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Textile Industry Sector In India

Paper Type: Free Essay Subject: Marketing
Wordcount: 3110 words Published: 4th May 2017

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1. Introduction

This is the report which contains about internal and external influences to the industry sector and Socio-economic changes in the industry-sector which affects policies and decision making.

1.1Introduction to Textile Industry Sector in India

In India textile industry is the second largest employment maker after agriculture and it is the second largest in the world. It holds major position in India as it offers one of the most basic necessities of the citizens. Textile industry was one of the earliest industries to come into existence in India and it accounts for more than 30% of the total exports.

Indian textile industry is formed of the following segments: Readymade Garments, Cotton Textiles including Man-made Textiles, Handlooms, Woolen Textiles, Silk Textiles, Coir, Handicrafts, and Jute. 

Nationwide Textile Policy was declared in the year 2000. Its major purpose was: to offer cloth of suitable quality at realistic prices for the vast majority of the people of the country and to compete with confidence for a rising share of the global market.

2. Internal and External Influence to the Industry -sector

This is a part which gives a various theories and concepts those impacts in the textile industry sector in India. The success of Indian textile industry, it is significant for firms to recognize the theories related environmental analysis. This contains internal and external analysis and its importance in relation to the textile industry.

Internal analysis contains capabilities, resources and core competencies. Alternatively, external analysis includes political environment, economic environment, social cultural environment, and technological environment and porter’s five forces.

2.1External Environment

The decision makers do not know the potential events or are unable to allocate probabilities about the particular changes that will be incurred. For analyzing the macro-environment, the significant variables that influence the demand, supply and its costs should be recognized.

2.1.1 Political environment

Textile industries in India are affected by the government at both nationwide and local levels not only for a short period throughout policies, laws, and authority but also on strategic level by generating opportunities and threats. Political decisions have a cause on industrial structure, markets, social and economic trends, tax policies, employment law, trade restrictions and tariffs. The affect of these important changes should be anticipated by the textile manufacturers

2.1.2 Economic Environment

It is significant for firms to learn the economic environment and recognize the changing trends, and their strategic implications. The economic change are affect of government policies, economic cycle, commodity prices, world trade pattern, changes in currency conversation rate, labor markets, capital markets, and their rates, , tax rates, inflation and interest rates.

The Indian textile industry is one of the most significant parts that provide employment to a large populace and thus contribute to the economic and financial expansion of the nation. In is the sector which has the availability of cheap and skilled labor power. The employment opportunity formed by the textile industry is also huge, creating up to 12 million jobs covering both agricultural as well as industrial sectors.

2.1.3 Social cultural Environment

In socio cultures, gender differentiation of clothing is measured suitable for men and women. The differentiations are in colors, styles and fabrics. Women’s outfits in India differ widely and are closely linked to local culture, religion and climate.

Traditional Indian clothing for women is the saris, salwar kameez and also Ghaghara Cholis. For males, traditional clothes are the Lungi, Dhoti, or Kurta. Saris are attractive clothing ones made out of silk and lots of people love them and have cupboards full of highly pretty silk saris. But also they prefer to wear western clothes such as trousers. So they have to adopt the new trend and perform due to the consumers preferences.

2.1.4 Technology Environment

Due to the technology advancement textile industry has developed new designs and patterns to consumer preferences. Designs is important part of the industry beyond effective concerns and the glamour and fashion  industries have developed in relation to textile marketing and retail.

2.2 SWOT analysis

In Internal analysis it helps them to recognize its strengths and weaknesses and in External analysis its help them to recognize its opportunities and weaknesses. They are explaining it in below:


1. Raw material base- India has high self sufficiency for raw material particularly natural fibers. India’s cotton crop is the third largest in the world. Indian textile Industry produces and handles all types of fibers.

2. Labor – availability of cheap labor and powerful entrepreneurial talents have always been the strength of the Indian textile Industry.

3. Flexibility – The small size of manufacturing which is major in the apparel industry allows for better flexibility to smaller and specialized orders.

4. Rich heritage- rich heritage and cultural diversity presents good inspiration base for designer.

5. GDP – increasing income levels, increasing urbanization and growth of the purchasing populace make domestic demand.

6. Very low import content and Enormous export potential


1. More dependence on cotton – Due to specialization in cotton, synthetic products in India are costly and fabric required for stuff like sky-wear, swimsuit and industrial apparel is relatively unavailable.

2. Poor work practices resulting in higher labor cost element in many staple garments, in spite of low labor costs.

3. Lack of standardization and quality control.

4. Lack of synergies between Govt. support institutions and practical market.

5. Technological obsolescence and worse efficiencies.


1. Better political equation with EU and US.

2. Information Technology has a important role in apparel manufacturing. Availability of Electronic Data Interchange makes communication fast, easy, transparent and reduces duplication.

3. Improvements in infrastructure and regulations.

4. Buyers preference is for India, after China.


1. Trading blocks like NAFTA, SAPTA, etc; has resulted in a change in the world trade scenario. Existence of mutual agreements would result in major disadvantage for Indian exports.

2. Enhanced competition from other countries similarly constrained by quotas.

2.3 Porters five forces

It is a framework for industry analysis and business strategy development created by Michael E. Porter of Harvard Business School in 1979. Indian textile industries five forces are explain in below (Appendix1).

2.3.1 Threat of New entrants 

Indian Textile Industry is extremely dependent on personal associates and experience. The new performers would have to get some kind of customer base along with the new establishment. Without any established customer portfolio it is difficult to attract.


As the new entrant has less experience in textile manufacturing and they don’t have relationships with customers so they might experience disadvantages comparative to the recognized competitors.

Governmental policies do influence the industry environment to some level. An example of this is subsidies, which are obtainable to companies launching production in certain regions.

2.3.2 Bargaining power of customers (demand scenario) 

India is likely to gain from the increasing demand in the home textiles in which it has competitive border against its neighbors.

Therefore, the bargaining power of customers is strong. As a result, it is importance for a producer of apparel to make different their products, thus it will not compete with price as primary mean.

Differentiation can be important in the Indian textile industry since agreements are usually put on short-term base and are hardly ever set more than six months ahead. Thus, there is a need to tie the consumer to manufacturers without the need of open agreements. And thus, the bargaining power for the consumer is enhanced.

2.3.3 Bargaining power of suppliers (supply scenario) 

In India, we have various players in textile industry. There has been raise in production and supply of textile products in last few decades.

In India, The excess of available suppliers gives an initial sign of a weak bargaining power for the supplier. In addition, the suppliers lack switching costs and have a low level of product differentiation. This directs to huge chances for textile manufacturers to scout the suppliers for finest terms and prices for production. Therefore, manufacturers can make contact with a huge number of suppliers and play suppliers against each other. Such activity weakens the bargaining power for suppliers and as a result pushes prices down and makes prices similar among suppliers.

A benefit which the Indian Suppliers have capitalized on is, Due to their capacity to integrate ahead in value added chain, they have got an enhanced bargaining position towards textile manufacturing.

2.3.4 Threat of substitute products 

When using such a wide term as Textile, there are apparent reasons for identifying substitute products proves hard.

Obviously, there are differences in types of material and clothing. Differences in textile sector can also be known as trends in styles and fashion. Thus products in the apparel sector can act as substitutes but the common conclusion still places; there’s no substitute to apparel.

2.3.5 Competitive rivalry within the industry  

The textile manufacturing sector is an enormous sector with lot of companies producing apparel.  The high growth rate of total textile exports shows that the rivalry between manufacturers is low. In some products segments growth rate is high but even negative in others. Thus, the rivalry between textile manufacturers is varied since they enjoy different growth rates.

As Indian textile manufacturers are forced to lower prices in order to stay competitive with companies in a foreign country, the overall rivalry within the industry gets companies to spread out their consumer base so as to keep profits up. Therefore reasonable to consider that such developments may happen on the behalf of competitors if possible, and thereby raise the rivalry in the industry sector.

2.4 Value Chain of Textile industry

Michael porter has created the value chain analysis in his book for the development of competitive advantage to the firm. it explain the activity within and around an organization and also it helps to identify the competitive advantages of the firm.

India is one of the few countries which have an existence across the whole value chain of the Textile Industry. A well defined strategy will allow India’s textile industry to move focus to Value Added products. The maximum value addition in the textile chain is created in the garmenting segment (Appendix2). The diagram below shows the value chain in Indian textile industry sector.

Figure: 2.4.1, value chain model

3. Socio-economic changes

The Indian textile industry plays a major role in the development of the Indian economy. Due to vast competition it’s struggling to survive from big players such as China, Indonesia, Mexico, Bangladesh and Turkey present in global economies. But also it is one of those divisions which have succeeded in intensifying its business in many verticals. The textile industry in India dates back to many centuries. Now, it is one of the eminent industries in the globe.

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The Indian textile industry is one of the most significant parts that provide employment to a large populace and thus contribute to the economic and financial expansion of the nation. In is the sector which has the availability of cheap and skilled labor power. The employment opportunity formed by the textile industry is also huge, creating up to 12 million jobs covering both agricultural as well as industrial sectors. A huge workforce is required because from cultivation of cotton and the collection of silk worms up to the production of cloth and the designing and stitching of garments. More than 2, 00,000 people are directly employed by this industry.

The cultivation of cotton varieties and hybrids, plant protection techniques, new production technologies, the increase in area under irrigation, education of farmers, practical government policies, high quality seeds and more research efforts have helped to develop the textile industry in India.

Employing a government owned cargo-shipping mechanism, rationalizing fiscal duties and development of technology via Technology Up-gradation Fund Scheme (TUFS), setting up more apparel parks, removing restrictive regulations and controlling raw material exports will also serve to develop the textile industry in India with the support of government schemes above.

It is a sector which undertakes progress if industrialists are eager to innovate. The Indian fabric is in great demand in the world market and more and more people are fascinated by the soft texture and possible color of the Indian textiles. This is the reason for the increasing demand of Indian fabrics in the international market.

It is reasonably an interesting fact to note that more than 30 percent of the whole exports of the country encompasses of textile goods. It is known to be one of the most profitable sectors in the field of business.

Earlier vegetable dyes were used throughout weaving. These formed fast colors, lasted for almost a generation, and remained as attractive and vibrant as ever. Due to the socio- economic changes, currently they are using aniline dyes. It has increased popularity as they are cheaper, less time-consuming and produce a larger variety of colors. Therefore they produce their goods and services cheaper rather than last decades thus all class of peoples can consume goods and services in cheaper which improves lifestyle of people of India and also it helps to the growth of the Indian economy.

Socio-economic usually to bring about socio-economic growth, usually in terms of development in metrics such as life expectancy, GDP, levels of employment and literacy.

GDP in India is especially varied in size, quality and quantity of its output, manufacturing facilities, cost and requirement for fabrics. The domestic market is very sensitive to new and modish trends which further promote this industry in the country. They have large, potential domestic as well as international market.

Compared to other countries like Mexico, Turkey and China, India’s geographic location causes a problem as shipping costs to reach western shores are higher, which causes trade imbalance to India. And the success of mercantilism and open economy giants like American, China are trying to dumb their product and spread their culture in India (for example North Indians almost adopted the western culture) therefore domestic products effects which imbalance the growth of the GDP.

Socio-economic changes include the technological advancements. In the textiles sector it is possible that technically qualified and efficient manpower has led to the terrific growth of the industry. Nowadays most of the textile company has begun online shopping for the customers ease to buy products. They are keeping the records and accounts in the computer and laptops to reduce the labor and costs to avoid errors and gain profit.

India suffers from technological obsolescence that has an effect on productivity as well as other activities. Most of the garment machineries imported in India, are from China or from Taiwan. These are obtainable at lower price, and are of apt qualities as available in Japan. The reason in back low cost of Chinese machinery is that they copy the highly developed technology in other countries and mass produces it. As a result, the same technology is obtainable to industries in India a bit later and at higher cost as compared available to garment manufacturers in China.

The global textiles and clothing industry is allocated to grow to USD 700 billion by 2013. After the expiry of the MFA, or the Multi-Fiber Arrangement, which ruled the textile trade between nations, quota-free trading started which resulted in changes in the apparel and textile trade, such as the shifting of supply bases, reduction in sourcing prices and a re-orientation of the buyer-supplier relationship.

Ecological changes also causes in the Socio-economic change. Over the last decade the sector has gone through modernization of equipment and work practice developments to improve competitiveness in the global market. It is estimated that in the coming decade energy efficiency and emission reduction (GHG and water) aspects will shape the competitive differentiators for the global marketplace.

Out of a range of activities in textile industry, chemical processing gives about 70% of pollution. Due to the nature of various chemical processing of textiles, large volumes of waste water with numerous pollutants are discharged. Reuse of the wastages represents an opportunity from an ecological conservation and also to generate savings.

The industry affords socio-economic benefits to the local society and to the country in the structure of income, employment, and foreign exchange. Being a key provider to the GDP, employment to rustic areas and to the less privileged, and as a main provider to industrial production and export, the textile industry has a better declare in the future development of the Indian economy.

4. Conclusion

In India textile industry is the second largest employment maker and it is the second largest in the world. It holds major position in India as it offers one of the most basic necessities of the citizens. In a changing marketplace, Textile industry will continue to expand their product lines and marketing reaches to be more powerful in global.

5. Appendix:


Appendix 2


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