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CHAPTER 6
SUMMARY OF FINDINGS,
CONCLUSIONS AND SUGGESTIONS
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Based on the review of the extant literature and findings of the study, it has been
unanimously recognized that textile Industry is globally one of the largest industries
and a key sector of the economy. India textile sector is undergoing radical changes in
its structure and dynamics of the industry. Majority of research studies examining the
textile exporting framework have found that textile exports are contributing
significantly in earning forex reserve for the country. Owing to its deep forward and
backward linkages, it has a strong multiplier effect and acts as one of the important
drivers of economic growth, with the gradual liberalization of the export sector in
India, the number of textile exporting units has grown progressively. It produces a
wide variety of products with different sub segments of textile industry i.e. cotton,
fiber, yarn, wool, silk, handlooms, handicrafts and jute industry etc. Indian textile
sector has become competitive after phase out of MFA in 2005 as result of liberal
export promotion schemes like Scheme of Integrated textile scheme, Technology Up-
gradation Fund, Export Promotion Capital Goods (EPCG) scheme, Duty draw back
scheme and Export Oriented Units (EOUs)/ SEZ/s Scheme. Moreover, liberalization
steps such as relaxation of foreign exchange and banking policies initiated by
Government of India. At present, the industry is witnessing positive outlook. Textile
firms in India are developing as global manufacturing hub so as to posit themselves as
global low cost competitors. However, Indian textile industry is still witnessing
uneven export profile due its heavy dependence on U.S.A, UAE and UK markets.
SECTION-A: SUMMARY OF FINDINGS
The extant literature reveals that as such no prior research was conducted into the
relationship of post-MFA scenario of Indian textile industry and the marketing
practices of textile exporting units to demonstrate the extent to which the existing
marketing practices affect the performance of these units along with the growth and
increased competition in this sector. On the whole, the present study considered two
dimensions of textile industry in relation to export, namely, post MFA scenario of
textile industry and existing marketing practices of the textile exporting units in India.
The present study also examined textile export marketing framework in the light of
foreign trade policy to improve textile export from India. The findings of the study are
as follows.
155
6.1 Export Marketing Performance of Textile Exporting Units
6.1.1 Export Sales Turnover
Though Indian textile export has gained significantly in world market in post MFA
era but is heavily dependent on European market and has not been commensurate
with its expectation by any reasonable yardstick. The study found only 15 out of 150
units crossing the turnover of 250 crores to be considered as large size textile
exporting units (Refer table 5.3). Reason being, poor capabilities and resources that
inhibited it from moving beyond the level of other competing developing countries
and limited size of the Indian textile companies due to which they had neither the
resources and capabilities to respond to the global market requirements nor the
orientation to strategize with a long run view, to develop new geographical or product
markets and to sustain competitive efforts in spite of initial market difficulties. So
India’s performance in textile in world market is substantially inferior as compared to
other European countries.
6.1.2 Sector-wise Analysis of Textile Industry
Sector wise analysis of export performance of Indian textile sector reveal that, cotton
is the most important fiber from India in overseas market as indicated by the
respondents. It has been observed that 54.67 per cent textile units export cotton to
other countries (Refer table 5.2). So to achieve the export priorities appropriate
technology is a must. India has an inherent advantage in this sector because of
abundant availability of raw material, long tradition of craftsmanship and design and
presence across the entire value chain. Verma (2002) also suggests that the export
competitiveness of this sector is significantly affected by the cost and reliability of
power supply, logistic and transaction costs. Readymade garments were also found
most significant item in the basket of goods exported in the textile sector by India
(Refer table 5.2). The textile exporting units 32 per cent under study contribute major
share in the exports of readymade garments.
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6.2 Export Marketing Practices of Textile Industry
6.2.1 Promotional Channels for Overseas Markets
Promotional channels used by the exporting units were found very conventional and
no hybrid promotional channels are used. Most widely used promotional channels in
all type of textile units are export promotion cells/councils, international trade fairs,
and through internet, and TV commercials in foreign media, sponsoring international
events/games are least approved by all textile units. It has been observed that 61.2 per
cent respondents prefer international trade fair, 49 per cent respondents promotion
cells/councils, 44.7 per cent respondents through internet, and only 1.54 per cent
believe in sponsoring international events/games (Refer table 5.4(a)). Based on the
ranks given by the respondents from small, medium and large scale textile exporting
units international trade fairs and export promotion councils for small and medium
size textile units whereas internet websites/social media and international trade fairs
for large size units, are the first and second choice for promotion of textile products in
overseas markets. TV commercials in foreign media is least approved by small and
large scale textile exporting units and sponsoring international events/games is not
considered by medium size units for the promotion of their products in overseas
markets. So it can be established that small and medium industries give first
preference to international trade fair and large industries give first preference to
internet for their promotional activities (Refer table 5.4(b)). Because, E-market make
information flows more transparent, not only industry indices, but also precise trade
information for both seller and buyer should be updated constantly. The function of a
textile industry e-market is to provide quota and tariff information as well as textile
industry news to help marketers make the right decision. In addition to the industry
knowledge, textile trade fairs, shows, and events are services that should be provided
by e-markets. Not only are these trade events provide great opportunities for
companies to buy and sell but also to build network with other companies. The
findings of the study also statistically established that there is a significant difference
in term of promotion channel in small, medium, and large textile industry.
6.2.2 Distribution Channels Adopted for Selling the Product in Overseas Market
Most widely used distribution channel in all type of textile units are selling directly to
overseas customers followed by agents or buying agencies, and manufacturing setup
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in any overseas market, franchise mode, company owned showroom, overseas
distribution networks are least preferred distribution channels for the type of product
they sell in overseas market. However, based on the three categories of textile units,
it has been observed that small and large industries give first preference to agents/
buying agencies but medium type of industries give their first preference to directly
selling products to overseas customer (Refer table 5.5(b)). Also from a manufacturers’
point of view, the success of the organization depend on the closeness with which it is
related to the needs and liking of their target group of consumer. It has to be an
exporter’s endeavor, not only to attract the customer by offering what they perceive in
a favorable way, but also to have their patronage by satisfying their needs on a
continuous basis. Exporters feel that there is a long lasting relationship with the buyer,
which is possible only after being competitive at the global level. The findings of the
study also revealed that there is a significant difference in terms of using distribution
channels in small, medium, and large textile industry. The null hypothesis was partly
rejected and alternate hypothesis that there is significant difference between small,
medium, and large exports units in terms of distribution channels used by them, partly
accepted. Overall, distribution channels should be chosen well, and efforts should be
made to maintain good relations between the parties concerned.
6.2.3 Pricing Policy to Determine Price of the Textile Products
The Indian textile exporters use different types of pricing policy for determining the
price of their products in international market such as Keep out pricing , Skimming
pricing, Penetration pricing, Psychological pricing, Price lining, One price versus
variable price policy, Discrimination pricing, Competition oriented pricing, Cost
oriented pricing. It was observed that most of the respondents preferred discrimination
pricing policy (95), and competition oriented pricing policy (10) were the least
preferred among all the policies as considered under the study by the respondents
(Refer table 5.6(a)). The findings of the study also revealed that there is a significant
difference in terms of the acceptance of pricing policies in small, medium, and large
textile industry (Refer table 5.6(c)). The null hypothesis was almost rejected and
alternate hypothesis that here is significant difference between small, medium, and
large exports units in terms of pricing policy used by them, accepted.
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6.2.4 Strategies for Creating Brand in International Market
Textile exporters use different types of branding strategies for creating brand of their
product in international market. Present study found that mixed brand strategy was the
first choice of all the textile exporters followed by single brand product strategy and
multi product brand strategy (Refer table 5.13 (b)). . The respondents also opted for
private brand strategy and manufacturer’s brand as a strategy to face the competition
in the international market environment. The findings of the study also revealed that
all branding variables in small, medium, and large textile units are same, so it can be
said that there is no significant difference between small, medium and large units in
terms of strategy adopted for creating the brand in international market. This is proved
using Chi-square test on the respondents’ views about the brand strategies used by
them.
6.2.5 Primary Sources used for Collecting Market Information
Textile exporters use different types of primary sources for collecting the market
information. Present study found that electronic survey, followed by personal survey
and mail survey method as the top three measures adopted by all the three categories
of textile exporting units (Refer table 5.14 (b). Personal interview with individuals
and telephone interview are the other methods taken into consideration by the small,
medium and large size textile units. The findings of the study revealed a significant
difference in small, medium, and large industries in terms of using the primary
sources for collecting market information.
6.2.6 Secondary Sources used for Collecting Market Information
Textile exporters also use different types of secondary sources for collecting the
market information. It was found that on-line databases, followed by personal files/
internal documents and press and media directories were the top three methods
adopted by all the three categories of textile exporting units (Refer table 5.15 b).
Academic journals and newspapers, public libraries, government records/publications
and trade associations were the other techniques taken into consideration by the small,
medium and large size textile units. The findings of the study also revealed a
significant difference in small, medium, and large size textile units in terms of
secondary sources use for collecting market information.
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The present study also found a severe problem for small- and medium-sized firms in
India as they often lack the internal resources to acquire essential information, while
large firms frequently have special departments geared to gathering information and
promoting their products overseas. Furthermore, the average SME in developing
countries can neither digest nor use effectively the vast quantity of general
information and flood of statistical data that are routinely handed to them in response
to their enquiries. Many of them lack the ability to sift through this mass of detail and
pull out the parts relevant to their specific and short-term operations.
6.2.7 Competitive Advantages over other Exporters
As textile exporters always strive to have competitive edge over others, this study also
found that Indian exporters were having a number of competitive advantages. It was
observed that good product quality, followed by always on-time delivery are the top
indicators to take competitive advantage as expressed by the respondents, and close
(or old) association with your customer, well established brand name in overseas
market were not found significant predictors of getting competitive advantage in
textile exports (Refer table 5.12(b)). On the basis of the ranking given by the
respondents belonging to the small, medium and large size textile units (Refer Table
5.12(c)). The study could not reveal any significant difference in considering the
factors under study for getting competitive advantage in export business among the
three categories of textile units. Good product quality, always on-time delivery,
lowest cost of production, wide range of products manufacturing capability and fast
product development capability were the top most five factors considered by small
and medium size units whereas always on-time delivery, followed by good product
quality, wide range of products manufacturing capability, lowest cost of production,
and fast product development capability were the factors given top five ranks by the
respondents belonging to large scale textile units for taking competitive advantage.
Surprisingly, well established brand name in overseas market was the least considered
factor leading to competitive advantage by all the textile exporting units over the
rivals. Based on the analysis, it can be observed that Indian textile industry
desperately needs to understand how to develop core competence and competitive
advantage in them. This will help them bring out good product mix into the market
and will increase their confidence in building their own brands in international
markets. Also, they need to update their skills in computer aided designing (CAD)
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base garment designing, understanding lifetime value of customer and customer
relationship management which is becoming the decisive factor in export marketing
today.
6.2.8 Insurance Policy Adopted by your Organization in Textile Exports
Various type of insurance policy such as open policy, special declaration policy, duty
insurance policy, seller’s contingency policy are adopted by textile exporters. The
study found open policy, special declaration policy, and duty insurance policy as the
top three policies adopted by all the three categories of textile exporting units. The
findings of the study also show a significant difference in term of insurance policy
adopted by textile exporter in small, medium, and large textile industry.
6.3 Marketing Barriers in Textile Exports
6.3.1 Infrastructure Problems in Exporting Textile Products
The Indian textile exporters face various types of infrastructure problems in textile
exports in overseas market. The respondents considered cost of electricity, followed
by un-availability of good quality fabric/ raw material as the biggest infrastructure
problems. Telecommunication network and IT was given the tenth rank as
infrastructure problem in textile exports by the respondents. Movement of goods to
sea ports and airports, inland container depots, air cargo complexes and augmentation
of transport facilities especially for decongestion were also highlighted as the
infrastructure related issues in textile export business. Further, the infrastructure
problems were analyzed on the basis of the ranking given by the respondents
belonging to the small, medium and large size textile units. The study found
significant differences in experiencing infrastructure problems among the three
categories of textile units. Cost of power was ranked as the first and foremost problem
in textile industry by all the respondents from these three types of exporting units.
Product development capability was the second largest infrastructure problem for
small and large size textile units whereas un-availability of good quality fabric/raw
material was the second largest problem for medium size textile units. Outdated
garmenting technology was the third largest infrastructure problems by medium and
large size units whereas un-availability of good quality fabric/raw material was the
third largest problem for small size textile units. Augmentation of transport facilities
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especially for decongestion was considered at eleventh positioned infrastructure
problem by all the textile exporters. Movement of goods to sea ports and airports,
inland container depots, air cargo complexes etc. by small size, Telecommunication
network and IT by medium size and Red-tapism by the large size textile exporting
units were indicated as the least significant issue among the infrastructure problems
(Refer table 5.7(c)).
6.3.2 Documentation Problems Experienced in Custom Clearance
The textile exporters face various types of documentation problems while exporting in
overseas countries. The study found issuance of commercial invoice and issuance of
photo copy of income tax registration certificate as the major documentation problems
in textile exports. Issuance of photo copy of income tax registration certificate was
admitted by 32.8 per cent respondents and issuance of commercial invoice by 26.9
per cent respondents as one of the main documentation problem in their export
business (Refer table 5.8(a)). The other documentation problems were issuance of
copy of export license, issuance of packing list, issuance of foreign exchange
declaration forms. Based on the ranks given to these problems by the respondents
from small, medium and large scale textile exporting units, issuance of commercial
invoice for small and large size units was the first and for medium size units the
second problem encountered in their custom clearance process. Whereas issuance of
copy of export license was ranked first by medium size and second rank was given to
the problem by the small size textile units. Issuance of photo copy of income tax
registration certificate was realized as documentation problem at second rank by the
large size units under study which was at third position as experienced by the small
and medium size textile exporting units (Refer table 5.8(b)). The present study
establishes that issuance of commercial invoice was the biggest documentation
problem for small and large textile units whereas issuance of copy of export license
for medium textile units. Issuance of custom declaration forms was the least
considered documentation problem for medium and large textile units whereas
issuance of certificate of origin for small textile units. Lack of information about
export procedures is large marketing barrier for textile units. Often, the documents
are not properly completed, causing delay in payments and thus creating cash flow
problems for the exporter. So a firm that wishes to enter the export market or intends
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to increase its export activity has to acquire the knowledge and skill to deal with
administrative procedures.
6.3.3 Trade Barriers for Textile Exports
The textile exporters also face various type of trade barrier in exporting their products
to overseas countries. It was observed from the survey that regulation and standards,
followed by environmental requirements were the chief trade barriers for textile units.
Other trade barriers were testing and certification, corruption and theft, quality, label
and packing, and transport cost (Refer table 5.9(b)). Further, the trade barriers were
also analyzed on the basis of ranking given by the respondents belonging to the small,
medium and large size textile units, the present study found significant differences in
facing the trade barriers among the three categories of textile units. Regulations and
standards and environmental requirements of the countries where the textile products
are to be exported, are first and second big barrier for all type of textile units.
Transport cost is the least significant barrier for small and medium size textile units,
whereas testing and certification was the least significant barrier for large textile units.
6.3.4 Tariff and Non-Tariff Barriers for Textile Export
Indian textile exporters face various types of tariff and non-tariff barriers. These are
import quota, licensing, exchange and other financial controls, prohibitions,
discriminatory bilateral agreement, advance deposit requirement, antidumping duties,
subsidies and other aids, government procurement policies, and competition. Present
study found licensing and import quota as two big tariff and non-tariff barriers in
textile exports. Whereas advance deposit requirement and prohibitions were least
significant barriers as indicated by the respondents in textile export (Refer table
5.11(b)). Prohibition can be selective with respect to commodities and countries of
origin/ destination; it includes embargoes and may carry legal sanctions. Prohibition is
sometimes in the form of intrinsic specification of the products. The survey revealed
that a larger proportion of smaller firms faced non-tariff barriers than larger firms.
Similarly, a smaller proportion of firms with foreign affiliation faced some kind of
barrier compared to those firms that had a foreign affiliation. Further, these barriers
were analyzed on the basis of the ranking given by the respondents belonging to the
small, medium and large size textile units. Overall, the present study indicated that
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licensing is the biggest barrier for small and medium type of textile units, whereas
import quota is the largest barrier for large type of textile units.
6.3.5 Problems in Cross Border Transactions for Textile Export
The textile exporters face various types of problems related to cross border
transactions in textile exports. The findings of the study revealed that currency
convertibility, followed by Political instability and unfavorable attitude towards the
foreign buyers were the three big hurdles in cross border transactions faced by the
exporters. However, professional service, memorandum of understanding and treaties
with the destination countries and local management and partner were the three cross
border transaction problems least bothered by these sampled exporters (Refer table
5.16(b)). Based on the analysis, the researcher establishes that political stability and
currency convertibility are the top most problem related to cross border transaction for
all type of textile units, whereas economic growth is largest problem in cross border
transaction for small and large units, and attitude towards the foreign buyers is biggest
problem for medium textile units. Local management and partner was the least
significant problem in cross border transaction for small and medium textile units,
whereas Memorandum of Understanding and treaties with the destination countries
was the least viewed problem by large textile units. The problem related to
Professional service was least significant problem for all type of textile units (Refer
table 5.16(c)).
6.3.6 Commercial Risk for International Transaction in Textile Export
Indian textile exporters also face various types of commercial risks in textile exports.
Such as government regulation, country financial risk, currency interest rate volatility,
political and social disturbances, spread of epidemics like world flu etc. Product
quality and safety problem was the other commercial risk in international transaction
in textile exports. It was observed that government regulations, followed by country
financial risk and political and social disturbances were the three major commercial
risks as indicated by the exporters under study (Refer table 5.17(b)), whereas currency
interest rate volatility, product quality and safety problem, activist attack on global
brand, natural disasters, terrorist attacks and spread of epidemics like world flu etc.
were other commercial risks in textile exports in their respective order. A sound
financial position is one of the keys to secure price advantage in the target market.
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Many SMEs in developing countries run into problems for lack of timely and
adequate working capital, which not only adds costs but can also endanger the entire
production operation. The literature review also provides evidence for the importance
of financial barriers to exporting such as difficulty in acquiring the necessary funds to
initiate or finance export sales (Cardoso, 1980; Weaver and Pak, 1990; Kaleka and
Katsikeas, 1995; Dicle and Dicle, 1992; Frances 1987). Government regulation was
found largest commercial risk for small and medium size units, whereas Political and
social disturbances for large textile units as a major commercial risk.
6.3.7 Risk of Currency Fluctuation in Textile Exports
The Indian textile exporters face various type of currency fluctuation risk in textile
export such as unstable exchange rates, revaluation of exporter’s currency, and
unconvertible foreign currencies. The findings of the study found a significant
difference in terms of risk of currency fluctuation for small, medium, and large textile
size textile units. This was proved using Chi-square test on the respondent’s views
about risk of currency fluctuation (Refer table 5.21).
6.4 Trade Incentives Provided by Indian Government
6.4.1 Export Finance Schemes Offered by the Government of India
When the respondents were asked to indicate various types of export finance schemes
offered by the Government of India to textile exporters which they preferred. It was
found that on line credit to exporters (56.67 per cent respondents), finance scheme for
export of goods for exhibition and sale (54.67 per cent espondents), and advance
against retention money (42 per cent respondents) were the three top most schemes
rated by the textile exporters (Refer table 5.19). Interest rate subvention scheme
(38.67 per cent respondents), advance against export bills purchased, discounted, or
negotiated (29.33 per cent respondents), rediscounting of export bills abroad scheme
(23.33 per cent respondents), export credit guarantee corporation maturity export
factoring scheme (20.67 per cent respondents), advance against for duty drawback
receivable from government (16.67 per cent respondents), International export
factoring scheme (6.67 per cent respondents), advance against undrawn balances on
export bills (4.67 per cent respondents), gold card scheme (2.67 per cent respondents)
and Factoring/ forfeiting scheme for conversion of credit sale into cash sale (1.33 per
165
cent respondents) were the other schemes considered by the respondents for getting
export finance assistance in their export business .
6.4.2 Market Access Initiative Schemes Availed/ Offered by the Government of India
The government continually support the textiles export sector through various policy
initiatives to enable the sector to increase market share in the global textiles markets.
The government is implementing various schemes for the development of the textile
industry in the country. Government has introduced several export promotion
measures in the union budget 2012 -13 as well as through schemes of Foreign Trade
Policy 2009 -14, including incentives under Focus Market Scheme and Focus Product
Scheme; enhancing the coverage of Market Linked Focus Product Scheme for textile
products and extension of Market Linked Focus Product Scheme etc to increase
India’s share in various countries (outcome budget 2012-13). The survey revealed that
84 per cent respondents agree with Focus Market Scheme (FMS), 42 per cent with
Market Linked Focus Product Scheme (MLFPS), 29.33 per cent with Special Focus
Market Scheme (SFMS), 26.77 per cent with Vishesh Krishi and Gramudyog Yojana
(VKGUY), and 25.33 per cent with Focus Product Scheme (FPS) (Refer table 5.20).
6.4.3 Schemes Availed/ Offered by the Government of India
Government of India offers different types of schemes for boosting the sales of textile
products in overseas market. Majority of the respondents 82.7 per cent admitted to
take government assistance for boosting the sales of their products (Refer table
5.10.1). The respondents indicated Export Promotion Capital Goods (EPCG) Scheme
and Duty Drawback Scheme as the most important schemes provide by the Indian
Government. However, 95.16 per cent respondents accepted export promotion capital
goods scheme and 73.39 per cent respondents opted for Duty Drawback Scheme
(Refer to table 5.10.2). Other important scheme offered from Government of India to
textile exporters are Development of Mega Cluster (DMS) Scheme (43.55 per cent
respondents), Generalized System of Preferences (GSP) Scheme (39.52 per cent
respondents), Annual advance license scheme (28.33 per cent respondents), Duty
entitlement passbook scheme (14.52 per cent respondents), and Textile Worker’s
Rehabilitation Fund (TWRF) Scheme (10.48 per cent respondents), and Duty Free
Replenishment Certificate Scheme (5.65 per cent respondents). Based on the findings
166
of present study, it can be concluded that EPCG was one of the most successful
comprehensive schemes which facilitate the import of new and second hand
machines.
6.5 TUFS Scheme and Constraints Associated with TUFS Scheme
Textile Up-gradation scheme was found very popular among the textile exporters.
The findings of the study indicated that 57.3 per cent respondents accepted that
technology up-gradation fund scheme help the growth of textile industry, whereas
42.7 per cent respondents were also ignoring this view about this scheme (Refer table
5.22.1). Further, the study observed that 32.1 per cent of the respondents viewed that
interest grant/subsidies from government are not available for boosting the product in
overseas market and 28.4 per cent of the respondents admitted the problems of
documentation requirement, 15.2 per cent of the respondents indicated problem with
the availability of fund from financial institution (Refer table 5.22.2). The present
study found that finance facility availed under TUFS is far less as compared to
spinning and other segments of textiles. The reason is the haphazard growth of textile
industry. The textile manufacturers don’t have planned expansions and they buy small
machines and when they have large orders and they required it. So there was no
motive to avail funds under TUFS scheme. The fund requirement at a time is not very
large and can arrange the same through internal accruals or from regular commercial
banks. This is why there are no large capacities the way these are in China and other
parts of Far East Asia or even in Bangladesh. Interest grant and subsidies provided by
the Indian Government is not enough for growth of the textile sector.
6.6 ITP Scheme and Benefits of the Integrated Textile Parks (ITP) Scheme
Integrated textile park schemes are a leap step towards creating clusters with modern
amenities like electricity, roads, water and Effluent Treatment Plant (ETP). The
concept of creating integrated textile part is very model and should prove to be engine
in the growth of textile export from India. It is under establishment and soon will be
operational. But the response of exporters is very mixed and not all agree with the
success story it is expected to write. It has been observed from the survey 62 per cent
respondents disagree on this view that the integrated textile parks scheme gives the
world class infrastructure facilities. And it will be helpful in boosting the textile
167
export from India. While approximately 38 per cent agree with the idea of integrated
textile part and are confident that they will be benefited with textile parks scheme
(Refer table 5.23.1). Under the benefits of the textile parks scheme the respondents
viewed that power, water and other utilities to the ITP, followed by tax exemptions
were the two main benefits where maximum exporters strongly agree to for the
growth of textile industry. Identification and procurement of suitable land, exemption
of stamp duty and flexible and conducive labor environment for the units located in
the ITP were the other benefits as viewed by many of the respondents.
6.7 Evaluation Criteria to Assess Potential of Export Market
Indian exporter were asked to assess different types of criteria for evaluating the
potential of export market such as market selection criteria, market potential, shipping
cost and time, potential competition, service requirement, and product fit. The finding
of the study revealed that market potential, market access are the major criteria for
evaluating the textile export market (Refer table 5.24 b). Market selection, potential
competition, shipping cost and time, and service requirement are the other criteria
used by these exporters. According to Lall (1991), a well designed and manufactured
product will not gain export markets unless it can be transported and delivered to
import markets safely, punctually, cheaply, and reliably. However, a product, which
sells well in a developing country, may not sell at all in a developed country. Based
on the analysis of extant literature and respondents’ views, the study observed that
quality is often indicated as one of the most important conditions for entering and
remaining in foreign markets. It concerns packaging, meeting importers quality
standards and establishing the suitable design and image for export markets. There are
different quality standards in India. However, many of the quality problems are the
result of inadequate knowledge about market requirements, product characteristics
and production technologies.
SECTION-B: CONCLUSIONS
In the post MFA phase era, Indian textile firms are becoming competitive in the
changed business environment. It has evoked diverse reaction from different textile
exporters. While majority of exporters were happy with the development, other is
getting cautious. Some are branching out while others are concentrating on niche
products. However, a majority of the exporters perceive that it will be positive
168
outlook to India, as well as to their organizations. The present study was focused to
assess the attitudes of Indian textile exporters towards textile exports in international
market and to identify their key success factors and constraints. For this purpose a
questionnaire was prepared to collect significant information relating to various
export problems of the textile exporting firms. In questionnaire a series of 25
questions was prepared on four different categories of problems. Before conducting
the actual survey, a pilot test was carried out with the purpose to check whether the
questions within the questionnaire were clear and easily understandable in the way
perceived by the author. Finally, the actual survey was conducted and the respondents
were asked to gauge the importance of the problem by rating each problem item being
investigated by its importance. For this, a five point scale was developed ranging from
1; “Strongly disagree”, 2; “Disagree” 3; “Neutral”, 4; “Agree” and finally last 5;
“Strongly agree”.
The study concludes that Indian textile exports heavily dependent to European and
the US markets. Sector-wise analysis of the export performance of Indian textile
sector revealed that cotton is the most important fiber from India in overseas market.
So to achieve these priorities with appropriate technology is a must. India has an
inherent advantage in this sector because of abundant availability of raw material,
long tradition of craftsmanship and design and presence across the entire value chain.
The export competitiveness of this sector is very significantly affected by the cost and
reliability of power supply, logistic and transaction costs. Indian textile Industry some
inherent advantages like excellent resource base, availability of cheap labor, presence
in the value chain which is making textile exports globally competitive in comparison
to other countries. Indian Government is promotional in boosting textile exports from
country through various export promotion schemes like Scheme of Integrated textile
scheme, Technology Up-gradation Fund, Export Promotion Capital Goods (EPCG)
scheme, Duty draw back scheme and Export Oriented Units (EOUs)/ SEZ/s Scheme
yet there have been certain constraint in implementation issues that had restricted the
ability of Indian textile industry to harness its potential globally. The study outlines
the view of textile export units in terms of difficulty faced by them that restricts their
ability to compete globally.
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6.8 Factors Affecting Indian Textile Exports
6.8.1 Infrastructure
The most prominent problem existing for Indian textile export industry is of
infrastructure mainly due to scarcity and cost of electricity, distance from sea port,
unavailability of frequent freight trains, congestion at the port or procedural hassles at
different levels, there is definitely lack of coordination and commitment from
government department who provide vital support services to promote the export
from country. There is definite need to provide single window for all logistic
problems. Although private participation is initiated in this direction but results are
awaited and can only hope for better future prospects.
6.8.2 Supply Chain Management (SCM)
The Indian textile industry has one of the longest and most complex supply chains in
the world, with as many as fifteen intermediaries between the farmer and the final
consumer. Each contributes not only to lengthening of lead times, but also adding to
costs. By the time cotton reaches from farmer to the spinning unit, its cost inflates
many folds. By the time it reaches to the final consumer in overseas market, its costs
increased substantially. This creates hindrance factor to penetrate global market. The
industries would need to develop this SCM perspective and rationalize costs at every
stage in the entire supply chain, and not only within their firms, or between
themselves and their vendors and suppliers. The focus of the firms shift to apparel
industry did take this initiative, and has managed to shrink the supply chain in terms
of lead times, as well as costs. Supply chain in India is extremely fragmented chiefly
due to the government policies and lack of coordination between industry and relevant
trade bodies. It is noteworthy that the countries that are globally competitive are the
ones who have a significantly consolidated supply chain.
6.8.3 Low Labour Cost
India textile sector enjoys favorably across the developing countries in terms of low
labour costs and skilled workforce. However, empirical evidence suggests that low
wages are not always a factor of competitiveness particularly in case of good quality
designer garments. Quite often high wages are paid to skilled laborers as
remuneration for the high levels of skill and productivity which, in turn are important
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factors of export competitiveness. It is identified that export oriented garment unit pay
higher wages to their labour than the domestic market oriented units. This difference
in wage rates is attributed to the unique and Indispensable skills of designers, pattern
makers and craftsmen, as well as to better-trained cutters and tailors employed by
exporting firms.
6.8.4 Cost of Raw Material
Indian cotton prices have been lower than international cotton prices of comparable
varieties due to ban on imports and control on exports of cotton. Indian prices
reported to be lower than their international counterpart. This gave a cost advantage to
Indian textile exporters. Major issue with the textile exporters include uncertain
demand from clients, product life cycles are short and competitive intensity is high
6.8.5 Factor Cost
Despite technological advances, textile sector remains labor-intensive globally, and
hence its manufacturing is secularly shifting away from developed to less developing
countries. Textile production has seen considerable technology improvement, but that
has only partially restored the comparative advantage of developed countries in textile
manufacture.
6.8.6 Labor Laws Relates Issues Affecting Textile Exports
Strict labor laws in India make it virtually impossible for companies to shed labor. It
also introduces unfair discrimination against large companies who are forced to
comply with the labor laws relating to minimum wages, social security, contractual
obligations, nature of terminations, internal transfers/ job rotation, right to leaves and
regulations regarding working hours etc., while the smaller ones (like powerloom)
manage to evade compliance with such regulations. This introduces a competitive
edge to powerloom compared to organized mills, and has led to decline of mills and
proliferation of powerloom in India, with all its attendant adverse implications for
competitiveness of the textile and clothing sector chain.
6.8.7 Government Policy Framework for Textile Sector
Many researchers have recognized that the origin of a substantial number of exporting
problems is rooted in the external environment. The nature of these problems tend to
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vary widely: distinctive foreign consumer preferences, unfamiliar business protocols
and practices, the imposition of tariff barriers and regulatory import controls by
overseas governments, fierce competition, exchange rate fluctuations and limited hard
currency for international trade. Government of India is focusing toward textile export
products to make them globally competitive. Some of the government policies that
have a bearing on global competitiveness of the Indian textile sector are briefly
outlined below.
6.8.7.1 Excise Duty
The excise duties applicable to the textile industry are the Basic Excise Duty (BED),
Additional Excise Duty (AED) at the rate of fifteen percent applicable on cotton yarn
and on all man-made/ blended yarn and fibre and AED in lieu of sales tax applicable
on power processed fabric. However, the duty structure is biased since duty incidence
falls disproportionately on different segments of the Indian textile and clothing
sectors. However, government of India is looking to reform the excise duties in textile
sector in the current Union Budget.
6.8.7.2 Technology Up-gradation Fund
Owing to the impact of globalization, Indian textile exports have been forced to
compete with global players in terms of quality and pricing of products. While
abundant human resources have helped the industries to survive to a certain extent,
Indian textile manufacturers are realizing that product quality and economies of scale
can be reaped only with sophisticated manufacturing facilities. The TUF scheme has
helped overcome technological obsolescence in the textile industry by infusing capital
for modernization of the infrastructure and machinery, which in turn enhances local
sourcing options for foreign apparel retailers. Under the TUF scheme, manufacturing
units are eligible for long and medium term loan from IDBI, SIDBI and IFCI, at
interest rates that are 5 per cent lower than the normal lending rates of banks. The
utilization of funds under this scheme has been disappointing. However, the one
positive observation is that processing sector-which is the least modernized in the
entire value chain- is also among the largest recipients of the loans. In textile exports
special preference for the small scale industries prevents units for making significant
investments and expanding their businesses and during recession the large textile
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exporting firms were not willing to expand capacity. However exporters availing the
scheme issues in documentation and getting necessary documentation for the same.
6.8.7.3 Scheme for Integrated Textiles Parks
Though the Indian textile industry has its inherent advantages, infrastructure
bottleneck is one of the prime areas of concern. To provide the industry with world-
class infrastructure facilities for setting up their textile units, the Scheme for
Integrated Textile Park (SITP) was availed by small and medium firm to locate their
units in textile parks of international standards and project fit as potential growth
centers. Taking into consideration the response to the scheme and the opportunities
for the growth of textile industry in the quota free regime but documentation, red
tapism, rentals and stringent non flexible norms for the units located in the parks are
acting as bottleneck to generate its truly potential.
SECTION-C: SUGGESTIONS
Even after the implementation of various textile policies in India, textile sector is
facing increased competition from the multinational companies and survival of the
fittest has been the buzz-word against the backdrop and in the light of the present
study, the following strategies are recommended for the promotion of the textile
sector in India for achieving the export targets for each of the product groups as
outlined below.
6.9 Government Level Initiatives
A substantial increase in production capacities is required to avail economies of scale.
Hundred per cent depreciation may be allowed on capital expenditure on textile
machinery for income tax purpose so as to encourage fresh investment. Rising input
costs are a factor affecting exports of garments worldwide. Since India has the
advantage of having its own source of raw material, this advantage needs to be
leveraged so as to gain a competitive edge over other countries. The exports of cotton
and cotton yarn need to be regulated in a manner which protects the domestic
industries from the major fluctuations in raw material prices. A huge potential exists
for increasing exports by undertaking capacity building in this sector. The high
custom tariffs in the importing countries is an important limiting factor in expanding
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our exports. Efforts are required to negotiate with these countries to reduce the tariff
structure. Dispense with the requirement of maintaining the average export
performance under the EPCG scheme. Exempt capital goods supplied indigenously
under the EPCG scheme from Terminal Excise Duty (TED).One of important
problem faced by textile sector is that of finance. In order to overcome the problem,
specialized bank branches for textile industries are to be opened by the banks to
facilitate operation of large number of textile loan/credit account. Specialized
branches have to be set up in clusters having concentration of textiles. In this
connection Government of India has to establish the modernization program
assistance of soft loan schemes. Most of the entrepreneurs are not aware of the
incentives; assistance and subsidies provided to the various networking banking sector
units by the Central and State Governments. The government should give wide
publicity to ensure better awareness. There is also a need to encourage large-scale
production, particularly in manmade and garment sectors. Disbursement of credit,
supply of cheaper raw materials, supply of electricity at reasonable rates, promoting
better capacity utilization, flexible labor laws, easy entry exit norms for the firms are
some of the basic policy measures which would help the Indian textile industry
become more cost effective. Further, it would be prudent to focus on selected states
having comparative advantage in a specific industry. Such measures could help
convert the post MFA challenges into an opportunity rather than a threat.
Infrastructure plays a very important role in export of textile industry. The
government should give top priority for creating basic infrastructural facilities like
road, power, transport and communication to the backward areas of our country. The
problem of shortage of power is wide spread throughout the country and the textile
units are hit hard by this. The government should take care of this and assure
uninterrupted power supply as provided to the large scale units. State government
should ensure uninterrupted supply of electricity to these textile parks. For this state
government may invite private players for power generation and distribution. This
will ensure continuous supply to industry and government can concentrate on
domestic and agriculture sector. Also, power theft is very high in industry. State
government can shed off this segment and give it to private players. There are various
power generation companies in India who can do this job and sometimes the tariff is
even lesser than government tariffs due to better management practices. Almost all
units in textile sector carry on production with outdated and obsolete technology.
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Another major problem, facing the industry is the procurement of raw materials. Open
market purchase by the textile units leads to high cost of production and competitive
inefficiency. Allocation of raw materials to textile industries should be based on
capacity utilization. In a competitive environment the share of labor input is higher in
most of the product groups followed by capital, therefore the results emphasize the
importance of skilled labor component for the industry. Foreign direct investment
should be allowed through automatic route in textile sector. This is must for up
liftment for the textile industry. Although inviting FDI in textile sector would not be
an easy task. Indian infrastructure is too poor to build confidence in overseas
investors. International certification or textile industry is going to be compulsion in
times to come. In order to export textile products to Europe and US, it is likely to be
must to have certain international certification. Ministry of textile must encourage
textile units’ or rather whole textile industry to obtain this international certification.
This will build confidence in overseas buyers on compliance of various sensitive
issues. Ministry of textile should constitute an agency of international repute to
provide complete package on consultancy, audit and certifications. . There must be a
series of awareness programs among textile exporter on various hedging tools and
techniques to cover transaction risks and ensure safeguard from exchange rate
fluctuation. Banks could be major participant in this program. This will help exporters
enter into long term agreements and provide price stability which is must in
international trade. Governments do not solely impose these procedural requirements.
Also independent organizations such as banks, shipping organizations and insurance
companies, have their own procedures. As the intense competition in the international
textile product market grows each year, the high quality advantage and brand
advantage of textile exports will be a major element in marketing strategy. Under
TUFS scheme spinning sector has played dominant role in modernization process.
International certification recognized globally is required the industry create
confidence and trust among foreign clients. In order to export textile products to
Europe and US, it is likely to be must to have certain international certification.
Ministry of textile must encourage exporting to obtain these international
certification. This will build confidence in overseas buyers on compliance of various
sensitive issues. Ministry of textile should constitute an agency of international repute
to provide complete package on consultancy, audit and certifications.
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6.10 Firm Level Initiatives
Small and medium textile exporting firms need to focus on quality of products to
survive in global market. For the firms selling in the mature market where product
differentiation is small, the cost reduction will be acting as important differentiator.
Small and Medium enterprises need to focus on quality to act as important
differentiator. Large exporting firms can focus on subcontracting to make them more
competitive and will act in terms of cost reduction, quality and availability. Firms can
explore the opportunity to customize the textile product as per client required and
accordingly the localization of products should be done by exporting firms. Marketing
knowledge should be developed as it is dependent on the relevance and depth of
marketing information available to the firm. Textile firms that use relevant, accurate
and timely information are in a better position to respond to export problems.
Information about exporting and more specifically market information was mentioned
as the most serious problem of manufacturing firms in developing countries. Getting
concrete information on prospective foreign markets is essential before exporting can
occur. The study identified several other marketing barriers that can inhibit exporting,
for instance, pricing of the product in the international market. Textile exporters rely
on international competitive prices as a benchmark and do not ask for premiums for
exchange and extraordinary risks so premium can be charged by the firms to compete
globally and earn foreign earnings. Deficient advertising and promotion programs are
also mentioned as other factors that constrain export activities which needs to be
explored. There is significant cultural distance between Indian and western countries
so to be successful in a foreign market textile exporters should choose a lower control
entry mode when country risk is high. The textile firms exporting in overseas market
need to focus on cultural distance, making it a less salient challenge. Indian textile
exporters needs innovative in product and production techniques. This is the greyest
area of Indian textile industry. They need to be more innovative and start designing
new product mix right from the yarn stage. They must learn the chemistry of colors
combinations, adopt designs from nature, understands themes of designs which are
hot topics these days for designers. International designers do not speak the language
of designs; but of themes and follow the nature. Then they must respond at the speed
of electricity so that customers feel attended and must get your attention. Then third is
the quality consciousness. Manufacturers must consider the retail price at which this
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garment will be sold to ultimate consumer and not the price at which they are selling
it to retailer. There is huge difference in the retail price and buying price. Most of
times the price of garment at which garment is sold to retailer are mere forty per cent
or less than the retail price at which it is sold to consumer. The consumer must get
value for money it must be delivered through delivering optimum quality standards.
Lack of information about export procedures has been mentioned as an export barrier
in many studies (Haidari, 1999). A firm that wishes to enter the export market or
intends to increase its export activity will have to acquire the knowledge and skill to
deal with administrative procedures. Exporting requires knowledge about export
procedures. One of the most cited obstacles with regard to exporting concerns the
time and paperwork required to comply with foreign and domestic market regulations.
6.11 Scope for Further Research
Appreciation of these findings and their implications should be tempered by an
acknowledgment of certain study limitations. First, this research was conducted
within the particular perception of exporters in Indian context. Any attempts to apply
the present findings to other research contexts may be potentially misleading. To
assess the generalisability of the study conclusions, it is essential that international
marketing scholars conduct replication studies in other countries. Likewise,
extensions of this work to different industry sectors can enhance the external validity
of findings. Research can be explored in the area of to acknowledge that the elements
that make up textile export venture branding advantage are complex and multifaceted.
They are dependent on the export market on which the venture operates, the cultural
idiosyncrasies and attitudes of the target customers, the competitive mix of the
offering, and the functional attributes of the product and brand itself. Future studies
may be done to integrate the value, rarity, imperfect imitability and substitutability
attributes of the resources and capabilities available to the export venture into the
present textile export marketing framework. Further research can be done to explore
the role of textile export firms located in export clusters and parks located in SEZ for
changed competitive strategies in light of incentives provided by government.