Overview of Apparel and Textile Industry -2010

In 2009, world apparel production stood at US$140 billion, with 71% of production accounted for by Asian countries. The developed nations/regions such as US and European Union (“EU”) accounted for 11% and 14% of global production respectively. Being a matured industry, growth rate of the Global Textile and Apparel industry is in sync with the growth rate in global GDP. Of the total apparel retail market valued at approximately US$500 billion in 2009, the developed nations/regions like US and EU accounted for 33% and 30% respectively.

The Indian textile and apparel industry is estimated to be worth Rs. 2,700 billion in fiscal year 2010. It has been estimated on the basis of industry interactions. Approximately 65% of the total textile and apparel production (wholesale price level) is consumed domestically. India’s domestic textiles and apparel consumption is estimated at Rs. 1,750 billion (wholesale price level), of which apparels account for approximately 71%. India exported US$20 billion worth of textiles and apparel of which 45% are apparel exports.

The textile and apparel industry is one of the largest and the most important sectors in the Indian economy in terms of output, foreign exchange earnings and employment. It contributes approximately 14% to India‟s industrial production, 4% to the country‟s GDP and 17% to the country’s export earnings. It provides direct employment to over 35 million people and is the second largest provider of employment after the agricultural sector. Thus the development of this sector has an overall impact on the economy. The Indian textile and apparel industry contributes approximately 4% to the global textile and apparel market. Since the textile industry has such economic importance, it has always attracted the Government’s attention. Therefore, the Government has introduced policies such as the Technology Upgradation Fund Scheme (“TUFS”), Scheme for Integrated Textile Parks (“SITP”), low excise duty, high import duty (to discourage imports) and National Textile Policy to develop the textile sector.

Indian Apparel Industry

Estimates say (based on industry interactions) that the Indian apparel market grew at a CAGR of 6.5% from Rs. 1,225 billion in fiscal year 2005 to Rs. 1,675 billion in fiscal year 2010 (wholesale level). The Indian apparel market comprises domestic apparel consumption and exports. The domestic market is estimated to be worth Rs. 1,250 billion in fiscal year 2010 (at wholesale level). Spending on domestic retail apparel has grown at a high rate of approximately 13–14%. The apparel market size at the retail level is estimated at Rs. 2,000 billion in fiscal year 2010. The retail purchases on apparels is expected to double to approximately Rs. 4,000 billion by fiscal year 2015, a CAGR of approximately 15%. Factors expected to contribute to the growth of the Indian apparel industry include:

Ø Rising levels of disposable income;

Ø Growing preference for ready-to-wear apparels;

Ø Increasing penetration of organised retail;

Ø Changing consumer habits;

Ø Increasing trend towards urbanization; and

Ø A comparatively younger populace.

Source: sebi.gov.in