INDIAN GARMENT INDUSTRY

Indian Garment Industry INDIAN GARMENT INDUSTRY Made by: Puneet Khurana Manika Pahwa Arushi Bansal Rachit Dhingra Akanksha Sharma INDIAN GARMENT INDUSTRY 2 ACKNOWLEDGEMENT The fulfillment of any research project work is in consequence of integrated effort of a number of people. This project report has been possible only through the guidance and help of many people. We hereby take an opportunity to express our sincere thanks to all those for their help and guidance. We would like to express our genuine gratitude to Mr Rahul Jain for his valuable guidance in research and analysis through out the project. With his unfaltering support and direction, we have been able to complete this project and learn a lot. The two log submissions during the project period really helped us in identifying and rectifying the mistakes and shortcomings in the project. We would finally thank all those friends who helped us in the completion of this project. INDIAN GARMENT INDUSTRY 3 TABLE OF CONTENTS Executive Summary Objective 1. Indian Garment Industry • History • Growth of Industry 2. Major Segments • Men • Women • Kids 3. Types of Merchandise and their Demand 4. Supply Chain in Apparel Sector 5. Key Players • Brief profile of key players • Differentiation 6. Key Issues in Indian Garment Sector 7. Exports in Garment Sector • Reasons for India’s recent sluggish export performance 8. Analysis of Decade Performance 9. USA and EU Dominancy • Zero-Zero Benefit 10. Retail Scenario 11. Indian Apparel Sector Trends • Salient Feature of India Apparel Sector • Production in Apparel Sector • Recent Trends INDIAN GARMENT INDUSTRY 4 12. Technology and Indian garment Industry • Role of Technology • Types of CAD Systems • Apparel Industry and Computers 13. Budgeting implications • Industry Wish List • Sops in Budget 14. Monetary Policy 15. Overview of Fashion Industry Advertising 16. SWOT Analysis 17. Recommendations 18. Conclusion References Annexure INDIAN GARMENT INDUSTRY 5 EXECUTIVE SUMMARY Fashion is serious business, everywhere. Admittedly, India was a latecomer in the scene, but the pace now is scintillating. This is testified through the escalating figures of the garment market as also by the growing tally of fashion brands and retailers who have occupied substantial share of the country’s retail space. Truly, the clock cannot be turned back now. Over the past year, the garment industry has been building up on its capacities at various levels, expanding its product base, incorporating innovative technology, and engineering newer avenues of business. This sector, being one of the largest industrial sectors of the country, is a major propellant of the economy’s growth. Inherent issues and challenges dominate the industry. With the changing dynamics of doing business in a rapidly-changing global economic scenario, the sector needs to identify scopes for potential business ideas and overcome challenges by converting them into fresh opportunities. The project aim is to understand how various movements in the economy affect the garment industry. An in-depth analysis for implications of various government policies on garment industry has also been done. The project work also highlights how important is the garment industry to the growth of our economy. The study also gives insights about the demographics and psychographics of Indian consumers, the key players in the industry and recent trends in the industry. INDIAN GARMENT INDUSTRY 6 OBJECTIVES The objectives of the project work are: ! To understand the impact of various government policies on Garment industry. ! To analyze various opportunities and threats confronted to Garment industry. ! To understand the demographics and psychographics of Indian consumers. ! To understand the reasons for India’s recent sluggish performance in exports for textiles & garments. ! To understand the entire process of garment manufacturing and budgeting implications at each stage of manufacturing process. ! To study the trends in the apparel industry (Retail, Exports & Technology). INDIAN GARMENT INDUSTRY 7 INDIAN GARMENT INDUSTRY The apparel and industry occupies a unique and important place in India. It is one of the earliest industries to come into existence in the country. The apparel industry caters to one of the most basic requirements of people and holds importance; maintaining the prolonged growth for improved quality of life. The sector has a unique position as a self-reliant industry, from the production of raw materials to the delivery of end products, with considerable value-addition at every stage of processing. Over the years, the sector has proved to be a major contributor to the nations' economy. Its immense potential for generation of employment opportunities in the industrial, agricultural, organized and decentralized sectors & rural and urban areas, especially for women and the disadvantaged is noteworthy. History The history of apparel in India dates back to the use of mordant dyes and printing blocks around 3000 BC. The foundations of the India's textile trade with other countries started as early as the second century BC. A hoard of block printed and resist-dyed fabrics, primarily of Gujarati origin, discovered in the tombs of Fostat, Egypt, are the proof of large scale Indian export of cotton textiles to the Egypt in medieval periods. During the 13th century, Indian silk was used as barter for spices from the western countries. Towards the end of the 17th century, the British East India Company INDIAN GARMENT INDUSTRY 8 had begun exports of Indian silks and several other cotton fabrics to other economies. These included the famous fine Muslin cloth of Bengal, Orissa and Bihar. Painted and printed cottons or chintz was widely practiced between India, Java, China and the Philippines, long before the arrival of the Europeans. Growth of Indian Garment Industry The industry has already given ample hint of ingenuity, as is evident from the revival of consumer enthusiasm in the seemingly stagnant menswear segment, besides remarkable growth in categories like sports wear, casual wear and party wear. The apparel market has grown 15.5% to INR 1,224 billion Apparel Market Growth Rate 4.2 4.7 5.9 13.1 13.6 15.5 0 5 10 15 20 25 2003>2002 2005>2004 2007>2006 Year % Annual growth rate Volume Value Figure 1 1 2 . 1 Images Yearbook 2008 2 Images Yearbook 2008 INDIAN GARMENT INDUSTRY 9 Indian Apparel Market Growth (Volume) 4,422 4,610 4,808 5,034 5,332 5,644 5,955 6,270 6,580 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2002 2003 2004 2005 2006 2007 2008 ex 2009 ex 2010 ex Year Million Units Volume Figure 2 3 The Indian apparel industry (including garment retail, fashion designing and accessories trade) is booming like never before. The rapid increase in job opportunities and expanding earning capabilities has resulted in the inculcation of a brand new mindset amongst Indian consumers. Spending on brands is no longer an improbability, with shoppers willing to pay for quality and premium products. The apparel industry has benefited immensely from these new market trends. 3 Images Yearbook 2008 INDIAN GARMENT INDUSTRY 10 The country’s organized retail is booming because of increasing private incomes and changing lifestyles and consumption pattern of consumers is having a positive effect on the apparel industry. There has been a rapid increase in the market size of ready-to-wear clothing and lifestyle apparel brands. Indian Apparel Market Growth (Value) 613 693 777 883 1,060 1,224 1,390 1,555 1,715 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2002 2003 2004 2005 2006 2007 2008 ex 2009 ex 2010 ex Ye ar INR Billion Value Figure 3 4 The clothing and apparel segment is the largest organized retail category, constituting Rs 21,400 crore of the country’s Rs 55,000 crore organized retail sector in 2006.only 19% of this segment is organized, with a strong potential for still further retail penetration. The high level of branding exercises undertaken by 4 Images Yearbook 2008 [...]... total value of production in the garment sector is around Rs.1,050–1,100 billion of which about 81 per cent comes from the domestic market The value of Indian garments (e.g saree, dhoti, salwar kurta, etc.) is around Rs.200–250 billion About 40 per cent of fabric for garment production is imported – a figure that is expected to rise in coming years 20 INDIAN GARMENT INDUSTRY Cotton (Farms) Composite... reservation) and lack of coordination between industry and trade bodies Existence of large number of intermediaries adds to the cost but also lengthen the lead times The countries who have significantly consolidated their supply chain are globally competitive – Korea, China, Mexico, Turkey Indian Garment Industry 35 EXPORTS IN GARMENTS SECTOR READYMADE GARMENTS Rank in India's Exports Destination of... preference, fashion retail can only continue to grow in direct proportion to the rising incomes and spending powers of Indian consumers With about 65% of these consumers below 35 years of age, apparel retail can only reign supreme in the marketplace 11 INDIAN GARMENT INDUSTRY MAJOR SEGMENTS Apparel industry has been broadly classified into three segments: 1 Men 2 Women 3 Kids Market Share of Major Apparel Segments... Cone Hank Stand-Alone Weaving (mid-size) Power looms (small) Garments & Accessories Distribution Channel (Export & Domestic Markets) Cloth Handlooms Spinning Grey Polymers (Petrochemic al Plants) Man-Made: Filament Extrusion Process Knitting Other Textile Products 21 Indian Garment Industry The weaving and knits sector lies at the heart of the industry In 2004-05, of the total production from the weaving... processing and have an average Indian Garment Industry 23 scale of about 20,000 m of cloth daily About 82.5 per cent or 10,397 units are hand processors who dye cloth or yarn manually and dry in open sunshine Of the remaining (and these use automated and semi-automated equipment), 2076 are independent process houses Cotton remains the most significant raw material for the Indian textile industry In 2003-04,... apparel business of Aditya Birla Nuvo dominates the premium and popular segments of the Indian lifestyle market with its companies, Madura Garments Lifestyle & Retail and Peter England Fashions & Retail Aditya Birla Nuvo Brands: • • • • • Esprit Peter England Allen Solley Van Heusen Louis Philippe Indian Garment Industry 27 Raymond A 100% subsidiary of Raymond Limited, Raymond Apparel Ltd (RAL) ranks... Different quality in different brands High Quality Medium Quality Loyalty Program For Some Brands No No Indian Garment Industry High End Print, electronic, hoardings, In store Different quality in different brands For Some Brands Print, electronic, hoardings, In store High Quality Yes 32 KEY ISSUES IN INDIAN GARMENT SECTOR Post-MFA Scenario The Multi-Fiber Agreement (MFA) had been forced in India since 1962,... this segment, Indian Apparel and Textiles companies face threat from low-cost Chinese Companies while negotiating with tough global buyers Indian Garment Industry 34 It has also been observed that the textile and apparel sector witnessed more investment in existing technology than on new technology Although nanotechnology has helped in developing manmade fibres (and filament yarn), the industry still... retailers It is estimated that there exist 65,000 garment units in the organized sector, of which about 88 per cent are for woven cloth while the remaining are for knits However, only 30–40 units are large in size (as a result of long years of reservation of non-exporting garment units for the small scale sectors – a regulation that was 19 INDIAN GARMENT INDUSTRY removed recently) While these firms are... value, there was a rather different tale to unfold With an appreciation in rupee value, the apparel and textile export industry now needs more introspection to reduce the extent to the blow Export agreements, which were conducted in US dollars, faced the most severe blows Indian Garment Industry 33 Though India enjoys the advantage of a host of low costs in textile and apparel manufacturing, subsidies . completion of this project. INDIAN GARMENT INDUSTRY 3 TABLE OF CONTENTS Executive Summary Objective 1. Indian Garment Industry • History • Growth of Industry 2. Major Segments. 11. Indian Apparel Sector Trends • Salient Feature of India Apparel Sector • Production in Apparel Sector • Recent Trends INDIAN GARMENT INDUSTRY 4 12. Technology and Indian garment Industry. the apparel industry (Retail, Exports & Technology). INDIAN GARMENT INDUSTRY 7 INDIAN GARMENT INDUSTRY The apparel and industry occupies a unique and important place in India. It