Perspective on Indian Textile Industry with reference to Indian Cotton

1
Perspective on Indian Textile Industry with
reference to Indian Cotton

• I. J. Dhuria

2
Indian Textile Industry An overview

• Indian textile industry has presence in complete
  textile value chain, investment of about 45
  billion dollar in last decade.
• Indian Textile Industry has largest direct
  industrial employment of about 33 million.
• India has more than 3300 spinning mills which
  comprises of about 2000 large spinning and more
  than 1300 small spinning mills having installed
  capacity of 48 mn spindles, which is about 20 of
  world installed capacity.
• In addition, there are about 800 thousand rotors
• The country has 2.2 mn powerlooms and about
  50,000 shuttle less looms
• A large number of knitting facility is developed
  in clusters like Tripur, Ludhiana etc.
• India produces 4700 mn kg spun yarn and about 62
  billion sqm of fabric
• Export oriented industry (About 40 produce
  exported).
• India export was US34 bn textile and clothing
  products(2011-12).
• Largest exporter of Cotton yarn in the world.
• Growing Export of High quality Fabrics.
• Leading Home textile exporter in the World.

3
Indian Textile Industry An overview

• In India, cotton is livelihood for an estimated
  60 million Indians (including 6 million farmers).
• Cotton crop provide 65 of fiber used in textile
  industry.
• It supplies a million ton of cooking oil.
• It supplies a million ton of animal feed.
• It contributes 40 million tons of bio-mass in
  form of cotton plant stalk.
• India contributes 1/3rd to global cotton acreage
  but 1/5th to global cotton production.

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World textile fiber consumption trends World textile fiber consumption trends World textile fiber consumption trends World textile fiber consumption trends World textile fiber consumption trends World textile fiber consumption trends World textile fiber consumption trends World textile fiber consumption trends World textile fiber consumption trends World textile fiber consumption trends World textile fiber consumption trends
  (Million Tones ) (Million Tones ) (Million Tones ) (Million Tones ) (Million Tones ) (Million Tones ) (Million Tones ) (Million Tones ) (Million Tones ) (Million Tones )
                     
World textile fibre consumption trends World textile fibre consumption trends World textile fibre consumption trends World textile fibre consumption trends World textile fibre consumption trends World textile fibre consumption trends World textile fibre consumption trends World textile fibre consumption trends World textile fibre consumption trends    
Natural Fibre 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011
Raw cotton 19.41 18.56 19.84 24.95 26.42 26.50 23.52 24.61 24.51 23.38
Wool etc. 2.05 1.60 1.43 1.31 1.32 1.30 1.26 1.23 1.20 1.10
SUB-TOTAL 21.46 20.16 21.27 26.26 27.74 27.80 24.78 25.84 25.71 24.47
Man made fibre                    
Viscose 1.87 1.79 2.23 2.80 2.97 3.22 2.97 3.02 4.04 4.28
Polyester Staple fibre 4.70 5.50 8.10 11.00 11.50 13.34 12.10 12.46 13.10 13.80
Acrylic staple fibre 2.35 2.49 2.60 2.60 2.50 2.40 1.90 1.86 2.00 2.03
Polymide-nylon staple fibre 0.73 0.60 0.50 0.40 0.40 0.30 0.30 0.28 0.28 0.28
PP     1.12 0.95 0.75 0.70 1.02 1.01 1.01 1.01
SUB-TOTAL     14.54 17.75 18.12 19.96 18.29 18.63 20.43 21.40
Man made filament yarn                    
Viscose 0.79 0.68 0.53 0.46 0.45 0.45 0.37 0.35 0.36 0.40
Polyester 3.98 6.44 10.70 15.30 16.00 19.70 19 19.30 23.00 25.00
Polypropylene     1.68 2.05 2.25 2.24 1.57 1.55 1.55 1.57
Nylon 3.01 3.14 3.60 3.60 3.70 3.30 3 3.33 3.80 3.70
Sub-total 7.78 11.56 16.51 21.40 22.40 25.69 23.94 24.53 28.71 30.67
MMFMan made filament yarn 19.38 23.59 31.06 39.15 40.51 45.65 42.22 43.16 44.71 52.07
Grand Total 40.84 43.76 52.33 65.42 68.25 73.45 67.00 69.00 70.90 76.54
Source The Fiber Year 2012
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CHINA FIBER CONSUMPTION TREND CHINA FIBER CONSUMPTION TREND CHINA FIBER CONSUMPTION TREND CHINA FIBER CONSUMPTION TREND CHINA FIBER CONSUMPTION TREND CHINA FIBER CONSUMPTION TREND CHINA FIBER CONSUMPTION TREND CHINA FIBER CONSUMPTION TREND CHINA FIBER CONSUMPTION TREND CHINA FIBER CONSUMPTION TREND
  (Million tons) (Million tons) (Million tons) (Million tons) (Million tons) (Million tons) (Million tons) (Million tons) (Million tons)
Natural Fibre 1990 2000 2005 2006 2007 2008 2009 2010 2011
Raw cotton 4.41 5.10 8.74 10.60 10.90 9.27 10.19 9.58 8.64
Wool etc. 0.17 0.38 0.34 0.35 0.38 0.41 0.50 0.60 0.60
SUB-TOTAL 4.58 5.48 9.09 10.95 11.28 9.68 10.69 10.18 9.24
Man made fiber                  
Viscose 0.17 0.51 0.92 1.08 1.14 1.17 1.31 1.62 1.90
PSF 0.88 2.85 5.70 6.21 6.78 6.89 7.64 7.98 8.82
ASF 0.33 0.83 1.19 1.13 1.07 0.84 0.86 0.85 0.70
Polymide-nylon 0.02 0.04 0.06 0.07 0.07 0.08 0.10 0.12 0.12
PP 0.09 0.15 0.25 0.28 0.29 0.32 0.32 0.34 0.34
SUB-TOTAL 1.48 4.37 8.13 8.76 9.35 9.30 10.23 10.91 11.88
Man made filament yarn                  
Viscose 0.04 0.12 0.17 0.16 0.16 0.16 0.12 0.15 0.20
Polyester 0.63 3.52 8.79 9.92 11.83 12.01 13.70 16.06 19.15
Polypropylene 0.24 0.67 0.75 0.72 0.71 0.81 0.85 0.85 0.85
Nylon 0.17 0.51 0.93 1.03 1.08 1.02 1.33 1.57 1.52
Spandex   0.00 0.13 0.15 0.18 0.16 0.19 0.27 0.28
Sub-total 1.08 4.83 10.77 11.98 13.95 14.17 16.19 18.90 22.00
MMFMan made filament yarn 2.56 9.20 18.90 20.74 23.30 23.47 26.42 29.81 33.88
Grand Total 7.14 14.68 27.99 31.70 34.59 33.14 37.11 39.99 43.12
Share of Natural Fibre 64.15 37.31 32.47 34.56 32.62 29.19 28.81 25.46 21.42
Share of Man made Fibre 20.69 29.80 29.04 27.64 27.03 28.05 27.57 27.28 27.56
Share of Man made filament Yarn 15.16 32.89 38.50 37.80 40.34 42.75 43.62 47.26 51.02
Share of MMF Man made filament yarn 35.85 62.69 67.53 65.44 67.38 70.81 71.19 74.54 78.58
Source The Fiber Year 2012, CCFI
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India Fibre Consumption Trends India Fibre Consumption Trends India Fibre Consumption Trends India Fibre Consumption Trends India Fibre Consumption Trends India Fibre Consumption Trends India Fibre Consumption Trends India Fibre Consumption Trends India Fibre Consumption Trends India Fibre Consumption Trends
  (Million tonnes ) (Million tonnes ) (Million tonnes ) (Million tonnes ) (Million tonnes ) (Million tonnes ) (Million tonnes ) (Million tonnes ) (Million tonnes )
  1997 2000 2005 2006 2007 2008 2009 2010 2011
Raw cotton 2.55 2.721 3.222 3.908 4.05 3.872 4.3 4.509 4.54
Wool etc.   0.142 0.156 0.158 0.15 0.16 0.16 0.16 0.16
SUB-TOTAL 2.55 2.863 3.378 4.066 4.2 4.032 4.46 4.669 4.7
Man made fiber                  
Viscose 0.19 0.221 0.228 0.237 0.25 0.22 0.27 0.26 0.25
PSF 0.45 0.56 0.61 0.68 0.74 0.65 0.74 0.78 0.78
ASF 0.11 0.10 0.11 0.11 0.10 0.09 0.09 0.1 0.1
PP 0.002 0.002 0.003 0.003 0.0027 0.003 0.003 0.003 0.003
SUB-TOTAL 0.752 0.889 0.954 1.022 1.087 0.966 1.103 1.143 1.133
Man made filament yarn                  
Viscose 0.057 0.047 0.047 0.042 0.042 0.045 0.051 0.053 0.0452
Polyester 0.66 0.79 1.07 1.16 1.28 1.34 1.34 1.26 1.1
Polypropylene 0.014 0.017 0.018 0.015 0.012 0.016 0.013 0.015 0.015
Nylon 0.03 0.025 0.042 0.038 0.03 0.03 0.03 0.03 0.03
Sub-total 0.761 0.878 1.18 1.256 1.363 1.431 1.434 1.358 1.1902
MMFMan made filament yarn 1.51 1.767 2.134 2.278 2.450 2.397 2.537 2.501 2.323
Grand Total 4.063 4.630 5.512 6.344 6.650 6.429 6.997 7.17 7.0232
age share of natural cotton 62.8 61.836 61.3 64.1 63.2 62.7 63.7 65.1 66.9
age share of man made yarn 18.7 19 21.4 19.8 20.5 15.4 15.4 15.9 16.1
age share of man made filament yarn 37.2 38.2 38.7 35.9 36.8 21.6 21.6 18.9 16.9
age share of MMFman made filament yarn 37.2 38.2 38.7 35.9 36.8 37.3 36.3 34.9 33.1
Source The Fiber Year 2012, Textile Commissioner
of India
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Importance of cotton to world textiles A
reality check

• With growing application of textiles in various
  usages , the fiber consumption has been
  witnessing increased use of man made fibers
  including filaments yarns
• However, the study of fiber consumption,
  excluding filament yarns, over the years shows
  that cotton still occupies a prominent place
• If fibers used in non wovens and non-spun usages
  are also excluded, the dominance of cotton fiber
  in spinning system become evident
• The above facts indicate that despite strides
  made by man made fibers, the dominance of
  cotton fiber used in spinning remains unchanged

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Even the overall fiber consumption excluding
filament yarns reflects the importance of cotton

• .

The above mentioned consumption of fiber includes
those fibers also which are used in non-woven and
technical textiles
Source The Fiber year GmbH, 2011 and
projections by economic analysis department,
Vardhman Group.
9
If we take the consumption of fiber in the
production of spun yarn, following picture
emerges from the year 2000 onwards..

• .

Source The Fiber year GmbH, 2011 and
projections by economic analysis department,
Vardhman Group.
10
Higher share of cotton in total apparel imported
in USA during 2000-2011 confirms cotton dominance
in apparel segment

• .

Source Derived from trade data, Department of
Commerce, USA
11
Regional pattern of global spinning capacity
indicates regions, which will remain important
for cotton processing in future

• .

The reduction in spinning capacity in some parts
of the world indicates relocation of spinning
capacity towards Asia in addition to setting up
of additional capacity
Source ITMF
12
Within Asia , China, India and Pakistan accounts
for 72 of spinning capacity in the world
Source ITMF
13
.
Based on capacities and spun yarn production,
Asia would continue to be major cotton consuming
hub in the world

• .

Source ICAC and projections by economic
analysis deptt., Vardhman Group
14
Future impact of price support operations of
China and/India Govt.

• China
• China reserve purchase at fixed price of 123
  cents/pound
• Restrictive policy of import of cotton reflects
  its resolve to incentivize farmers
• Going by trends of increase in reserve price, we
  presume that by 2020, this will go upto 135-139
  cents/pound
• India
• Govt. has followed minimum support price for
  variety of farm products including cotton
• Between 2000-2012, the minimum support price of
  cotton has increased at a CAGR of 7
• Assuming the rate of increase is maintained in
  future, the Indian support price will reach upto
  120-125 cents/pound

15
Internationally , cotton price gradually will
converge to China reserve price

• We have seen that Asia cotton deficit will rise
  from1.56 mn tons to about 6 mn tons by 2020
• China, India and Pakistan would account for about
  70 of world cotton consumption
• India will have negligible surplus and China and
  Pakistan would be net importers of cotton
• Growth in world cotton consumption to 30 mn tons
  and limited scope for increase in world area
  under cotton crop will at best balance supply to
  demand
• In view of the tight balance in future between
  supply and demand of cotton and price support
  operations of countries having largest
  consumption of cotton, there will be a paradigm
  shift in factors/forces affecting the world
  cotton price
• Ruling prices in domestic markets of China and
  India will pull world price toward that level
• Virtually world price may show a clear tendency
  to converge to China reserve price over next few
  years

16
India Cotton will have dominant share in all
fibers consumption

• .

Source Based on Textile Commissioner office,
India and our projections by economic analysis
deptt., Vardhman Group
17
India Consumption of fiber in spun yarn
production show that cotton will remain a
dominant fiber
Source Derived from spun yarn data reported in
Textile Commissioner office, India and
projections by economic analysis deptt., Vardhman
Group
18
Indian textile industry size is expected to grow
from 91 bn in 2012 to 160 bn by 2020

• .

Source Ministry of Textiles, India and
projections by economic analysis deptt.
Vardhman Group
19
.
India The textiles exports are estimated to grow
at a higher rate than clothing
Source Textile Commissioner office and DGFT,
India and projections by economic analysis
deptt, Vardhman Group
20
Emerging clothing manufacturing hub in Asia offer
opportunities for increased textile trade

• Growing free trade agreements among Asian
  countries leading to reduction in tariff and non
  tariff barriers facilitating movement of textile
  material within Asia
• Increased participations of LDC countries powered
  with low labour cost and trade preferential
  advantages in most of the importing countries
• Bangladesh Garments exports crossing 18 bn
• Vietnam Garment exports touching 15 bn
• Cambodia Good potential for clothing exports
  
• Myanmar Attracting investors especially
  Asian for garment manufacturing
• China focusing on high value realization on per
  kg fiber processed aiming 400 bn TC exports,
  meeting its textile material requirements
  partially through imports
• India focusing on textile material production
  like yarns, fabric and home textiles. With rising
  labour cost and inflexible labour laws, India
  may not be able to compete profitably with low
  value clothing products from emerging exporting
  countries
• Therefore, in Asia , there will be considerable
  interdependence among the textiles and clothing
  producers

21
Intra-Asia trade in textiles, which is
increasing at a higher rate than world textile
trade is an indicator to growing integration of
Asian textile industry

• .

Source WTO
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AREA ,PRODUCTION YIELD - HISTORICAL TREND
(Prod In Million tones) (Area Lacs hac)
  World World World India India India
Year Area Prod Yield Area Prod Yield
1970-71 317.78 11.740 369 78.00 1.11 142
1980-81 336.67 13.831 411 78.24 1.32 169
1991-92 347.10 20.677 596 76.95 2.05 267
1992-93 322.49 17.941 556 75.43 2.38 316
1993-94 304.35 16.861 554 73.37 2.10 286
1994-95 321.14 18.762 584 78.61 2.36 300
1995-96 360.46 20.330 564 90.63 2.89 318
1996-97 340.90 19.584 574 91.66 3.02 330
1997-98 338.41 20.080 593 88.50 2.69 304
1998-99 328.82 18.691 568 92.87 2.81 302
1999-2000 319.69 19.082 597 85.50 2.65 310
2000-01 318.87 19.438 610 85.76 2.38 278
2001-02 334.09 21.473 643 87.30 2.69 308
2002-03 299.78 19.298 644 75.71 2.31 305
2003-04 321.51 20.961 652 80.00 3.04 380
2004-05 357.57 27.011 755 93.00 4.13 444
2005-06 339.60 25.64 755 88.73 4.10 462
2006-07 343.30 26.77 780 91.58 4.76 520
2007-08 333.48 26.07 782 95.55 5.22 546
2008-09 306.74 23.46 765 94.06 4.93 524
2009-10 299.42 22.17 740 103.29 5.19 502
2010-11 333.59 25.21 756 111.42 5.87 526
2011-12 360.42 27.44 761 121.78 6.00 493
2012-13 342.24 25.95 758 117.73 5.61 477
2013-14 315.77 23.20 735 109.49 5.59 511

• .

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YIELD COMPARISON OF WORLD INDIA
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Role of India in Increased World Production
(Prod In Million tones) (Area Lacs hac)
  World World World India India India
Year Area Prod Yield Area Prod Yield
2000-01 318.87 19.438 610 85.76 2.38 278
2012-13 342.24 25.95 758 117.73 5.61 477
In last 12 years, there is an increase of 7.33
in World area where increase in India is of about
37 during the same period.
In last 12 years, the world yield has increased
by about 24 where India yield has increased by
about 96 during the same period.
During this period , the world production has
gone up by about 34 where increase in India is
of about 136 during the same period.
The share of India 46 to the increased world
yield during this period
ICAC- Feb. 2013
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Indian Textile Industry Investment Perspective
2020 Continue

• In the recent Manufacturing Cost comparison study
  by ITMF of 9 countries ( Italy, Indonesia,
  China, Brazil, Egypt, Turkey, Korea, USA and
  India)India is quite better of in spinning and
  weaving of cotton textiles as compared to
  competing countries .
• India would retain its advantage of home grown
  cotton to large extent
• Indian textile industry may be biased towards
  textiles and cotton.
• India would be producing 8100 mn kg yarn by 2020.
• India will remain largest exporter of cotton
  yarn, which may grow from about 1000 mn kg at
  present to 1500 mn kg by 2020
• India will add more than 18 mn spindles .

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Indian Textile Industry Investment Perspective
2020

• Indias installed capacity would grow to 66 mn
  spindles.
• The share of woven fabric produced from
  shuttle-less looms would
• considerably grow by 2020
• India would add about 75000 shuttlesslooms by
  2020
• More investment in modern garment manufacturing
  for domestic market would take place. India would
  be more competitive in high value added products
  in export market
• Technical textiles may witness substantial growth
  in next few years.
• Indian textile industry may attract a total
  investment of USD70 bn by 2020

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Government of India has been promoting textile
industry growth in India

• Higher incentives under TUF for shuttle-less
  looms and modern process houses reflecting the
  emphasis on weaving, processing and knitting also
• Exemptions on import duty on modern textile
  machinery
• Development of SEZ and apparel parks are put on
  fast track
• For infrastructure development in apparel parks,
  government provides subsidy to the extent of 40
  of the project cost
• Special emphasis on skill development in textile
  industry-cost of skilling being reimbursed
• FDI in textile being encouraged- No
  approval/permission is required from RBI
• Many States are offering very attractive package
  of incentives to attract textile industry

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Thank You