India Taxtile

8/8/2019 India Taxtile

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Presentationon

Textile sector report

Presented by:Shailesh patel

Sunil patidar


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INTRODUCTION: The textileand clothing sector

A leading sector role in the Indianeconomy.

Provide employment. (38millionpeople).

contributes 7% to GDP.

14% to industrial output.

18% to industrial employment.


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Ave

ra

g

e

co

m

p

ou

n

d

ed

ra

te

billion$


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The principal markets.

the US and the European Union.

together accounted for 83% ofIndias total clothing exports.

52% of its textile exports in 2003.


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Degree of fragmentation


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Early: 1980-1990s.

inward-looking till the 1980s.

increasingly integrated into globalmarkets since the late-1980s and1990s.

emerging as one of the top ten globalexporters of textiles and clothingafter 1998.


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Problems during 1980-90s

technological obsolescence.

fragmented capacities.

low scales of operation. lack of an exit policy.

rigid labor laws.

despite all this factor the sector grow

at a steady rate.


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The Indian way.

Without significant FDI.

a tier of highly competitive domestic

firms.

build new ties with buyers and suppliers

at home and abroad during 1980-1990s.

Legacies: if nurtured well, move the

Indian apparel industry toward a new


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T h re e fe a tu re s a re strikin g w h e n o n e.co m p a re s In d ia w ith o th e r co u n trie s

.A la te sta rt

A n e xte n sive d o m e stic fib e r a n d.fa b ric b a se

.B a rrie rs to g lo b a l in te g ra tio n


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Policy turnaround: deregulationand external sector reforms

After 1985 the government revisedits textile policies.

Apparel exports :From barely $30million in 1970 to $6.6 billion in2003.

Textile exports grew from $1 billion in1980 to $6.8 billion in 2003.


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first phase of growth.

first phase of growth took place inthe early 1970s.

As a result of in demand from the USand Europe for Indian handloomgarments, and clothing of

indigenous cotton fabrics.


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The second phase ofgrowth.

The second phase of growth began inthe mid-to-late-1980s.

was triggered by the deregulation of

the textile industry. adopted a new textile policy.

allowing firms to diversify their fabric

and fiber base raising the maximum limits on

allowable investment.


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third phase of growth.

between the 1990s and early 2000s.

textile and apparel exports grewrobustly.

removed export barriers.

slashed import duties especially forexporters.

TUFS


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Emerging Firm Strategies

Flexible, small-batch production: Indian apparel firms oriented their exports

toward the European market rather than theUS.

Indian apparel exporters in the 1980s and 1990stended to be with small and medium sizedwholesalers and retailers.

flexibility and the ability on the part of theirsuppliers to handle fast-changing orders of

variable designs and specifications.


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Scaling up:

invested over $700 million in new equipment, new mills andproducts and expected to spend $2.5 billion more by the end of

2005.

Removal of quotas.

Three striking features:

1) Liberalization of restrictions on capacity increases.

2) Significant forward integration by yarn-makers and spinning millsinto garments.

3) Backward integration by small and medium knitwear and garmentexporters into yarn making, and significant investments in theadoption of new technologies.


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Customized mass production:

After quota removal home furnishing andtextiles is emerging as a major growthsector.

This growth relies on diversity of localfabrics available in India, especially

handlooms, cotton, silks and blends.


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ercen are o ea ng


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ercen are o ea ngCotton

Producer


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SWOT

STRENGTH

Abundant raw material

availability

Low cost skilled labor

Developed value

chain.

Growing domestic

market

Weaknesses

Fragmented industry

Technological

obsolescence Higher indirect taxes &

interest rates.


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OPPORTUNITIES

Growth rate ofdomesticindustry.

Elimination ofquota

restriction. Greater

investment

and FDI are

threats

Competitionfrom china.

fluctuation inexportdemand.


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GOVERNMENT REGULATION &SUPPORT

The technology up gradation

fund scheme low interest loans

Modernisation- 20% capital subsidy

,capital

support of 10%

Quality Improvement Various


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Cont

Schemes by central government-integrated textile and apparel

parks.

Investor can invest up to 100%

through FDI

Changing the duty structure of

textiles.


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Recent fiscal duty reforms

04-05, duty structure was revised

Except mandatory duty ,all other textile

goods were exempt from excise duty.

Duty reduced to 4% -cotton textile

items

8%-other textile

items

Additional excise duty was abolished


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IMPACT OF FISCAL DUTYREFORMS

Decentralized sector- relieved of

problems

Reduction in the cost of production Employment opportunity

Investment has started for capacity

addition, modernization

Industry is geared up for facing post

quota challenges


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ENVIRONMENT ANALYSIS


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Thanks

Documents

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