ADVANCE LEARNING SYSTEMS

A-146, SECTOR- 63, NOIDA, U.P. - 201307 LC CODE: 02882 A MARKET RESEARCH PROJECT REPORT ON

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

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

EXAMINERS CERTIFICATION

THE PROJECT REPORT OF

OPERATION MANAGEMENT IN TEXTILE INDUSTRY

is approved and is acceptable in quality & form.

Internal Examiner AMIT ZUTSHI (MBA HRD) Management Faculty

External Examiners Qualification Designation

(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 (Guides Name and Qualification)

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.

TABLE OF CONTENTS
CHAPTER I: INTRODUCTION Overview of the Indian Textile Industry Indias 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 Indias 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

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 INSPECTION

QUALITY

CONTROL

&

PRE-SHIPMENT

Labeling, packaging, packing & marking of goods Adherence to quality norms by o Fabstract Clothing India Pvt. Ltd. o Role of Testing Body: SGS India Ltd

Orient Craft Limited

CHAPTER VIII:

CONCLUSION Government Initiatives in Sectoral Capability Building

BIBLIOGRAPHY & REFERENCES ANNEXURES

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 handwoven 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.

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.

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.
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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 handspun 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.
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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 noncellulose 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 endowed with all the four varieties of silk, namely, Mulberry, Eri, Tasar,
13

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 sociocultural 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 value

14

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.

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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, Indias 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. Readymade garments exports from India are expected to touch US$ 14.5
17

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 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$
18

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

INDIAS TEXTILE EXPORT AT A GLANCE

Value (US$ Million) 2006-07 ITEM Readymade Garment RMG of cotton including accessories RMG of Man-made fibre RMG of other textiles material Cotton Textiles Cotton raw including waste Cotton yarn, fabrics & madeups Man-made Textiles Manmade staple fibres Manmade yarn fabrics & made-up Wool & Woolen textiles RMG of Wool Wool Yarn, fabrics & made-up Silk RMG of Silk Natural silk yarn, fabrics & made-up Silk Waste Sub-Total Textiles 3 Handicrafts Handicrafts (excluding handmade carpets) Silk carpets Coir & coir manufactures Coir & Coir manufacturers Jute Floor Covering of Jute Other Jute manufactures
20

2005-06 (PROVISIONAL) 7986.38 6553.69 1025.94 406.74 4600.78 656.00 3944.78 2039.57 81.76 1957.82 455.92 370.63 85.29 693.28 260.72 428.06 4.50 15775.9 17056.87 1314.53 461.98 23.35 133.35 133.35 296.26 76.34 57.04 1259.16 371.75 27.41 156.38 156.38 257.52 65.74 57.65 8075.57 6752.39 871.46 451.73 5485.04 1348.49 4136.65 2361.17 196.55 2164.62 445.49 361.67 83.82 689.61 257.42 427.30 4.88

Jute yarn Jute Hessian Grand-Total Textiles Exports

51.99 110.88 17,520.

53.54 80.60 18,729.93

07
Source : Foreign Trade Statistics of India, DGCIS

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:

Mens knitwear
Zipper/button polo, mock neck, Henley, cut and sewn, crew neck, tank tops/t-shirts.

Ladies knitwear

21

 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 East man cutting machine Single needle sewing machines (Juki) 4/5 thread over lock (Pegasus/Juki) 5 thread flat lock (Pegasus/Kansai) Button and button holing Fusing machine Smocking machine Terrot circular knitting machine Steam iron tables Air and pressure controlled mini spotty Hydro extractor Tumble drier

QUANITY 2 7 14 10 1 1 1 2 12 1 2 3

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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 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 inhouse 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 Dillards Inc. o The Limited o Marc Jacob o Ann Taylor o Dockers
26

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:

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

Year 2001 CIAe highest export award Gold trophy for highest global exports for apparel

Year 2000 Gold trophy for highest global exports for apparel BID World Quality Commitment International Star Award-Madrid DHL-CIAe highest export award
27

Year 1999 Gold Trophy for being Indias largest knit apparel manufacturer Silver plaque for second largest in global exports for apparel

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.

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BUSINESS DISTRIBUTION
Orient Craft has a strong foothold in Mens and Womens wear and expanding its range in childrens category. The following is the business distribution of the company: Mens t-shirt 17% Mens polo shirt 23%
Boys t-shirt 11%

Boys polo shirt 3%

Ladies top 33%

Girls top 7% Infants/Todd 6%

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INDIAS TOTAL PRODUCTION OF KNITTED COTTON WOMEN DRESSES

Production: in million metres Quantity: in million pieces Sector 2005 Production Urban sector Rural Sector 6 10 Quantity 3 6 2006 Production 8 13 Quantity 5 6

Source: Library, PHD House.

Total Consumption of Raw Material (Fabstract Clothing India Pvt. Ltd.)

30

INDIGENOUS/DOMESTIC
Value: in Rs.

2004-05 Tailoring Material Consumable Stores Packaging Material Yarn Purchase 25,76,740 3,50,502 12,76,520 2,39,758

2005-06 10,61,142

2006-07 21,85,770

98,54,764

1,10,30,236

16,16,120

11,89,139

1,56,25,897

2,45,06,237

Source: Fabstract Clothing India Pvt. Ltd.

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 IMPORTED

Value: in Rs. 2004-05 Topnet, HongKong Security Ticketing,Hongk ong Label Tax, Hongkong Brand ID Ltd., Hongkong Lambada, Hongkong
Source: Fabstract Clothing India Pvt. Ltd.

2005-06 32,45,346

2006-07 64,91,490

2,18,073

73,577

1,18,185

65,636

5,440

6,87,044

27,263

13,112

31,446

1,42,273

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 EXPOR T U.S.A GERMANY FRANCE U.K ITALY

Qty

Val

Qty

Val

Qty

Val

Qty

Val

Qty

Val

200203

1296. 53

6.3 3

1499. 34

5.7 8

2045. 38

5.4 6

857. 87

3.2 5

472. 89

1.8 4

200304

618.4 8

3.1 5

1749. 03

5.7 9

1365. 08

4.9 0

880. 70

2.7 7

555. 23

1.5 9

200405

1477. 18

7.2 2

1807. 40

6.0 2

1859. 39

6.1 9

549. 61

2.6 4

284. 78

1.3 8

200506

1144. 03

5.2 2

2035. 86

6.9 3

1129. 95

3.6 7

561. 32

1.9 9

175. 87

0.8 9

200607

1298. 42

5.4 6

1046. 82

3.1 5

807.5 3

2.8 1

738. 93

3.3 5

429. 41

1.9 8

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TOP 5 KNITTED RMG EXPORTING COUNTRIES

Value: In US $000 CHINA Value TURKEY Value MEXICO Value U.S.A Value ITALY 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

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TOP 5 KNITTED RMG IMPORTING COUNTRIES (FROM INDIA)

Value: In Rs. lakhs Quantity: In Thousand Units Worlds Imports CHINA HONGKONG THAILAND ITALY U.K

Qty

Valu e

Qty

Value

Qty

Valu e

Qty

Valu e

Qty

Valu e

2002-03

2003-04

0.6 2

2.05

0.0 4

0.04

0.0 0

0.01

0.0 7

0.35

2004-05

0.0 6 0.0 5 0.3 9

0.16

1.30

7.83

0.1 4 0.4 8 _

0.24

0.1 0 _

0.14

2005-06

0.27

0.08

0.52

0.49

0.1 0 _

0.26

2006-07

1.02

0.11

0.76

0.1 9

1.55

36

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 e

250

250

250

250

250

250

251. 18

251.1 8

251. 18

37

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.

B.

TECHNOLOGY (TUFS)

UPGRADATION

FUND

SCHEME

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
38

(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; or 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
39

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.

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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 as

41

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 b. Duty Entitlement Passbook Scheme.
42

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.

43

EXPORT TARGETS SET BY THE GOVERNMENT OF INDIA

With the abolition of various quotas imposed over the exports from the lowcost 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

44

The Ready Made Garment sector is the biggest segment in the Indias 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 expected to grow

45

exponentially with an estimated CAGR of 18-20 % to reach nearly USD 16bn in 2009-10.

46

PROBLEMS FOR THE GAP

I.

Imposition agreement

of

quota

under

Multi-fibre

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, Indias 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 Indias 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, powerlooms and mills. Each of these sectors presents their own unique set of problems to the garment exporters.
47

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 this gap can be attributed to the various quality factors or issues in the exports of Indian RMG.
48

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, delivery, price, packaging and presentation are some of the many aspects that need to be taken care of in garment export business.

49

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

50

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.

51

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.

52

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.

53

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.
54

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 Inspection) Act, 1963, about 1000 commodities under the major groups of Food and Agriculture, Fishery, Minerals, Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic
55

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

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.
56

 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. 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.
57

 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).

58

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 ensured that all the
59

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

60

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 embroidery the garments at the factory premises. Sampling Department: The company has 6 sampling coordinators assisted by a sampling staff of 10 who can turn out new beading/hand

samples/developments with in a reasonable time

61

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 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
62

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.

63

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 worlds 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.

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.
64

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

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:
65

 Chemical Testing

Identifying substances contained in the products and their properties Eco Testing RoHS, REACH, VOC, etc.

o o

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

66

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 antidust 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.

67

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 2000 1999 Gold Trophy for being Indias largest knit apparel manufacturer Silver plaque for second largest in global exports for apparel Gold trophy for highest global exports for apparel BID World Quality Commitment International Star Award-Madrid DHL-CIAe highest export award CIAe highest export award Gold trophy for highest global exports for apparel

1997 & 1998 Gold Trophy for highest global exports for apparel

68

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.

69

 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.

70

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. for

Duty free import of trimmings and embellishments

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. A new Handicraft Special Economic Zone shall be established.
71

 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 organized and unorganized sectors. The Scheme was further fine tuned to increase the rapid investments in the targeted sub-sectors of the
72

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 capital goods without any restriction on age is also allowed under the new Foreign Trade Policy as announced on August 31, 2004.

73

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:

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.

74

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 (Andhra (Gujarat), Pradesh),

Thiruvananthapuram

(Kerala),

Visakhapatnam

Ludhiana (Punjab), Bangalore (Karnataka), Tirupur & Kanchipuram (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.

75

11)The

Textiles Centers Scheme (TCIDS):

Infrastructure

Development

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, BalotraBithuja belt Barmer Distt. and Paali (Rajasthan), Narol-ShahwadiAhmedabad City, SEWA Trade Facilitation Centre, Ahemdabad and Pandesara-Surat (Gujarat), Tirupur, Kancheepuram, Cauvery Hitech 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):

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

76

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. 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.

77

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 o o o o o o

www.aepcindia.com www.dgciskol.nicin www.texmin.nic.in www.commerce.nic.in www.intracen.org www.texstylesindia.com www.infodriveindia.com

78

QUESTIONNAIRE
PLEASE MARK THE APPROPRIATE CHOICES 3 YES AND NO: What is the nature of your organization? Garment Producers Indian Apparel portal Others Garment Exporters Government Organizations

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

79

Please tick (2) the advantages that, according to you India has, would help pave its way towards a bright future? Huge Cotton resources Low-cost labor Government policies towards this sector & Initiatives Strong power loom sector Politically stable country

What, according to you, is the most important hurdle in the way of the growing garment industry? .Inflexible LongerLead Indian Labor times laws Artificial Shortage pricing of the trained Chinese manpower Currency of Outdated Technology

Recommend the use of following tools in the Garment industry: Very Imp 1.CAD/CAM 2.Use of Internet 3.E-Commerce 4.Total Quality Management 5.Quality circles 6.Research & Development Importa nt Somewhat Imp Not Important

Do you think India would be able to match China in Garment exports 5 years from now? Yes No Not sure

80

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 cant 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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