Improving productivity could help make India more competitive internationally

Improving productivity could help make India more competitive internationally

India's hopes of capturing more business within the international textile and clothing market lie in expanding its man-made fibre (MMF) production – combined with innovative product design, improved labour laws, quick delivery systems and drastically improved logistics, experts say.

Together, these measures could help Indian textile and clothing producers become a more important sourcing hub for the industry worldwide, according to speakers at the three-day Textiles India 2017 event in Gujarat last week.

The conference was staged as India introduced its long-awaited Goods and Services Tax (GST) on 1 July, and government officials said the industry should take advantage of cost savings from this fiscal simplification to invest in upgrading skills and machinery.

Data circulated at the event by the India Brand Equity Foundation (IBEF), a government agency promoting Indian-made products, showed India's textile and clothing sector is the second largest employer in the country after agriculture, employing more than 60m people directly or indirectly. It contributes approximately 5% to India's gross domestic product (GDP), and 14% of overall industrial production.

Sourcing hub

Speaking at an event assessing India's role as a sourcing hub and investment destination, Christian Schindler, director general of the International Textile Manufacturers Federation (ITMF), said that although India was not as cost-effective a market as probably Indonesia or Vietnam, developing better productivity could overcome that shortcoming by making India more competitive internationally.

Investing in new machines and in the education of the labour force is the key for the future success of the textile value chain in India

His advice to the Indian textile industry: "Investing in new machines and in the education of the labour force is the key for the future success of the textile value chain in India."

Officials at the event talking to just-style stressed how the Indian government is certainly keen to assist. In January it released a memorandum of understanding (MoU) flagging US$1.3bn worth of public spending on policies such as developing textile industrial parks, textile processing, new machinery, and building niches such as carpet-making.

In the 2017-18 financial year, the government has promised a major spending package to boost the powerloom sector, which will include social welfare schemes, developing clusters of producers, upgrading obsolete looms, widening insurance coverage, new tax benefits and marketing support.

Also, while India is the largest producer of cotton in the world and Indian textiles comprise 65% cotton and 35% MMF – compared to the world norm of 30% and 70% respectively – many of the more than 200 CEOs who attended the three-day event felt India's textile sector needed to boost MMF production to move ahead.

Sunil Arora, CEO of Impulse Buying House, warned if India does not move fast enough on MMF it could miss grabbing global market share in the long term. "Indian textile exports remained stagnant at US$17bn in the last three years. Only MMF exports have been on the rise."

Narain Aggarwal, chairman of the Synthetic & Rayon Textiles Export Promotion Council, told just-style: "There is a limit to the growth of cotton. At best, it can grow by 5% per annum. If the textile sector has to rise from US$110bn to US$300bn, as proposed by the Prime Minister Narendra Modi, that growth can only come from the MMF sector."

Coordination boost

Textiles India 2017 should help. It was organised by Confederation of Indian Industry (CII) with support from India's ministry of textiles, and staged at the Gujurat capital Gandhinagar.

The new Indian textiles minister Smriti Irani said the idea behind the expo was to bring together executives from allied ministries such as commerce, skill development, textile, agriculture and industry to boost coordination in improving India's textile sector.

The good thing that emerged from our discussions is that man-made fibre (MMF) is not at war with Indian cotton

One outcome of the conference has been the creation of a joint working group created between the textile, agriculture and chemical and fertiliser ministries, she said, adding: "The good thing that emerged from our discussions is that MMF is not at war with Indian cotton."

This truce has been prompted by a realisation of the potential of international markets for Indian textiles, especially with China's growth slowing and India's domestic market expanding.

According to a study by Wazir Advisors and PCI Xylenes & Polyester, the Indian textile and clothing industry has the potential to reach US$500bn in annual sales by 2025. Domestic sales could rise to US$315bn from US$68bn today, and exports to US$185bn from approximately US$41bn.

Skilled workforce

Upskilling will be of critical importance. The Indian government's Skill India Mission programme has been designed to create a skilled workforce that can be employed in the textile sector, said Rajeev Pratap Rudy, India's skill development and entrepreneurship minister.

Richard McCallum, managing director of the UK India Business Council, said a huge opportunity existed between India and the UK to collaborate in skill upgradation in high value supply chains.

Quoting a British Council report that said India would need 60m skilled workers by 2020, he said the British government was committed to investing GBP30m in training Indian workers in new textile skills by 2020. India will need 60,000 textile designers by 2020, it is estimated.

As for niches, the unorganised handloom and handicrafts sector has potential significant value, notably in scoring export sales, said Nirmala Sitharaman, India's minister of state for commerce and industry. She made a strong plea at the conference for developing sectors such as handmade carpets, where India has rich traditions and skill.

The chairman of textile major Raymond Ltd, Gautam Singhania, explained how his company has partnered with the government's Khadi and Village Industries Commission (KVIC) to sell Khadi-marked readymade hand-spun garments and fabric in KVIC and Raymond outlets across India.

Also, the Aditya Birla Group chairman Kumar Mangalam Birla spoke about his textile and fibre group's engagement with the handloom sector to provide design and innovation to make this traditional sector more vibrant.