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Changing scenario of Indian textile industry - II

Rushin H Vadhani

We could import raw material, fabrics at lower costs which are not being produced in the country, add value and then export. This is already being done in case of readymade women fashion garments. This is the fruit of liberalisation.

Research and development

Where product innovation is the demand of the day, lack of innovation has been gnawing our textile industry/exports for years. To retain the attention of international consumers, the industry needs constant research and upgradation. Fresh modern design patterns are the demand of the market but we major in traditional ones. New experiments to change from usual can be undertaken. For example, Indian silk otherwise used in making apparels, scarves, kurtas etc can also be used in manufacturing high couture home furnishing products that can successfully be marketed to sophisticated European markets. Jute, once the golden fibre of our country, has started losing its market to Bangladesh. The sector can be revived giving it a new form. Similarly, khadi can be made appealing to the high fashion segment with the help of our designers. Besides clothing manufactures, there are specialised areas like floor covering, medical textiles, footwear, polymer industry, home furnishings, upholstery, civil aviation, transport, sports, shipping, packaging etc, where our industrialists could venture into. The industry has to provide new fabrics, yarns or new products that have not been provided before. Whole effort will require lot of market research in order to keep track of shifting consumer tastes and demand.

The backbone of any business is the availability of expertise. Do our educational institutions have enough courses to provide expertise so as to meet the challenges of strangling competition? Only few institutes impart technological courses in textiles. Rest all concentrate in textile designing, which is only a small area in the field of textile education.

Marketing

To make its presence felt in international markets, the industry needs to make concentrated marketing efforts. Plight of our products is that they are exported and not marketed. We can capture untapped market by means of forward integration. Our top textile industrialists who have been successful in producing world class fabrics can reap the real benefits of trade by adding value. To undertake serious brand exercises, requires setting up offices and continuous presence in country in question. But this is generally found impractical due to high costs. There are some organisations like AEPC (Apparel export promotion council) and TEXPROCIL (Cotton Textile Export Promotion council of India) involved in constantly promoting the Indian textiles and garments. AEPC has been actively participating in buyer seller meets in various counties like Latin America, Australia, and New Zealand and South Africa. The India International Garment fair and India knit Fair are fruits of all these efforts. It required strong efforts like setting up of office, creation of own work force and distribution network and account management for dealing with the host country’s administrative authorities and managing under completely different cultural and business environment to create brand value for our product, should be established. All this is not easy and requires massive investments and efforts and may have a long gestation period. This is only possible for big business houses. This is also an important factor for our products being sold under the brands of importing party. Nonetheless, this does not let us evade the need to make long-term efforts. One way to do this is to acquire patents and trademarks, which is much easier an exercise in foreign land than in India. Recently, Khadi and Village Industries Corporation (KVIC)’s success in making khadi a brand is worth applause and definitely a step in the right direction.

Supplies

In all these years, we have failed to come up as world class suppliers. The inability to manufacture and provide goods in time owing to the small production houses that lack state-of-the-art technology and lack of investments has only blemished the image of Indian suppliers as incapable to cater to the large orders, creating dissatisfied customers. Inability to supply shipments in time, to cater as per trends of the international market are the main reasons for our being second to our main Asian competitors.

Countries like Japan, Hong Kong, China have successfully cracked the distribution systems of their importing countries through their sheer hard work and complex, intricate and widely spread distribution and supply chain networks.

Environmental/ geographical norms

As the competition intensifies and trade barriers vanish further, qualitative and geographical/environmental norms will play a substantial role in trade dynamics. Even now Western European economies protect their industry in the name of environmental and other non-tariff barriers. So can’t we be proactive in anticipating their moves and develop our products accordingly. Eco-labelling or so-called green labelling of products of very superior quality can help us crack the barriers.

Overview of developments post-MFA

• India recorded exports of $ 461 million in March 2005 against $ 351 million in March 2004. The increase has continued from February, when textile exports stood at $ 410 million. India has shown a 28 per cent growth for the period January to March 2005 as compared to the same period last year. While China remains the lead country in terms of textile imports to the US, countries like Mexico and Canada continue to loose out to India and China. The Bush administration is re-imposing quotas on three categories of clothing imports from China, responding to complaints from domestic producers that a surge of Chinese imports was threatening thousands of US jobs. The US has the power to impose caps of 7.5 per cent growth in textile and clothing categories on China under an agreement that cleared the way for China’s membership in WTO in 2001.
• The ministry of finance has added 165 new textile products under duty drawback schedule. The new products included wool tops, cotton yarn, acrylic yarn, viscose yarn, various blended yarn/fabrics, fishing nets, etc. Further, the existing entries in the drawback schedule relating to garments have been expanded to create separate entries of garments made up of (a) cotton, (b) blended and (c) MMF. Separate rates have been prescribed for these categories of garments on the basis of composition of textiles.
• After the phasing out of quota regime under the multi-fibre pact, India can envisage its textile sector becoming $ 100 billion industry by 2010. This will include exports of $ 50 billion. The proposed targets would be achieved provided reforms are initiated in the textile sector and local manufacturers adopt measures to improve their competitiveness. A five-pronged strategy aiming to attract FDI by making reforms in local market, replacement of existing indirect taxes with a single nationwide VAT, liberalisation of contract norms for textile and garments units, elimination of restrictions that cause poor operational and organisational performance of manufacturers, was suggested.
• Proposals for modernisation of NTC mills have been made to the consultative committee members, including formation of a committee of experts to improve management of these mills. Even the present status of the jute industry was under the scanner of the consultative committee.
• The government had announced change from the value-based drawback rate hitherto followed to a weight-based structure for textile exports that will discourage raw material exports and also curtail the scope for misusing the drawback claims by boosting invoice value of exports.
• NCDEX launched its silk contract (raw silk and cocoon) on January 20, 2005. With this launch, the total number of products offered by NCDEX goes up to 27. The launch of silk contracts will offer the entire suite of fibres to the value chain ranging from farmers to textile mills. With the objective of protecting the interests of thoes affected but WTO agreements and globalisation process, the Government of India jointly with NCDEX has adopted a policy of encouraging future contracts of silk. The ministry of textiles and the Central Silk Board (CSB) had decided to introduce futures trading in mulberry cocoons and raw silk on NCDEX. The basic purpose is to mitigate the risk associated with the changing prices through an efficient price discovery mechanism. Futures trading on the NCDEX will provide an alternative trading avenue for farmers, weavers and traders and help them make a better price discovery for their produce. It will also help them to reduce risks associated with price volatility through hedging.

The Indian textile industry is geared up for changes. The current developments post MFA-era clearly indicate that the government is equally supporting the industry by planning policies favourable for the growth of the textile industry. The need of time is to respond positively to dynamics of the international market, lot of revamping required, enter niche segments, improve market shares and realisation. Lets prove ourselves to the world that we too are better than the best and have immense potential to compete globally. Let’s make things happen today and not tomorrow.

(The author is with ATE Marketing Pvt Ltd)