India goes for leadership in textile manufacturing.
In a context where China is becoming more expensive, giving way for other competitors like Vietnam, Cambodia or Myanmar, among others, to enter the market of textile production with plenty of possibilities, what role does India take in this situation? What is happening in India in the face of this new scenario? What strategies have been determined by its leaders and textile entrepreneurs?.
We all know that labor costs in India are dramatically lower than China’s, but India doesn’t have the “amazing infrastructure” of the Asian Giant.
Entrepreneurs and company directors dream about the availability of reliable infrastructure in those countries they trust with the manufacturing of their products. To all of them, a country with constant power outages, battered routes, muddy roads and unstable supply of power and basic utilities would be a nightmare. So, as India satisfies all of those prerequisites, why do you think more and more companies are investing millions of dollars there?.
This is partially explained by the efforts made by the Indian Prime Minister, Narendra Modi. The governor plans to strengthen India’s manufacturing power just like he did in Gujarat, a province he ruled for 13 years and that now is the largest industrial center in the country. Thanks to my journeys, I’ve been able to see first-hand the important and meteoric development of this area, and I can assure you that it won’t let you be indifferent!.
A golden opportunity. India vs. China.
Given the new benefit programs for investing companies and improvements to the railway service, the Indian economy is expected to grow steadily during these years at a rate of 6-7%. For many economists and researchers, the slowing of investments in China offers India a “golden opportunity” to take its place, as it is the only country in Asia with a similar volume of available labor.
Nevertheless, there is a still a lot to be done. India hasn’t even come close to China’s investments in roads, ports, railway tracks and power networks. The terrible Indian infrastructure plus an overwhelming red tape and the complexity of legal, juridical and shipping processes partially “eats from” the advantage that manufacturing in this country with lower labor costs has.
Of course, the intention of the Indian government and of each entrepreneur and businessman there is to change this situation with investments in new infrastructure, advanced technology and the creation of a simpler and more transparent legal framework. This process is currently underway and it is possible to notice the first benefits.
Textile industry in India.
As we all know, textile industry in India is one of the largest of the world. To be more precise, India is the world’s second largest textile producer. In addition, it’s one of the most important sectors for the national economy, as it represents around 14% of the industrial production, nearly 15% of manufacturing, 4% of the GNP, 17 % of export revenues, and it accounts for 21% of total employment, more than 35 million direct workers, in addition to the 55 million people who work on related products and services. This industry comes in second -after agriculture- as the sector that creates the most direct jobs.
Raw materials for textile manufacturing, domestic demand and exports are the cornerstones of this large industry. It comprises everything from manufacturing, with knitted or hand-embroidered garments which is an unorganized sector, with scarce technology and mainstream, to the more organized production with high-technology and intensive capital, which is selected and represented by large companies.
Thanks to the policies developed by the government of Narendra Modi, the attraction of direct investments and the promotion abroad, this industry’s growth rate has gone from 3-4 % during the last six decades to reaching 8-9%.
In addition to the government strategy, the main reasons for the increase in exports including semi-finished products are a constant availability of raw materials, the increase in the production of fabrics, the tradition and creativity of designs, the skills of workers specialized in different hand-made techniques, a very flexible manufacturing capacity that can easily accommodate small orders and very competitive labor costs.
The two keys of Indian textile industry.
In a more comprehensive analysis and digging deeper into textile industry, the two keys of the development of this industry in India –and those that allow them to get ahead of their competitors in South East Asia—are: full availability of raw materials and necessary accessories for manufacturing, and the possibility of completing the whole process of production, from the yarn to the final product.
Manufacture of natural and synthetic fibers.
The production of fibers and yarn includes almost all types of natural textile fibers such as cotton, jute, silk and wool; and now the full development of synthetic fibers such as polyester, nylon, acrylic, polypropylene, etc. The industry of synthetic textile includes the production of fiber and filament yarns of cellulosic sources.
Although right now the different stages of the manufacturing process in this industry show that cotton is the predominant material –since around 50% of the total fabrics are made of cotton, as the years go by, other materials are increasing their share, and that is extremely necessary for India to become thoroughly competitive, given the increasing use of synthetic fibers in the global fashion market.
Currently, India is the second largest textile manufacturer in the world, right after China, and it’s one of the few countries that have all the stages in the supply chain, from yarn to the finished product, ready for the market.
This important ability, in addition to a vast work force and the government’s firm stance, as well as that of the entrepreneurs, to improve infrastructure and invest in technology make India “the best option” to take China’s place as the world leader of textile manufacturing.
In the next article, we will thoroughly analyze the Indian textile sector and the most important areas of production.
I hope these articles will “make textile sourcing in India easier”.
See you soon!