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Consolidation will help withstand price pressure: SIMA

Sudha Swaminathan

Consolidation of capacities in spinning, weaving, processing and garments would help withstand pressure exerted by global retail chains on price and profitability, said Mr Vijay Venkataswamy, past chairman, SIMA.

“The large global retail chains control 25 per cent of the global textile trade, which has resulted in pricing pressure in every segment of the value chain and thus increased pressure on profitability. Consolidation of capacities in spinning, weaving, processing and garments would be the logical solution to cope up with this pressure. However, the process of consolidation is extremely slow in India, given the highly fragmented nature of the industry,” he said during the CEO’s conference - Redefining Textile Business, organised by SIMA recently.

The textile industry has set an ambitious target of US$ 85 billion by 2010. This kind of growth will require economies of scale, efficient supply chain management at competitive pricing and adherence to social order. Our strength in basics should be leveraged to move up the value chain, he added. He further added that India’s capability of retaining 25 per cent share in the global yarn trade should now be taken to its logical end of increasing the share in textiles and clothing from its present four per cent. Customer centric manufacturing should be the key to any growth-oriented organisation and service to the customers should be given top priority. He also urged the industry to be proactive to changes and fashion, quick turnaround. Mr Venkatasamy also advocated divesting management from ownership to infuse professionalism and good governance. Eminent personalities from the industry deliberated on subjects like value addition through innovation, customising to market needs, input models for forward integration for spinners, relevance of equity concepts for the growth in textile industry, etc.