However, the industry has now risen to being the second biggest textile industry In the world, only trailing China. It accounts for 38% of total exports In the country, which makes It a major Industry In the country (Singleton, 2007: pop). The factors discussed in this paper affecting the Indian textile industry such as political factors are vital since lack of stability would adversely affect it. Since the economy of India is dependent largely on manufacture and export of textiles with 27% of Its foreign exchange coming from the sector, environmental and social factors re also of great Influence (Singleton, 2007: pop).
Therefore, these factors have been discussed, as have the issues that affect these factors in the textile industry. Analysis of Macro environment in India The textile industry emerged In the 18th century during the industrial revolution as clothing mass production turned Into a major Industry. The textile Industry In India began as an unrecognized industry until liberalizing of the economy in the ass 1 OFF affected by various factors such as environmental, legal, technical, social, economic, and political factors. Political Environment
Business enterprise management, as well as that of their policies, is influenced considerably political systems in existence. Since India is a democracy, stability of political policies is an issue. Production reservation imposed on small companies so as to aid smaller companies led to fragmentation, distorting the industry competitiveness (Roy, 2010: pappy). This sector, however, has now been De-reserved with big corporations now investing more capital in the establishment of bigger facilities and expansion of those in existence.
Foreign investment, initially, was excluded from production of clothing and apparel, which has, however, now been eliminated gradually. This has been done through decreased capital equipment import duties that have given foreign investors a chance and incentive to set up in India. Despite these motivating steps adopted by the government, problems like excise imbalances and taxes still persist because of diversification into Union territories and 35 states. VAT outlines, however, are under implementation to replace other diversification of tax that will clear out these imbalances on implementation (Roy, 2010: pappy).
The Indian government has also introduced measures like an upgrading fund for national technology and the removal of differential schemes of taxation that were discriminatory against big units. Economical Environment Economic factors include employment generation, capital formation, development of infrastructure, natural resource exploitation, infiltration of resources, national income, per capita income, and industrial development in relation to how they influence Indian’s textile industry. The industry provides a fundamental necessity to most people that has, at every processing stage, a huge addition of value.
It accounts for approximately 14% of Indian’s industrial input with Indian fabric being in demand due to its many textures, earth colors, and ethnic dimension (Roy, 2010: pappy). If one is ready to be innovative, it has potential since it accounts for 30% of Indian’s exports. It is the largest employer in the economy and generated 12 million new Jobs in 2011, on top of additional employment potential in the industrial and agricultural sectors, especially in the cotton sector. Exports from the industry topped $50 billion in 2011 with $25 billion exported to the US (Roy, 2010: pappy). Japan, Bangladesh, Canada,
Russia, Italy, France, Germany, the I-J, and I-JAW constitute additional important markets. Sociological Environment Policy makers and managers cannot afford to avoid social variables like knowledge, education, and beliefs and norms common in the rural areas in India. Textile industry in India is cotton based and is mainly to be found growing in rural areas. Therefore, the textile industry in India has to be mindful of its social responsibility in these areas (Swami, 2010: pappy). In the Indian sub continent, social stratification, for instance, has a vital role to play in every day life.
This will have a significant effect on how companies will enter the sector in the rural areas. In the ass, most foreign managers and those from urban areas did not think of these cultural differences between the rural and urban areas, which, however, they were forced to reconsider as farmers preferred to deal with those who they felt as one of them (Swami, 2010: pappy). Technological Environment government assigned increased importance to technology and its transfer, especially via its FEAR and MRS. regulations, industrial licensing policies, and industrial policy resolutions (Swami, 2010: pappy).
Major problems afflicting the textile industry under these factors include inadequate training facilities, fragmented garment industry, a processing sector that is technologically backward and fragmented, weaving and processing structural weaknesses, and an inadequate capacity of the manufacturing industry domestic textile industry. The Indian government has taken various progressive measures such as the introduction of TM, technology upgrade funds, the National Institute of Fashion Technology, 100% foreign direct investment, Apparel Design and Training Centers and others for strengthening and upgrading of
Indian’s textile sector (Swami, 2010: pappy). The textile industry in India, presently, is going through a re-orientation towards other areas apart from the textile sector’s clothing segment, commonly referred to as technical textiles. This vertical movement has a mean growing rate of approximately two times that of textiles for application in clothing, which accounts for over half of output of textiles (Swami, 2010: pappy). These processes of technical textiles need skilled workers and costly machinery.
Legal Environment Various laws relating to foreign exchange regulation, monopoly control, industrial spites, factory administration, and industrial licensing are part of the legal environment affecting the Indian textile industry. The industry has suffered under labor laws that are unfavorable that do not favor the trades as companies do not have an ideal policy to “hire and fire” (Swami, 2010: pappy). There is no trade membership, which is restrictive on tapping of potential markets. There is also lack of economies of scale generation as the government has charged higher interest rates, power rates, and indirect taxes.
Barriers to attaining supply chain links have also en cause by an uneven supply base, creating inconsistent, unreliable, and uncontrollable performance. The ass era brought with it liberalizing that led to many previous constraints on the sector being relaxed. This included removal of the Statement of Industrial Policy, as well as the Textile Regulation and Development Order in the early ass via licensing removal (Swami, 2010: pappy). The Indian government was also a signatory of the General Agreement of Trade and Tariffs in 1995, bringing it to par with international standards.
The end of the regime of textile autos for quantitative import restrictions in the MFC in 2005 under Wet’s Textiles and Clothing Agreement has also greatly affected the sector. Sis’s, Pep’s and specialized textile parks are other regulatory policies that enhance the sector (Swami, 2010: pappy). Environmental Factors The textile industry in India is responsible for the preservation and protection of the environment, as well as maintenance of ecological balance. The Indian government is committed to ensuring that the industry takes their responsibility seriously.
Industrial waste recycling and technology free of pollution is now a reporter concern. For this purpose, the government has adopted legislative measures such as sass’s Water Act that provides for control and prevention of water pollution, sass’s Air Act that seeks to reduce, control, and prevent air pollution, as well as sass’s Environment Act that seeks to ensure improvement and protection of India textile industries can be classified broadly into unrecognized and organized. Prior to the ass, the industry was relatively small and unrecognized with real potential for growth.
The opening of the economy in the ass led to stunning improvements in he industry. The Indian economy is, today, dependent largely on textiles. The industry contributes approximately 14% of Indian’s total industrial production. In addition, the industry contributes around 3% of Indian’s GAP with the numbers increasing steadily (Mazda, 2011 : Pl 200). It also involves approximately 35 million workers in direct employment, accounting for generation of 21% of Indian’s employment figures. The textile industry also accounted for approximately 38% of total exports with the exports forecasted to reach $45 billion by 201 5 (Mazda, 2011: pappy).
In 2007, which was the last year data was available in completion; textile machinery was at an estimated $900 million. At that point, the market was projected to increase at a mean nominal rate of 6% in the following five years (Mazurka, 2011 : pappy). India has approximately 20 domestic companies that offer texturing, spinning, weaving, and finishing. Alkalis group is the most successful, which can be attributed to its longevity and ability to give a range of machinery via sister companies or directly (Mazda, 2011 : Pl 201).
Consequently, the company can meet end user requirements. The market, in the last four years, has been through a recession, which has made players become price sensitive and cost conscious. The future, however, seems bright for used machinery. Major factors that are expected to lead to growth in this sector are reduced used equipment costs that make operations in textile manufacturing more viable, reduced restrictions by government on used capital goods imports, and custom duty lowering on textile machinery that is imported (Mazda, 2011: Pl 202).
RILL is a private company involved in textiles headquartered in Iambi, employing over 12,500 people. It has recorded revenues of approximately $25. 537 million during the 2010 fiscal year, which was an increase of approximately 24. 4% from 2009 (Mazda, 2011: pappy). The market share of the US in imported machinery is at 3% with European countries such as the I-J, Switzerland, and Germany have taken the lead in equipment for winding, carding, weaving, spinning, and finishing of cotton.
One strategy that the US and other countries could use to improve its competitiveness in this industry would be a focus on using turn key basis for marketing used machinery, as well as coupling machinery transfer with buy back ointment, training, and technological transfers for Indian garments and textiles (Mazda, 2011: pappy). This strategy is supported at regional and national levels of the Indian government. Market profile of Textile Industry In order to sustain the growth, it is essential that the industries produce high quality goods at a reasonable price.
The industry needs to continuously modernize machinery, which means that the industry needs to play an integral role in the growth of textile exports in India. Textile prices have been analyzed to be increasingly competitive globally as developing countries continue to enter the textile trade Bandier & Mattie, 2009: pop). In order for India to maintain market share, they need to buy low cost and modern textile machinery that can produce garments and textiles low cost new technology.
In India, there are around 1,200 large and medium scale textile mills with 20% in Combaters. It also has 34 million cotton spindles that manufacture cotton yarn that accounts for 70% of its textile exports, on top of almost 80% of textile yarn coming from coarser yarns (Bandier & Mattie, 2009: pop). Finally, the domestic industry in knitting comprises of by small scale enterprises that do not eave adequate facilities for finishing, processing, and dyeing. These industries are concentrated in Lithuania and Trauma.
The latter produces approximately 60% of total knitwear exports. Almost 32% of exported garments are accounted for by knitted garments with major players including Jersey India, Run processing, and Near spinning (Bandier & Mattie, 2009: pop). Textile Machinery Industry Status Approximately 120 companies are involved in complete textile machinery manufacture. Receipts for this industry in 2007 were approximately $700 million with he industry employing 300,000 workers both indirectly and directly (Bandier & Mattie, 2009: pop).
Demand for this machinery comes from cotton textile end users, as well as those from wool units and manmade fibers textile factors. Major problems that afflict this industry are high quality of equipment that is imported, foreign country competition resulting from decreased import duties on machinery, demand constraints, high finance costs, high component and raw material costs, and inadequate engineering and design capabilities. This industry saw a nominal growth of between 7 and 8% in 2007 (Bandier & Mattie, 2009: pop).
Conclusion In conclusion, any organization and industry that wants to retain market share in the Indian textile industry needs to be socially responsible, adhere to regulations and rules, as well as maintain low environmental pollution. Growth rate in India is dependent on the textile industry, which is a self reliant and independent industry. However, the Indian government instituted strong labor laws that affected the industry significantly. In India, the market is shifting gradually towards garments that are ready made and branded with increased opportunities in the domestic and foreign market.