Indian Garment Industry-I

1. Indian Garment Industry-I 19th Century saw the emergence of ready-made garment industry in the world Post World War I, the rapid rise of the sector began 1920 is the year which is considered to be the sunrise year for this sector During 1960s and 1970s, Indian emigrants acted as import agents opening up a huge export market for India Need for mass production, in the absence of large corporates led to the emergence of a fragmented and small units, a trend that continues till today

2. Indian Garment Industry-II WTO and its post MFA implications are a major course deciding force for the sector today Government policies and incentives have not been able to build a synergetic structure for the sector Structural deficiencies and the unprofessional environment of the small units are today the lethal weaknesses of the sector Management systems, Designs and Brands have never been the concern of the industry, very unfortunately

3. Garment Export and Quota In 1950s, the Japanese cotton textile penentration in the US market resulted in US designing the Voluntary Export Restraints for the Japanese Many countries followed and imposed VERs on exporting countries quite contarary to the GATT rules and spirit Consequently a STA was brought under the GATT ambit, covering the whole domain of the export issue (september 1961 till August 1962) The sixth round of GATT negotiations called the Kennedy Round, held in 1962 with 62 countries participating resulted in LTA With non-cotton fibres gaining ground, LTA was replaced by MFA (MFA-I in 1974-77, MFA-II in 1978-81, MFA-III during 1982-85 and MFA-IV during 1986-94) Between 1995 and 2004, MFA is to be phased out and free global trade in textiles set in

4. Average Export Share of Select items in Total Exports during each 5 year plan Items First Fourth Seventh Leather & Acc. 3.9% 6.8% 7.3% Ready made G 0.9% 2.8% 10.9% Gems & Jwell 3.4% 18.1% Source: International Trade, Verma (1995) pp. 99

5. Global Clothing trade and Indian Competitiveness World trade in clothing in 1994 stood at US $ 140 billion which is 3.4% of total global trade India�s clothing exports were to the tune of US $ 3.4 bn Out of 15 leading exporters 8 are from Asia Post MFA China may acquire 60-70% of market share in Textiles atleast India has not performed at consistently high levels in exports Preparedness for the Post MFA Scenario especially for the non-tariff barriers is conspicious by its absence Indian firms have rarely tried to move up the value chain and enter the �Design and Brand� ownership market where larger margins reside

6. Where do we belong ? Paradox of high end and low end is a real one in our situation Our present competitive advantage which is eroding fast is in the low-end garments, where China, Banladesh, Sri-lanka and Vietnam are rapidly annexing our market shares Our potential and sustainable competitive advantage in addition to low cost is of our Creative Talent Pool Moving up the value chain hence is not only an imperative but also a strategic move to rightfully appropriate the market We belong hence simantaneously to both the earth and the sky

7. The UVR Story High UVR signifies a mature status of the industry in a given country Low UVR results in the industry being subjected to the Cost Cutting and Economy of Scale turbulence occuring anywhere in the world Low UVR also at times indicates too much cost undercutting due to the fragmented nature of the industry Raising UVR by better quality propositions and brands has to be the export thrust today UVR enhancement through branding and design is better practised by our players in the domestic markets than in the export markets

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