Make in India' Manufacturing Industry: Impact of On The Denim

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IMPACT OF
MAKE IN INDIA
ON THE DENIM
MANUFACTURING
INDUSTRY
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Suryalakshmi Cotton Mills Limited

WHITE PAPER
Impact of Make in India on
the Denim Manufacturing Industry
ormulated to foster innovation in the manufacturing

sector, the Make in India initiative by the
Government is aimed at enabling a best-in-class
manufacturing infrastructure. Centred on the idea of
The Vision that is Make in India

By 2022, rev up the manufacturing sector to
developing India into a global manufacturing hub and

attracting investments from around the world, it also aims to
leverage Indias tremendous export potential.
Such a programme is sorely required for the much-needed
transformation of the country from a predominantly agrarian
Contribute 25% to the national GDP

Create 100 million jobs
society to a modern industrial one. While an industry-focused

strategy will ease the pressure off the agriculture sector,
it will also strengthen Indias standing in the context of a
24 manufacturing cities envisaged
globalized and increasingly industrialized economy.
Indias Textile Sector: A Synopsis
Make in India for the Textile Sector

The government has announced several initiatives to
2nd largest manufacturer of textiles globally
incentivise and support the growth of 25 sectors. The
14% of industrial production
economy of the country, features in the priority list. The
4% of national GDP
Employs 45 million people
12% share of the countrys export basket
textile sector, which is an important segment of the

significance of the sector is evident (See box: Indias Textile
Sector: A Synopsis1). Following agriculture, it is the second
largest employer in the economy besides being one of the
largest contributing sectors in Indias exports worldwide,
underscoring the fact that the growth (See Estimated
Growth of the Indian Textile Industry2) and all round
development of the textile industry has a direct bearing on
the health of the nations economy.
Estimated Growth of the Indian Textile Industry
1
2
http://texmin.nic.in/sector/note_on_indian_textile_and_clothing_exports_intl_trade_section.pdf
http://makeinindia.com/sector/textiles-garments/
Although India is the second largest textile manufacturer and

the second largest exporter globally (See graph: World Textile
World Textile Exports
Exports, 20133), it contributes to a minuscule ~5% of Indias total

exports (See graph: Indian Textile Exports: Market Size Estimates4).
According to a report by UN Comtrade in 2013, Indias textile
exports were
estimated at USD
40 billion whereas
Chinas were
pegged at USD 274
billion.
There is a huge
gap in the current
capacity and
potential of the textile sector. The Make in India initiative is targeted at
bridging this gap effectively while catapulting the country into becoming a
textile export powerhouse.
Indias Denim Potential

The global market for denim is forecast to reach USD 64.1 billion by 2020.
The Indian denim industry has shown continual growth over the years and
India Denim Export Market Overview
currently the country boasts of a denim manufacturing capacity of around

1.1 billion metres per annum. Its utilization levels are pegged at 80-85%.
Despite the impressive statistics, the Indian denim manufacturing industry
contributes ~5% to the global scenario, reflecting the overall performance of
the textiles industry.
However, according to industry experts, denim is the only segment in the
Indian textile industry that has the potential to grow manifold (See chart:
India Denim Export Market Overview5). An increasing number of global
denim manufacturers are looking at India as an emerging denim export
region owing to its quality standards, cost effectiveness and large pool of
skilled work force.
On the domestic front, the denim wear market is driven by increasing disposable incomes, westernization of work
culture and the ensuing rise in the popularity of denim jeans as business
casual wear (See chart: Domestic Apparel Market v/s Denim Market6).
With increasing globalization, young India prefers denims as a part
of their essential daily wear. As is true of the great Indian consumer
story, the middle class is driving this growth. The mid-value segment of
denim wear, characterized by quality, value-for-money and increasing
styling quotient is their preferred option. Denim manufacturing and
consumption in India has grown at a compounded annual growth rate
(CAGR) of up to 15% over the last decade and is expected to grow at
similar levels over the next few years7.
Theme Paper - Texcon (2014)

India Textile Study - Wazir Advisors & PCI Xylenes & Polyesters (2014)
5
DGFT
6
Technopak Compendium Textile Apparel (2012)
7
Denim Manufacturers Association
3
4
Challenges Faced by the Sector

India offers numerous advantages
to denim manufacturers. It is
among the handful of countries
that has a presence across the
textile value-chain from cotton
production to garment production.
In addition, it has a huge skilled
workforce and offers quality
products at competitive cost. To
remain competitive in the global
markets, most textile companies
have adopted global standards of
safety and environment compliance. Additionally, the countrys demographics with an expanding purchasing power and
modernizing fashion sense (See chart: Presence of International Brands in India8) contributes to the sectors growth. In fact,
India has been ranked as a top destination for retail investments among 30 global emerging markets. However, despite the
Indian denim manufacturing industry witnessing rapid growth in the last 4-5 years, technological expertise is still an issue.
For the Make in India initiative to be successful for the textile sector, it is important that the government provides
specific impetus for the growth of the indigenous denim industry. The technological integration of the manufacturing
process coupled with capacity build-up can result in a rise in production of the fabric leading to enhanced domestic
consumption and exports.
Existing Regulatory Framework Review

To upgrade technology, the government already has a number of policies in place:
Technology Upgrade Fund Scheme:
Aimed at modernization and upgrade of technology in the textile sector by providing credit at reduced rates and
capital subsidies
Investments worth over INR 2,500 billion in the industry
Scheme for Integrated Textile Parks
Provides world class infrastructure to new textile units
Till date , 57 Textile Parks have been sanctioned with an investment of INR 60 Billion
By 2017, 25 more Textile Parks are to be sanctioned
Integrated Processing Development Scheme
Aimed at sanctioning processing parks
INR 5 Billion has been earmarked
Besides these schemes, the government also provides the industry with support for continuous technological upgrade under the
TUF scheme. Despite these incentives, India is not a primary outsourcing hub for denim manufacturers. The future of the Indian denim
industry lies in product intelligence and investments in greater technological enhancement.
Conclusion
The Indian denim industry stands to benefit immensely from the ambitious Make in India initiative. The vision of the
programme has the potential to overhaul the segments perception and the countrys contribution in the world denim
scenario. However, to turn this vision in to reality, Indias denim manufacturing segment needs to be equipped with
facilitating mechanisms. Even more important is the effective implementation of these mechanisms. Once this is done, the
strength of domestic Indian denim markets as well as its denim export capabilities will remain unparalleled.
8
Worldwear Brands - Technopak

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Edited with the trial version of

Foxit Advanced PDF Editor

To remove this notice, visit:

Suryalakshmi Cotton Mills Limited

Suryalakshmi Cotton Mills Limited

Suryalakshmi Cotton Mills Limited

Impact of Make in India on

the Denim Manufacturing Industry

ormulated to foster innovation in the manufacturing

manufacturing infrastructure. Centred on the idea of

The Vision that is Make in India

developing India into a global manufacturing hub and

Contribute 25% to the national GDP

society to a modern industrial one. While an industry-focused

24 manufacturing cities envisaged

globalized and increasingly industrialized economy.

Indias Textile Sector: A Synopsis

Make in India for the Textile Sector

2nd largest manufacturer of textiles globally

incentivise and support the growth of 25 sectors. The

14% of industrial production

economy of the country, features in the priority list. The

textile sector, which is an important segment of the

Estimated Growth of the Indian Textile Industry

Suryalakshmi Cotton Mills Limited

Although India is the second largest textile manufacturer and

World Textile Exports

Exports, 20133), it contributes to a minuscule ~5% of Indias total

Indias Denim Potential

India Denim Export Market Overview

currently the country boasts of a denim manufacturing capacity of around

Theme Paper - Texcon (2014)

Suryalakshmi Cotton Mills Limited

Challenges Faced by the Sector

Existing Regulatory Framework Review

Worldwear Brands - Technopak

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