Export Potential of RMG From India to UK

Export of Ready Made Garment to United Kingdom

INTERNATIONAL INSTITUTE OF FOREIGN TRADE & RESEARCH

Export potential of Ready Made Garment to United Kingdom

“Indo- UK Trade With Reference To Ready Made Garment Sector Submitted To Devi Ahilya University, Indore towards Partial Fulfillment of Master of Business Administration (Foreign Trade)”

Name of Supervisor: Prof. Vinni Arrora

Submitted By:Anil Shrivastava

INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

1


(Date of submission)

I.

INDEX Chapter

Contents

Pages

Certificate of Originality by Student

iii

Certificate by the Supervisor

iv

Preface

v

Acknowledgement

vi

Conceptual framework

Vii

i.

Research rationale Viii

ii. Objectives Research Methodology I.

Indian Ready Made Garments Industry.

ix 12-18

1.1 Introduction to Readymade Garments. 1.2 Overview of Indian Economy. 1.3 Indian RMG Industry (An Overview). II.

1.4 Global RMG Industry and India’s Position. Export of RMG from India.

20-32

2.1 Introduction. 2.2 Market Portfolio. 2.3 Product Portfolio. 2.4 Major Production Centers in India 2.5 Transportation and Packaging of RMG 2.6 Pricing of Indian RMG INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

2

Export of Ready Made Garment to United Kingdom 2.7 Market Characteristics and Segmentation

III.

Ready Made Garment Industry of UK

34-38

3.1 Overview of UK Economy. 3.2 Changing Structure of UK RMG Industry 3.3 UK RMG Industry (An Overview) IV.

Trade Relation between India and UK

40-47

4.1 Overall Trade Performance 4.2 Export Performance of RMG (Last 5 years) 4.3 HS Code wise Export Performance. V.

Government Support.

49-56

5.1 Indian Foreign Trade Policy regarding RMG. 5.2 Import Regulation of UK regarding Textiles 5.3 Bilateral trade Between India and UK 5.4 Govt. Polices, Promotional Scheme and Incentives. VI.

Competitive Environment.

58-60

6.1 Major Competitors. 6.2 Competitive Advantage for India. 6.3 Major Players in Indian RMG Export VII.

SWOT Analysis.

62-63

VIII.

Major Findings

65


3

Export of Ready Made Garment to United Kingdom IX. X.

Recommendations and Conclusion

67-69

References

70

iii

Certificate of Originality by the Student

I, Anil Anil Shriva Shrivasta stava va hereby hereby certi certify fy that that the projec projectt title titled d “Expor “Exportt Potent Potential ial of Ready Ready Made Made Garment to United Kingdom” has been undertaken under the supervision of Professor Vinni Arro Arrora ra,, facu facult lty y of IIFT IIFTR, R, towa toward rdss part partia iall fulf fulfil illm lment ent of Degre Degreee of Mast Master er of Busi Busine ness ss Administration.

It is further certified certified that the project project report compiled compiled by me is my own work and to the best of my knowledge, it does not contain any part of any work, which has been submitted for the award of degree in this University, or any other University/ Deemed University without proper citation.

Place: Indore Date:

(Anil Shrivastava)


4


iv

Certificate of Originality by the Supervisor

This is to certify certify that the project titled titled “Export “Export Potential Potential of Ready Made Garment to United United kingdom” is a piece of research work has been done by Anil Shrivastava under my guidance and superv supervisi ision on toward towardss parti partial al fulfil fulfillme lment nt of Degree Degree of Master Master of Busine Business ss Admini Administr strati ation. on. I recommend that the project to be submitted to Devi Ahilya University, Indore.

It is further certified that the project report compiled by him/her is his/her own work and I recommend that the project to be submitted to DAVV.

(Project Guide)

(Director)

Prof. Vinni Arrora

DR. V.K. Gautam

Date:

(External Examiner) Date


5


v Date of Submission Submission PREFACE

Working on things which are of your interest always gives pleasure.

I am very much pleased with the things going on my research project as it suited to the field which I like most. Garment sector and United Kingdom both attracted my way of approaching in completing the project.

When I chose the topic-Export of Ready Made Garment to United Kingdom, as my research project, the first thing that came in my mind was that I am working on that topic in which INDIA almost rules the world.

As being student of Foreign Trade, I felt that this is the topic where in-depth study could be possible. The Garment industry is at transition stage, where we can say it is reaching towards mature stage from growing stage. Our exports are getting increased and many emerging markets are coming up. United Kingdom along with other countries is becoming our major market. This fact attracted me to relate my research on Garment industry with United Kingdom.

At the completion stage of my project, I feel that ocean is vast entity on earth and for human beings; it’s not possible to have a complete picture within a short span of time.

Place-INDORE

ANIL SHRIVASTAVA

Dated-

M.B.A (F.T) 5y.r.s INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

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Export of Ready Made Garment to United Kingdom SEM- VIth IIFTR, INDORE (M.P.)

vi

Acknowledgement

I would like to express my sincere gratitude to our o ur Col. Dr. V.K.Gautam to give the opportunity to do research on “Export of Ready Read y Made Garment working with him was a real learning experience. I would also like to thanks Prof. Vinni Arora, my project guide for his constant support throughout my project. Discussing the project with him led to many more ideas. I would also like to thanks to Library in charge Mr. Anurag Kumar Khare to provide the Study Material regarding Garment Industry. I would also like to thanks thanks to Computer Lab In charge Mr. Devendra Singh Thakur to help on desk research. He provide some useful websites to gather the information

Thanks to you all. Without your constant guidance and support my project would not be completed.

Place:-INDORE

ANIL SHRIVASTAVA

Dated: -

M.B.A (F.T.) 5Y.R.S SEM-VIth, IIFTR, INDORE (M.P.)


7


vii

Research Rationale and Objective

Rationale One of the most important reasons of choosing export potential of Ready made garments g arments is one of the largest exporting commodities from India and brings a good amount of foreign exchange exc hange in the country and to know the various ways by which it can be exported. India can have a high competitive edge over others because we are having abundant amount of raw materials, Cotton Yarn plants, spinning and weaving mills and rich biodiversity with a strong manufacturing base. But there are so many problems which are faced by our exporter, so to know about their problems and to find out the alternatives and Governmental support to increase the exp ort of Ready made garments from the country.


8


viii

Objectives

1. To Stud Study y glob global al scenar scenario io of RMG 2. To stud study y Indi Indiaa scen scenari ario o of RMG po tential of RMG from India to UK 3. To analyze the export potential 4. To identify Strength, weakness, opportunities and threats for Indian RMG 5. To Recommendation proper production of Indian RMG 6. To analyze export potential of Indian RMG to world 7. To analyze the growth trend of Indian RMG for last 5 years


9


ix

Methodology

In this desk research the use of internet has a major role to play. The most of the research has been conducted through the data available on the various website. However many website many website are outdated but data and figures available with the sites of government organization help me overcoming this limitation


10


CHAPTER 1

INDIAN RMG INDUSTRY

1.1 INTRODUCTON TO READY MADE MADE GARMENTS. 1.2 OVERVIEW OF INDIAN INDIAN ECONOMY. 1.3 INDIAN RMG INDUSTRY (AN OVERVIEW). OVERVIEW). 1.4 GLOBAL RMG INDUSTRY AND AND INDIA’S POSITION.


11


1.1

Introduction.

Source: www.tis-gdv.de

Ready-made garments are mass-produced finished textile products of the clothing industry. They are made from many different fabrics and yarns. Their characteristics depend on the fibers used in their manufacture. Ready-made garments are divided into the following types: Outer clothing: work wear and uniform, leisure wear, sportswear (e.g. suits,

pants, pants, dresses, dresses, ladies' ladies' suits, suits, blouses, blouses, blazers, blazers, jackets, jackets, cardigans, cardigans, pullovers, coats, sports jackets, skirts, shirts shirts (short- or long-sleeved), long-sleeved), ties, jeans, shorts, T-shirts, polo shirts, sports shirts, tracksuits, bathing shorts, bathing suits, bikinis etc.) Underclothing (underwear): jersey goods, lingerie (e.g. underpants, undershirts,

briefs, socks, stockings, pantyhose etc.) Most jersey underwear consists of knitwear made from cotton or synthetic filament warp-knit goods (Dederon, nylon). Knitwear is divided into fully fashioned an d cut goods:

Fully fashioned jersey goods are produced in finished form and size with securely finished edges; they are a high-quality product, as the loops cannot run at the edges. ed ges. Cut jersey goods are cut from tubular knit piece goods and sewn together; they are a lower value product, as the loops can run at the edges and the fit of the garment is not as good as in the case of fully fashioned jersey goods as the knitted fabric may twist out of shape.

Category Categor y For Formal mal Wear ear

Range Suit Suits, s, Trou Troussers ers, Shir Shirtts, Jack Jacket etss Blaz Blazer ers, s, Neck Neckti ties es… …

Casual Wear

Shirts, Tr Trousers, Je Jeans, Te Tee Sh Shirts Sh Shorts

Kids wear

Shirts, Trousers, Jeans, Tee Shirts Shorts

Ladies Wear

Skirts, Tops, Salwar Kameez , Sarees

Under Under garmen garments ts

Vests, Briefs, T-Shirts, etc.

Knitwear Table 1.1

1.2

Indian Economy (Overview).

Source: www.ecoomywatch.com


12

Export of Ready Made Garment to United Kingdom India is the seventh largest and second most populous country in the world. A new spirit of economic freedom is now stirring in the country, bringing sweeping changes in its wake. A series of ambitious economic reforms aimed at deregulating the country and stimulating foreign investment has moved India firmly into the front ranks of the rapidly growing Asia Pacific region and unleashed the latent strengths of a complex and rapidly changing nation The economy has been growing at an average growth rate of 8.8 per cent in the last four fiscal years (2003-04 to 2006-07), with the 2006-07 growth rate of 9.6 per cent being the highest in the last 18 years. Significantly, the industrial and service sectors have been contributing a major part of this growth, suggesting the structural transformation underway in the Indian econo my. Industrial and services sectors have logged in a 10.63 and 11.18 per cent growth rate in 2006-07 respectively, against 8.02 per and 11.01 cent in 2005-06. Similarly, manufacturing grew by 8.98 per cent and 12 per cent in 2005-06 and 2006-07 and transport, storage and communication recorded a growth of 14.65 and per cent 16.64 per cent, respectively. Another significant feature of the growth process has been the consistently increasing savings and investment rate. While the gross saving rate as a proportion of GDP has increased from 23.5 per cent in 2001-02 to 34.8 per cent in 2006-07, the investment rate-reflected as the gross capital formation as a proportion of GDP-has increased from 22.8 per cent in 2001-02 to 35.9 per cent in 2006-07. The process continues in the previous fiscal year. On the back of 9.9 per cent growth in the first half of 2006-07, GDP grew by 9.1 per cent during April-September 2007. •

While overall industrial production grew by 9 per cent during April-December 2007, importantly capital goods production rose by 20.2 per cent compared to 18.6 per cent during same period in 2006.

•

Services grew by 10.5 per cent in April-September 2007, on the back of 11.6 per cent during the corresponding period in 2006-07.

•

Manufacturing grew by 9.6 per cent during April-December 2007, on the back of 12.2 per cent growth during same period in 2006-07.

•

Core infrastructure sector continued its growth rate recording 6 per cent growth in April November 2007. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

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Export of Ready Made Garment to United Kingdom •

While exports grew by 21.76 per cent during April-December 2007, imports increased by 25.97 per cent in the same period.

•

Money Supply (M3) has grown by a robust 22.8 per cent growth (year-on-year) as of December 21, 2007 compared to 19.3 per cent last year.

Per Capita Income

Along this significant acceleration in the growth rate of Indian economy, India's per capita income has increased at a rapid pace, exceeding an earlier forecast made by Goldman Sachs BRIC report which estimated India's per capita to touch US$ 800 by 2010 and US$ 1149 by 2015. Figure 1.1

Source: www.economywatch.com www.economywatch.com

Per capita income has increased from US$ 460 in 2000-01 to almost double to US$ 797 by the end of 2006-07. In 2007-08, India's per capita income is estimated to be over US$ 825.07, according to the advance estimates of the Central Statistical Organization (CSO). Further, India's per capita income is expected to increase to US$ 2000 by 2016-17 and US$ 4000 by 2025. This growth rate will, consequently, propel India into the middle-income category. 1.3

Indian RMG Industry (An Overview)

Source: www.fabre2fashion.com www.fabre2fashion.com

India is the world’s second largest producer of textiles and garments after China . It is the

world’s third largest producer of cotton—after China and the USA—and the second largest INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

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Export of Ready Made Garment to United Kingdom cotton consumer after China. The textile and garment industry in India is one of the oldest manufa manufactu cturin ring g sector sectorss in the countr country y and is curren currently tly it’s it’s larges largest. t. The texti textile le and garmen garmentt industry fulfils a pivotal role in the Indian economy. It is a major foreign exchange earner and, after agriculture, it is the largest employer with a total workforce of 35 mn. Readymade Garment (RMG) industry in India has seen resurgence in the recent times. The industry has witnessed sluggish growth in the past decade; however the scenario has changed substantially due to globalization initiatives by WTO and subsequent phasing out of quotas by United United States States (US) and European European Union (EU), the key export destination. destination. Ample opportunities opportunities are there for Indian garment manufacturer, to tap in the international market.

The Readymade Garments account for approximately 45% of the textiles exports. This item covers readymade garments of cotton, man-made fiber and other textiles material, and excludes readymade garments of silk or wool. During 2004-2005, readymade garments exports were US$ 6 billion, up by 4.1% over 2003-04. During 2005-2006, the readymade garments exports were US$ 7.75 billion, recording an increase of 28.68 % over 2004-2005. During April-October 200607, the readymade garments exports were US$ 4.45 billion, up by 3.80%, over the corresponding period of 2005-2006. India ranks among the world’s leading apparel exporters. It has an abundant domestic cotton supply, and cotton items account for about three-quarters of its apparel exports. Indeed, 13 of the 14 major clothing types exported from India to the EU are cotton products.

Structural Characteristics of RMG industry

1.

The Indian Ready made garment industry is fragmented with only a few large and

numerous small and medium companies


15

Export of Ready Made Garment to United Kingdom 2.

Cost advantages of manufacturing textiles and garments in India is derived from:

i.

Abundant supply of inputs at competitive prices

ii.

Low cost manpower with a range of skill levels from unskilled labour to fashion

design. iii.

Position as a leading cotton producer

3.

India's ability to manufacture a wide range of products in the backward supply chain has

endowed it with a very strong and diverse raw material base for manufacturing natural and artificial fibres. India also has capacity-based advantage in textile and spinning. However, the high power and interest costs impair the advantage adv antage to a great extent.

4.

Most domestic companies lack global scale but are cost-competitive due to the ready

availability of raw material and low-cost manpower.

5.

Indi Indiaa has becom becomee a sour sourci cing ng bas basee for for many many int inter ernat natio ional nal labe labels ls suc such h as GAP GAP,, WalWal-Ma Mart rt,,

Tommy Hilfiger, Benetton, G Star, Levi's and Marks & Spencer

1.4

Global RMG and India’s Position Source @ Fibre2fashion.com

The global textiles and apparel trade estimated at US$ 450 billion and expected to touch US$ 700 billion by 2010 with demand for textiles and apparels expected to grow to 25 per cent from current figures where Asia will contribute 85 per cent. The sudden growth and demand for textiles and apparels will prompt international brands and buyers will look to source low cost producing countries India's textiles and apparels industry is estimated to be worth US$49 billion where 39 per cent is accounted by the exports market. The domestic and exports markets in this sector are expected to grow at 6.5 per cent and 12 per cent CAGR respectively. The growth has continued with total


16

Export of Ready Made Garment to United Kingdom exports increasing to US$ 19.62 billion in 2006-07. Currently India has a 3.5-4 per cent share in world export of textiles and 3 per cent in clothing exports. Europe continues to be India's major export market with 22 per cent share in textiles and 43 per cent in apparel, the US is the single largest buyer of Indian textiles and apparel with 19 per cent and 32.6 per cent share respectively. Other significant countries in the export list include the UAE, Saudi Arabia, Canada, Bangladesh, China, Turkey and Japan. A recent study of the textile industry predicts growth for the sector form USD 19 billion in 2006-07 to USD 50 billion by 2012. The year 2007 proved to be an exceptional year for the textile & garment industries of some countries & tumultuous for others. On one hand countries like China & Vietnam had h ad a very excellent year, on the other hand countries like USA and India had declining figures. According to revised reports from China, enterprises in the textile industry are expected to complete a total industrial output value of 3.05 trillion Yuan, up u p 21.9 percent year on year. In 2006, the largest manufacturers and exporters of apparel were countries from the Asia-Pacific region region which which includ includes es countri countries es like like China, China, Hong Kong, Kong, Phili Philippi ppines nes,, Malays Malaysia, ia, Indone Indonesia sia,, Bangladesh, Bangladesh, Srilanka, Pakistan, Thailand and India. India. The other major apparel apparel manufactur manufacturing ing nations were USA, Italy, Germany and Mexico. While on the other hand the textile & garment industry in India had to face the contentious issue of the appreciation of the rupee. The rupee has appreciated by nearly 15 percent in the last one & half year which has severely affected the competitiveness of the textile & garment industry. Global Trade Volume and Trends

As the appare apparell manufa manufactu cturin ring g indust industry ry is more more labour labour intens intensive ive and requir requires es less less capita capitall invest investmen ment, t, its concent concentrat ration ion is shifti shifting ng more more toward towardss the develo developin ping g countri countries es and even even constituting large amount of their exports. This can be analyzed by the fact that the apparel pro produ duct ctio ion n in indu indust stri rial aliz ized ed count countri ries es decre decreas ased ed betw betwee een n 198 1980 0 and and 1996 1996,, where where as the the production increased in developing countries during the same period. Similar trend was seen in exports, the apparel exports of developing countries increased six times between 1980 and 1997, and

that

of

developed

economies

rose

by

150%.

The global apparel industry’s total revenue in 2006 was US $ 1, 252.8 billion, which was approximately 68% of the overall industry value. Asia Pacific constitutes the largest amount of INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

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Export of Ready Made Garment to United Kingdom production and trade in the apparel industry worldwide. The percentage share of different regions of the world in the total trade revenue in the year 2006 was Table 1.2

Region

% Share

Asia Pacific Europe USA Rest of the world Source @ Fibre2fashion.com

35.40% 29.40% 22.30% 12.90%

China had captured 65% of the global market share towards the end of 2006 in total apparel exports. The other major apparel exporting exp orting nations include USA, Germany, Hong Kong, Italy, Malaysia, Pakistan, Thailand and India. Some of the trade statistics are presented below: Table 1.3

Country

US $ Billion

China 8,260.921 Hong Kong 1,723.210 Italy 1,353.586 Malaysia 1,255.069 Germany 669.130 Pakistan 618.830 Thailand 597.758 USA 595.171 India 522.463 Source @ Fibre2fashion.com

CHAPTER 2 INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

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EXPORT OF RMG FROM INDIA.

2.1 Introduction. Introduction. 2.2 Market Portfolio. 2.3 Product Portfolio. 2.4 Major Production Centers in India 2.5 Transportation and Packaging of RMG 2.6 Pricing of Indian RMG .

2.7 Market Characteristics and Segmentation

2.1 Introduction Apparel exports from India have risen exponentially in the last few years, and are expected to touch the $10 billion mark by the end of the current fiscal, up from $8.4 billion in the last financ financial ial year. Accord According ing to the Apparel Apparel Export Export Promotio Promotion n Counci Council, l, the future future of appare apparell exports is bright. In the last few years, India made rapid strides. India expects apparel exports to grow at a healthy rate of 12 percent year-on-year. Next financial year, it is expected that the exports to be in excess of $10 billion. Indian apparel exporters have three years to explore INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

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Export of Ready Made Garment to United Kingdom inaccessible markets and establish their presence. During 2003-04, Indian apparel exports stood at $4.6 billion. In 2004-05, it increased to $5.8 billion. It rose to a high of $8.4 billion during 2005-06 and increases to 8.9 billion in 2006-07. Figure 2.1

Source: texmin.nic.in

After more than 4 decades of quota restrictions, the international textile trade moved into a quota free free regime regime from from Januar January, y, 2005. 2005. This This has provid provided ed an opportu opportunit nity y to the domest domestic ic textil textilee industry to expand and strengthen itself in the international markets. According to the Industry Vision, the Indian textiles and apparel industry can achieve a potential size of US$ 85 billion by 2010. In view of the growth potential of the industry, the Government is aiming at a still more ambitious target of attaining an Industry size of the order of 115 billion US Dollars by the terminal year of the Eleventh Plan. Figure 2.2


20


Source: fashionproduct.com fashionproduct.com

2.2 Market Portfolio The Ready Made Garment sector is the biggest segment in the India’s textile export basket contributing contributing over 46% of total textile exports and a little over 12% of the total export of the

Country. The exports exports of RMG have grown over the past one and the half decade at a CAGR of 13%. Currently exports accounts for 31% of the total revenues of RMG sector. In 2004-05 the total total expor exports ts market market was estim estimate ated d at USD 6.4 bn and is expect expected ed to become become USD 16 bn opportunity by 2009-10 growing with a CAGR of 18-20%.

US and EU are the key exports destination for Indian RMG Companies. Currently with an export valve of USD 2.1bn India has a share of 3% in total US apparel imports (in term of Sq. mt) and its expected to increase to 6% by 2010. The valve of total exports from India in 2009-10 would 6.8bn. The growth in apparel exports to the US market from the low-cost manufacturing countries like INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH 21

Export of Ready Made Garment to United Kingdom India under the multi-fibre agreement (MNF), were the key impediments that had hindered the growth of domestic RMG companies. During the quota regimen exports grew by a moderate CAGR of 6.3% from USD 4.6bn 4.6bn in 2000-01. 2000-01. The domestic and exports markets in this sector are expected to grow at 6.5 per cent and 12 per cent CAGR respectively. The growth has continued with total exports increasing to US$ 19.62 billion in 2006-07. Currently India has a 3.5-4 per cent share in world export of textiles and 3 per cent in clothing exports e xports Table 2.1 

USA



U ARAB EMTS



GERMANY



NETHERLAND



U K



CANADA



FRANCE



SPAIN



ITALY



DENMARK

Table 2.2 Principal export destinations of India for knit apparels Sino.

Country

Values in US$ Mn

Quantity in thousands

2005-2006

2006-2007(Apr-Sep)

1

USA

925.44

560.68

2

GERMANY

369.65

180.8

3

UK

329.22

173.64

4

FRANCE

256.41

155.77

5

ITALY

176.51

116.31

6

U ARAB EMTS

160.37

96.61

7

NETHERLAND

122.7

87

8

CANADA

139.75

78.26

9

SPAIN

119.27

62.72

10

DENMARK

67.76

38.64

Source: www.aepcindia.com Table 2.3


22


Principal export destinations of India for woven apparels S.No.

Country

Values in US$ Mn 2005-2006

2006-2007(Apr-Sep)

1

USA

1,928.32

859.64

2

UK

615.5

286.71

3

U ARAB EMTS

286.98

180.75

4

FRANCE

383.4

170.77

5

GERMANY

309.03

158.41

6

NETHERLAND

170.82

95.52

7

SPAIN

241.27

88.67

8

ITALY

206.9

88.47

9

SAUDI ARAB

140.48

82.32

10

CANADA

134.97

61.51

Source: www.aepcindia.com

2.3 Product Portfolio . 1. RAW RAW MAT MATER ERIA IAL L CON CONSUM SUMED ED.. •

COTTON

•

SILK

•

WOOL

•

BLENDED FABRIC

•

MILL MADE FABRIC- POLYESTER, NYLON, & OTHER

•

SYNTHETIC FIBICS, HANDLOOM

2. PROD PRODUC UCT T CATE CATEGO GORI RIES ES •

MEN’S WEAR

•

LADIES WEAR

•

CHILDREN’S WEAR

•

OTHERS

These categories can be further classified as follow


23

Export of Ready Made Garment to United Kingdom MEN’S WEAR 1. Anorak 3. boxer shorts 5. Blouson. 7. ca c ardigan 9. lungies 11. night suit 13. pullov pullover er 15. t-shi t-shirt rtss 17. Track suit 19. Under pants 21. shorts

table 2.4 2. bath rode 4. Bermudas 6. Car coat. 8. ku k urta pyajama 10. night gown/dressing gown 12. over coat 14. shirts shirts 16. Ski suit. 18. Trousers 20. Waist coat 22. wind cheater

LADIES WEAR 1. Apron 3. blouses 5. Panties 7. Cape 9. Corset 11. ethic dresses 13. Jacket/ coat 15. leotards 17. night dresses 19. parka 21. Sarees 23. Salwar suit 25. Shirts with zipper 27. Skirts 29. Swim suit 31. rain coat 33. Wind cheater

table 2.5 2. bathrobe 4. bra 6. camisole 8. Cardigan 10. dresses knitted or woven 12. garters 14. knitted/ woven ensemble 16. Long dresses 18. overall 20. petticoat 22. romper 24. Shirts 26. Shorts 28. Slips 30. T- Shirts 32. Waist Suit 34. Trousers

CHILDREN’S WEAR 1. Dresses for infants 3. babe suit

table 2.6 2. frocks 4. Knickers

OTHERS 1. 3. 5. 7.

table 2.7

Defense Uniform Handkerchiefs Occupational garments ties

2. gloves 4. Industrial Garments 6. socks


24


2.4 Major Production Centers in India Table 2.8 

Mumbai



Kolkata



Delhi



Chennai



Bangalore



Ahmadabad



Ludhiana



Gurgaon



Tirupur



Jabalpur



Indore



Pune

In the apparel sector Ludhiana, tirupur, Delhi, Bangalore, Mumbai, Indore and Chennai are all remarkably unique and dynamic centers of production. For example, Tirupur in south India formally a small town is today a strong hold of cotton knitted wear with annual export of billion dollars. Ludhiana in the prosperous northern state of Punjab, originally built its strength in woolen knit wear through export to the former Soviet Union. After a brief space in early 90’s it regain its dynamic and is now a supply hub for sweater knits to some of the largest fashion brands in the USA and Europe. Delhi the leading export centre for apparel in volume and value, leads also in design and merchandising skills, with miller and flexible production qualities. Chennai on the other hand is more more geared geared toward towardss large large and well well establ establish ish factor factories ies produci producing ng large large quanti quantitie tiess of basic basic products, while Bangalore is growing in more engineered product including tailored clothing and foundation garments. Indore has a strong production capacity in both men’s as well as children’ wear. It is also a leading export centre from Madhya Pradesh.

2.5 Transportation and Packaging of RMG. Packaging

when transported by truck, outer clothing is often carried as hanging garments, while other clothing items are generally transported in folding cartons and primarily containerized. Hanging INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

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Export of Ready Made Garment to United Kingdom garments must be inserted into tight-fitting individual dust covers, sealed at the bottom. When outer clothing is shipped in folding cartons, it is essential, in particular for higher quality goods, for the folding cartons to be lined with tissue paper or the like, the individual items to be secured and interlayer’s used. The cartons often consist of wet strength c orrugated board. Figure 2.3

Figure 1

Figure 2

Figure 3

Figure 4

Source: www.tis-gdv.de The Government of India considers a garment as a Packaged Commodity and made it subject to the provisions of Standard Weights and Measurement Acts as well as the Packaged Commodity Rules there under. It is the view of the Government that by doing so, the interests of the consumer will be protected. Markings on the garment

any garment have the following markings: 1. Brand name, if any. 2. The label “Made in India ". This is a statutory requirement. 3. Size label in internationally and domestically accepted symbols: S, M, L, and XL each of which determine a range of sizes. Depending upon the type of garment, such labels are attached either under the collar or under the waistband. For example: neck size for shirts; chest size for bush shirts, coats and garments covering the upper part of the body; waist size for garments covering the lower p art of the body.

In respect of children garments, the size label covers age groups. 1. Care Instructions according to internationally accepted symbols covering use of detergents and/or temperature for ironing. These are generally gen erally explained in detail on tags attached firmly to the garment.


26

Export of Ready Made Garment to United Kingdom 2. Label showing the dominant fibre -- thus in a 100% cotton garment, ga rment, the label will state " All Cotton " whereas in the case of say a cotton-polyester blend where cotton predominates, the word " Cotton " only or if polyester po lyester predominates, the word " polyester ". From the above, it is observed that the customer's interest is fully protected. He knows what he is buying, feels it for smoothness and tries it out in a trial room to make sure of the fit of the garment. It is only after he is satisfied on all these counts that he affects a purchase. Figure 2.4

Marking of packages

Keep dry

T op

www.tis-gdv.de

Transportation Means of transport



Ship,



Truck,



Railroad,



Aircraft

Container transport

Standard containers are suitable for transporting ready-made garments, subject to compliance with limits for water content of goods, packaging and flooring. Garment containers are best suited to transporting items of clothing, as they provide maximum protection against INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

27

Export of Ready Made Garment to United Kingdom creasing, dust and dirt. Garment containers have bars for hanging up items of clothing on coat-hangers. The bars are generally anchored an chored in perforated rails in the walls. The coatco athangers are secured by special clips. A horizontally open able curtain is located between b etween the door and the inside. The wooden floor is impregnated and lined with floor covering (carpet). Cargo handling

In damp weather (rain, snow), the cargo must be protected from moisture, since garments are strongly hygroscopic and readily absorb moisture. Stowage factor 2.30 - 9.47 m³/t (cartons) [1] 1.08 - 6.06 m³/t (boxes) [1]

Cargo securing

the cargo must be stowed in such a way that the boxes or cartons do not slip and become damaged during transport. Where garments are shipped hanging, the shipping container (e.g. ISO container, box body/swap body) must be carefully inspected for cleanness, leakproofness and the ability to secure individual coat-hangers firmly. The coat-hangers must be secured on the bars with retaining clips.

Figure 2.6

Figure 5

Figure 6

Figure 7

Figure 8

www.tis-gdv.de


28


Industry Supply Chain

The apparel industry supply chain can be broadly categorized into five major components, componen ts, as, raw materials, textile plants, apparel plants, export chains, retail stores, and customers Figure: 2.7 The Textile and Apparel supply chain


29


2.6 Pricing of Indian RMG. Typical cost structure of garments would have materials contributing 55% of the cost, while fabrication, overheads and finishing contributes 22%, 15%, and 9% respectively of the garments, while fabrication and overhead are a result of garment industry decentralized structure, fabric cost is a function more of the productivity at the textile manufacturing stages. In India one b ig stumbling block to higher productivity lies in the structure of India textile sector. With only 5% of fabric produced in organized mill and about 57% produced in decentralized power looms (over and above the 17% knit fabric) the quality of fabric supply to garment sector is poor. Despite technological advance, clothing sector remains labor intensive globally and its manufacturing is secularly shifting away from developed to developing countries. The actual cost may vary depending on the ratio of in-house production (higher the in-house production, higher the overheads) and certain value adding feature like embroidery which increase the cost of finished cost. However, the material cost remains the most important element of the cost; the capacity of raw material is viewed as representative of the product quality in garment industry. Textile product has seemed considerable technology improvement, but that has partially restored the comparative advantage of developed countries in textile manufacturing. Figure 2.8


30


Source - Industry, I-SEC Research Investment per machine is very low in India at $250 compared to $3510 and $1500 in Hong Kong and China. This was due to Indian firm having a much proportion of manual machine and even the power based machine was not so sophisticated.

2.7 Market Characteristics and Segmentation The domestic market is expected to boom with demand for high value branded items and household items showing a sharp increase. Not surprisingly, yarn manufacturers are shifting away from exports and focusing on domestic markets. The industry is ready to utilise high quality yarn in the domestic market, which was earlier meant exclusively for exports.

Of the total exports, apparel and accessories acc essories generated over $105.43 billion, b illion, a rise of 22.2 percent; yarn, fabric and other textile products makes up $51.152 billion, augmenting 15.3 percent. The US and EU imports nearly $30 billion worth of home textiles. The US market is growing at 5 per cent per year while the EU market is growing at an estimated rate of 9-10 per cent. Japan, Australia, New Zealand are also large consumers of home textiles. McKinsey estimates that the global trade in home textiles will grow from $8.6 billion to $23 billion in 2010. India's presence in the US home textile market is growing. India is the largest supplier of terry towels, bed linen and second largest vendor of cotton made-ups to the US markets. China, Pakistan, Bangladesh and Vietnam are major competitors for India in this segment. In the postquota regime, India's share of US imports has grown g rown for sheets (20%) terry towels (21%), INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

31

Export of Ready Made Garment to United Kingdom pillowcases (19%) and total made-ups (11%).

Another segment in which India is a strong player is the embroidery market. The Indian market for embroidery is valued at Rs 7.5 billion b illion and is growing at 18 per cent cen t per year. This is a highly fragmented market with the organized sector constituting 40 per cent of the industry. Demand for embroidery is on the rise and export to countries like the US, UK, Africa, Middle East offers a huge market for embroidery products.

CHAPTER 3

UNITED KINGDOM’S READY MADE GARMENT INDUSTRY.

3.1 Overview of UK Economy. 3.2 Changing Structure of UK RMG Industry INTERNATIONAL INTERNATION AL INSTITUDE TRADE & RESEARCH 3.3 UK RMG Industry OF (AnFOREIGN Overview)

32


3.1 Overview of UK Economy. Source: www.BERR.com The UK Economy is the largest in Europe after Germany, at the same time it is also ranked as the fifth worldwide as per the market exchange rates, that is, in terms of GDP. The GDP of the UK Economy grew by around 3 percent in the preceding fiscal (2006). London, the Capital UK is one of the most important centers of trade and commerce in the world along with New York City and Tokyo. The UK Economy is characterized by a free market involving a low taxation and regulation on the part of the administration. The UK is the fifth largest economy in the world, with a gross domestic product (GDP) of US$2,345 billion (Source: World Bank, 2007). The UK is forecast to have the strongest business environment of all major European economies for the period from 2007 to 2011 (Source: EIU, 2007). In summary, the UK:

1. Has a population population of 60.6 milli million on (Source: (Source: ONS, 2007),

2. Was the second second largest largest recipien recipientt of foreign foreign direct direct investment investment (FDI) (FDI) globally globally in in 2006 (Source: UNCTAD, 2007),


33

Export of Ready Made Garment to United Kingdom 3. Is a leading leading global global trading trading nation, nation, being the second second largest largest exporter exporter and and third largest largest importer of commercial services, and the seventh largest exporter and fourth largest importer of merchandise (Source: World Trade Organization, 2007),

4. Is a member member of the European European Union, Union, the world’s world’s largest largest trading trading entity entity,, with nearly nearly 500 million consumers and a GDP of approximately US$16,000 billion,

5. Is one of the the most competi competitive tive locations locations in in Europe for for business business and persona personall taxation, taxation,

6. Has low unemploy unemployment ment (with (with an unemploym unemployment ent rate well well below the the European European Union average), and

7. Has the the best European European city city – London London – in which which to do business business

(Source: Healey & Baker, European Cities Monitor, October 2007).

3.2 Changing Structure of UK RMG Industry Much of the manufacturing sides of the UK fashion and clothing industry have moved overseas. Many factors have contributed to this move, including: •

The low cost of manufacturing in developing countries;

•

Increasing globalization of companies;

•

The growing importance of branding and marketing.

Specifically, there has been a rise in the importance and speed of design, marketing and distribution. In 2005, the UK clothing and was worth £44.45 billion. Large-scale manufacturers have almost vanished from the UK: the core business now is the sourcing and supply of goods. However, there is a trend for some large retailers (notably Gap and Next plc) to become beco me involved in both manufacture and sales. Today, imports account for 95% of the fashion and textiles market. Although this far outstrips exports, many of these imported goods b ear UK labels. They are designed, marketed and distributed from within this country, but manufactured abroad.


34

Export of Ready Made Garment to United Kingdom The fashion and textile industry is active in both imports and exports. Countries such as Hong Kong, India, Turkey, Bangladesh, Greece and Portugal are major importers to the UK. However, the key player is the Republic of China, which was providing the UK and EU with cheap goods to the extent that the EU took action to restrain the trend and stabilize prices. A significant amount of total UK exports to the USA, Germany, Italy, Australasia and East and South East Asia is due to the fashion and textile industry. Japan is an important export market for designer fashion. The growing globalization of the industry has led to a trend towards the separation of the various functions that make up the supply chain. This has meant the relocation of essential parts of the supply process, particularly manufacturing. These functions now take place in developing companies and countries, geographically separated from product development and marketing.

3.3 UK RMG Industry (An Overview) Most clothing and textiles products purchased in the UK have made a journey across the globe before arriving in retailers’ shops. The UK clothing industry depends on a global production system, designed to minimize costs at each stage of the supply chain. Operations that must be completed by hand are generally located in countries with cheap labor; more knowledge intensive processes can be located elsewhere. Given that existing location decisions have largely been driven by cost considerations, would there be an environmental or social benefit from choosing different locations.

Major facts about UK RMG industry 1. One fifth fifth of the UK’s UK’s annual annual consumption consumption by weight weight of clothi clothing ng and textile textile products products is manufactured in the UK (about 0.4 million tones). Of this about one third is carpet alone.

2. About two-thi two-thirds rds of the UK import import of basic basic textile textile materials materials (fibres, (fibres, yarns yarns and fabrics) fabrics) by mass to the industry is man-made, the rest is of natural o rigin (primarily cotton and wool – about 15% and 10% respectively).


35

Export of Ready Made Garment to United Kingdom 3. Total employm employment ent in the industr industry y amounted amounted to 182 thousand thousand people people in 2004 (47% (47% in textiles and 53% in clothing). This is equivalent to a productivity of about £50 thousand of sales per employee

4. About 3.25 million Tones of textiles flow through the UK each year – approximately

55kg per person.

5. Of this, half (52%) is imported as textile products, 25% as ‘intermediate products’ mainly

fabric, yarn and non-woven. The rest is imported fibre and fibre created in the UK – about 10% each. The total import of textile materials and products is about 2.9 million tones.

co mprising fibres, 6. The UK exports 1.15 million tones of clothing and textiles each year, comprising fabric and some completed products (mainly clothing and carpets). This includes about 200 thousand tones of products for reuse, recycling and final waste disposal abroad.

ap proximately 2.15 million tones 7. The total UK consumption of textile products is approximately equivalent to approximately 35kg per UK capita. The average consumer expenditure can therefore be estimated to be around £20 per kg.

Key drivers in the textiles sector

A range of factors are playing a significant role in shaping the development of the textiles sector. These include: 1. Globalization - with increased sourcing (particularly of finished clothing) from lower-

cost overseas countries 2. Environmental legislation - rules affecting the development, use and disposal of

chemicals can have a significant impact in the textiles sector (a major consumer of dyes, pigments and oils)


36

Export of Ready Made Garment to United Kingdom 3. Technology and research and development - including streamlined production

processes, and the development of new fibres and textiles (including high-value technical textiles) International trade in the textiles sector

The textiles sector is an important element of the UK's international trading. While an increasing proportion of finished clothing goods are imported from overseas, ov erseas, the UK's export strengths lie in areas such as textiles and clothing design, and in the development and production of new textiles including specialty and technical textiles. The textiles sector runs a trade deficit - the UK imports more textiles goods than it exports. In July-September quarter of 2006, exports totaled £1,373 million while imports reached £4,188 million (source: HM Revenue & Customs). In 2005, exports in the textiles sector totaled £5.1 billion, equivalent to 2.5 per cent of total exports that year. Imports totaled a much larger £14.7 billion, 5.3 per cent of total imports (source: Department for Business, Enterprise and Regulatory Reform (BERR) 2005). Important categories of textiles goods in terms of their export performance in 2005 were textile weaving (which generated exports worth £830 million), knitted and crocheted articles (£392 million), carpet manufacturing (£203 million) and manufacturing in the "other textiles" subcategory (£513m) (source: BERR, 2005). The priority p riority export markets in the sector are: •

Germany

•

France

•

Netherlands

•

Japan

•

USA

(Source: UK Trade & Investment, 2006).


37


CHAPTER 4:-

TRADE RELATION BETWEEN UK & INDIA

4.1 Overall Trade Performance 4.2 Export Performance of RMG (Last 5 years) 4.3 HS Code wise Export Performance.


38


4.1 Overall Trade Performance UK is India’s largest trading partner in Europe with 6.4 percent market share. The India-UK bilateral trade in the first 8 months of 2007 was up 13.2 percent over the comparable period of 2006. The total bilateral trade in goods has grown from £3.58 billion in 2001 to £5.83 bn in 2006 with UK being the second largest importer of Indian goods after US. The total trade in goods and services in last five years (2002-2006) grew 0ver 75 percent to £ 8.74 bn in 2005 from £ 4.99 bn in 2002. With the presence of more than 350 Indian companies, India is the eighth largest investor in the UK in terms of number of projects. Of this, 275 firms are from Information and Communications Technology. UK ranks third in terms of foreign investments in India after Mauritius and the US. The important facts here are: 1. UK is India’s India’s fifth fifth largest largest tradin trading g partner account accounting ing for 3.56% 3.56% of India’s India’s total total foreign trade in goods in 2005-06. 2. India is is UK’s 18th 18th largest largest export export market market and the largest largest in in the developing developing world world (ahead of China). 3. Bilate Bilateral ral Trade Trade turn turnove overr in in 2006 2006 Trade in goods:

£ 5.8 bn

Trade in services:

£ 2.9 bn

Total trade:

£ 8.74 bn

4. The balance of trade is currently cu rrently in India’s favor.

India’s main exports to the UK are petroleum crude & products, engineering goods, ready made garments, textiles, gold jeweler, footwear, marine products, rice and agricultural products etc. Major exports from the UK are uncut diamonds, metal scrap, iron, chemicals, machinery, transport equipment, scientific equipment etc. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

39


The UK is the largest market in Europe for Indian IT services. British companies have off-shored work to India (about 30) and created over 60,000 jobs. British businesses are estimated to save upwards of £1 billion every year due to off-shoring, the bulk of which is accounted for by India. Bilateral merchandise trade statistics are presented in the table below :( In £ million) Year

UK Exports

%

UK Imports % change Total %

to India

change from India

2000

2058

+41.9% 1651

+15.8%

2001

1772

-13.8% 1816

2002

1755

-1.0%

2003

India's Balance

change

of Trade

3709

+30%

-407

+10.0%

3588

-3.2%

+44

1804

-0.66%

3579

-0.25%

+29

2284

+30.1% 2093

+16.1%

4377

+22.29% -191

2004

2235

-2.18% 2290

+9.41%

4525

+3.8%

2005

2798

+25.1% 2783

+21.52% 5581

+23.33% +15

2006

2695

-3.6%

+12.68% 5831

+4.48% +441

2062

-26.2% 2719

-13.29%

-18%

2007 (JanSept)

3136

4781

(Office of National Statistics and Overseas Trade Statistics, HM Customs & Excise)

-55

+657 Table 4.1

Bilateral trade in Services is presented in the table below. (In £ million) Year

UK Exports

UK Imports

Total

% change

India's Bal of Trade

2001

664

816

1480

+ 21.81%

+152

2002

623

808

1431

- 3.31%

+185

2003

605

810

1515

+ 5.87%

+105

2004

981

1095

2076

+ 37.02%

+114

2005

1146

1311

2457

+ 18.06%

+165

2006

1424

1485

2909.

+18.68

+61

(Office of National Statistics and Overseas Trade Statistics, HM Customs & Excise)

table 4.2

4.2 Export Performance of RMG ( Last 5 years)


40


Commodity: 61 ARTICLES OF OF APPAREL AND CLOTHING ACCESSORIES, KNITTED OR CORCHETED.

Country: U K S.No. \Year 1 Values in US$ Million 2 3 4 5

%Growth Total export of commodity %Growth Total export to country

2002-2003 227.96

2,386.66 2,496.41

2003-2004 239.76

2004-2005 277.4

2005-2006 329.22

2006-2007 346.16

5.18

15.7

18.68

5.15

2,701.73

2,641.29

3,191.13

3,615.27

13.2

-2.24

20.82

13.29

3,023.25

3,681.09

5,059.28

5,613.63

44.9315

44.2735 Table 4.3

45.2849

Exchange rate: (1US$ = Rs.) 48.3953 45.9516 Source: Directorate General of Central Intelligence Statistics, DGCI&S

Commodity: 62 ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, NOT KNITTED OR CROCHETED.

Country: U K S.No.

\Year

1

Values in US$ Million

2

%Growth Total export of

3

20022003 287.12

3,351.78

2003-2004

2004-2005

2005-2006

2006-2007

298.29

380.11

615.5

599.35

3.89

27.43

61.93

-2.62

3,541.35

3,932.68

5,435.50

5,279.59

5.66

11.05

38.21

-2.87

3,023.25

3,681.09

5,059.28

5,613.63

commodity 4 5

%Growth Total export to country

2,496.41

Exchange rate: (1US$ = Rs.) 48.3953 45.9516 44.9315 Source: Directorate General of Central Intelligence Statistics, DGCI&S

44.2735 45.2849 Table 4.4

4.3 HS Code wise Export Performance 1. ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, KNITTED OR CORCHETED.

Country: - UK

Value in US$ million


41


S.

HS

No.

Code

1

6101

Commodity

2002-2003

MEN'S/BOYS' OVERCOATS,

2006-2007

20032004

2004-2005

2005-2006

5.22

4.04

3.74

1.9

0.65

2.45

2.48

0.81

0.2

0.51

11.91

13.36

15.16

16.01

12.71

13.77

18.87

18.23

20.22

21.45

CAR-COATS, CAPES (INCL SKI-JCKTS), WIND-CHEATERS, WIND JCKTS ETC, KNTTD/ CRCHTD, EXCL OF HDG NO 2

6102

6103 WOMEN'S/GIRLS' OVRCOATS, CARCOATS ETC (INCL SKIJCKTS), WIND-CHEATERS ETC., KNITD/CRCHTD, EXCPT

3

6103

THOSE OF HDG 6104 MEN'S/BOYS'SUITS,ENSEMBL ES, JACKETS,BLZRS TRSRS, ETC(EXCPT SWIMWEAR),

4

6104

KNTD/CRCHTD WOMEN'S/GIRLS'SUITS,ENSE MBLES, JACKETS DRESSES, SKRTS & DIVIDED SKRTS, TROUSERS, BIB, BRACE OVERALLS ETC, KNTTD/

5

6105

CROCHETED MEN'S/BOYS'SHIRTS,

20.22

16.32

18.81

19.51

18.94

6

6106

KNITTED/CROCHETED WOMEN'/GIRLS' BLOUSES,

17.18

14.72

18.92

26.73

26.04

17.11

19.61

24.74

21.61

17.33

24.14

34.12

38.71

31.98

33.1

63.01

61.22

78.11

129.38

136.5

SHIRTS & SHIRTS-BLOUSES, 7

6107

KNITTED OR CROCHETED MEN'S/BOYS'UNDERPANTS,B RIEFS, NIGHTSHIRTS, PYJAMAS,BATHROBES ETC,

8

6108

KNTTD/CRCHTD WOMEN'S/GIRLS' SLIPS, PETTICOATS,BRIEFS,PANTIES ,NIGHTDRESS,PYJAMAS, NEGLIGES,BATHROBS,DRESN G GOWN ETC, KNITD/

9

6109

CROTCHTD T-SHRTS,SNGLTS & OTHR VESTS,KNTTD/CRCHTD


42

Export of Ready Made Garment to United Kingdom 10

6110

JERSEYS,PULLOVERS,CARDI

18.79

14.97

16.19

10.57

16.78

6111

CRCHTD BABIES GRMNTS & CLTHNG

26.94

27.86

29.26

37.53

47.33

6112

ACSSRS,KNTTD/CRCHTD TRACK SUIT,SKI SUIT &

0.21

0.89

0.63

0.72

0.61

6113

SWM WER,KNTTD/CRCHTD GRMNTS,MADE UP OF

0.04

0.04

0.03

0.05

0.06

6114

HDNG NO. 5903 5906 OR 5907 OTHER GARMENTS,

2.35

6.23

6.76

5.9

5.57

6115

KNITTED/CROCHETED PANTY HOSE, TIGHTS,

3.31

3.68

3.49

3.73

5.72

6116

SOLES,KNTD/CRCHTD GLOVES,MITTENS & MITTS,

0.3

0.54

0.58

0.33

0.99

6117

KNITTED/CROCHETED OTHR MADE UP CLOTHNG

1.03

0.83

3.21

2.85

1.88

227.98

239.78

277.38

329.22

346.17

2,386.66

2,701.75

2,641.29

3,191.13

3,615.27

63,842.9

83,535.94

103,090.54

126,262.6

GANS,WAISTCOATS & SIMILAR ARTICLS, KNTTD/ 11 12 13

KNTTD/CRCHTD FABRICS OF 14 15

STOCKINGS, SOCKS & OTHR HOSIERY,INCL STOCKINGS FR VARICOSE VEINS & FOOTWEAR WTHT APPLD 16 17

ACCSSRS,KNTD/CRCHTD; KNTD/CRCHTD PRTS OF GRMNTS/CLOTHNG ACSSRS EXPORT OF ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, KNITTED OR CORCHETED. TO UK TOTAL EXPORT OF ARTICLES OF APPAREL AND Tota l

CLOTHING ACCESSORIES, 61

KNITTED OR CORCHETED. India's Total Ex Export

52,719.43

7

8

Source: Directorate General of Central Intelligence Statistics, DGCI&S

Table 4.5

2 ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, NOT KNITTED OR CROCHETED.

Country UK

Value in US$ million


43


S. No.

HS Code

Commodity

2002-03

2003-04

2004-05

2005-06

2006-07

1

6201

MEN'S/BOY'S OVRCOTS,

2.74

3.81

13.2

10.89

3.18

1.03

3.28

4.12

5.14

1.11

15.89

19.03

24.25

35.85

52.88

84.72

83.95

116.71

246.06

225.28

CARCOTS,CAPES, CLOAKS ANORAKS (INCL SKIJACKETS), WIND CHETRS, WINDJACKETS & SMLR 2

6202

ARTCLS EXCPTG HDG 6203 WOMEN'S/GIRL'S OVERCOATS,CARCOATS, CAPES, CLOKS,ANORAKS (INCL SKI-JACKETS), WIND-CHTRSWINDJACKETS & SMLR ARTCLS

3

6203

EXCL HDG 6204 MEN'S OR BOYS' SUITS, ENSEMBLES,JACKETS BLAZERS,TROUSERS,BIB & BRACE OVERALLS BREECHES & SHORTS

4

6204

(OTHER THAN SWIMWEAR) WOMEN'S/GIRLS' SUITS, ENSEMBLES,JACKETS, DRESSES,SKIRTS,TROUSER S,BIB & BRACE OVRALS, BRECHS & SHORTS

5

6205

ETC(EXCPT SWIMWEAR) MEN'S OR BOY'S SHIRTS

58.64

49.57

50.42

62.67

67.81

6

6206

WOMEN/GRLS' BLOUSES,

62.2

66.6

101.65

162.02

156.82

6207

SHRTS & SHRT-BLOUSES MEN'S OR BOYS' SINGLETS

4.93

4.05

3.81

4.17

1.19

7

AND OTHER VESTS UNDERPANTS,BRIEFS,NIGH T-SHIRTS,PYJAMAS, BATHROBES,DRESSING GOWNS & SIMILAR ARTCLS


44

Export of Ready Made Garment to United Kingdom 8

6208

WOMEN'S OR GIRLS'

19.78

24.62

21.41

16.62

16.76

11.03

12.13

9.69

17.4

19.21

0.62

2.33

1.71

1.98

1.03

6211

OR 5907 TRCK SUITS,SKI SUITS &

5.5

6.78

7.88

12.95

15.64

6212

SWMWEAR,OTHR GRMNTS BRSSRS,GRDLS,CORSTS

0.23

0.29

0.26

0.55

0.62

0.5

0.19

0.3

0.11

0.28

SINGLETS & OTHER VESTS, SLIPS,PETICOTS,BRFS, PANTIES,NIGHTDRESSES, PYJMS,NEGLIGES,BATHROB 9

6209

S,ETC.& SMLR ARTCLS BABIES' GARMENTS AND CLOTHING

10

6210

ACCESSORIES GARMENTS,MADE UP OF FABRICS OF HEADING NO.5602,5603,5903,5906

11 12

,BRCS,SUSPNDRS,GRTRS & SMLR ARTCLS & PRTS THROF,W/N KNTD/ 13

6213

CROCHTD HANDKERCHIEFS

14

6214

SHWLS,SCRVS,MUFLRS,

18.04

20.1

22.41

36.1

32.69

6215

MNTLS,VELS & THE LIKE TIES,BOW TIES AND

0.04

0.12

0.13

0.23

0.3

6216

CRAVATS GLOVES,MITTENS AND

0.33

0.32

0.36

1.19

1.66

6217

MITTS OTHR MDE UP CLOTHNG

0.9

1.11

1.8

1.57

2.16

287.12

298.29

380.11

615.50

599.35

3,351.78

3,541.35

3,932.6

5,435.50

5,279.59

15 16 17

ACCSSRS,PRTS OF GRMNTSOR OF CLOTHING ACCSSRS, EXCL OF HDG Total

62

6212 TOTAL EXPORT OF ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, NOT KNITTED OR CROCHETED TO UK ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, NOT KNITTED OR CROCHETED


45


Source: Directorate General of Central Intelligence Statistics, DGCI&S

Table 4.6

CHAPTER 5:-

GOVERNMENT SUPPORT. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

46


5.1 Indian Foreign Trade Policy regarding RMG. 5.2 Import Regulation of UK regarding Textiles 5.3 Bilateral trade Between India and UK 5.4 Govt. Polices, Promotional Scheme and Incentives.

5.1 Indian Foreign Trade Policy regarding RMG. Announcements in the new Foreign Trade Policy: (Source: www.aepcindia.com)

The new Foreign Trade Policy contains a number of positive features. The features, which are particularly beneficial to the textile industry, are: 1. The office office of the Textile Textile Commis Commissioner sioner will will focus focus attention attention on the the development development of the garment industry; 2. Garment Garment industry industry will be be taken out out of the the SSI reserva reservation tion list; list; 3. Joint venture venturess and strategi strategicc alliances alliances with with leading leading world manufact manufacturers urers will will be promoted;


47

Export of Ready Made Garment to United Kingdom 4. Schemes Schemes with necessar necessary y infrastr infrastructura ucturall facilities facilities for for the establis establishment hment of textile/apparel parks will be designed with the active involvement of State Governments, Financial Institutions and the private sector; and 5. Setting Setting up of strong strong domestic domestic retail retail chains chains to ensure ensure easy availabi availability lity of branded Indian products will be encouraged. 6. Leftover Leftover material materialss and fabrics fabrics of the the 100% EOUs EOUs up to 2% of CIF CIF value value or quantity quantity of import shall be allowed to be disposed of on payment of duty on transaction value only.

National Textile Policy 2000 (Source: www.aepcindia.com) For the growth and development of Indian Textile Industry and to make it more vibrant, Govt. of India passed National Textile Policy in 2000.

Objectives of Policy:

1. To produce produce and provide provide good quality quality cloth cloth in affordabl affordablee price to fulfil fulfilll different different needs of customers. 2. To increase increase the share share of India in in Global Global Textile Textile Market Market.. 3. To increase increase the contrib contribution ution for for employment employment and economi economicc growth of of country. country. 4. Facilitate Facilitate the Textile Textile Industr Industry y to attain attain and sustain a pre-eminen pre-eminentt global standing standing in the manufacture and export of clothing. 5. Liberaliza Liberalization tion of control controlss and regulation regulationss for the market market developm development ent of different different Textile Segments and to make them stronger to perform in competitive environment. 6. Encourage Encourage FDI and and R&D to to improve improve the manufact manufacturing uring capabili capabilities ties and and infrastructure under the environmental standards. Highlights of Policy:

1. Achieving Achieving the target target of Textil Textilee and Apparel Apparel Exports Exports from US $ 11 billio billion n to US $ 50 billion by 2010. The share of garments g arments is targeted US $ 25 billion. 2. Increasing Increasing contribut contribution ion of private private sector through through set up up environment-f environment-friendl riendly y and technologically advance textile units and complexes. 3. To De-reser De-reserve ve the Garment Garment Industr Industry y from Small Scale Indust Industry. ry. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

48

Export of Ready Made Garment to United Kingdom 4. To improve improve the availabil availability, ity, producti productivity vity and qualit quality y of Raw Material Materials. s. 5. Improvement Improvement in quality quality of fiber/Ya fiber/Yarn rn and its availa availabilit bility. y. 6. To make Silk Silk and Sericultur Sericulturee sector strong, strong, Govt. Govt. is aimed aimed to improve improve R & D, Productivity of non-mulberry verities of silk. 7. Encourage Encourage Private Private Sector Sector to increase increase producti productivity, vity, and to to market the the Wool products products.. Establishing Pre-Loom & Post-Loom facility. 8. Technologica Technologicall Up-gradation Up-gradation,, Strategic Strategic Alliance Alliance with internat international ional textile textile majors, majors, Improved Quality, and Productive HR environment are the concern for Organized Mill Industry. 9. To Increase Increase Productiv Productivity, ity, Enhanced Enhanced Marketin Marketing g and Distribut Distribution, ion, Technologi Technological cal Upgradation and increased Research Development in Handloom Sector. 10. To Improve Export, Promotion, Technological Support, Infrastructure, Infrastructure, Marketing Marketing & Distribution and R & D for the growth of Handicraft Sector. 11. To increase Exports to 50 billion billion US $ by 2010, Increase FDI FDI & Investment, and to Increase Infrastructure Support to export oriented areas.

5.2 Import Regulation of UK regarding Textiles Source: www.BERR.com www.BERR.com

As the European Union (EU) is a customs union, any one can buy goods from other member countries without restrictions - although VAT and excise duty can still apply. However, if the goods are restricted textiles they must be in free circulation before they can be moved without w ithout restriction. If you import from outside the EU, you may have to comply with import licensing requirements and with common customs tariffs that apply across the EU. Import licences

Under Registration, Evaluation, and Authorization of Chemicals (REACH) legislation in force from 1 June 2007, importers or manufacturers of more than one tonne of chemicals a year must register with the European Chemicals Agency. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

49

Export of Ready Made Garment to United Kingdom Import restrictions can be product-specific or trade-specific. Many products are subject to product-specific standards and need to be supported by applicable certificates, product-specific licences and documentation. Quite separately, quantitative restrictions or limitations and anti-dumping duties may apply to certain imported commodities. In these instances an import licence from the Department for Business, Enterprise and Regulatory Reform (BERR) may be required. Goods imported to the UK must also comply with domestic business standards, including product safety, manufacturing, patents and health and safety regulations. Proof of Origin

The EU has a requirement for imports of textiles and clothing from non-EU sources to provide "proof of origin", most usually with a Certificate of Origin. The European Commission has identified the need nee d to secure supply chains for goods leaving and entering the EU. However, increased customs checks are likely to lead to delays in journey times for consignments, and possibly longer shipping lead times. In response, HM Revenue & Customs is introducing a new status for businesses - Authorized Economic Operator (AEO). While the scheme is not compulsory, companies that meet the requirements of the scheme will be registered as AEOs and can take advantage of simplified customs procedures that relate to the security and safety of their goods in transit.

5.3 Bilateral trade Between India and UK UK, the gateway to European Union single market, is a long and stable trade partner ranking second in India’s global trade partnership after the US and third in terms of foreign direct investment in India. India considers UK as one of the most important sources of FDI for India not only amongst the EU countries but also vis-à-vis other countries in the world. With a share of 37 percent in EU’s total outflow of FDI in non-EU countries, UK is a very natural and impo import rtan antt part partne nerr for for a coun countr try y like like Indi Indiaa that that requi require ress mass massiv ivee inves investm tmen entt for for its its infrastructural needs. The Indo-British Partnership was started in 1993 by the then Indian and British Prime Ministers P V Narsimha Rao and Sir John Major respectively. The economic INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH 50

Export of Ready Made Garment to United Kingdom reforms initiated by the Indian government in 1991 and recovery of the British economy had opened up countless opportunities for Indo-British collaboration. On the trade front, the bilateral trade has increased to 100 per cent in the last five years and it is increasing at a rate 20 per cent per year. UK is the 4th largest trading partner of India with bilateral trade of US $ 9.8 billion in 2006-07, which is about 3 per cent of India’s total trade. Percentages of bilateral trade compared to total trading basket of UK (US $ 1 trillion in 2006) are negligible. This again indicates an immense potential existing between the two countries. cou ntries. There is a growing realization in the UK of the immense business opportunities in India. The House of Commons Select Committee on Trade & Industry in June 2006 published its report on “Trade and investment opportunities with India”. Their major findings were that the UK was not as engaged with India’s markets as it should be, the Indian market was liberalizing at a pace not fully fully appreci appreciate ated d in the UK, and the UK’s UK’s instit instituti utional onal arrange arrangemen ments ts to suppor supportt trade trade and invest investmen mentt with with India India were were charact characteri erized zed by enthusi enthusiasm asm but also also by confusi confusion. on. Differ Different ent mechanisms have been set up to oversee economic cooperation between India and the UK.

5.4 Govt. Polices, Promotional Scheme and Incentives. Government Policies (Source: Annual Report 2007 (Textile Ministry) 1. There are no restrict restrictions ions regarding regarding location location for for establishi establishing ng manufacturin manufacturing g units. 2. All producers producers of of Clothing Clothing and Accessor Accessories ies are exempt exempt from from obtaining obtaining Industri Industrial al License to manufacture. The declicensed undertakings, however, are required to file an Industrial Entrepreneur Memoranda (IEM) in Part 'A' with the S ecretariat of Industrial Assistance (SIA), and obtain an acknowledgement. No further approval is required. 3. From 1st April 2000, Govt. Of India reduced tariffs on: Manmade Fibers & Filament

Yarns from 35% to 20% · Cotton Yarn from 25% to 20% · Spun, Blended, and Woolen Yarn from 40% to 20 % 4. India agreed agreed to bind bind its tariff tariffss on 265 textile textile & apparel apparel products products (Texture (Textured d Yarns of Nylon & Polyester, Filament Fabrics, Sportswear, and Home Textiles.) 5. Apparel Apparel products products are are free free from from Excise Excise Duties Duties & various various Taxes. Taxes. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

51

Export of Ready Made Garment to United Kingdom 6. Customs Customs duty duty on Raw Materi Materials als such such as DMT, DMT, PTA and MEG reduced reduced from from 10% to to 7.5%. 7. For Small Small Scale Industri Industries es there there is Full Exempt Exemption ion Limit Limit being increase increased d from Rs.1 Rs.1 crore to Rs.1.50 crores. 8. Most of of the products products fall under under HS HS code 61 and and 62 carry carry an import import duty duty of 56.83% 56.83% which includes 30% basic duty, 16% additional duty and 4 per cent special additional duty. 9. Excise Excise Duty Exempti Exemption on on specified specified Textile Textile Machinery Machinery Items Items is withdra withdrawn wn and 8% Excise Duty is imposed. 10. CST rate reduced from 4% to to 3% with effect from from April 1, 2007. 11. Removal of surcharge on income tax on all all firms and companies with with a taxable income of Rs.1 crore or less.

Promotional Scheme (Source: Annual Report 2007 (Textile Ministry))

1. The

Export Export

facilitat facilitates es

Promo Promotion tion

import import

appropriate export

of

Capital Capital

Goods Goods (EPCG )

The The scheme

Sche Scheme me :

capital capital goods at 3% concessional rate of duty

with

obligation. The import of second hand capital goods without any

restriction on age is also allowed under the new

Foreign

Trade

Policy

as

announced on April, 2008. DEPB cred credit it rate ratess have have been been Duty Exemptio Exemption n Pass Pass Book (DEPB) Sch Scheme eme: DEPB 2. The Duty prescribed for 83 textiles and

clothing

products.

The

nomenclature and rates for

DEPB entries entries pertaini pertaining ng to certain certain textile textile produc products ts have have been been ration rationali alized zed.. The DEPB credit rates were reduced by 45% across the board in all textile items on September 23,

2004, by Department Department of Commerce. Commerce. DEPB credit rates were again revised on December December 30, 2004 by announcin announcing g changes to the extent of

60% reduction in

respect of cotton textile items, 30% reduction in blended textile items and 22.5% reduction in man-made textile items in place of 45% reduction effected earlier. 3. The Duty Drawback Scheme : The exporters are allowed refund of the

excise and

materi rial alss und under er the the schem schemee to make make the produc products ts more more impo import rt duty duty paid paid on raw raw mate competit competitive ive in the Inter Internat nation ional al marke market. t. All All Indust Industry ry Duty Duty Drawback Drawback Rates Rates were last last INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

52

Export of Ready Made Garment to United Kingdom revised in May 2005. 4. The Apparel Park for Exports

Apparel Park for Scheme : The Apparel

Exports Scheme

(APES), a centrally sponsored scheme, was launched in March 2002 to set up apparel units of international standards at potential growth areas and concomitantly give fillip to

textiles exports. Twelve project were sanctioned under the scheme at Tronica City & (Gujarat ) , Kanpur (U.P.), Surat (Gujarat Prades esh h ) , (Andhra Prad

Kanchipuram (Tamil (Tamil

Thiruvananthapu Thiruvananthapuram ram

(Karnataka aka), ), Tirupur Tirupur & (Punj (Punjab ab ) ,Bangal ,Bangalore ore (Karnat

Ludhi udhian ana a Nadu) Nadu),,

(Kerala), Visakhapatnam

SEZ SEZ

Indo Indore re (Madhy (Madhyaa

Prades Pradesh), h),

Mahal, Mahal, Jaipur

(Rajasthan) and Butibori- Nagpur (Maharashtra). 5. The Scheme for Integrated Textiles Parks (SITP): The Government launched the

for Exports Exports (SITP) in in August August 2005, by merging the two 'Scheme for Apparel Parks for

existing schemes, viz. Apparel Park for Export Scheme Infrastructure Development Scheme. The Scheme, a

and

Textile

Centers

public –private partnership, is

being implemented through a Special Special Purpose Vehicle (SPV). The industry associations/ group of entrepreneurs are the main promoters of SITP. 6. Technology Up gradation Fund Scheme: In view of the urgent need for stepping up the

process process of modernizati modernization on and technology. Up gradation gradation of the Textile industry in India, India, Ministry of Textiles launched a Technology Up gradation Fund Scheme (TUFS) for the Textile and Jute Industry w.e.f. 01.04.1999 and the scheme will be continued during the Eleventh Plan. Against a provision of Rs.535 crore in 2006-07 for the scheme, Rs.911 crore has been allocated allocated for the same for 2007-08. The scheme provides provides for 5% interest reimbursement in respect of loans availed there under from the concerned Financial Institutions (FIs) for investments in benchmarked technology for the sectors of the Indian textile industries specified there under.

EXPORT PROMOTION COUNCILS

Source: Annual Report 2007 (Textile Ministry)

1.

Apparel Export Promotion Council

(AEPC)

The Apparel Export Promotion Council (AEPC) was incorporated on February 22, 1978, to promote exports of readymade garments from India. The Council was administering the exports entitlements quota in respect of

readymade garment


53

Export of Ready Made Garment to United Kingdom items, which were subject to restraint in USA, European Union and Canada .

Besides its headquarter at New Delhi, the Council has Regional Offices at New Delhi, Jaipur (Rajasthan), Ludhiana (Punjab), (Punjab), Mumbai (Maharashtra), Surat (Gujarat), Chennai (Tamilnadu ) ,Bangalore (Karnataka), Kochi (Kerala) and Kolkata (West Bengal).

2. Apparel Apparel Interna Internation tional al Mart Project Project

The Apparel Export Promotion Council has constructed an Apparel International Mart (AIM) at Gurgaon, at an estimated cost of Rs. 63.62 crores (including the land cost of Rs. 12.10 crores),

which is borne by Government of India, and Rs.

57.10 crores had been released so far. The

Mart will will have centrally centrally air-condi air-conditioned tioned showrooms (about 250 nos) n os) which will be given either on lease or on license basis to the established garment exporters. These will provide a world class

facility to the apparel exporters to showcase showcase their their products and and serve as as one shop shop for reputed international buyers. The Project is near completion. The Head Offices of AEPC & ATDC have already shifted to Gurgaon and started functioning effectively from March, March, 2006. 2006. Shri Shankersinh Vaghela, the Hon'ble Minister of Textiles inaugurated the Auditorium of AIM on

June 13, 2006.

Special Incentives Given to Textile Industry 1. Spec Specia iall Ince Incent ntiv ives es to Read Readym ymad adee Garm Garmen ent, t, Powe Powerr loom loomss and and Made Made-u -up p Garm Garmen entt industries: 2. Benefits Benefits under Government Government of India’s India’s schemes schemes such as Apparel Apparel Park Scheme, Textile

Centre Infrastructure Development Scheme (TCIDS) Modernization on of units of this sector through Technology Technology Up gradation gradation Fund Scheme 3. Modernizati (TUFS), Group Work Shed Scheme. 4. Exempted from the binding of minimum wage fixation on a daily basis.

Apparel Training Training Insti Institut tutee would would be set up with with the assistan assistance ce of Appare Apparell Export Export 5. An Apparel Promotion Council in the State, so that maximum number of trained worker could get employment in the Ready-made Garment industry. 6. Efforts to establish a national level fashion designing technology institutes in the States in

order to facilitate textile industry of the States regarding the information for design development and to provide forecasts. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

54

Export of Ready Made Garment to United Kingdom Development of the process house through through private private participat participation ion by providing providing necessary 7. Development facilities and if required their cases would be considered by the committee for Mega Projects. 8. The provision related to labor laws declared for Special Economic Zone will be made

applicable to the projects / special areas established such as Apparel Park, Garment Complex and unit established/being transferred under Group Work Shed Scheme

CHAPTER 6:-

COMPETITIVE ENVIRONMENT

6.1 Major Competitors. 6.2 Competitive Advantage for India. 6.3 Major Players in Indian RMG Export


55


6.1 Major Competitors. Table 6.1 

CHINA



Korea



Thailand



Sri Lanka



Mexico



Italy



CBI



Cambodia



Taiwan



Pakistan



Bangladesh



Philippines



Turkey

.

Major competitors and their Market Share

In 2006, the largest manufacturers and exporters ex porters of apparel were countries from the Asia-Pacific region which includes countries like China, Hong Ho ng Kong, Philippines, Malaysia, Indonesia, Bangladesh, Sri Lanka, Pakistan, and Thailand. The other major apparel manufacturing nations were USA, Italy, Germany and Mexico.


56


Figure 6.1

Source: fashionproduct.com fashionproduct.com

6.2 Competitive Advantage for India. 1. India has a large fibre base, and ranks as the world’s third-leading producer of cotton,

accounting for 15 percent of the world’s cotton crop. India produces a wide variety of cotton, providing operational flexibility for domestic textile producers. In the man made fibre sector, India is the world’s fifth-largest producer of polyester fibres and filament yarns and the third-largest producer of cellulosic fibres and filament yarns.

second-largest textile textile producer producer (after (after China), China), and is diversified diversified and 2. India is the world’s second-largest capab capable le of produ produci cing ng a wide wide vari variet ety y of text textil iles es.. Th Thee spin spinni ning ng segm segmen entt is fair fairly ly modern modernize ized d and compet competiti itive, ve, account accounting ing for about about 20 percent percent of world world cotton cotton yarn yarn exports. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

57


3. India’s textile and apparel industry benefits from a large pool of skilled workers and

competent technical and managerial personnel. India’s labor is inexpensive; hourly labor costs in the textile and apparel industry average less than 5 percent of those in the U.S. textile and apparel industry. 4. India is the the third largest largest producer producer of cotton cotton with the largest largest area area under cotton cotton cultivation cultivation in the world. It has an edge in low cost cotton sourcing compared c ompared to other countries. 5. Large Indian players such as Arvind Mills, Welspun India, Alok Industries and Raymond

have established themselves as 'quality producers' in the g lobal market. This recognition would further enable India to leverage its position among global retailers. Large raw material base :- India has a rich raw material base, especially cotton which has seen

improved productivity in the country under the Cotton Co tton Technology Mission, Wide variety of cotton produced India, making India capable of catering to various segments of world trade, Indian industry has ability to handle different materials - cotton, wool, silk and jute with equal skill Positive developments in the Textile Policy: - Reservation for small scale sector, especially

key segments removed over last few years, Fiscal anomalies in terms of excise duty structure removed Flexibility in production: - Capabilities across the entire value chain within the country reduces

lead time for production and reduces intermediate shipping time, Indian companies have flexibility and skilled manpower to handle small orders with complex designs Product development and design capabilities: - Several institutes in India for textile

development, the major one being National Institute of Fashion Technology (NIFT), several leading colleges also offer courses in Textile Engineering

Major Players in Indian RMG Export

Table 6.2 INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

58

Export of Ready Made Garment to United Kingdom 

Arvind Mills



Ashima Syntex



Raymond



KG Denim



Reliance Textiles



Sanghi Polyesters Ltd.



Vardhaman Spinning



S. Kumar Synfabs Ltd.



Welspun India



BSL Ltd.



Century Textiles



Indian Rayon



Morarjee Mills



Alok Textiles



Indo Rama



Birla Group Dormeuil Birla VXL Ltd.



GTN Textiles



Gokuldas Images



Ginni Filaments Ltd.



Hanil Era Textiles



LNJ Bhilwara Group



Oswal Knit India



Mafatlal Textiles



Niryat Sam Apparels



Modern Group 

Filaments India Ltd

Source: www.india-craft.com

CHAPTER 7:-

SWOT ANALYSIS.


59


7.1 Strengths 7.2 Weaknesses 7.3 Opportunities 7.4 Threats

7.1 Strengths 1. Indian apparel industry is an Independent & Self-Reliant industry. 2. Abundant Raw Material availability that helps industry to control costs and reduces

the lead-time across the operation. In addition to this Availability of Low Cost and Skilled Manpower provides competitive advantage to industry. 3. Availability of large varieties of cotton fibre and has a fast growing synthetic fibre

industry. 4. India has has great great advantage advantage in Spinning Spinning Sector Sector and has a presenc presencee in all process process of operation and value chain.


60

Export of Ready Made Garment to United Kingdom 5. India is is one of the largest largest export exporters ers of Yarn Yarn in internati international onal market market and contribut contributes es around 25% share of the global trade in Cotton Yarn. 6. The Apparel Apparel Industry Industry is is one of largest largest foreign foreign revenue revenue contribut contributor or and holds holds 12% of the country’s total export. 7. Industry Industry has large large and diversi diversified fied segments segments that that provide provide wide variety variety of products. products. 8. Growing Economy and Potential Domestic and International Market.

7.2 Weaknesses 1. Indian Apparel Industry is highly Fragmented Industry and lower Productivity in

various segments 2. Indust Industry ry is is highly highly depen dependen dentt on Cotton Cotton.. 3. Lack of Technolog Technological ical Developme Development nt that affect affect the product productivity ivity and and other activi activities ties in whole value chain. 4. Infrastru Infrastructura cturall Bottlenecks Bottlenecks and Efficien Efficiency cy such as, Transacti Transaction on Time at Ports Ports and transportation Time. 5. Unfavourable labor Laws.

6. Lack of Trade Trade Membershi Membership, p, which restri restrict ct to tap tap other potential potential market. market. 7. Lackin Lacking g to gener generate ate Econ Economi omies es of Scale. Scale. 8. Higher Higher Indire Indirect ct Taxes, Taxes, Power Power and Inter Interest est Rates Rates..

7.3 Opportunities

1. Growth Growth rate rate of Domest Domestic ic Textile Textile Industr Industry y is 6-8% per annum. annum. 2. Large, Large, Potentia Potentiall Domestic Domestic and Interna Internationa tionall Market. Market. 3. Product Product development development and Diversi Diversificat fication ion to to cater global needs. 4. Eliminati Elimination on of Quota Quota Restricti Restriction on leads to to greater greater Market Market Development Development.. 5. Market Market is graduall gradually y shifting shifting towards towards Branded Branded Readymade Readymade Garment. Garment. 6. Increased Disposable Income and Purchasing Power of Indian Customer open New

Market Development. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

61

Export of Ready Made Garment to United Kingdom 7. Emerging Emerging Retail Retail Industry Industry and Malls Malls provide provide huge opportuni opportunities ties for for the Apparel, Apparel, Handicraft and other segments of the industry. 8. Greater Greater Investm Investment ent and and FDI opportuniti opportunities es are are availabl available. e.

7.4 Threats

China.. 1. Competition from other developing countries, especially China 2. Continuous Continuous Quality Quality Improve Improvement ment is need need of the hour hour as there there are differen differentt demand patterns all over the world. 3. Eliminati Elimination on of Quota syste system m will lead lead to fluctuati fluctuations ons in Export Export Demand. Demand. 4. Threat for Traditional Market for Power loom and Handloom Products and forcing

them for product diversification. d iversification. 5. Geogra Geographi phical cal Disadva Disadvanta ntages ges.. 6. Intern Internati ational onal labor labor and Envir Environm onmenta entall Laws. Laws. 7. To bala balance nce the demand demand and supply supply.. 8. To make make balan balance ce betwee between n price price and and qualit quality. y.

CHAPTER 9


62


MAJOR FINDINGS

Key Findings ex pected to increase at a CAGR of 1. Demand for readymade garments in rural India is expected 16.5% during 2008-2010. Women apparel market (in value terms) is anticipated to grow at a CAGR of 17.79% till 2010. The organized apparel retailing in India is projected to surge at a CAGR of 30% from 2008 to reach Rs. 52,289 Crore in 2010. Increasing at a CAGR of 25%, branded apparel industry for women is expected to hit Rs. 18,351 Crore by 2010. 2. The organized organized lingerie lingerie retail retail market market in India India is expected expected to touch touch Rs 4000 Crore Crore mark mark by 2009. INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

63

Export of Ready Made Garment to United Kingdom 3. Liberalizat Liberalization ion of FDI policy policy with with up to 100 per per cent foreign foreign equity equity participa participation tion may help in increasing production capacity. 4. By creating creating state owned owned cargo shipping shipping mechanis mechanism m with rationali rationalizing zing fiscal fiscal duties, duties, upgrading technology through the technology up gradation fund scheme (TUFS) 5. As per today’s today’s demand, demand, eco-fri eco-friendly endly garment garment are are more demanded demanded in the the UK market, market, we can tap the target market. 6. By setting up of quality checking laboratory, more quality product will be exported in

UK. With better value added product India can expand it’s market in UK

CHAPTER 9


64


RECOMMONDATION AND CONCLUSION

Recommendations 1. Deli cense cense the the import import of used textil textilee looms, looms, and expedite expedite the implementation of the present decision to allow imports of PU

(1982-87 vintage) models

2. Create, Create, within within a short short time period, period, one or more more world-cl world-class ass Apparel Apparel and Textile Textile Export Parks, with Special Economic Zone [SEZ] status, in selected port cities- Mumbai and Tamil Nadu having export clusters, follow international best-in-class practices in these parks, including customs bonded warehousing, zone -based export clearances, etc. 3. Allow textile textile and apparel apparel cluster cluster areas areas to set up distribut distributive ive generation generation model model for power 4. Disparity in excise duty structures on the basis of fibre and Remove enterprise INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH

65

Export of Ready Made Garment to United Kingdom size in the textile sector. uniform rate of excis excise/ e/ duty duty across across all type type of yarns, yarns, fabrics, fabrics, knitwear, knitwear, a) Fix uniform processing processing etc, and remove remove - scale-base scale-base duties duties,, which which are creating creating uncompe uncompeti titiv tivee distortions. b)

Ration Rationali alize ze excise excise duty duty structur structuree across across the entir entiree value value chain from from fibre to

garment retailing. Levying of moderated, uniform VAT should be the long-term objective. c) Do away away with with exem exempt ptiions ons on ginn ginned ed cott cotton on,, hank hank yarn yarn,, grey grey fabr fabric ic,, hand hand processors, knitwear and hosiery and Small Scale Industry [SSI] units in garments. d) Rationali Rationalize ze excise excise duty incide incidence nce at spinning spinning stage. stage. Spinning Spinning bears bears 55% of total total excise revenue collections from this industry, but contributes only 39% to value addition. e) Equalize Additional Excise Duty (Textile and Textile Articles) on mm/yarn and

cotton yarn.

5. Allot a part of the available textile and apparel quotas to regular, large importers having

branch offices or dedicated buying houses in India transferable quotas, to bring down transaction costs in apparel 6. Cap the premium level for all transferable exports and improve utilization levels

7. Initiate measures to improve customs procedures, especially with regard to

arbitrary valuation of imported goods, through following steps: a) Accept a self declaration basis for hazardous -materials-free certification, and for

valuation, accompanied by international accountant’s third party certification

b) Introduce Introduce a random random audit process process for for checking checking valuation valuation rather rather than impose impose an arbitrary value on shipments

c) Have a consulta consultative tive panel panel including including UK textil textilee body, to resol resolve ve issues, issues, as an alternative to appellate process

8. Allow FDI by buying houses in merchandising and trading of textiles for export as well as INTERNATIONAL INTERNATIONAL INSTITUDE OF FOREIGN TRADE & RESEARCH 66

Export of Ready Made Garment to United Kingdom domestic sector, sector, which will bring in management processes and skills into the domestic do mestic industry at par with levels in other o ther competing countries

Conclusion

In view of non-tariff restrictions on imports of garments from India by the developed West, India needs to strike a fine balance to protect exports of her garments, by concentrating in countries in the Southern hemisphere. A free-trade agreement which encompasses South-East Asia (synthetic); India (cotton); Far East (silk) and Pacific Ocean countries of Australia & New Zealand (wool) will make for a more meaningful spread of its garment exports.


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Export of Ready Made Garment to United Kingdom This issue assesses the main factors affecting competitiveness of the apparel and textile industry covering trade barriers, industrial and trade policies, infrastructure, buying power, financial capital, managerial skills and the impact of Multinationals on socio-economic stability

References 

Webliography

www.aepcindia.com dated 21, 23, 24, 30 April 2008 www.commerce.nic.in

Dated 28 April 2008 at 3.45 pm

www.indiainfodrive.com dated 20 April 2008 At 10.38 Am


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Export of Ready Made Garment to United Kingdom www.interiortextiles.co.uk dated www.interiortextiles.co.uk dated 5 may 2008 at 4.52 pm www.economywatch.com dated 21 April 2008 at 3.23 pm www.prospects.ac.uk dated www.prospects.ac.uk dated 23 April 2008 at 11.38 Am www.india-crafts.com 27 April 2008 at 11.32 Am www.indiainbusiness.nic.in/index.htm 29 April 2008 at 5.19 pm www.nmcc-vikas.gov.in/sector/Pages/Sector.aspx 27 April 2008 at 3.15 pm www.icdfc.com dated 22 April 2008 at 11.00 Am www.indiantextilejournal.com dated 21 April 2008 at 12.45 pm www.febre2fashion.com dated 21April 2008 11.30 Am


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Export Potential of RMG From India to UK

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