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ADVANCE LEARNING SYSTEMSA-146, SECTOR- 63, NOIDA, U.P. - 201307
LC CODE: 02882
A MARKET RESEARCH PROJECT REPORTON
OPERATION MANAGEMENT IN TEXTILE INDUSTRY
BY
Executive Summary submitted in partial fulfillment of the requirements for the degree of Master of Business Administration of Sikkim Manipal University, INDIA
SIKKIM – MANIPAL UNIVERSITY OF HEALTH, MEDICAL AND TECHNOLOGICAL SCIENCE DISTANCE EDUCATION WING, SYNDICATE HOUSE, MANIPAL – 576104
1
STUDENT DECLARATION
I hereby declare that the project report entitled:-
OPERATION MANAGEMENT IN TEXTILE INDUSTRY
Submitted in partial fulfillment of the requirements for the degree of Masters of Business Administration to Sikkim Manipal University, India, is my original work and not submitted for
the award of any other degree, Diploma, Fellowship or any other similar title or prizes.
Place: Noida
Date
2
EXAMINER’S CERTIFICATION
THE PROJECT REPORT OF
OPERATION MANAGEMENT IN TEXTILE INDUSTRY
is approved and is acceptable in quality & form.
Internal Examiner External Examiners
AMIT ZUTSHI (MBA HRD) Qualification
Management Faculty Designation
3
(UNIVERSITY STUDY CENTRE CERTIFICATE)
This is to certify that the project report entitled:
OPERATION MANAGEMENT IN TEXTILE INDUSTRY
Submitted in partial fulfillment of the requirements for the degree of Masters of Business Administration of Sikkim Manipal University of Health, Medical and Technological Sciences
Has worked under my supervision and guidance and that no part of this report has been submitted for the award of any other degree, Diploma, Fellowship or other similar titles or prizes and that the work has not been published in any journal or Magazine
520833690
CERTIFIED
(Guide’s Name and Qualification)
4
ACKNOWLEDGEMENT
It is a pleasure to record my thanks and gratitude to persons and organizations whose
generous help and support enabled me to complete this project within the stipulated
time period. My special thanks to for their valuable guidance for leading Textile
Industry.
This report is the culmination of the synchronized effort of all the above mentioned
that had faith and confidence in me.
I am greatly indebted to all those persons who have helped me in some way or other in
the completion of the project.
5
TABLE OF CONTENTS
CHAPTER I: INTRODUCTION
Overview of the Indian Textile Industry
India’s Textile Exports
CHAPTER II: LITERATURE REVIEW
CHAPTER III: RESEARCH METHODOLOGY
OBJECTIVES OF THE STUDY
CHAPTER IV: ASSESSMENT OF INTERNATIONAL DEMAND IN
READYMADE GARMENT & MADE-UP SECTOR
India’s Total Production of Knitted Cotton Women Dresses
Total Consumption of Raw Material
(Fabstract Clothing India Pvt. Ltd.)
Production Expansion Plan (Beyond 2000 A.D.)
Total Exports of knitted RMG from India to Top 5 destinations
Top 5 Knitted RMG Exporting Countries
Top 5 Knitted RMG Importing Countries (from India)
Unit Value Realization for Top 3 Knitted RMG Importing
Countries identified as Target Market
6
CHAPTER V: EXPORT POLICY OF INDIAN GOVERNMENT FOR RMG SECTOR
FDI Policy
TUFS
Duty Drawback Scheme
Advance Licensing Scheme
Exports Targets set by the Government of India
CHAPTER VI: GAP ANALYSIS (INTERNATIONAL DEMAND – INDIAN SUPPLY)
Reasons for the Gap
Imposition of quota under MFA
Sourcing of fabric
Voluntary export Restraints (VERs)
Administration of export entitlements
Post MFA Scenario
CHAPTER VII: COMPULSORY QUALITY CONTROL & PRE-SHIPMENT
INSPECTION
Labeling, packaging, packing & marking of goods
Adherence to quality norms by
o Fabstract Clothing India Pvt. Ltd.
Role of Testing Body: SGS India Ltd
o Orient Craft Limited
CHAPTER VIII: CONCLUSION
Government Initiatives in Sectoral Capability Building
BIBLIOGRAPHY & REFERENCES
ANNEXURES
7
INTRODUCTION
OVERVIEW OF THE INDIAN TEXTILE INDUSTRY
The Indian textile industry is one of the oldest industries in the country and
displays a very complex sectoral dispersal matrix with hand-spun and hand-
woven sector on one end of the spectrum and the capital-intensive
sophisticated mill sector at the other, with the decentralized powerloom and
knitting sectors coming in between. Even in the organized sector, “island of
excellence” exist, using highly sophisticated information technology based
equipment with facilities for ERP/SAP which are second to none in the world.
The fibre specific configuration of the textile industry includes almost all
types of textile fibres from natural fibres like cotton, jute, silk and wool to
synthetic/man-made fibres like polyester, viscose, nylon, acrylic,
polypropylene and the multiple blends of such fibres and filament yarns.
The diverse structure of the industry coupled with its close linkage with our
ancient culture and tradition provides it with the unique capacity to produce,
with the help of latest technological inputs and design capability, a wide
variety of products suitable to the varying consumer tastes and preferences,
both within the country and overseas.
8
It is perhaps the only industry in the Indian industrial arena which is self
reliant and complete in value chain, i.e. from raw material to the highest
value added products, i.e. garments/made-ups.
9
LITERATURE REVIEW
SUBSTANTIAL CONTRIBUTIONS TO THE ECONOMY
The Indian textile industry has a significant presence in the Indian economy
as well as in the international textile economy. Its contribution to the Indian
economy is manifested in terms of its contribution to the industrial
production, employment generation and foreign exchange earnings.
The Textile Sector contributes:
About 4 percent to the gross domestic product;
About 14 percent of the total industrial output;
26 percent to the manufacturing sector;
21 percent of the work force ;
About 17 percent of the gross export earnings.
It provides direct employment to about 35 million persons including
substantial segments of disadvantaged sections of the society and women.
Besides, another 50 million people are engaged in allied and ancillary
activities. The industry has been growing at a steady rate of 9-10 percent. In
the post quota period, the industry size has expanded from US$ 37 billion in
2004-05 to US$ 49 billion in 2006-07. In this period, while the domestic
market increased from US$ 23 billion to US$ 30 billion, exports increased
from around US$ 14 billion to US$ 19 billion. Being one of the largest of its
kind in the world, the Indian textiles industry has inherent strengths that
have the potential to increase its share substantially in the global trade of
textiles and clothing.
10
STRENGTHS OF THE INDIAN TEXTILE SECTOR
Second largest producer of raw cotton
Second largest producer of cotton yarn
Second largest producer of cellulose fibre / yarn
Second largest producer of silk
Fourth largest producer of synthetic fibre / yarn
Largest producer of jute
Accounts for 61 percent of global loomage
Accounts for 22 per cent of the global spindleage
Has 25 percent share in the total world trade in cotton yarn
India is one of the few countries that encompass the entire supply chain in
close proximity, from diverse fibres to a large market. It is capable of
delivering packaged products to customers comprising a variety of fibres,
diverse count sizes, cloth of different weight and weave, and variety of
finishes. One unique feature is of its being extremely varied, with the hand-
spun and hand-woven sector at one end of the spectrum, and the capital
intensive, sophisticated mill sector at the other. The decentralized hand
looms / hosiery and knitting sectors form the largest section of the textiles
sector. The close linkage of the textile industry to agriculture and the ancient
culture and traditions of the country make the Indian textiles sector unique
when compared to the textiles industry of other countries.
11
MAJOR SECTORS OF
THE TEXTILES INDUSTRY
1. Organized Cotton / Man-made Fibre Textiles Mill Industry: It is
the largest manufacturing industry in the country in terms of
employment with nearly 1 million workers and number of units. There
are more than 1818 cotton / man-made fibre textiles mills (non-Small
Scale Industry), with an installed capacity of 35.37 million spindles and
0.45 million rotors. The production of spun yarn stood at 3791 million
kg during 2006-07.
2. Man-made Fibre / Filament Yarn Industry: The industry comprises
fibre and filament yarn manufacturing units of cellulose and non-
cellulose origin. The total man-made fibre production from April-August
2006, increased by 16 percent, as compared to the corresponding
period of the previous year. The total production of man-made filament
yarn increased by 11 percent during 2006-07.
3. Decentralized Power-looms Sector: The decentralized power-looms
sector plays a pivotal role in meeting the clothing needs of the country.
The power-looms industry produces a wide variety of cloth, both grays
as well as processed. There are over 1.95 million power-looms in the
country that provide employment to nearly 4.86 million workers.
12
4. Wool and Woollen Textiles Industry: The woollen textiles industry
is a rural-based, export oriented industry in which the organized
sector, the decentralized sector and the rural sector complement each
other. This industry provides employment to 2.7 million workers in a
wide spectrum of activities. The country is the seventh largest
producer of wool, and contributes 1.8 percent to total world
production. The anticipated production of indigenous raw wool is
estimated at 57.20 million kg. in 2006-07.
5. Jute & Jute Textiles Industry: The Jute industry occupies an
important place in the national economy. Globally, India is the largest
producer and the second largest exporter of jute goods. This sector
supports the livelihood of about 4 million families. It provides direct
and indirect employment to 400,000 workers. The production of jute is
concentrated in 36 districts of West Bengal, Orissa, Bihar, Assam,
Meghalaya, Tripura and Andhra Pradesh. There are 78 jute mills in the
country. Of these, 61 are in West Bengal, three each in Bihar and Uttar
Pradesh, seven in Andhra Pradesh, and one each in Assam, Orissa,
Tripura and Chhattisgarh. The ratio of domestic consumption to
exports is 80:20.
6. Sericulture and Silk Textiles Industry: Globally India is the second
largest producer of silk and contributes about 18 percent to the total
world raw silk production. India has the unique distinction of being
13
endowed with all the four varieties of silk, namely, Mulberry, Eri, Tasar,
and Muga. Sericulture is one of the most important cottage industries
and is practiced in approximately 54,000 villages throughout the
country. Sericulture sector provides employment to about 6 million
people, mainly in rural areas.
7. Handlooms Industry: The handloom sector is characterized by
clusters. Indian handlooms are among our proudest and most enduring
cultural heritage constituting a timeless facet of perhaps the oldest
sectors within textiles industry. The outstanding weaving tradition they
represent has been kept alive by skilled weavers from generation to
generation. The handloom sector, therefore, reflects not only the
traditions of the weaving communities all over India but also the socio-
cultural heritage of our entire nation. To lend this segment the desired
credibility, ‘Handloom Mark’ has been launched to provide a collective
identity to Indian hand woven products as a hallmark of high quality
and high creativity. The production of cloth by the handlooms sector
was 6871 million sq. mtrs. in 2006-07.
8. Handicraft Industry including Carpets: The importance of
handicrafts, in brief, can be said to be both cultural and economic. The
sector at present provides employment to an estimated 6.4 million
artisans, of which 47.42 percent are females. The strength of the
Indian handicrafts industry is low capital investment, high ratio of
14
value addition, negligible import content, wide raw material base and
very high export potential.
OBJECTIVE OF STUDY
To analyse about operation management in textile industry.
To study about all the operational functions in textile industry.
To analyze the achievements, problems and challenges in textile
industry.
15
RESEARCH METHDOLOGY
DATA COLLECTION METHODS
PRIMARY OBJECTIVE
The primary objective of my project is to make or operation management in
textile industry. In the textile industry the main work is done by the textile
manufacturing and export procedures and all the operations in textile industry.
It improves the services of the organization.
SECONDARY OBJECTIVE
In this point we can conclude the company objective which is to increase the
market share in the textile industry and this will happens it becomes more
beneficiary and reliable to the economic condition. The information is collected
from Magazines, Newspapers, Internet and websites etc.
16
GLOBAL EXPANSION
The global Textiles and Clothing Industry constitutes a US$ 480 billion
market which is expected to grow to about US$ 700 billion by the year 2012.
Of this, India’s share in global trade accounts for 4 percent. The Indian textile
industry has collectively embarked on a long-term mission to increase its
global share of world textile trade to attain 10 percent by 2015, and of
stepping up the rate of growth from 9-10 percent to 16 percent during the
currency of the 11th Five Year Plan period.
While Europe continues to be India's major export market with 22 percent
share in textiles and 43 percent in apparel, the USA is the single largest
buyer of Indian textiles and apparel with 10 percent and 32.6 percent share
respectively. Other significant countries in the export list include the UAE,
Saudi Arabia, Canada, Bangladesh, China, Turkey and Japan. The basket of
Indian textile exports consists of wide range of items containing cotton yarn
and fabrics, man-made yarn and fabrics, wool and silk fabrics, made-ups and
variety of garments. Currently India has about 4 percent share in world
export of textiles and 3 percent in clothing exports.
Readymade garments (RMG) are the largest export segment, accounting for
45 per cent of total textile exports and 8.2 per cent of India's total exports.
17
Readymade garments exports from India are expected to touch US$ 14.5
billion by 2009-10 with a cumulative annual growth of 18 to 20 percent. India
is the world leader in carpet exports with 36 percent of the global market
share. Exports of carpets have increased from US$ 654.32 million in 2004-05
to US$ 930.69 million in 2006-07, showing a growth rate of 42.23 percent.
ON FAST FORWARD TRACK TO THE
FUTURE
There has been resurgence in the Indian Textile Industry in the post quota
period. India is emerging as one of the major outsourcing hubs as it has
comparative advantage over its competitors on availability of relatively
inexpensive but skilled workforce, design expertise, a large production base
of basic raw materials such as yarn & fabric, and availability of a wide range
of textiles. The Industry is aiming at attracting investments of the order of
Rs. 15,060 billion by 2012. This enhanced investment will generate
additional 17 million jobs by 2012 comprising 12 million direct and 5 million
indirect jobs.
The Government is implementing schemes like Technology Upgradation
Fund Scheme (TUFS), Scheme for Integrated Textiles Park (SITP), Mill Gate
Price Scheme (MGPS) and Technology Mission Schemes, viz., Technology 18
Mission on Cotton (TMC) and Jute Technology Mission (JTM) to facilitate
Indian textiles industry to grow at the rate of 16 percent in value terms to
reach level of US$ 115 billion (comprising of US$ 55 billion of exports and
US$ 60 billion of domestic market) and attain 7 percent share in global
textile trade by the terminal year of the Eleventh Plan period.
Abiding with the norms of WTO and spirit of openness of global markets to
competition; fiscal duty structure has been rationalized by doing away with
the multiplicity of taxes, reduction in excise and customs duty, and by
providing relief from maintaining excessive records under the excise regime.
As a part of the overall policy of de-regulation and de-control, the
Government of India has de-reserved the garments, hosiery and knitwear
sectors from the Small Scale Industries sector to enable the industry to
realize economies of scale. 100 percent Foreign Direct Investment has been
allowed in the textile sector under the automatic route.
19
INDIA’S TEXTILE EXPORT AT A GLANCE
Value (US$ Million)
ITEM2005-
06
2006-07
(PROVISIONAL)
Readymade Garment 7986.38 8075.57
RMG of cotton including accessories 6553.69 6752.39
RMG of Man-made fibre 1025.94 871.46
RMG of other textiles material 406.74 451.73
Cotton Textiles 4600.78 5485.04
Cotton raw including waste 656.00 1348.49
Cotton yarn, fabrics & madeups 3944.78 4136.65
Man-made Textiles 2039.57 2361.17
Manmade staple fibres 81.76 196.55
Manmade yarn fabrics & made-up 1957.82 2164.62
Wool & Woolen textiles 455.92 445.49
RMG of Wool 370.63 361.67
Wool Yarn, fabrics & made-up 85.29 83.82
Silk 693.28 689.61
RMG of Silk 260.72 257.42
20
Natural silk yarn, fabrics & made-up 428.06 427.30
Silk Waste 4.50 4.88
Sub-Total Textiles15775.9
317056.87
Handicrafts 1314.53 1259.16
Handicrafts (excluding handmade carpets) 461.98 371.75
Silk carpets 23.35 27.41
Coir & coir manufactures 133.35 156.38
Coir & Coir manufacturers 133.35 156.38
Jute 296.26 257.52
Floor Covering of Jute 76.34 65.74
Other Jute manufactures 57.04 57.65
Jute yarn 51.99 53.54
Jute Hessian 110.88 80.60
Grand-Total Textiles Exports17,520.
0718,729.93
Source : Foreign Trade Statistics of India, DGCIS
21
FABSTRACT CLOTHING INDIA PVT. LTD.
The company was set up in July 1991 as a sole proprietorship. Since then, it
has been a very progressive venture for the company with an average
growth rate of 9.8% per annum. At present, the company has a turnover of
US$ 3 million approximately and is now a private limited company. It
manufactures and exports knitted garments worldwide.
PRODUCT LINE
The product line of the company is as follows:
Men’s knitwear
Zipper/button polo, mock neck, Henley, cut and sewn, crew neck, tank
tops/t-shirts.
Ladies knitwear
Mock neck, crop tops, camisols, dresses, tank tops, t-shirts with
embroidery, lace, tie dye, garment dyed t-shirts.
22
MAJOR CUSTOMERS
The company exports its products to importers placed in various countries
which are as follows:
Denmark
France
United States of America
Canada
Italy
FABRICS HANDLED
The company handles a varied range of fabrics such as velour, Sherpa, single
jerseys, pique, twill knit, interlock, flat back ribs, textures, mini waffle ribs in
solid and yarn, dyed and pigment dyed garments, viscose jersey, viscose
spandex, modal/cotton.
23
IN-HOUSE MACHINERY AND FINISHING
EQUIPMENTS
The company is well equipped with the latest machinery and equipments.
The in-house machinery and the finishing equipment possessed by the
company include:
NAME OF MACHINE/EQUIPMENT QUANITY
East man cutting machine 2
Single needle sewing machines (Juki) 7
4/5 thread over lock (Pegasus/Juki) 14
5 thread flat lock (Pegasus/Kansai) 10
Button and button holing 1
Fusing machine 1
Smocking machine 1
Terrot circular knitting machine 2
Steam iron tables 12
Air and pressure controlled ‘mini spotty’ 1
Hydro extractor 2
Tumble drier 3
24
SAMPLING DEPARTMENT
The company has 6 sampling coordinators assisted by a sampling staff of 10
who can turn out new samples within a reasonable time.
Production
The production lead time of the company is 60-120 days after confirmation
of the purchase order. The production capacity is approximately 50,000
pieces per month.
The company is approved by California State Compliance
Corporation, U.S.A (CSCC) and also by VF Corporation, U.S.A.
25
ORIENT CRAFT LIMITED
Orient Craft started its operations in 1978 and today, it has reached a
turnover of USD 112 million. The company has a modern manufacturing
plant with over 3, 40,000 square feet of covered area at one location. It
deploys over 7000 sewing machines for its manufacturing operations. The
company has an in-house testing laboratory well-equipped to test all
parameters including c.f. to light. Also, it has a specialized home furnishing
division exporting to names like DKNY and Tommy Hilfiger. It has advanced
washing plants and Perc dry cleaning machines as well.
CLIENTS
The client base of the company has various names attached to it which are:
o MAY Department Stores
o Tommy Hilfiger
o Banana Republic
o Marks & Spencer
o Dillard’s Inc.
o The Limited
o Marc Jacob
o Ann Taylor
26
o Docker’s
o Polo
o Lands End
o Zara, Susan Bristol and many more...
HONORS AND ACHIEVEMENTS
The company has various awards and achievements to its credit. They are as
below:
o Year 2002
BID international quality summit award for excellence and
business prestige in Platinum category
CMAI Gold trophy for highest global export and certificate of
merit for largest export of knitted garments
o Year 2001
CIAe highest export award
Gold trophy for highest global exports for apparel
o Year 2000
Gold trophy for highest global exports for apparel
27
BID World Quality Commitment International Star Award-
Madrid
DHL-CIAe highest export award
o Year 1999
Gold Trophy for being India’s largest knit apparel
manufacturer
Silver plaque for second largest in global exports for apparel
o Year 1997 & 1998
Gold Trophy for highest global exports for apparel
The organization has come a long way since 1978 when it started with a
turnover of USD 400,000.
28
BUSINESS DISTRIBUTION
Orient Craft has a strong foothold in Men’s and Women’s wear and
expanding its range in children’s category.
The following is the business distribution of the company:
Men’s t-shirt – 17%
Men’s polo shirt – 23%
Boy’s t-shirt – 11%
Boy’s polo shirt – 3%
Ladies top – 33%
Girls top – 7%
Infants/Todd – 6%
29
INDIA’S TOTAL PRODUCTION
OF
KNITTED COTTON WOMEN DRESSES
Production: in million metres
Quantity: in million pieces
Sector 2005 2006
Production Quantity Production Quantity
Urban sector 6 3 8 5
Rural Sector 10 6 13 6
Source: Library, PHD House.
30
Total Consumption of Raw Material
(Fabstract Clothing India Pvt. Ltd.)
INDIGENOUS/DOMESTIC
Value: in
Rs.
2004-05 2005-06 2006-07
Tailoring
Material
2,39,758 10,61,142 21,85,770
Consumable
Stores
12,76,520 98,54,764 1,10,30,236
Packaging
Material
3,50,502 16,16,120 11,89,139
Yarn Purchase 25,76,740 1,56,25,897 2,45,06,237
Source: Fabstract Clothing India Pvt. Ltd.
31
IMPORTED
Value: in Rs.
2004-05 2005-06 2006-07
Topnet,
HongKong
2,18,073 32,45,346 64,91,490
Security
Ticketing,Hongk
ong
73,577 1,18,185 65,636
Label Tax,
Hongkong
5,440 6,87,044 -
Brand ID Ltd.,
Hongkong
27,263 13,112 31,446
Lambada,
Hongkong
- - 1,42,273
Source: Fabstract Clothing India Pvt. Ltd.
32
PRODUCTION EXPANSION PLAN
(BEYOND 2000 A.D.)
Expansion plans of Fabstract Clothing India Pvt. Ltd.
Growth rate of 20% every year (volume wise)
Plans to increase sales to Rs. 13 crores by FY 2007-08.
Plans to add a new incorporated in the name of Amrit Garments Pvt.
Ltd. to be headed by one of the directors of Fabstract Clothing India
Pvt. Ltd. (adding 5000 sq. ft. covered area)
EXPANSION PLANS OF ORIENT CRAFT LTD.
Orient Craft has planned to set up another state of the art
manufacturing facility for Knits adding 150,000 sq. ft. covered area.
This new facility will take Knitwear capacity to 1 million units per
month.
Adding new state of the art Washing plant for fancy washes in
collaboration with an International leader.
Planned Investment of over USD 11 million in new Sewing and Washing
facility
Fully air conditioned and dust proof facility.
33
WORLD TRADE FIGURES
Total Exports of knitted RMG from India to Top 5
destinations
Value: In US$ Million
Quantity: In Thousand Units
INDIA’S
EXPORT
U.S.A GERMANY FRANCE U.K ITALY
Qty Val Qty Val Qty Val Qty Val Qty Val
2002-03
1296.53
6.33
1499.34
5.78
2045.38
5.46
857.87
3.25
472.89
1.84
2003-04
618.48
3.15
1749.03
5.79
1365.08
4.90
880.70
2.77
555.23
1.59
2004-05
1477.18
7.22
1807.40
6.02
1859.39
6.19
549.61
2.64
284.78
1.38
2005-06
1144.03
5.22
2035.86
6.93
1129.95
3.67
561.32
1.99
175.87
0.89
2006-07
1298.42
5.46
1046.82
3.15
807.53
2.81
738.93
3.35
429.41
1.98
34
TOP 5 KNITTED RMG EXPORTING COUNTRIES
Value: In US $’000
CHINA TURKEY MEXICO U.S.A ITALY
Value Value Value Value Value
2002 35,98,152 9,95,332 7,26,441 5,43,369 5,24,845
2003 5,27,85,75 13,22,513 7,00,303 6,23,084 4,34,250
2004 66,59,526 13,27,146 6,54,461 7,07,513 _
2005 62,52,143 13,04,484 5,76,978 7,09,845 _
35
TOP 5 KNITTED RMG
IMPORTING COUNTRIES (FROM
INDIA)
Value: In Rs. lakhs
Quantity: In Thousand Units
World’s Imports
CHINA HONGKONG
THAILAND ITALY U.K
Qty Value
Qty Value Qty Value
Qty Value
Qty Value
2002-03
_ _ _ _ _ _ _ _ _ _
2003-04
0.62
2.05 _ _ 0.04
0.04 0.00
0.01 0.07
0.35
2004-05
0.06
0.16 1.30 7.83 0.14
0.24 _ _ 0.10
0.14
2005- 0.0 0.27 0.08 0.52 0.4 0.49 0.1 0.26 _ _
36
06 5 8 0
2006-07
0.39
1.02 0.11 0.76 _ _ _ _ 0.19
1.55
UNIT VALUE REALIZATION FOR TOP 3 KNITTED RMG
IMPORTING COUNTRIES IDENTIFIED AS TARGET MARKET
Unit value realization = Total value/Quantity
Fabstract Clothing India Pvt. Ltd.
Value: in Rs.
2004-05 2005-06 2006-07
Target
market
U.S.
A
Canad
a
Ital
y
U.S.
A
Canad
a
Ital
y
U.S.A Canad
a
Italy
Averag 250 250 250 250 250 250 251. 251.1 251.
37
e 18 8 18
A. FOREIGN DIRECT INVESTMENT (FDI) POLICY
As per the present policy of Government of India, 100% FDI is allowed in
spinning,
weaving,
processing,
garments and knitting sector
under the automatic route for both new ventures and existing companies
except in cases where industrial license is required on account of location of
such units falling in a locatioanlly restricted area. In respect of such
proposals, government approval is required.
38
B. TECHNOLOGY UPGRADATION FUND
SCHEME (TUFS)
The Technology Upgradation Fund Scheme, the flagship scheme of the
Ministry of Textiles, was launched on April 1, 1999, with the objective of
making funds available to the domestic textiles industry to upgrade the
technology of existing units, and also to set up new units with state-of-the-
art technology in order to enhance its viability and competitiveness in the
domestic and international markets. The scheme, which was to last up to
March 31, 2004, was extended till March 3, 2007. In the Xth five year plan
(2002-07), Rs.1,270 crores was earmarked for the scheme. The Government
have decided to continue the scheme in the XIth five year plan, and
Rs.911.00 crores had been earmarked for the scheme during 2007-08.
BENEFITS
5% interest reimbursement of the normal interest charged by the
lending agency on Rupee Term Loan (RTL); or
5% exchange fluctuation (interest & repayment) from the base rate on
Foreign Currency Loan (FCL); or
15% credit linked capital subsidy (CLCS) for the SSI textiles and jute
sectors; or
20% credit linked capital subsidy (CLCS) for the powerlooms sector; or39
5% interest reimbursement plus 10% capital subsidy for specified
processing machinery.
25% capital subsidy on the purchase of new machinery and equipment
for pre-loom & post-loom operations, upgradation of handlooms, and
testing & quality control equipment for handloom production units.
The scheme covers spinning, cotton ginning & pressing, silk reeling &
twisting, wool scouring & combing, synthetic filament yarn texturising,
crimping and twisting, manufacture of viscose filament yarn (VFY)/ viscose
staple fibre (VSF), weaving/knitting (including non-wovens) and technical
textiles. It also covers the manufacture and processing of fibres, yarns,
fabrics, garments and made-ups, the jute sector, and handloom sector (since
2006-07).
PROGRESS
The progress of TUFS since its inception up to December 2006 is shown
below.
40
41
C.DUTY DRAWBACK SCHEME
The Ministry of Finance, Department of Revenue has announced the revised
All Industry Rates of Duty Drawback through Notification No.68/2007 -
CUSTOMS (N.T.) dated 16th July, 2007.
Taking into account the duty incidence on inputs, the drawback rates have
been increased in most cases. The increased rates of drawback have been
made effective retrospectively from 1.4.2007.
In the Ready Made Garments sector,
The new drawback rate for Knitted Blouses/Shirts/Tops of Cotton
is 10% with a cap of Rs.48 per piece as against the existing rate of 7%
with a cap of Rs.31 per piece.
The new rate for Knitted Blouses/Shirts/Tops of Man-made Fibre
is 11.5% with a cap of Rs.48 per piece as against the existing rate of
8.1% with a cap of Rs.34 per piece.
For Knitted Blouses/Shirts/Tops of Cotton and man made Fibre
Blend, the new drawback rate is 10.7% with a cap of Rs.48 per piece
42
as against the existing rate of 7.5% with a cap of Rs.32 per piece. The
drawback rates on Woven Garments have been revised accordingly.
But recently, the Government of India has further increased the drawback
rate for Knitted Blouses/Shirts/Tops of Cotton from 10% to 11%.
D. Advance Licensing Scheme
An Advance License is issued under Duty Exemption Scheme to allow import
of inputs which are physically incorporated in the export product (making
normal allowance for wastage). In addition, fuel, oil, energy, catalysts etc.
which are consumed in the course of their use to obtain the export product,
may also be allowed under the scheme.
Advance License can be issued for:-
a. Physical exports
b. Intermediate supplies
c. Deemed exports.
For physical exports, Advance License can also be issued on the basis of
annual requirement in respect of export products for which SIONs have been
notified. Duty Remission Scheme consists of
a. Duty Free Replenishment Certificate and
43
b. Duty Entitlement Passbook Scheme.
The scheme allows drawback of import charges on inputs used in the export
product (making normal allowance for the wastage). In general, units
primarily engaged in production of domestic market can also get required
inputs free of duty for executing an export order under the duty exemption
scheme for which they are required to execute a bond with customs
authorities and are required to fulfill the export obligation.
With a view to facilitate exporter's access to duty-free inputs under the
scheme, Standard Input-Output Norms (SION) for about 300 textiles and
clothing export products have been prescribed. The SION for a number of
apparel items have been revised upwards, based on large garment size.
Additional items such as zip fastners, inlay cards, cyclets, revets, eyes,
toggles, Velcro tape, cord and cord stopper are included in input-output
norms for garment exports under Advance Licensing Scheme.
44
EXPORT TARGETS SET BY
THE GOVERNMENT OF INDIA
With the abolition of various quotas imposed over the exports from the low-
cost manufacturing countries like India under the Multi-fiber agreement
(MFA), the Government of India has set a target of CAGR of 18-20 % to reach
nearly USD 16bn in 2009-10.
Source : Foreign Trade Statistics of India, DGCIS
Gap = International Demand – Indian Supply
45
The Ready Made Garment sector is the biggest segment in the India’s textile
export basket contributing over 46% of total textile exports and a little over
12% of the total export of the Country. The 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
exports market was estimated at USD 6.4 bn and is expected to become USD
16 bn opportunity by 2009-10 growing with a CAGR of 18-20%.
UNITED STATES (US) and EUROPEAN UNION (EU) is two key exports
destinations for Indian RMG Companies. Currently with an export value of
USD 2.1bn India has a share of 3% in total US apparel imports (in terms of
Sq.mt) and is expected to increase to 6% by 2010. The value of total exports
from India in 2009-10 would be expected around USD 6.8 bn. The growth in
apparel exports to the US market would be largely driven by apparels made
from cotton, the segment where India has natural advantage. The quotas
imposed over the exports from the low-cost manufacturing countries like
India under the Multi-fiber agreement (MFA), 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 in 2000-
01 to USD 6.2 bn in 2004-05. With the abolition of quotas exports are
46
expected to grow exponentially with an estimated CAGR of 18-20 % to reach
nearly USD 16bn in 2009-10.
47
PROBLEMS FOR THE GAP
I. Imposition of quota under Multi-fibre
agreement
The first and the foremost reason for this gap was the imposition of
quota over the exports from low-cost manufacturing countries under
the Multi-fiber agreement (MFA). The quota had hindered the growth of
domestic RMG companies. Also, during the quota regime, India’s
export of RMG grew at a CAGR of 6.3%.
But, gradually with the abolition of quotas, this gap has reduced
considerably and now the exports are expected to grow exponentially
with an estimated CAGR of 18-20% thereby making the exports of
India’s RMG reach nearly USD 16 billion by 2009-10.
II. Sourcing of Fabrics
There are certain problems that could be faced by Indian garment
manufacturers when sourcing for certain fabrics, so precautions should be
taken for it beforehand to minimize the problems. The Indian garment
exporters source cotton fabrics mainly from handloom sectors,
48
powerlooms and mills. Each of these sectors presents their own unique
set of problems to the garment exporters.
Sourcing cotton from handloom sectors might present some set of
problems like color variation, missing ends and picks, irregular weaves
and unreliable supplies. However, the handloom sector is significant
source of heavier cotton.
Common problems faced in powerloom cotton sourcing are broken
ends and reed marks, thick and thin places, difference in width and
massive variation in costing.
The major problem in mill-made fabric sourcing is to meet huge
demands from the mills. Fabrics have to be ordered well in advance in
mills and the long time taken for producing the fabric is a matter of
concern for garment exporters. Mills generally hesitate to take small
orders which pose a problem for small scale exporters.
III. ISSUES IN QUALITY
Besides the quota imposition and problems related to sourcing of fabic,
there are various other reasons that have accounted for the huge gap
between the international demand and Indian supply. Another reason for
49
this gap can be attributed to the various quality factors or issues in the
exports of Indian RMG.
In the garment industry quality control is practiced right from the initial
stage of sourcing raw materials to the stage of final finished garment. For
textile and apparel industry product quality is calculated in terms of
quality and standard of fibres, yarns, fabric construction, color fastness,
surface designs and the final finished garment products. However quality
expectations for export are related to the type of customer segments and
the retail outlets.
There are a number of factors on which quality fitness of garment
industry is based such as – performance, reliability, durability, visual and
perceived quality of the garment. Quality needs to be defined in terms of
a particular framework of cost. The national regulatory quality
certification and international quality programmes like ISO 9000 series lay
down the broad quality parameters based on which companies maintain
the export quality in the garment and apparel industry.
For a garment exporter there are many strategies and rules that are required
to be followed to achieve good business. The fabric quality, product quality,
50
delivery, price, packaging and presentation are some of the many aspects
that need to be taken care of in garment export business.
51
However, the major issues involved in the Export of Indian RMG area as
follows:
• Quality negligence on account of not using design and technology as
major upgradation tools
• Packaging and delivery issues
• Final product not matching to the buyers’ specifications/samples
shown/as shown in the catalogue
• Timely delivery of garments
• Long delays in shipments, clearance
52
CORRECTIVE ACTION
Several actions can be contemplated along these lines. They are as follows:
One, abolish the reservation for small-scale industry in the
garment sector.
Two, include the garment industry in the list of industries for automatic
approval for foreign direct investment up to 100 percent foreign
equity.
Three, make imported fabrics available for export production in an
effective manner. Currently, there are long delays in shipments,
clearance and there are several problems in the operation of the duty
free input for exports schemes.
Four, remove the policy bias against synthetic fibers in the shape
of high taxation, thereby increasing the domestic base of synthetic
fibers and providing the factories an additional source of demand.
53
QUALITY RELATED ISSUES
There are certain quality related problems in garment manufacturing in India
that needs special attention:
Sewing defects - Like open seams, wrong stitching techniques used,
same color garment, but usage of different color threads on the
garment, miss out of stitches in between, creasing of the garment,
erroneous thread tension and raw edges are some sewing defects that
could occur so should be taken care of.
Color effects - Color defects that could occur are – difference of the
color of final produced garment to the sample shown, accessories used
are of wrong color combination and mismatching of dye amongst the
pieces.
Sizing defects - Wrong gradation of sizes, difference in measurement
of a garment part from other, for example- sleeves of 'XL' size but
body of 'L' size. Such defects do not occur has to be seen too.
Garment defects - During manufacturing process defects could occur
like - faulty zippers, irregular hemming, loose buttons, raw edges,
improper button holes, uneven parts, inappropriate trimming, and
difference in fabric colors.
54
55
Quality is ultimately a question of customer satisfaction. Good Quality
increases the value of a product or service, establishes brand name, and
builds up good reputation for the garment exporter, which in turn results into
consumer satisfaction, high sales and foreign exchange for the country. The
perceived quality of a garment is the result of a number of aspects, which
together help achieve the desired level of satisfaction for the customer.
Therefore quality control in terms of garment, pre-sales service, posts – sales
service, delivery, pricing, etc are essentials for any garment exporter.
56
VOLUNTARY EXPORT RESTRAINTS (VERs)
ADMINISTRATION OF EXPORT ENTITLEMENTS (QUOTA)
The international trade in textiles and clothing was regulated by special
arrangements for forty years outside the rules of General Agreement on
Tariff and Trade (GATT). The framework of Multi- Fibre Arrangement (MFA)
applied to international trade in textiles and clothing from 1974 to 1994.
India entered into bilateral agreements with USA, Canada, EU, etc., exports
to these countries accounted for a major share of total exports of Indian
textiles. Consequent upon the establishment of the World Trade
OrgaOrganizationO) with effect from January 1, 1995, the quantitative
restrictions in the bilateral agreements under the MFA were governed by the
Agreement on Textiles and Clothing (ATC) contained in the final Act of the
Uruguay Round negotiations. The quota regime in the textile sectors was
completely phased out by December 31, 2004. Prior to January 1, 2005, the
exports of textiles and clothing (including knitwear), subject to quantitative
restrictions, were regulated by means of the Export Entitlements (Quota)
Policies (for garments and textiles respectively) formulated by the
Government. With the dismantling of the Quota Regime, there is no Quota
Policy in operation since January 1, 2005. However, certain provisions of the
Quota Policy have been extended up to June 30, 2007, to deal with the
situations arising out of the residuary operations of the Policy.
57
POST-MULTI FIBRE ARRANGEMENT (MFA)
SCENARIO
In the period after the expiry of the Multi Fibre Arrangement (MFA) from
January 1, 2005, textiles exports were up by 22% in 2005-06 over 2004-05.
The share of Indian textiles exports in imports of the USA increased from 4%
to 5% in the calendar year 2005, as compared to those in 2004.
The share of textiles exports in extra-EU imports increased from 6% to 7% in
2005, growing at 18%, year-on-year, as compared to 5.6% growth in extra-
EU imports. In 2005, India was the third largest supplier of textiles to USA
and EU.
During 2005-06, India's total apparel exports were US$ 8.63 billion,
registering a year-on-year increase of 31%. The country enjoys a higher
realization in US markets for apparel (US$ 3.9/sq. meter.), compared to
China (US$ 2.8/sq. Meter). Investment in the textiles sector has picked up in
the past two years, increasing from Rs. 7349.00 crores in 2004-05 to Rs.15,
032 crores in 2005-06. It is estimated that total investment in the textiles
and clothing industry during 2003-06 was around Rs. 42,978.00 crores.
An important aspect about the goods to be exported is compulsory quality
control and pre-shipment inspection. Under the Export(Quality Control and
58
Inspection) Act, 1963, about 1000 commodities under the major groups of
Food and Agriculture, Fishery, Minerals, Organic and Inorganic Chemicals,
Rubber Products, Refractoriness, Ceramic Products, Pesticides, Light
Engineering, Steel Products, Jute Products, Coir and Coir Products, Footwear
and Footwear Products / Components are subject to compulsory pre-
shipment inspection.
Specific provisions have also been made for compulsory inspection of textile
goods.
Products having ISI Certification mark or Agmark are not required to be
inspected by any agency. These products do not fall within the purview of
the export inspection agencies network. The Customs Authorities allow
export of such goods even if not accompanied by any pre-shipment
inspection certificate, provided they are otherwise satisfied that the goods
carry ISI Certification or the Agmark.
The Textile goods meant for export are inspected for quality in the
following manner:
Consignment to Consignment Inspection
59
Each individual consignment is inspected by the Export Inspection
Agency, Commodity Board and certificate of inspection is issued.
The application for inspection for goods has to be submitted well in
advance before the expected date of shipment of the consignment.
Inspection of the consignment is generally carried out either at the
premises of the exporter, provided adequate facilities exist therein for
inspection, or at the port of shipment.
The export inspection agency has a right to exercise supervision of
inspected consignment(s) at any place or time.
The application should be made in duplicate in the new prescribed
form 'Intimation for Inspection' as per standardized pre-shipment
export documents to the nearest office of the respective Export
Inspection Agency along with the following documents :
Particulars of the consignment intended to be exported.
A crossed cheque/draft for the amount of requisite inspection
fees or an Indian Postal Order.
Copy of the Commercial Invoice. 60
Copy of letter of credit.
Details of packing specifications.
Copy of the export order/contract, indicating inter alia the
buyer's requirement that goods are strictly according to the
prescribed specifications, or as per samples etc.
After satisfying itself that the consignment of exportable goods meets
the requirements stipulated in the export contract/order, the
inspection agency issues, generally within four days of receipt of
intimation for inspection, the necessary certificate of inspection to the
exporter in the prescribed proforma in five copies.
The certificate is issued in the standardized form which is aligned pre-
shipment export document. (Three copies for exporter, original copy
for customs use, the second copy for the use of the foreign buyer and
the third copy for the exporter's use, fourth copy for Data Bank, Export
Inspection Council, New Delhi and the fifth copy is retained with the
agency for their own office record).
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LABELING, PACKAGING, PACKING &
MARKING GOODS
An important stage after manufacturing of goods or their procurement is
their preparation for shipment. This involves labeling, packaging, packing
and marking of export consignments. Labeling requirements differ from
country to country and the same should be ascertained well in advance from
the buyer. The label should indicate quality, quantity, method of use etc.
Special international care labels have been specified for the textile items by
GINITEX, and the same should be scrupulously adhered to.
Packaging fulfills a vital role in helping to get the export products to the
market in top condition, as well as in presenting the goods to the overseas
buyer in an attractive way. While packaging, quality should not be
compromised merely to cut down costs, packaging should also be in
conformity with the instructions issued by the importer. Packing refers to the
external containers used for transportation. The shape of packing cases play
a very important role in packing the cargo, and the nature of packing
material to be used will depend upon the items exported. As regard
specification for the size, weight and strength care must be taken to ensure
that the weight of standard case does not exceed 50 kilograms for easy
handling of the cargo. Before packing and sealing the goods, it should be
62
ensured that all the contents are properly placed in the case and the list of
contents of packing notes should be prepared so that the buyer, the Customs
authorities and the Insurance authorities can easily check the contents of
each and every case.
The consolidated statement of contents for a number of cases is called the
Packing List, which should be prepared in the prescribed standardized
format.
Marking means to mark the address, number of packages etc. on the
packets. It is essential for identification purpose and should provide
information on exporters' mark, port of destination, and places of
destination, order number and date, gross, net and tare weight and handling
instructions. It should also be ensured that while putting marks, the law of
buyer's country is duly compiled with. All shipping cases should be marked a
number with special symbols selected by the exporters or the importers, so
that the competitors cannot find out the details of the customers and the
country of destination or supplier's country of dispatch. Care should also be
taken to ensure that the marking conforms to those written in the invoice,
insurance certificate, bill of lading and other documents. The International
Cargo Handling Co-ordination, Association has set out for the use of
exporters a number of recommendations for the marking of goods carried by
ocean-going vessels. They are equally useful for sending goods by other
modes of transportation
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ADHERENCE TO QUALITY NORMS BY THE COMPANIES (UNDER STUDY)
FABSTRACT CLOTHING INDIA PVT. LTD.
Fabstract Clothing India Pvt. Ltd. is approved by California
State Compliance Corporation, U.S.A. (C.S.C.C.) & also by VF
Corporation, USA.
The company strictly adheres to the quality standards laid down by
these two bodies
PROCEDURE FOR QUALITY CONTROL
AND PRE-SHIPMENT INSPECTION
• Right from knitting, fabric checking, cutting, stitching, finishing &
packing, the merchandise is completely handled in house till it is ready
to ship.
• The company has five stages for garments checking, all under
supervision of highly experienced and skilled personnel.
• In case of delicate designs, the company is equipped for
beading/hand embroidery the garments at the factory premises.
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• Sampling Department: The company has 6 sampling coordinators
assisted by a sampling staff of 10 who can turn out new
samples/developments with in a reasonable time
• In-house Quality Control: Headed by a Q.A. manager, it assures that
the merchandise shipped is up to the required standard of the
customers.
THE FIVE STAGES FOR GARMENT CHECKING ARE AS
UNDER:
Step 1: As soon as the company receives the fabric for cutting, the
fabric is checked for any defects like holes, dyeing defects,
knitting/weaving defects, central salvage i.e., color difference on the
side and middle of the garment etc.
Step 2: After the checking process, the fabric is issued to the cutting
department. Random checks are made on the cutting layers physically
to see that the correct pattern is being used for the specified style
being cut at that time. Also, the size ratio is checked and matched with
the purchase order. Then small bundles of cutting are made to be
issued on the stitching floor.
Step 3: After this step i.e. cutting issue from tailoring to stitching , all
the tailors are handed over a measurement chart to follow for the
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given style and asked to make one or two initial pieces and get them
checked by the floor supervisor.
After their sample is approved, they are asked to start the bulk
production. After the bulk starts coming off the machines, all the
garments are checked by the measurement checker specially deputed
for measuring the stitched garment.
If any alteration is found above the tolerance level, the pieces are
given back to the tailor to alter it.
Step 4: The next stage is the finishing of the garment, where the
loose threads are cut and the garment is ironed. After this, it goes to
the final checker who checks the garment for any kind of stain, hole or
alteration. The final checker also has to ensure that the appearance of
the garment is fine and it is as per the looks required by the buyer.
Step 5: Then it goes into the packaging department where it is tagged
and polybagged as per the size and color. The polybagged garments
are put in corrugated boxes and sealed after counting and the carton is
then strapped after which it is ready for shipping.
Sometimes the buyer/buying agent deputes a Quality assurance
person to inspect the goods. After the shipment is ready, the Q.A.
comes and randomly checks about 5-10% of the garment from the
total shipment.
66
67
ROLE OF TESTING BODIES –
ASSESSMENT OF CONFORMITY
Fabstract India Pvt. Ltd. gets its products tested by SGS India Pvt. Ltd., one
of the largest inspections, verification, and testing and Certification Company
in India.
SGS is the world’s leading inspection, verification, testing and certification
company for Consumer Products. SGS, recognized as the global benchmark
for quality and integrity, has achieved international recognition.
It has:
global resources and offices in over 130 strategic locations worldwide
(key manufacturing zones and transit points)
Highly-trained staff of quality control and regulatory specialists for
unrivalled understanding of each individual market as well as global
expertise
Compliance with international standards such as BS, EN, AS, DIN,
ASTM, ISO, NF, etc.
68
Customized services - Serving small and medium sized firms to large
international groups, SGS can manage expertise in developing your
own product safety and performance specifications.
ACCREDITATIONS
SGS has internationally accredited laboratory facilities. Its worldwide labs are
recognized by relevant accreditation bodies or authorities, such as UKAS
(United Kingdom), COFRAC (France), HOKLAS (Hong Kong), A2LA (US), etc.
NOTIFIED BODIES
SGS laboratories have been designated as Notified Bodies by the Member
States: they fulfill the relevant requirements to carry out conformity
assessment according to directives.
SGS assesses the quality of a product referring to 3 major aspects:
The product safety, requiring compliance with the right international
regulations or standards.
The product performance
The product reliability
69
SGS has wide expertise and technical resources to help comply with both
regulations and technical specifications. Their comprehensive testing
services portfolio includes chemical tests, performance tests and
mechanical tests and other specialized tests.
Various tests performed by SGS are as follows:
Chemical Testing
Identifying substances contained in the products and their properties
o Eco Testing
o RoHS, REACH, VOC, etc.
Performance Testing
Assessing product quality and functionality under normal use and
establishing conformity to contractual requirements.
Reliability Testing
Assessing the life expectancy of the product
Materials Testing
Confirming the suitability of raw materials and components
Comparative Testing (Benchmarking)
Benchmarking the products against others in the market
70
71
ORIENT CRAFT LIMITED
• All the factories of Orient Craft abrasive have obtained the ISO9001
certification for their own quality system.
• For the customer this means to have the security that all the
production cycle, from the development to the delivery of the
products, follows rules and precise methods, in order to always
improve the offered service.
• Every operator must be protected by glasses, gloves and protective
cloths against the possibility of material being projected as well as
anti-dust masks and hearing protections.
• The use of these tools can cause noise equal or superior to 85 dBA; the
operator must therefore wear protective ear muffs or other suitable
personal protections.
72
HONORS & ACHIEVEMENTS
2002
• BID international quality summit award for excellence and
business prestige in Platinum category
• CMAI Gold trophy for highest global export and certificate of
merit for largest export of knitted garments
2001
• CIAe highest export award
• Gold trophy for highest global exports for apparel
2000
• Gold trophy for highest global exports for apparel
• BID World Quality Commitment International Star Award-Madrid
• DHL-CIAe highest export award
1999
• Gold Trophy for being India’s largest knit apparel manufacturer
• Silver plaque for second largest in global exports for apparel
1997 & 1998
• Gold Trophy for highest global exports for apparel
73
PROCEDURE FOR QUALITY CONTROL
&
PRE-SHIPMENT INSPECTION
Orient Craft has in-house testing laboratory well equipped to test all
parameters including c.f. to light.
At Orient Craft, the quality standards are strictly adhered to. Special
attention is paid so that quality standards are met at each and every stage.
Various quality initiatives are taken by the company at each step of
production and manufacturing of the garments. They are as follows:
Quality measures during fabric production and processing
On-site quality inspectors for in process checks
100% in-house fabric inspection
In-house testing lab
Quality measures during fabric cutting:
– Pre-cut fabric checking in cutting room.
– 100% panel ticketing & checking.
74
Quality measures during sewing, finishing and packaging of
the garment:
– In-line quality check points at critical operations.
– 100% piece goods inspection .
– In the process of implementing S.P.C.
– Use of templates and special attachments for consistent and
better product Needle Policy in place for product safety.
75
76
GOVERNMENT INITIATIVES IN
SECTORAL CAPABILITY BUILDING
Export Promotion Measures
To encourage up-gradation of textiles sector and to give a fillip to exports of
textile products, some of the important initiatives taken are as follows:
1)Announcements in the new Foreign Trade Policy:
The new Foreign Trade Policy contains a number of positive features.
The features which are particularly beneficial to the textile industry are
as follows:
❏ Handicrafts and Handloom sectors, among others, have been
identified as Special Focus Initiatives.
❏ Duty free import of trimmings and embellishments for
Handlooms & Handicrafts sectors increased from 3% to 5% of
FOB value of exports.
❏ Import of trimmings and embellishments and samples shall be
exempt from CVD.
❏ Handicraft Export Promotion Council to import trimmings,
embellishments and samples for small manufacturers.
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❏ A new Handicraft Special Economic Zone shall be established.
❏ Leftover materials and fabrics of the 100% EOUs up to 2% of
CIF value or quantity of import shall be allowed to be disposed of
on payment of duty on transaction value only.
2)The National Textiles Policy, 2000:
One of the main objectives of the New Textile Policy (NTxP-2000),
announced in November 2000, was to facilitate the textiles industry to
attain and sustain a pre-eminent global standing in the manufacture
and exports of clothing. The policy endeavors to achieve the target of
textiles and apparel exports of US $50 billion by 2010, of which the
share of garments will be US $ 25 billion. Subsequent to the
announcement of NTxP-2000, woven segment of readymade garment,
hosiery and knitwear sub-sectors were de-reserved from the ambit of
SSI.
3)The Technology Upgradation Fund Scheme:
The Ministry of Textiles had launched a Technology Upgradation Fund
Scheme (TUFS) for the Textile and Jute Industry w.e.f. April 1, 1999
initially for a period of five years and had been subsequently extended
till March 31, 2007. The Scheme was launched to facilitate the
modernization and upgradation of the textile industry both in the
78
organized and unorganized sectors. The Scheme was further fine tuned
to increase the rapid investments in the targeted sub-sectors of the
textile industry. The cost of machinery has been further brought down
by reducing the customs duty on imports. For speedy modernization of
the textiles processing sector, Government has introduced w.e.f. April
20, 2005, a credit linked capital subsidy scheme @10% under TUFS, in
addition to the existing 5% interest reimbursement. For small scale
textile and jute industrial units, Government has enhanced the rate of
Credit Linked Capital Subsidy (CLCS) from 12% to 15% w.e.f. January 1,
2005. In 2006-07, the scheme was extended to handlooms sector.
4)The Liberalization of FDI Policy:
The Government has allowed foreign equity participation up to 100%,
through automatic route, in the textiles sector with the only exception
of knitwear/knitting sector, which was reserved for SSI. The
Government had since de-reserved the woven segment of readymade
garment, and hosiery and knitwear from the ambit of SSI sector.
5)The Export Promotion Capital Goods (EPCG) Scheme:
The scheme facilitates import of capital goods at 5% concessional rate
of duty with appropriate export obligation. The import of second hand
79
capital goods without any restriction on age is also allowed under the
new Foreign Trade Policy as announced on August 31, 2004.
6)The Duty Exemption Pass Book (DEPB) Scheme:
DEPB credit rates have been prescribed for 83 textiles and clothing
products. The nomenclature and rates for DEPB entries pertaining to
certain textile products have been rationalized. The DEPB credit rates
were reduced by 45% across the board in all textile items on
September 23, 2004, by Department of Commerce. DEPB credit rates
were again revised on December 30, 2004 by announcing 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.
7)The Duty Drawback Scheme:
The exporters are allowed refund of the excise and import duty paid on
raw materials under the scheme to make the products more
competitive in the international market. All Industry Duty Drawback
Rates were last revised in May 2005.
8)Setting up of modern laboratories:
80
The Textile Committee, with the assistance the Ministry of Textiles has
set up modern textiles laboratories to facilitate that the textiles
exported from the country meet all international environmental
standards.
9)Organization of buyer-seller meets/fairs in the
country as well as abroad:
The Export Promotion Councils regularly conducts seminars, organize
buyer seller meets, and participates in exhibitions in the country and
abroad to promote textiles exports. Besides, events like TEX-STYLES
India, The Handicrafts and Gift Fair, The India International Garment
Fair are organized to provide exposure of India's capabilities in textiles
and clothing sectors to the foreign buyers.
10) The Apparel Park for Exports Scheme:
The Apparel Park for 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 & Kanpur (U.P.), Surat (Gujarat),
Thiruvananthapuram (Kerala), Visakhapatnam (Andhra Pradesh),
Ludhiana (Punjab), Bangalore (Karnataka), Tirupur & Kanchipuram
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(Tamil Nadu), SEZ Indore (Madhya Pradesh), Mahal, Jaipur (Rajasthan)
and Butibori-Nagpur (Maharashtra). The scheme had since been
discontinued and the projects sanctioned are being implemented
under SITP.
11) The Textiles Centers Infrastructure Development Scheme (TCIDS):
The Textiles Centre Infrastructure Development Scheme (TCIDS)
was launched in December 2002, to provide infrastructure
facilities at important textiles centers. Eighteen projects were
approved under the TCIDS at Pashmylarlam-Distt. Medak, and
Sircilla-Distt. Karimnagar (Andhra Pradesh), Panipat (Sector 29,
Phase-II, Haryana), Indore (Madhya Pradesh), Jassol, Balotra-
Bithuja belt Barmer Distt. and Paali (Rajasthan), Narol-Shahwadi-
Ahmedabad City, SEWA Trade Facilitation Centre, Ahemdabad
and Pandesara-Surat (Gujarat), Tirupur, Kancheepuram, Cauvery
Hi-tech Weaving Park, Komarapalayam (Tamil Nadu), Solapur,
Bhiwandi and Malegaon (Maharashtra), Kannur (Kerala), Zakura
(Jammu & Kashmir) and Pilkhuva (Uttar Pradesh). The scheme
had since been discontinued; however, the projects sanctioned
are being implemented under SITP.
12) The Scheme for Integrated Textiles Parks (SITP):
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The Government launched the 'Scheme for Apparel Parks for
Exports (SITP) in August 2005, by merging the two existing
schemes, viz. Apparel Park for Export Scheme and Textile
Centers Infrastructure Development Scheme. The Scheme, a
public-private partnership, is being implemented through a
Special Purpose Vehicle (SPV). The industry associations/group of
entrepreneurs is the main promoters of SITP.
CONCLUSON
There has been resurgence in the Indian Textile Industry in the post quota
period. India is emerging as one of the major outsourcing hubs as it has
comparative advantage over its competitors on availability of relatively
inexpensive but skilled workforce, design expertise, a large production base
of basic raw materials such as yarn & fabric, and availability of a wide range
of textiles. The Industry is aiming at attracting investments of the order of
Rs. 15,060 billion by 2012. This enhanced investment will generate
additional 17 million jobs by 2012 comprising 12 million direct and 5 million
indirect jobs.
Readymade garments (RMG) are the largest export segment, accounting for
45 per cent of total textile exports and 8.2 per cent of India's total exports.
Readymade garments exports from India are expected to touch US$ 14.5
billion by 2009-10 with a cumulative annual growth of 18 to 20 percent. India
is the world leader in carpet exports with 36 percent of the global market
share. Exports of carpets have increased from US$ 654.32 million in 2004-05
to US$ 930.69 million in 2006-07, showing a growth rate of 42.23 percent.
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An important stage after manufacturing of goods or their procurement is
their preparation for shipment. This involves labeling, packaging, packing
and marking of export consignments. Labeling requirements differ from
country to country and the same should be ascertained well in advance from
the buyer.
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BIBLIOGRAPHY
BROCHURE
o Fabstract Clothing India Pvt. Ltd., Noida.
o Orient Craft Limited, Gurgaon.
IMPORTANT OPERATIONS
o Library, PHD House, Khel Gaon, New Delhi.
o Library, Indian Institute of Foreign Trade (IIFT), Qutab Institutional
Area,
New Delhi.
o Ministry of Commerce, Government of India.
WEBSITES
o www.aepcindia.com
o www.dgciskol.nicin
o www.texmin.nic.in
o www.commerce.nic.in
o www.intracen.org
o www.texstylesindia.com
o www.infodriveindia.com
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QUESTIONNAIRE
PLEASE MARK THE APPROPRIATE CHOICES “3 – YES AND – NO”:
What is the nature of your organization?
Garment Producers Garment Exporters
Indian Apparel portal Government Organizations Others
What is your designation in the organization?
Employee Manager Executive Other
Do you think that the removal of quotas in the Textile & Clothing Industry are beneficial for India?
Yes No
Which country, according to you, would have biggest advantage from the removal of quotas? (Please tick)
China
Hongkong
India
Srilanka
Bangladesh
Pakistan
Others
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Please tick (2) the advantages that, according to you India has, would help pave its way towards a bright future?
Huge Cotton resources Strong power loom sector
Low-cost labor Politically stable country
Government policies & Initiatives towards this sector
What, according to you, is the most important hurdle in the way of the growing garment industry?
.Inflexible Indian Labor laws
LongerLead times
Artificial pricing of the Chinese Currency
Shortage of trained manpower
Outdated Technology
Recommend the use of following tools in the Garment industry:
Very Imp Important
Somewhat Imp
Not Important
1.CAD/CAM
2.Use of Internet
3.E-Commerce
4.Total Quality Management
5.Quality circles
6.Research & Development
Do you think India would be able to match China in Garment exports 5 years from now?
Yes No Not sure
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If yes, then which of these features would be most important in accomplishing the same?
.Technology &
Infrastructure
Design Capabilities
Scale & Integration
Pricing Any other
Are the current Government policies in benefit of the Textile & Clothing Industry in India?
Yes No can’t say
According to you, will India be able to achieve the $50Bn exports target set for 2010?
Yes No not sure
Name: ________________________________________________
Age: ________________________________________________
Sex: ________________________________________________
Occupation: ________________________________________________
Address: ________________________________________________
***THANK YOU***
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ANNEXURE - II
Name of the Organization: ________________________________
Name of the person interviewed ________________________________
Designation: ________________________________
1. Which states in U.S.A do you want to focus?
Boston New York California New jersey
Mississippi Alaska Washington any other
2. Which market has the major potential for your product?
3. To which countries do you to export?
4. Is designer garments preferred?
Yes No
5. Do you think Quota restriction is affecting Indian garments exports?
Yes No
6. In your opinion, what should government do so that Indian exporters of
garments get advantage of quotas?
7. Do you think the china factor on the Indian garment industry in 2005 will
have a big impact
8. How much important is product development in this sector and how much
R&D your organization does?
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9. What are the payment modes?
10. How secured are they?
11. How do you manage your financial risks? Which modes do you employ?
12. Which factors do you take into account while pricing your product?
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