<p>Thanks to the global economic recovery, exports from India are booming and one industry which has greatly benefited from the demand upturn is readymade garments. <br /><br />Being the second largest job provider, the garments industry now employs nearly 70 lakh people in India. Besides, the rise in exports is also good news for the economy. <br /><br />Helped by the rising demand in the US, India’s apparel exports have increased by a whopping 24 per cent in February 2011 over the same month, the previous year to Rs 5,284 crore after registering an impressive rise of 18 per cent in January 2011. Though monthly exports of garments in 2010-11 were below the previous year’s levels in the intial months, the situation turned for the better from November 2010. In the first 10 months (April-January) of the last financial year (2010-11), the total garment exports stood at Rs 39,787 crore, against Rs 41,771 crore, the previous year.<br /><br />In fact, encouraged by the impressive growth, Union Textiles Secretary Rita Menon recently said that the target for textile exports has been raised to around $30 billion for the current financial year against $25 billion achieved in the previous year. “As the demand is on the rise in Western markets, the government has raised the target,” she said. <br /><br />Big player<br /><br />Bulk of India’s exports of apparels go to the US, Canada and the European Union.<br /><br />The government thinks India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5 per cent to 8 per cent and reach $80 billion by 2020. India has the highest number of looms – 1.8 million shuttle looms (at 45 per cent of global capacity) and 2,00,000 shuttle-less looms (at 3 per cent of global capacity).<br /><br /> We also have 3.9 million hand looms (at 85 per cent of global capacity) and the second highest number of spindles at 23 per cent of global capacity.<br /><br />Exporters are enjoying good demand and the industry players are booked with orders through June and July 2011, which is exceptionally good for the Industry. “There is a good demand for our exports in the US. There is an improvement in the European market as well,” said Apparel Export Promotion Council (AEPC) Chairman Premal Udani. The US accounts for about 40 per cent of India’s total garment exports. Exports started growing in August 2010 after witnessing deceleration in the initial months of the current fiscal.<br /><br />Udani said Indian exports have become competitive, thanks partly to the government’s restrictions on exports of cotton and cotton yarn which lowered the raw material prices.<br /><br />Texport Syndicate India Limited CEO & Director Avinash Misar is also very bullish on the future. He said that rising cost of labour in China and marginal price difference in fabric prices in India against China, are helping India. Chinese apparel industry is also plagued with strikes and production delays. “If India can grab 10 per cent of their business, Indian apparel exports will double to $20 billion in coming years,” he added.<br /><br />Growth sustainable<br /><br />Can India sustain the growth? Since costs are rising in China, the medium to long term business will move from there to other countries which can better or match China’s cost and delivery capabilities. It is also true that without any compelling advantage, customers will reduce their dependence on China for their bulk sourcing. Since buyers are looking at alternative markets for sourcing, India has greater chance because our country is democratic and economically and socially stable. <br /><br />But the question is can India cater to much larger demand for garments? With focus on better productivity and building capability to deliver core/bulk quantity, India is certainly becoming preferable sourcing destination. Besides, the large garment industry is also getting more organised for higher demand. <br /><br />Challenges galore<br /><br />To be able to grab the opportunity, the garment industry here, however, will have to stitch together many of its shortcomings. <br /><br />Different bodies like Cotton Corporation, Indian Textiles and AEPC should sit together and formulate the right strategy rather than each pulling in different directions. The government should formulate a structured approach as garments is a complex supply-chain industry.<br /><br />Manufacturing garments is a labour intensive process as a single unit can employ as much as 50,000 people. In an inflationary situation the country is going through, there is a constant and justified demand for raising wages for the workers. But the industry cannot afford this if it is to remain globally competitive. Further, low availability of skilled manpower is another great challenge. “Worldwide and even in Asian manufacturing destinations like Vietnam, Sri Lanka, China and Thailand, manufacturing takes place in villages where cheap labour is available in plenty. Only in India the industry got concentrated in cities like Mumbai, Bangalore, Ludhiana and so on. So the only way for the future is to go to the villages,” said Shahi Exports Private Limited Director Subhash Tiwari.<br /><br />International competition<br /><br />Other countries are not sitting idle either. According to Sangam India Limited Executive Director V K Sodani, Global giants such as Wal-Mart, VF Corporation, GAP and H&M have begun flocking India to source fabric as China, the largest supplier, is slowly retreating from denim production due to cotton crunch. “India has a golden opportunity to grab a share in the world denim market. This is because the Chinese government has reduced cotton acreage. Instead of being a mass supplier, China is trying to be a value supplier,” Sodani said. <br /><br />The opportunity is huge as China makes 3 billion metres of denim a year, miles ahead of India’s 650 million metres output. The biggest hit we take is on the productivity when compared to China and Bangladesh. Average labour productivity of India is around 45 per cent, whereas productivity in other countries is at 65-70 per cent. This is actually a double hit our cost is high and productivity is low.<br /><br />India has a better and longer history of textiles compared to any other country but still our roots are not known in global business. Since garments exports do not have large profit margins, investments from private entrepreneurs are low and this is why this industry has not grown much in India compared to many countries.<br /><br />Can government help?<br /><br />Tiwari urged the government: “If the government wants large employment providers to move towards smaller towns, the best thing is to structure minimum wages as it would motivate us, as there is negligible difference between the cities and towns.” The recent increase in cotton yarn and fabric prices has also affected exports to a considerable extent. Instead of exporting cotton, the government should facilitate making yarn and garments in India. “It should export only the finished goods, which will increase the exports threefold and will provide employment to a lot of people,” he said. <br /><br />Sodani emphasis that India should focus on Free Trade Agreement (FTA) as apparel industry will gain by enlarging bi-lateral trade and bringing stability in the region. Asian region is developing and is becoming a developed force for economic growth because of cheap labour and big local market due to large domestic consumption. <br /><br />It is time that the government increased the duty draw back for the industry to give its best, JJ Exporters Limited General Manager Nirmal Kumar Sharma said. <br /><br />The industry pointed out that the budget 2011 was extremely disappointing with slapping of excise duty on branded garments. Such a labour oriented industry which provides livelihood to millions of people deserves real special efforts by the government. <br /><br />So the government must revoke its excise duty, the industry urged. <br /><br />There is no reason for an essential item like clothing to be charged a high rate of duty. The industry is already highly fragmented because the benefits bestowed on small scale units push manufacturers to create many small units rather than large units to derive better economy of scale. <br /><br />Earlier, the rate of excise was at 4 per cent and the levy was optional for garment makers who wanted to get refund under the Centvat scheme. Since most units did not register themselves to claim Centvat refund, the duty was virtually zero. Now all branded garment makers will have to pay 10 per cent duty on the 60 per cent of the MRP. <br /><br />Clothing Manufacturers Association of India Regional Chairman and Chief Mentor of Gokaldas Exports Limited Rajendra J Hinduja said that for garment exporters, the new duty will create problem because even for exports, which are exempted from excise duty, all units will have to maintain detailed records, paper work will increase and man power cost will go up.</p>
<p>Thanks to the global economic recovery, exports from India are booming and one industry which has greatly benefited from the demand upturn is readymade garments. <br /><br />Being the second largest job provider, the garments industry now employs nearly 70 lakh people in India. Besides, the rise in exports is also good news for the economy. <br /><br />Helped by the rising demand in the US, India’s apparel exports have increased by a whopping 24 per cent in February 2011 over the same month, the previous year to Rs 5,284 crore after registering an impressive rise of 18 per cent in January 2011. Though monthly exports of garments in 2010-11 were below the previous year’s levels in the intial months, the situation turned for the better from November 2010. In the first 10 months (April-January) of the last financial year (2010-11), the total garment exports stood at Rs 39,787 crore, against Rs 41,771 crore, the previous year.<br /><br />In fact, encouraged by the impressive growth, Union Textiles Secretary Rita Menon recently said that the target for textile exports has been raised to around $30 billion for the current financial year against $25 billion achieved in the previous year. “As the demand is on the rise in Western markets, the government has raised the target,” she said. <br /><br />Big player<br /><br />Bulk of India’s exports of apparels go to the US, Canada and the European Union.<br /><br />The government thinks India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5 per cent to 8 per cent and reach $80 billion by 2020. India has the highest number of looms – 1.8 million shuttle looms (at 45 per cent of global capacity) and 2,00,000 shuttle-less looms (at 3 per cent of global capacity).<br /><br /> We also have 3.9 million hand looms (at 85 per cent of global capacity) and the second highest number of spindles at 23 per cent of global capacity.<br /><br />Exporters are enjoying good demand and the industry players are booked with orders through June and July 2011, which is exceptionally good for the Industry. “There is a good demand for our exports in the US. There is an improvement in the European market as well,” said Apparel Export Promotion Council (AEPC) Chairman Premal Udani. The US accounts for about 40 per cent of India’s total garment exports. Exports started growing in August 2010 after witnessing deceleration in the initial months of the current fiscal.<br /><br />Udani said Indian exports have become competitive, thanks partly to the government’s restrictions on exports of cotton and cotton yarn which lowered the raw material prices.<br /><br />Texport Syndicate India Limited CEO & Director Avinash Misar is also very bullish on the future. He said that rising cost of labour in China and marginal price difference in fabric prices in India against China, are helping India. Chinese apparel industry is also plagued with strikes and production delays. “If India can grab 10 per cent of their business, Indian apparel exports will double to $20 billion in coming years,” he added.<br /><br />Growth sustainable<br /><br />Can India sustain the growth? Since costs are rising in China, the medium to long term business will move from there to other countries which can better or match China’s cost and delivery capabilities. It is also true that without any compelling advantage, customers will reduce their dependence on China for their bulk sourcing. Since buyers are looking at alternative markets for sourcing, India has greater chance because our country is democratic and economically and socially stable. <br /><br />But the question is can India cater to much larger demand for garments? With focus on better productivity and building capability to deliver core/bulk quantity, India is certainly becoming preferable sourcing destination. Besides, the large garment industry is also getting more organised for higher demand. <br /><br />Challenges galore<br /><br />To be able to grab the opportunity, the garment industry here, however, will have to stitch together many of its shortcomings. <br /><br />Different bodies like Cotton Corporation, Indian Textiles and AEPC should sit together and formulate the right strategy rather than each pulling in different directions. The government should formulate a structured approach as garments is a complex supply-chain industry.<br /><br />Manufacturing garments is a labour intensive process as a single unit can employ as much as 50,000 people. In an inflationary situation the country is going through, there is a constant and justified demand for raising wages for the workers. But the industry cannot afford this if it is to remain globally competitive. Further, low availability of skilled manpower is another great challenge. “Worldwide and even in Asian manufacturing destinations like Vietnam, Sri Lanka, China and Thailand, manufacturing takes place in villages where cheap labour is available in plenty. Only in India the industry got concentrated in cities like Mumbai, Bangalore, Ludhiana and so on. So the only way for the future is to go to the villages,” said Shahi Exports Private Limited Director Subhash Tiwari.<br /><br />International competition<br /><br />Other countries are not sitting idle either. According to Sangam India Limited Executive Director V K Sodani, Global giants such as Wal-Mart, VF Corporation, GAP and H&M have begun flocking India to source fabric as China, the largest supplier, is slowly retreating from denim production due to cotton crunch. “India has a golden opportunity to grab a share in the world denim market. This is because the Chinese government has reduced cotton acreage. Instead of being a mass supplier, China is trying to be a value supplier,” Sodani said. <br /><br />The opportunity is huge as China makes 3 billion metres of denim a year, miles ahead of India’s 650 million metres output. The biggest hit we take is on the productivity when compared to China and Bangladesh. Average labour productivity of India is around 45 per cent, whereas productivity in other countries is at 65-70 per cent. This is actually a double hit our cost is high and productivity is low.<br /><br />India has a better and longer history of textiles compared to any other country but still our roots are not known in global business. Since garments exports do not have large profit margins, investments from private entrepreneurs are low and this is why this industry has not grown much in India compared to many countries.<br /><br />Can government help?<br /><br />Tiwari urged the government: “If the government wants large employment providers to move towards smaller towns, the best thing is to structure minimum wages as it would motivate us, as there is negligible difference between the cities and towns.” The recent increase in cotton yarn and fabric prices has also affected exports to a considerable extent. Instead of exporting cotton, the government should facilitate making yarn and garments in India. “It should export only the finished goods, which will increase the exports threefold and will provide employment to a lot of people,” he said. <br /><br />Sodani emphasis that India should focus on Free Trade Agreement (FTA) as apparel industry will gain by enlarging bi-lateral trade and bringing stability in the region. Asian region is developing and is becoming a developed force for economic growth because of cheap labour and big local market due to large domestic consumption. <br /><br />It is time that the government increased the duty draw back for the industry to give its best, JJ Exporters Limited General Manager Nirmal Kumar Sharma said. <br /><br />The industry pointed out that the budget 2011 was extremely disappointing with slapping of excise duty on branded garments. Such a labour oriented industry which provides livelihood to millions of people deserves real special efforts by the government. <br /><br />So the government must revoke its excise duty, the industry urged. <br /><br />There is no reason for an essential item like clothing to be charged a high rate of duty. The industry is already highly fragmented because the benefits bestowed on small scale units push manufacturers to create many small units rather than large units to derive better economy of scale. <br /><br />Earlier, the rate of excise was at 4 per cent and the levy was optional for garment makers who wanted to get refund under the Centvat scheme. Since most units did not register themselves to claim Centvat refund, the duty was virtually zero. Now all branded garment makers will have to pay 10 per cent duty on the 60 per cent of the MRP. <br /><br />Clothing Manufacturers Association of India Regional Chairman and Chief Mentor of Gokaldas Exports Limited Rajendra J Hinduja said that for garment exporters, the new duty will create problem because even for exports, which are exempted from excise duty, all units will have to maintain detailed records, paper work will increase and man power cost will go up.</p>
