India’s Textile & Apparel Industry – An Overview Arvind Singhal Jaipur 18th November 2016

India’s GDP: Current and Projected India’s GDP US$ 2.1 Trillion in 2015, projected to cross US$ 3.1 Trillion (nominal) by 2020-21 7.30 7.55 5.48 5.62 6.64 Annual GDP growth rate (%) Source: worldbank.org

India’s GDP Break-up Textiles & Apparel Sector comprises 5.4% of India’s GDP and 12% of India’s Manufacturing sector Source: Planning commission, Gov’t of India, Technopak Analysis

T&A Sector’s Break-up in India’s GDP GDP: USD 2,090 billion 2015 Gross rent, fuel & power Textiles & Apparel Public Spending and Investment: USD 834 billion (40%) Private Consumption: USD 1256 billion (60%) Medical and health services Leisure & Education Others Food & Beverages Retail: USD 615 billion (51%) Non-retail: USD 641 billion (49%) T&A Domestic Market: USD 64 billion T&A Exports: USD 41 billion Furniture, furnishing etc. Transport & Communication Fabric & Apparel USD 45billion (70%) Apparel USD 19 billion (46%) Other Textiles USD 19 billion (30%) Fiber, Yarn, Textiles USD 22 billion (54%) Technical Textiles USD 15 billion (79%) Home Textiles USD 4 billion (21%) Source : Technopak Analysis, *All numbers are rounded-off

T&A Industry Size India’s T&A industry was about USD 104 billion in 2015 (including both domestic consumption and exports) and is projected to grow at a CAGR of 9% to touch about USD 238 billion by 2025 with domestic market being the bigger growth driver (~10% CAGR) USD bn CAGR 9% Source: Technopak Analysis, *All numbers are rounded-off E: Estimate P: Projection

Product-wise Share of Global T&A Exports China dominates T&A exports, with the highest share of yarn, fabric, apparel & made-ups exports India’s share of global exports is comparatively higher in fiber, yarn, made-ups & carpets Indonesia, Thailand, Cambodia, Mexico, Taiwan, and Vietnam are the other major T&A exporters Source: ITC, UN Comtrade, Technopak Analysis

Indian Domestic Apparel Market - A Snapshot Domestic Textile & Apparel Market (2014) : USD 64 Bn. Men’s Apparel Market USD 19.1 Bn. (INR 114,370 Cr.) Women’s Apparel Market USD 17.0 Bn. (INR 102,070 Cr.) Kid’s Apparel Market USD 9.2 Bn. (INR 55,440 Cr.) 42% 38% 20% Source: Technopak Analysis

Relative High Receptivity To Modern Retail Whilst corporatized retail is estimated at 8% penetration of the total retail sector, the apparel retail sector enjoys a significantly high share of corporatized retail at 20%. Apparel retail & fashion market is expected to witness increase in corporatized retail driving growth beyond major urban clusters. This shall be driven by growth of multiple retail formats across specialty retail, hypermarket, cash and carry and e-commerce. This share is poised to grow over the next 5 years to contribute 28% share by 2019. US$ 72.2Bn CAGR US$ 45.3Bn 10% 7% 17% 20% 28% Source: Technopak Analysis

Indian Apparel Market: Size and Growth India’s domestic apparel market is expected to grow at a CAGR of 10%. The growth will be driven by increases in both the per capita consumption and the average spend on apparel Segment Split 2015 (E) 2020 (P) 2025 (P) CAGR 10% Source : Technopak Analysis, All Numbers are rounded off

Segment-wise Market Projections Currently, menswear is the biggest segment within the apparel market; however, kidswear and womenswear are growing more rapidly. It is estimated that, within another decade, the womenswear category will rival menswear in dimension CAGR 11.0% CAGR 9.8% CAGR 11.0% CAGR 10.6% Source : Technopak Analysis *All numbers are rounded off

Home Textiles Market Overview The Home Textiles market is expected to grow at a CAGR of 8% over the next decade Category-wise Market Breakup (INR cr)  Categories 2015 (E ) 2020 (P) 2025 (P) CAGR 2015-25 Bed Linen 11966 17583 25835 8% Towels 4355 6108 8567 7% Curtains 2551 3924 6038 9% Blankets 1887 2525 3379 6% Upholstery 1679 2583 3974 Kitchen Linen 1455 2041 2863 Rugs & Carpets 698 1073 1651 Total 24590 35837 52306 CAGR : 8% 11 *All numbers are rounded-off Source : Technopak Analysis

Major Growth Drivers For India’s T&A Industry Higher focus from Gov’t of India on “manufacturing” sector, with Textiles being one of the big focus sectors A relatively complete and robust fibre – finished product value chain within India Competitive labour & energy costs Strong growth in domestic T&A consumption, driven by multiple factors

Major Growth Inhibitors Lack of globally competitive scale Infrastructural issues leading to bottlenecks in an efficient supply chain. Relatively lesser investment in high-value added fabric & non-cotton apparel Inadequate availability of skilled workforce, leading to lower productivity Absence of free trade agreements / preferential duty access with leading importing countries like USA and European Union 13

Thank You Very Much

For Further Dialogue, Please Contact: Arvind Singhal E-mail: arvind.singhal@technopak.com Technopak Advisors 208, Baani The Address 1 Golf Course Road Sector 56 Gurgaon 122 011, INDIA T: 0124 – 454 1111