Investment Opportunity in Textiles & Garments

Current Status and Size of the Market

• Textiles & Garments constitutes about 5% of the GDP in India and the current value of the industry is $36 billion
• India’s share of the world trade in textiles is currently only 3.5% compared to China's 20% share
• Indian textile exports grew by 14% in 2004-05 over 2003-04; growth of over 20% in CY 2005
• India is amongst the largest producers of:
• Cotton (medium staple) – 16.75 million bales p.a.
• Yarn - 4,170 million kgs. p.a.; about 25% share of world trade in cotton yarn
  Fabrics - 4,283 million sq.mts. p.a.
• About 35 million people in India are directly employed in textiles & garments sector and it is the second
• largest employer after agriculture.

Government of India Policy
100% FDI is allowed through the automatic route

Major players and presence in value chain




Structure of Indian Textiles & Garments Industry

• The Indian textile industry is dominated by only a few large (organized)and numerous small and medium (unorganized) companies
• Most of the small and medium companies don't have global presence but are cost-competitive for the advantages of ready availability of raw material and low-cost manpower
• Cotton and synthetic fiber is available in large quantities
• Many international brands, such as GAP, Wal-Mart, Tommy Hilfiger, Benetton, G Star, Levi’s and Marks & Spencer, are using India as a sourcing hub

Potential & Opportunities

• The domestic and the export market are expected to grow at a very high rate
• Forecasts say the industry is expected to reach $83 billion in the coming five years
• The domestic market growth is driven by a larger consuming class and increasing per capita consumption (currently only 3 kgs. of fibre per capita: 1/3rd of world average)
• India is hoping to become the second largest exporter of apparel among LCCs by 2010, next only to China
• After the removal of international quota, India will convert its cost advantages into a larger share of the global market
• Opportunity to also exploit India’s large and growing consumer market with increasing spending power

India's cost advantages of manufacturing textiles and garments derive from:

• Abundant supply of inputs at competitive prices
• Low cost labor with a range of skill levels – from unskilled labor to fashion design

Special Economic Zones will build on these advantages by:

• Absence of domestic taxes or import duties
• 5 year income tax holiday followed by income taxes at 50% of the normal rate for as long as 10 years
• Reduced transaction costs
• Better infrastructure
• 25 integrated textile parks, planed by the Ministry of Textiles, are coming up soon
• There are over $30 billion worth investment opportunities for capacity expansion and modernization
• Recently, Carrera Jeans has announced its Jeans manufacturing plant in India with an investment of over $110 million