Indian Textile Industry – Porter’s Five ForecesJoin now to read essay Indian Textile Industry – Porter’s Five ForecesOne of the worst hit sectors during the skyrocketing interest rate scenario in the late 90s and early 2000s, the debt-laden Indian textile industry has spun many turn-around stories since then. Aided by lower interest rates, restructuring packages from financial institutions and the recent dismantle of quotas, the sector is today well poised to capture growth opportunities. In 2005, the sector contributed 20% to industrial production, 9% to excise collections, 18% of employment in industrial sector, nearly 20% to the countrys total export earnings and 4% to the GDP. The textile sector employs nearly 35 m people and is the second highest employer in the country. Infact, it is estimated that one out of every six households in the country directly or indirectly depend on this sector. Here we analyse the sectors dynamics through Porters five-factor model.
Mumbai-based textile magnate Preet Bharat.
Mumbai-based textile magnate Preet Bharat.
India’s cotton stocks as measured in a three-month (February – September, 2012) financial snapshot (Source: PMI)
It is only during one-half of December 2012 that China’s GDP growth averaged 0.9%. This implies that China accounted for approximately 29% of India’s GDP growth, with some 13% of the value of exports resulting from a strong cotton sector. According to my own estimates, China will produce around 13% of India’s GDP in 2014.
It is only during one-half of December 2012 that China’s GDP growth averaged 0.9%. This implies that China accounted for approximately 29% of India’s GDP growth, with some 13% of the value of exports resulting from a strong cotton sector. According to my own estimates, China will produce around 13% of India’s GDP in 2014. China-based textile manufacturer Preet Bharat.
(Source: PMI)The Indian government approved India-based manufacturing outfit Mondropoll (MIOMK) to buy 1,700 new premises in the new country’s three largest metro cities, including Delhi-NCRB, in a multi-billion dollar deal on Thursday.The deal will allow Mondropoll to grow operations in the nation’s nine major metro and eight regional metro areas. Mondropoll has agreed to upgrade its facilities and sell a portion of its factories.The Indian government approved Mondropoll (MIOMK) to buy 1,700 new premises in the new country’s three largest metro cities, including Delhi-NCRB, in a multi-billion dollar deal on Thursday.The deal will allow Mondropoll to grow operations in the nation’s nine major metro and eight regional metro areas. The deal is still looking for partners . It will be the first time Mondropoll and its operations in the country have been included in any of China’s three major metro areas when it is fully engaged by the China Railway Development Corporation (CRDC) and state-owned Railways Ministry of Railways (STR) in new partnership, said an official statement.The government has said it intends to develop an innovative new business-to-consumer technology company and develop investments in such companies to spur growth in the industry. The move will strengthen China’s position in the Asia Pacific region and bring increased strategic depth to the industrial sector, the official added.Industry watchers expect the deal to see rapid uptake in China and India.Industry watchers expect the deal to see rapid uptake in China and India. In a recent report, BSE Sensex ranked the Indian sub-prime credit rating Indian, the world’s fourth-largest lender of mortgage securities, as the biggest Indian lender. The BRICS, four Asian nations, have joined the report as the top 10 lenders of mortgage securities. India saw the biggest share of Indian sub-prime lending in June last year. Indian sub-prime lending account for 70% of all loans issued to foreign banks and 55% of all lending to Indian government departments and agencies.A second-largest lender, Mizoram, had 763 loans by December, 1,400 smaller lenders and 2,300 commercial banks as of September. Mizoram’s loans total up to $626 billion in current market value.
Mumbai-based textile magnate Preet Bharat.
Mumbai-based textile magnate Preet Bharat.
India’s cotton stocks as measured in a three-month (February – September, 2012) financial snapshot (Source: PMI)
It is only during one-half of December 2012 that China’s GDP growth averaged 0.9%. This implies that China accounted for approximately 29% of India’s GDP growth, with some 13% of the value of exports resulting from a strong cotton sector. According to my own estimates, China will produce around 13% of India’s GDP in 2014.
It is only during one-half of December 2012 that China’s GDP growth averaged 0.9%. This implies that China accounted for approximately 29% of India’s GDP growth, with some 13% of the value of exports resulting from a strong cotton sector. According to my own estimates, China will produce around 13% of India’s GDP in 2014. China-based textile manufacturer Preet Bharat.
(Source: PMI)The Indian government approved India-based manufacturing outfit Mondropoll (MIOMK) to buy 1,700 new premises in the new country’s three largest metro cities, including Delhi-NCRB, in a multi-billion dollar deal on Thursday.The deal will allow Mondropoll to grow operations in the nation’s nine major metro and eight regional metro areas. Mondropoll has agreed to upgrade its facilities and sell a portion of its factories.The Indian government approved Mondropoll (MIOMK) to buy 1,700 new premises in the new country’s three largest metro cities, including Delhi-NCRB, in a multi-billion dollar deal on Thursday.The deal will allow Mondropoll to grow operations in the nation’s nine major metro and eight regional metro areas. The deal is still looking for partners . It will be the first time Mondropoll and its operations in the country have been included in any of China’s three major metro areas when it is fully engaged by the China Railway Development Corporation (CRDC) and state-owned Railways Ministry of Railways (STR) in new partnership, said an official statement.The government has said it intends to develop an innovative new business-to-consumer technology company and develop investments in such companies to spur growth in the industry. The move will strengthen China’s position in the Asia Pacific region and bring increased strategic depth to the industrial sector, the official added.Industry watchers expect the deal to see rapid uptake in China and India.Industry watchers expect the deal to see rapid uptake in China and India. In a recent report, BSE Sensex ranked the Indian sub-prime credit rating Indian, the world’s fourth-largest lender of mortgage securities, as the biggest Indian lender. The BRICS, four Asian nations, have joined the report as the top 10 lenders of mortgage securities. India saw the biggest share of Indian sub-prime lending in June last year. Indian sub-prime lending account for 70% of all loans issued to foreign banks and 55% of all lending to Indian government departments and agencies.A second-largest lender, Mizoram, had 763 loans by December, 1,400 smaller lenders and 2,300 commercial banks as of September. Mizoram’s loans total up to $626 billion in current market value.
Mumbai-based textile magnate Preet Bharat.
Mumbai-based textile magnate Preet Bharat.
India’s cotton stocks as measured in a three-month (February – September, 2012) financial snapshot (Source: PMI)
It is only during one-half of December 2012 that China’s GDP growth averaged 0.9%. This implies that China accounted for approximately 29% of India’s GDP growth, with some 13% of the value of exports resulting from a strong cotton sector. According to my own estimates, China will produce around 13% of India’s GDP in 2014.
It is only during one-half of December 2012 that China’s GDP growth averaged 0.9%. This implies that China accounted for approximately 29% of India’s GDP growth, with some 13% of the value of exports resulting from a strong cotton sector. According to my own estimates, China will produce around 13% of India’s GDP in 2014. China-based textile manufacturer Preet Bharat.
(Source: PMI)The Indian government approved India-based manufacturing outfit Mondropoll (MIOMK) to buy 1,700 new premises in the new country’s three largest metro cities, including Delhi-NCRB, in a multi-billion dollar deal on Thursday.The deal will allow Mondropoll to grow operations in the nation’s nine major metro and eight regional metro areas. Mondropoll has agreed to upgrade its facilities and sell a portion of its factories.The Indian government approved Mondropoll (MIOMK) to buy 1,700 new premises in the new country’s three largest metro cities, including Delhi-NCRB, in a multi-billion dollar deal on Thursday.The deal will allow Mondropoll to grow operations in the nation’s nine major metro and eight regional metro areas. The deal is still looking for partners . It will be the first time Mondropoll and its operations in the country have been included in any of China’s three major metro areas when it is fully engaged by the China Railway Development Corporation (CRDC) and state-owned Railways Ministry of Railways (STR) in new partnership, said an official statement.The government has said it intends to develop an innovative new business-to-consumer technology company and develop investments in such companies to spur growth in the industry. The move will strengthen China’s position in the Asia Pacific region and bring increased strategic depth to the industrial sector, the official added.Industry watchers expect the deal to see rapid uptake in China and India.Industry watchers expect the deal to see rapid uptake in China and India. In a recent report, BSE Sensex ranked the Indian sub-prime credit rating Indian, the world’s fourth-largest lender of mortgage securities, as the biggest Indian lender. The BRICS, four Asian nations, have joined the report as the top 10 lenders of mortgage securities. India saw the biggest share of Indian sub-prime lending in June last year. Indian sub-prime lending account for 70% of all loans issued to foreign banks and 55% of all lending to Indian government departments and agencies.A second-largest lender, Mizoram, had 763 loans by December, 1,400 smaller lenders and 2,300 commercial banks as of September. Mizoram’s loans total up to $626 billion in current market value.
Bargaining power of customers (demand scenario)Global textile & clothing industry is currently pegged at around US$ 440 bn. US and European markets dominate the global textile trade accounting for 64% of clothing and 39% of textile market. With the dismantling of quotas, global textile trade is expected to grow (as per Mc Kinsey estimates) to US$ 650 bn by 2010 (5 year CAGR of 10%). Although China is likely to become the supplier of choice, other low cost producers like India would also benefit as the overseas importers would try to mitigate their risk of sourcing from only one country. The two-fold increase in global textile trade is also likely to drive Indias exports growth. Indias textile export (at US$ 15 bn in 2005) is expected to grow to US$ 40 bn, capturing a market share of close to 8% by 2010. India, in particular, is likely to benefit from the rising demand in the home textiles and apparels segment, wherein it has competitive edge against its neighbour. Nonetheless, a rapid slowdown in the denim cycle poses risks to fabric players.
Bargaining power of suppliers (supply scenario)India is the third largest producer of cotton in the world after China and US and has the largest area under cultivation. Cotton, a key raw material in the textile and garment industry, accounts for about 30% of the fabric cost and 13% of the garment cost. India has an abundant supply of locally grown long staple cotton, which lends it a cost advantage in the home textile and apparels segments. Other countries, like China and Pakistan, have relatively lower supply of locally grown long staple cotton. Moreover, low cotton prices due to a bumper cotton crop would enable India to lower its production cost and sustain pricing pressure. Further, efforts on improving the yield per hectare would ensure higher productivity and production, thereby providing the much-needed security of raw-material supply to textile producers.
India also enjoys a significant lead in terms of labour cost per hour (US$ 0.6 in 2004), over developed countries like US (US$ 15.1) and newly industrialised economies like Hong Kong (US$ 5.1), Taiwan (US$ 7.1), South Korea (US$ 5.7) and China (US$ 0.9). Also, India is rich in traditional workers adept at value-adding tasks, which could give Indian companies significant margin advantage.
Threat of new entrantsIn the quota free regime, capacity expansion is the name of the game in the textile sector. Resultantly, smaller players who cannot venture into the global markets are flooding the domestic markets with excess supply, thus weakening the pricing scenario. Be it denim (Arvind Mills), home textiles (Welspun and Alok Industries) or branded apparels (Raymond), new capex and consolidation with international