group, Measures for Ensuring Sustained Growth of the Indian
Manufacturing Sector, V.Krishnamurthy, Chairman of the Committee.
• Indian Cotton Manufacturers Federation (ICMF) (2002-03) Annual Report 2002-

03.
• ILO (2000) Labour Practices in the Footwear, Leather, Textiles and Clothing
Industries Report for discussion at the Tripartite Meeting on Labour Practices in
the Footwear, Leather, Textiles and Clothing Industries (ILO Sectoral Activities
Programme, Geneva.
• J ane Korinek (2005) Trade and Gender: Issues and Interactions (OECD Trade
Policy Working Paper No. 24).
• Kelegama S (2005) Ready Made Garments Industry in Srilanka: Preparing to Face

the Global Challenges, Asia Pacific Trade & Investment Review, Vol. 1, No1..
• Maurice Landes, Stephen MacDonald, Santosh K. Singh and Thomas

Vollrath(2005) Growth Prospects of India’s Cotton and Textile Industry.
• Working Group for Textile and Jute industry for the Eleventh Plan (2007-12)

Websites:
1. Renana Jhabvala (SEWA) and Shalini Sinha: Liberalisation and the Women
Worker
(http:/ www.sewa.org)
2. Neil Kearney (General Secretary, International Textiles, Garment and Leather

Workers’ Federation): Trade in Textiles and Clothing after 2005
(http:/ www.ers.usda.gov)
3. Profile of the Indian Cotton Textile Industry, Cotton Textile Export Promotion
Council
(http:/ www.texprocil.com)
4. K. Rajendran Nair: India’s Handloom Sector

@ http:/ www.pib.nic.in
5. Davos 2006 (Report by KPMG for IBEF-India Brand Equity Foundation)

@ http:/ www.kpmg.com
6. Mc Kinsey report on world trade in textile and garments.

(www.euitymaster.com).
7. www.bharattextile.com/features/research-brief/

Annexure – 1
Survey Questionnaire: Company/Manufacturing Unit
National Productivity Council is carrying out a Nationwide survey across four

Manufacturing Sectors (Food Processing, Textile & Clothing, Leather & Leather
Products and Electronics & IT hardware) on behalf of National Manufacturing
Competitiveness Council (NMCC), DIPP, Ministry of Commerce and Industry, GoI. The
objective of this stakeholder survey is to identify and understand major constraints that
are hindering the growth of manufacturing sector in the path of productivity growth and
export competitiveness and to suggest Sector Specific recommendations to NMCC with a
view to enhance sectoral/manufacturing productivity and export competitiveness.
(Please fill as per instructions given with each question.

Write codes/ values in the box provided at the right hand side)
1.0 Sector (1= Food Processing, 2 = Textile & Clothing, 3 = Leather

& Leather Products, 4 = Electronics & IT Hardware)
2.0 State (1 = AP, 2 = Delhi & NCR, 3= Gujarat, 4 = Himachal
Pradesh, 5=Maharashtra, 6=Karnataka, 7 = Kerala, 8 = North
East, 9 = Rajasthan, 10 = Punjab, 11 = Tamil Nadu, 12 = UP,
13= West Bengal)
3.0 Location (1= Industry Centre, 2 = Cluster, 3 = EPZ, 4 = SEZ,
5=Others
Factory/Unit/Organisation specific information
4.0 Company Name & Address: -------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Website if any:----------------------------------------------------------------
Contact Person’s Name-----------------------------------------------------------------

Telephone if any: ----------------
e-mail address if any: ----------------------------------------------------
4.1 Year of Establishment
4.2 What is the Primary Business of your company ?
(1=Manufacturing, 2=Trading Company, 3= Multinational company,
4=Others, _______________________________________________
4.3 What is the nature of your company?
(1= Small Scale Sector, 2=Informal Sector, 3= Registered
Manufacturing, 4= Others)
4.4 What is the category of your company? The primary Business
(1= Small, 2=Medium, 3=Large, 4=Other,)

4.5 Does Your organization has Quality Accreditation like ISO 9000,
HACCP etc? (1= yes, 2=No)
4.5.1 If yes, please specify the name of the accreditation:
4.5.2 If yes, please specify whether the accreditation has helped in

boosting business growth? (1= yes, 2=No)
4.6 Annual turnover of your organization/Company/Enterprise (Rs lakhs)
2003-04
2004-05
2005-06
2006-07
2007-08
4.7 Average profitability (Profit After Tax) of your enterprise during
1991 to 2000 (considering 1991 as base year) (1= Increased, 2=
Decreased, 3=No Change)
4.8 Average profitability (Profit After Tax) of your enterprise after
2000 (keeping 2000 as base year) (1 = Increased, 2= Decreased, 3=No
Change)
4.8.1 What was the extent of increase in profitability after 2000 (keeping
2000 as base year) (1=0-5%, 2=5-10%, 3=10-25%, 4=25% & above)
4.8.2 What was the extent of decrease in profitability after 2000
(keeping 2000 as base year) (1=0-5%, 2=5-10%, 3=10-25%, 4=25%
& above)
4.9 Share of Foreign Direct Investment in your Enterprise
(1=0-5%, 2=5-10%, 3=10-25%, 4=25-50%, 5= Above 50%, 6=Not
Applicable)
4.10 What is the extent of foreign ownership of your company?
1=No foreign ownership, 2=Foreign partner(s) have less than or equal
to 50% ownership, 3=Foreign partner(s) have more than 50%
ownership, 4=Other)
4.11 Did your organization acquire any firm in other countries?
(1=No acquisition, 2= Full ownership, 3=less than or equal to 50%
ownership, 4=more than 50% ownership,)
4.12 Extent of Usage of ICT in firms’ operation/production.
(1=0-5%, 2=5-10%, 3=10-25%, 4=25-50%, 5= Above 50%, 6=Not
Applicable)
4.13 Did your Organisation conduct/commission any Research &
Development (R &D) during the last five years? (1= yes, 2=No,)
4.14 Did your Organisation get any product patented during the last
five years? (1= yes, 2=No,)
4.14.1 If yes, please mention the number & name of the product
4.15 Did your Organisation introduced any product innovations

during the last five years? (1= yes, 2=No,)

4.15.1 If yes, please mention the number & name the innovation
5.0 Employment Related Information
5.0 Total Number of Employees in your organization (Nos)

2003-04
2004-05
2005-06
2006-07
2007-08
5.1 Employment growth in the organization during the last five years.
(1= Increased, 2= Decreased, 3=No Change,)
5.1.1 If Increased, please specify the range of increase in employment
during the last five years?
(1=0-5%, 2=5-10%, 3=10-25%, 4=25% & above)
5.1.2 If decreased, please specify the range of decrease in employment
in your organisation in the last five years? (0=1-5%, 2=5-10%,
3=10-25%, 4=25% & above) (specify)
The casualisation of labour during the last five years has
5.2 (1=Increased, 2=decreased, 3=No change, 4=Don’t know)
5.3 Growth in wages/salary in the organization after 2000 (with 2000
as base) (1= Increased, 2= Decreased, 3=No Change,)
5.4 If Increased, please specify the range of increase in wages/salary
in your organisation in the last five years?
(1=0-5%, 2=5-10%, 3=10-25%, 4=25% & above)
5.5 If decreased, please specify the range of decrease in wages/salary
in your organisation in the last five years? (1=1-5%, 2=5-10%,
3=10-25%, 4=25% & above)
6.0 Trade Related Information
Is your organization engaged in Exports
(1=Yes, 2= No)
6.1 If yes, what is the percentage of Export to Total Sales
(1=1-10%, 2=10-25%, 3=25-50%, 4=50-75% 5=Above 75%)
6.2 Growth in export during the last five years. (1= Increased, 2=
Decreased, 3=No Change,)
6.2.1 If Increased, please specify the range of increase in export during
the last five years?
(1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above)
6.2.2 If decreased, please specify the range of decrease in export in
during in the last five years?
(1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above)
6.3 Is your organization engaged in Imports
(1=Yes, 2= No)
6.3.1 If yes, what is the percentage of Import to Total Sales
(1=1-10%, 2=10-25%, 3=25-50%, 4=50-75% 5=Above 75%)
6.4 If yes, the level of import of raw material for your company’s
production requirement.
(1=0-10%, 2=10-25%, 3=25-50%, 4=50-75% 5= 75 & above)

6.5 The level of import of finished products by your company?

(1=0-10%, 2=10-25%, 3=25-50%, 4=50-75% 5= 75 & above)
6.5.1 Please specify the major country from where you are
importing finished products.
___________________________________________
6.6 Please mention your export destinations
6.6.1 Product Description Countries you were trading in the
past
6.6.2 Product Description Countries you are Currently Please mention the
trading with (Country Name) name of
competing
Countries
Also specify the
Competitive
Advantage of that
Country: (1=Cost
of Product, 2=
Latest Technology,
3=Quality of
product, 4=Other)
6.6.3 Product Description Countries you are planning to trade in near future
6.7 The factor (s) hindering the quantity of imports

(1= Import pricing Scheme,2= Import licenses, 3=Import quotas,
4=Import prohibition, 5=Quantitative safeguard measures, 6=Export
restraint arrangement,7=Non trade Barriers, 8=Any other)
6.8 The factor (s) affecting the export of your products
(1=Export taxes, 2= Export quantitative restriction, 3=Certification,
4=Inspection fee, 5=State trading administration, 6=Dual pricing
schemes, 6=Non trade barriers,7=Any other)
7.0 Domestic Market Related Information
What is the market share of your product? Please specify the
range (1=1-5%, 2=5-10%, 3=10-25%, 4=25% & above)
7.1 What is the percentage of Domestic Sales to Total Sales
(1=1-10%, 2=10-25%, 3=25-50%, 4=50-75% 5=Above 75%)
7.2 Growth in the domestic demand of your products after 2000

during last five years. (1= Increased, 2= Decreased, 3=No Change)
7.2.1 If Increased, please specify the range of increase in the domestic
demand of your products in the last five years? (1=1-5%, 2=5-
10%, 3=10-25%, 4=25% & above)
7.2.2 If decreased, please specify the range of decrease in the domestic
demand of your products in the last five years? (1=1-5%, 2=5-
10%, 3=10-25%, 4=25% & above)
7.7 Extent of competition in the domestic market from local
companies? Please specify the range [1=Intense (>20 players),
2=Medium (10to 20 Players), 3=Low (0-10 Players), 4=No
Competition]
8.0 Cost Related Information
The Cost competitiveness of your company during the last five
years. (1= Increased, 2= Decreased, 3=No Change, 4=Other)
8.1 If Increased, please specify the range of increase in cost
competitiveness of your products in the last five years? (1=1-
10%, 2=10-25%, 3=25-50%, 4=50% & above)
8.2 If decreased, please specify the range of decrease in cost
10%, 2=10-25%, 3=25-50%, 4=50% & above)
8.3 Please indicate the Current percentage (%) contribution of the following
components to total cost of production
8.3.1 Wages & Salaries (1=1-10%, 2=10-25%, 3=25-50%, 4=50% &
above)
8.3.2 Other labor related cost (1=1-10%, 2=10-25%, 3=25-50%, 4=Above
50%)
8.3.3 Raw Materials (1=1-10%, 2=10-25%, 3=25-50%, 4=50% & above)
8.3.4 Fuel and Energy (1=1-10%, 2=10-25%, 3=25-50%, 4=50% &
above)
8.3.5 Interest Charges (1=1-10%, 2=10-25%, 3=25-50%, 4=50% &
above)
8.3.6 Security (1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above)
8.3.7 Taxes (1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above)
8.3.8 Others(1=0-10%, 2=10-25%, 3=25-50%, 4=50% & above)
8.4 Please indicate the Change in contribution of the following components
to total cost of production
8.4.1 The share of wages and salaries in the cost of production over the
last five years (1= Increased, 2= Decreased, 3=No Change)
8.4.2 The share of Other labor related cost in the cost of production over
the last five years,( 1= Increased, 2= Decreased, 3=No Change)
8.4.3 The share of Raw Materials in the cost of production over the last
five years, (1= Increased, 2= Decreased, 3=No Change
8.4.4 The share of Interest Charges in the cost of production over the last
five years, (1= Increased, 2= Decreased, 3=No Change)
8.4.5 The share of Security in the cost of production over the last five
years, (1= Increased, 2= Decreased, 3=No Change)
8.4.6 The share of taxes in the cost of production over the last five years,
(1= Increased, 2= Decreased, 3=No Change

8.4.7 The share of other elements in the cost of production over the last
five years, 1= Increased, 2= Decreased, 3=No Change)
8.5.1 Is there any increase in cost of production of your product in
recent years due to increase in exports of raw materials. (1= Yes,
2=No) If yes, please specify the range (1=1-5%, 2=5-10%, 3=10-
25%, 4=25% & above)
8.6.1 Is there any increase in cost of production of your product in
recent years due to decrease in imports of raw materials. . (1=
Yes, 2=No). (1= Yes, 2=No)If yes, please specify the range (1=1-
5%, 2=5-10%, 3=10-25%, 4=25% & above)
8.7.1 Is there any decrease in cost of production of your product in
recent years due to increase in exports of raw materials? If yes,
please specify the range (1=1-5%, 2=5-10%, 3=10-25%, 4=25% &
above)
8.8.1 Is there any decrease in cost of production of your product in
recent years due to increase in imports of raw materials. . (1=
Yes, 2=No) If yes, please specify the range (1=1-5%, 2=5-10%,
3=10-25%, 4=25% & above)
9 Price Related Information
The Price competitiveness of your products during the last five
years. (1= Increased, 2= Decreased, 3=No Change)
9.1.1 If Increased, please specify the range of increase in Price
10%, 2=10-25%, 3=25-50%, 4=50% & above)
9.1.2 If decreased, please specify the range of decrease in Price
10%, 2=10-25%, 3=25-50%, 4=50% & above)
9.2.1 Is there any increase in Price of your product during the last
five years due to increase in imports of raw materials? (1= Yes,
2=No) If yes, please specify (1=1-5%, 2=5-10%, 3=10-25%, 4=25%
& above)
9.3.1 Is there any increase in Price of your product in last five years
due to increase in exports of raw materials. (1= Yes, 2=No) If
yes, please specify the range (1=1-5%, 2=5-10%, 3=10-25%, 4=25%
& above)
9.4.1 Is there any decrease in Price of your product in last five years
due to increase in imports of finished goods. (1= Yes, 2=No) If
& above)
9.5.1 Is there any decrease in Price of your product in last five years
due to decrease in exports of finished goods. (1= Yes, 2=No) If
& above)
10.0 Factors Affecting Productivity
10.1 The Labour Productivity (out put produced relative to number
of workers/employees used) of your firm during the last five-
year (1= Increased, 2= Decreased, 3=No Change)
10.1.1 If Increased, please specify the range of increase in Labour
Productivity in your enterprise in the last five years? (1=1-5%,
2=5-10%, 3=10-25%, 4=25% & above)
10.1.2 If decreased, please specify the range of decrease in Labour

2=5-10%, 3=10-25%, 4=25% & above)
10.2 The Total Factor Productivity (i.e., output produced relative to
all inputs used) of your enterprise during the last five-years (1=
Increased, 2= Decreased, 3=No Change)
10.2.1 If Increased, please specify the range of increase in Total factor
2=5-10%, 3=10-25%, 4=25% & above)
10.2.2 If decreased, please specify the range of decrease in Tota factor
2=5-10%, 3=10-25%, 4=25% & above)
10.3 Identify the main factors that have affected labour productivity in your
Enterprise in the last five Years (Please mention five)
1.
2.
3.
4.
5.
10.4 Identify the main factors that have affected Total Factor productivity in
your Enterprise in the last five Years (Please mention five)
1.
2.
3.
4.
5.
10.5 Have you introduced any measures that have enhanced the
labour productivity of your enterprise in the last five years?
(1= yes, 2= No)
10.5.1 If yes, (Please Specify)
10.5.2 If No, Please indicate the reasons

10.6 Have you introduced any measures that have enhanced the
Total Factor Productivity of your enterprise in the last five
years? (1= yes, 2= No)
10.6.1 If yes, (Please Specify)
10.6.2 If No, Please indicate the reasons
11.0 Factors responsible for Competitiveness

The competitiveness of your company during the last five years.
(1= Increased, 2= Decreased, 3=No Change)
11.1 Availability of Raw materials for production?
1=Imported, 2=Within country, 3=Within Region/State, 4= Other
(Please specify)
11.2 Availability of Quality Human Resource in the last five years
(1= Increased, 2= Decreased, 3= No change)
11.3 Does the present Educational system in the country is catering
to the industry’s requirement? (1= yes, 2= No)
11.4 Labour relations in the state are productive? (1= yes, 2= No)
11.5 Are you satisfied with the quality of infrastructure (both Social
and physical) available in your state? (1= yes, 2= No)
11.5.1 If No, Please specify the physical infrastructure that requires
attention towards development and maintenance? (1= Road, 2=
Rail, 3=Airport, 4= Port, 5= Power, 6= ICT, 7= Cold storages &
warehouses, 8=Other) (Please Specify)
11.5.2 If No, Please specify the social infrastructure that requires an
attention towards development and maintenance?
(1=School, 2= Higher Education, 3=Technical Institution, 4=
General Hospital, 5= Specialized Medical Centres, 5=Other) (Please
Specify)
11.6 Are you satisfied with the Government’s interface with
business/private sector ? (1= yes, 2= No)
11.7 Is your State government is friendly towards investors?
(1= yes, 2= No)
11.8 Are you satisfied with the extent of computerization of
government records? (1= yes, 2= No)
11.9 Corruption level in the government during last five years.
(1= Increased, 2= Decreased, 3=No Change)
11.10 Are you satisfied with the Transparency in your government?
(1= yes, 2= No)

12.0 Identify the main factors that have affected the competitiveness of your industry
in the last five Years (Please mention five)
1.
2.
3.
4.
5.
13.0 What measures have you taken over the past five years to boost Competitiveness
in the domestic and export markets?
14.0 What are your views regarding the enhancement of Productivity and
Competitiveness in India? (Please mention)
15. Policy Interventions that are urgently required from the Government for
enhancing productivity and competitiveness of your sector (Please mention five)
1.
2.
3.
4.
5.
16.0. Any other comments : (Please specify )
Thank you
Name of the Official/Investigator:------------------------------------------------

Signature : ---------------------------------------------------------
Place of Survey : ---------------------------Date: -----------------------

Annexure -2
List of Textile Manufacturing Units contacted for the NPC Field Survey
1 Silk Fashion Creator, J.12/63-83, Bumkar Colony Matiimuvns, Varanasi, U.P.

2 Ansari Nisa Collection, No. NH A17/74 A4-1, Pathani Tula Vns, Varanasi, U.P.
3 Diamond Silk Coop.Soc. Ltd., J.11/63-101, Bunker Colony, NatiInli, Varanasi, U.P.
4 Usman Gani Ltd.
5 Over Nice Silk Manufacturing Coop Society Ltd.
6 Milap Silk Industrial Coop Society Ltd.,
7 Sheena Enterprises, 412-D, Defence Colony, Kanpur 208 010
8 Gramin Bunkar Society, Near Thai Budish Temple, Sarnath, Varanasi 2211007
9 Lotus Handicrafts, 10/492, Khalasi Line, Kanpur, 208001, UP
10 Ganesh Polytex Ltd., 113/216-B, Swaroop Nagar, Kanpur- 208002, U.P.
11 Amitech Industries Ltd., B-20, UPSC, Industrial Area, Site 1, Kanpur 208 022 U.P.
12 Motilal Dulichand (P) Ltd., 20, Industrial Estate, Kanpur 208012, U.P.
Ravika Creations Pvt. Ltd., 62/4 Bommanahalli Village, Begur, Hobli, Bangalore
13 560068
14 JAL Exports 188 Agara Village, HSR Layout, Bangalore 34
Color Lines, MRRJ Complex, 839/1, Sector I, HSR Layout, Agara Post, Bangalore
15 560034
16 Devatha Silk Kendra, Niranjan Silk Place, Avenue Road, Banglore 02
Entity Garments 105, 2nd Floor, Robby House, JM Road, Avenue Cross, Bangalore
17 560 002
18 M.G. Creations, 9 Anekallappa Mata Lane, Narayana, Bangalore 560 002
Texport Overseas, 86D-1, Industrial Suburb, II Stage, Yeshwanthpur, Bangalore
19 560022
20 M/s R.N. Oswal Hosiery Factory, Circular Road, Shivpuri, Behind Ved Bhawan 104
21 Vardhman Spinning & General Mills, Chandigarh Road, Ludhiana
22 M/s Mahavir Spinning Mills Ltd., Chandigarh Road, Ludhiana
23 Nahar Spinning Mills Limited, 373, Industrial Area, Ludhiana
24 M/s Venus Garments (India) Ltd., G.T. Road, Near Jalandhar by pass, LDH-141005
25 M/s Suyansh Knitt. Pvt. Ltd., H-7, Textile Colony, Indus. Area A Ldh.
26 M/s Duke Fashions (India) Ltd., G.T. Road (West), Jalandhar by pass, Ldh.
27 M/s Kansal Hosiery Exports, Industrial Area-A, Ldh-141 003
Coated Sales Co. P. Ltd., C-1304/14, GIDC III Phase, Near Gamma Colour, Vapi-
28 396 195 , Gujarat
Alok Industries Ltd., Peninsula Tower, A Wing, G.K. Marg, Lower Parel, Mumbai
29 400013
Mekatronics Products Pvt. Ltd., 104, MG House Commercial Complex, Wazirpur
30 Industrial Area, New Delhi 110052
31 Sahib Textiles, T-55, Balfit Nagar, West Patel Nagar, New Delhi 110001
Fab Knit Pvt. Ltd., 10/6781, D B Gupta Road, Dev Nagar, Karol Bag, New Delhi
32 110005
33 A S Silks, 1656/15, 1st Floor, Govindpuri, Kalka Ji, New Delhi 110019
Delhi Tirpal House, Agarwal Tower Plot. No. 3 Block C II, 3rd Floor 302Pitam Pura,
34 New Delhi 88
35 Santogen Silk Mills Ltd., A-13, MIDC, Patalganga, Dist. Raigard
36 Nahar Industrial Enterprises Ltd.,21st Mile Stone, Ambala, Chandigarh Road, PO

Dappar, Lalru, Punjab

37 Kiran Foot Comfort Pvt. Ltd., F-21, Malviya Industrial Area, Jaipur 302017
38 Sare Orginal, F 133, Sitapura Industrial Area, Jaipur 22
Rajasthan Syntex Ltd., A-27 Nawalakha Apt, Bharat Mata Path, DLB Marg, C
39 Scheme, Jaipur
40 BSL, Flat No. 11, 2nd Floor, Ankur Apt. 5-6 Jyoti Nager East, Jaipur- 302005
41 Jagjanan Textiles limited, S-25, Shyam nagar, Jaipur
42 Cheer Sagar,E-194, Industrial Area, Mansarover, Jaipur
43 Major Exports Ltd, E-258, Mansarover, Jaipur-20
44 Ratan Textile Pvt. Ltd, F-200-201, EPIP, Sitapura Industrial area , Jaipur -22
45 A & A Exporters, G1-156 EPIP, Riico Industrial Area, Jaipur-302022
46 Art & Craft Exclusies, G-108, RiicoWtrsal Area, Mansorover, Jaipur
47 Avon Creations, G-112, Mansarover Industrial Area, Jaipur 302020
48 Kandoi Impex Pvt. Ltd., F-128, Sitapura Industrial Area, Sitapura, Jaipur 302022
49 Arham Spinning Mills, 6th Milestone Tisaraacwar Road, Bhiwadi 301018
50 Shree Rajasthan Texchem , A-2 Nawalahkha Apt. Bharat Mata Path JLB Marg,
Shree Shyam Filamens, A-2 Nawalakha Apts Bharat Mata Pata JLB Marg, Schem
51 Jaipur
Gampaklal Gopaldas/Toppot Nxt-G, 4, Inreeram Industrial Polign, Vonna Magdpla
52 RD, Jurat
53 Vikram Kiniter (P) Ltd., , C-1/121, GIDC Pandersa, Surat, Gujarat
54 S.P. Garments, No. 11 Peranbur Hiesh Road, Chennai 12
55 Design Clasic Exports, AVV Koil Street, Chimmayanlages stage I, TN
56 Dignity Innovation, G-15, 1st Main Road, Ambattur Industry Estate, Chennai 600058
57 Aarveen International, 23&23A, Pulla Avenue,Shenoy Nagar, Chennai 30
58 Big Apple Exports Pvt. Ltd., 17, Mount Road, Saidapet, Chennai 600 015
59 Virgose Fashions, 6 Ram Kumar Rakshit Lane, 2nd Floor, Kolkata – 7
60 Shree Balaji Export, FlatNo 505, 11 Clive Row, Kolkata
GINI & JONY APPARELS P. LTD., 47 EPIP PHASE-I, JHANJHARI, HIMACHAL
61 PRADESH
62 Winsome Textdile Industries Ltd., Industrial Area, Baddi Solan, SCO 191-192, 34 A
63 Vardhman Textile Mills, 55, HPSIDC BADDI, HP
64 Gwaritex Industries, 79 Industrial Area Ph-II, Panchkula, Haryana
65 V.K. Textiles, Shop No. 147, Industrial Area Baddi - 173 205 Nalagarn Solan
66 Sobhagia Clothing Company, 6-8 EPIP-I Jharnagri H.P.
67 G&J Aprarew (P) Ltd., 2 D, EPPP Phase I
68 Golden Textiles, 155, Industrial Area, Baddi, HP
69 Janvi HosiERY Industry Ltd., GOI, Jamala Swarghat Road, Nalagan, HP
70 GPI Textile India Ltd., Bharatgast Road, Nalagarh, HP
71 Saluja Exim Manifacturing Ltd., 106 Industrial Area, HP
72 Birla Textiles Ltd., Bhatolikalan, SAI Road, Baddi
73 Jalan Suit and Sons, G06/3, Katra Asharfi, Chandni Chock, New Delhi
74 Jalan Suit & Saris, 506/3, Katra Asharfi, Channdni Chouk, New Delhi
75 Nandhari Tent Manufacturers, 115,9/54, DB Gupta Road Karol Bagh, New Delhi
76 Fancy Silk Expressions, 5493/9, Shyam Market, Nai Sarak Chandni Chowk, New
Delhi
77 Prashad Textiles limited, 427-28,katra choubar, Chandni chowk , New Delhi-6
78 Wires & Fabriks (SA) Ltd., 63, Industrial Area, Jhotwara, Jaipth 302012
Usha Dyeing Works, 2, Prem Colony, Behind hanuman Tubewell , Tonk road, Jaipur-
79 11

80 United Exports, B-24, Mogappair Industrial Estate, Chennai

81 ZEUS International, No. 223/228, Agara Post, Sarjapur Road, Bangalore - 560 034
U.D.G. Pvt. Ltd., #428/6/1/12, First Floor, Hongosandra, Off. Begur Road,
82 Bommanahalli, Bangalore-560 068
Excel Synthetic Pvt. Ltd., Site No. 62/4, 13, 14, 15, Begur Road, 11th 'A' Cross, Ward
83 No. 12 Bommanahalli, Bangalore - 560 068
84 J.P. Kumar Socks, 18/19, 2nd Cross, Behind Essac Ind. Estate, Chikanahalli Road,
Bommanahalli, Bangalore-68
85 IIMAGES CLOTHING CO. # 543/7, (Old No. 62/1), CMC Khata No. 229,
Kodichikkanahalli Main Road, Bommanahalli, Begur Hobli, Bangalore-560 068
86 Venkatadatta Silks & Cottons, # 764, 9th Main, 34th Cross, 4th Block, Bangalore
87 Suchitra silk pvt. Ltd., 567/1, Burugal Mult Road, V.V.
88 Datta Silk. Exports(P) Ltd.,No.217/2, Cubbonpet Main Road, Bangalore
89 Indus.Garments(India) Private Limited, Unit-V, 78/1, Daddakannehalli Carmel/Rane
Post Sarjapur Main Road,
90 Goodwill Fabrics Pvt Ltd., 250 Ring Road, Sarjapur, Bangalore
91 Zenith Koplavitch Exports Ltd., Bangalore
92 JaiShri Bhujanga 6, South Crossd Road, Basavana gudi,Bangalore
93 Orion, 20/1,9th Cross, Cubbonpet,

Annexure - 3
Methodology Adopted for Partial and Total Factor Productivity

Estimations
Productivity can be measured in terms of both partial and total factor productivity
methods. Most commonly used partial productivity measures are Labour Productivity and
Capital Productivity estimations. The partial productivities are measured as a ratio of
Gross Value Added per worker or per unit of capital invested.
The partial productivity methodology is based on the premise ‘ceteris paribus’ that only
two factor inputs used in the production process such as labour and capital. Details
regarding the data construction and estimation procedures are given as below.
A. Labour Productivity
• Labour input is considered as the total number of persons engaged in the
production process. The data has been compiled from Annual Survey of Industries
summary results for factory sector data base for various years. The Gross Value Added
data has been first deflated by the whole sale price index for the textiles(Broad Category).
The formula for calculating the labour productivity can be given as follows:
Labour Productivity (LP) =

[((Gross Value Added/Price Index) x 100)
Number of Persons Engaged ]
Labour Productivity Growth
• Once the labour productivity has been calculated, we can estimate annual labour
productivity growth using the growth rate estimation formula :
]×
Labour Productivity ═
Growth [ Labour Productivity t – Labour productivity t-1
Labour Productivity t-1
100
Labour Productivity Growth Index:
To understand the trends in Labour Productivity Growth, we can construct year to year
growth rates as an index of Labour Productivity Growth Rate. Initial value of the series is
considered equal to 100 and the subsequent years Labour Productivity Growth Rates are
added to it cumulatively. This will provide us an index of Labour Productivity Growth for
the textile and garment sector for the years starting from 1995-96 to 2005-06.

B. Capital Productivity
Since capital investment is given as the book value in the ASI data, we have to estimate
the capital stock in operation for every year. The Capital stock estimation follows the
procedure given below.
• Capital Stock Estimation
To calculate capital stock we have used Perpetual Inventory Method. Capital stock has
been estimated from the book value of Gross Fixed Capital compiled from the ASI
Database.
• Fixed capital data from ASI for the textiles and garments sector taken for the years
1995-2006.
• The book value of fixed capital at 1995-96 is multiplied by Gross net ratio of
capital for getting initial year capital stock.
• Incremental capital during the year 1996-97 at constant prices (deflated with the
machinery and machine tools prices at 1993-94 prices) is added to the initial year
capital stock of 1995-96 for getting the capital stock for 1996-97at constant prices.
Incremental capital = ((Fixed capital 1996-97 - Fixed capital 1995-96)
To calculate the capital productivity we have divided Gross Value Added at constant
prices by the estimated fixed capital. The formula used to calculate the capital productivity
is as follows:
Capital Productivity=
[ Gross Value Added at constant prices
Capital stock at constant prices ]
Capital Productivity Growth
Capital Productivity
Growth Rate =
[ ]
Capital Productivity t - Capital Productivity t-1 x 100
Capital Productivity t-1
Capital Productivity Growth Index
As in the case of Labour Productivity Growth Index, Capital Productivity Growth Index is
also constructed on a scale 100.
Gross Value Added Growth Rate =

[ GVAt – GVA t-1
GVA t-1 ] x 100

Capital Productivity Growth Index:
To make the index of Capital Productivity Growth Rate, first of all assume the initial value
of series equal to 100 then add subsequent terms of the Capital Productivity Growth Rate
cumulatively. This will give us the index value of Capital Productivity Growth Rate.
C. Total-Factor Productivity Growth (TFPG)

Total Factor productivity Growth has been estimated using the Divisia index method.
Here, it is considered that Total Factor Productivity Growth is the result of technical
progress. Technical progress or TFPG is estimated as a residue of the difference between
output growth rates and input growth rates.
o o
TFPG= GVA – [WL x Labour Productivity Growth + WK x Capital Productivity Growth]
Where
WL + WK = 1
and
WL = Wage Share in Total Cost
WK= Capital Share in Total Cost
Total-Factor Productivity Growth Index
As in the case of Labour and capital productivity , Total Factor Productivity Growth Index
can also be constructed with the base 100 for the initial year and adding the subsequent
growth rates cumulatively to it.

TextilesClothing 03july2010

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

TextilesClothing 03july2010

Uploaded by

Copyright:

Available Formats

CONTENT

Chapters Particulars Page No.

EXECUTIVE SUMMARY i-vi

Chapter II Textile and Garments Sector – Global Scenario

Chapter III Indian Textile & Garments Sector – A Review

3.1. Background 9-10

Chapter IV Performance of Indian Textile & Garments Sector

Chapter V Field Survey Findings

5.1. Profile of Textile Manufacturing units 30-31

5.2. Implementation of ISO – Its impact on Business 31

5.3. Turnover of Textile Manufacturing Units 31

5.4. Profitability of the Manufacturing Units 32-33

5.5. FDI and ICT Usage 33

5.6. Employment Profile 33-34

5.7. Trade Related Information 34

5.7.1. Comparison with other countries in the export 34-36

5.8. Domestic Market 36-37

5.9. Manufacturing Cost Related Details 38

5.10. Price related Factors 39

5.11. Factors affecting Productivity 39

5.12. Factors responsible for Competitiveness of the sector 39-40

5.13. Measures adopted by the Industry for improving 40-41

5.14. Requirements for enhancing Productivity & 41

5.15. Region-wise findings of major Problems faced by the 41-42

Annexure Annexure - 1 : Survey Questionnaire 49-57

Annexure - 2 : List of Units Contacted for the Study 58-60

Annexure - 3 : (Methodology Adopted for Partial and Total 61-63

2.1 Year on Year Growth in Secondary Sector 7

3.1 Structure of Indian textile Industry 10

3.2 Installed Capacity: Textile and Garments Sector 11

3.3 Sector-wise Production of Cloth (millions sq. meters.) 12

3.4 Production of Fibres and Yarn 13

3.5 Production of Cloth (millions sq. mtrs) 14

3.6 Textile Exports (Rs. millions) 15

3.7 Textile Exports (value in US $ millions) 16

3.8 Country-wise Export of Textile Items by India 17

3.9 India's Share in World Export of Textile and Clothing 18

3.10 Item wise Textile Imports by India (Rs. million) 19

3.11 Country-wise Import of Textile and Clothing by India 20

4.1 Textile and Garments Sector: Registered Manufacturing 22

4.2 Textile & Garments: Registered Manufacturing (All India) 23

4.3 Share of Textile & Garments Sector in Total 24

4.5 The Change in Share of Major States in the Textile & 25

4.6 Labour Productivity Growth (%) 26

4.7 Partial Productivity Estimates for Labour and Capital 27

4.8 Labour, Capital, and Total Factor Productivity Growth 28

4.9 Index of Labour, Capital, and Total factor Productivity 29

5.1 Relationship between Size and Quality Accreditation 31

5.2 Annual Turnover of Textile Manufacturing Units : State 31

5.3 Average Profitability of the Manufacturing Units (1991- 32

5.4 Average on Profitability of the Manufacturing units (2000- 33

5.5 Extent of ICT usage in firm’s operation/production 33

5.6 Share of Exports earnings to Total Sales 34

5.7 Competitive advantage of India in the Export Market 35

5.8 Import of finished products 35

5.9 Factors hindering Export of textile products (%) 35

5.10 Factors hindering the quantity of imports (%) 36

5.12 Share of Domestic sales to Total sales for the 37

5.13 Nature of Competition in the Domestic Market 37

5.15 Range of increase in Cost Competitiveness 38

5.16 Ratio of various Cost Components in Total Cost of 38

Structure of Indian Textile Industry

Textile industry in India comprises mostly of small-scale, non-integrated spinning, weaving,