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Thursday, January 31, 2008

Global markets are changing – is India following suit?!

The D.K. NAIR, Secretary General, Confederation of Indian Textile Industrymarket for textile products is witnessing significant changes. Competition from Asian suppliers has been increasing even in Western markets, whereas participants in their Regional Trade Agreements are losing ground. Domestic production in North America & Western Europe has been declining consistently during the last few years and their textile industries are projected to shrink mostly into high tech segments in the coming years. In India, the industry has experienced an impressive growth in terms of installed capacities. Exports have also recorded significant growth after abolition of bilateral quotas. However, certain developments during the last few months such as the rupee appreciation and increase in interest rates seem to have dampened the enthusiasm that this industry has witnessed during last few years.

The current retail boom is bringing large distribution networks to the domestic market, necessitating production facilities that can meet their demand for volumes. We are the second fastest growing economy in the world, with the second largest population. The problems being faced by this industry in the international markets could also turn out to be an opportunity for strengthening supplies to the domestic market. After all, competitive exports can come only from an efficient industry. Given the poor R&D activities and traditional ways of carrying out business that most segments of our industry are accustomed to, our response to the current changes in market trends has not been adequate. Adding value to commodity type products, scaling up production facilities in order to reduce cost & branding to climb up the value chain are major areas that need attention.

We have made sufficient progress on the raw materials front. Productivity of cotton has gone up from about 300 kg per hectare a few years back to over 500 kg per hectare and cotton production has reached an all time high record of 280 lakh bales this year. In garments and home textiles, organised production has been picking up, though not fast enough. In the case of fabrics, however, we have not been able to keep pace with the changes in demand trends. Organised weaving does not have a share of even 5% in our fabric production. The processing segment has been seeing some increase in investments. But again, a major portion of our fabrics continue to get processed in the hand processing segment. With increasing pressure on prices, cost reduction assumes extra importance. Scaling up production facilities is the key for optimising cost through effective utilization of modern technology. The Scheme for Integrated Textile Parks and TUFS are positive policy inputs from the government for making this feasible. Power at affordable prices as well as acceptable quality and workable labour laws are the important inputs still lacking.

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Source :
IIPM Editorial, 2007

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