Strengths of Indian Textile Industry And Advantages of sourcing fabrics from India Presentation by: The Cotton Textiles Export Promotion Council of India (Sponsored by: Ministry of Textiles, Government of India) on 19th September, 2014 at TEXWORLD, Paris

Welcome On behalf of Texprocil, I extend a very warm welcome to all the dignitaries and attendees at this Seminar. We would like to thank all of you for taking time off to be with us to understand the “Strengths of Indian Textile industry and Advantages of Sourcing Fabrics from India” We are grateful to the Embassy of India in Paris for taking initiative in organizing this Seminar for the benefit of both Indian exhibitors as well as visitors to the Fair

Structure of Presentation About TEXPROCIL Snapshot of Indian Textile Industry Strengths of Indian Textile Industry Advantages of Sourcing Fabrics from India Import of T & C into EU and India’s position Import of T & C into France and India’s position Business Opportunities with India 3

About TEXPROCIL Established in the year 1954 and this is the oldest Export Promotion Council in India, having over 3500 Members Non-trading - Non-profit export promotion body sponsored by the Ministry of Textiles, Govt of India Promotes the entire range of Indian Cotton, Cotton yarns, Fabrics and Made-ups / Home Textiles The one-stop solution for sourcing Indian Cotton Textiles Collection, Collation and dissemination of trade information Market Research Organising Group Participation in Trade Fairs/Exhibitions Organising Buyer Seller Meets (BSM) / Delegation Receiving Overseas Delegation 4

Snapshot of India Textile Industry Role of T&C Industry in Indian Economy Textile and Clothing (T&C) Industry constitutes 4% of India’s GDP, 14% of Industrial Production and over 12% of total exports of goods. Second largest employer after agriculture : Provides direct employment to over 35 Million people and indirect employment to 45 Million. Textile sector exports 1/3 of its production. In 2012-13 exports reached to a level of US $ 33 Billion and the target for the year 2013-14 is US$ 41 billion. India’s share in world trade is 6.43% in Textiles and 3.74% in Clothing in 2012. The domestic home textile market is growing at a CAGR of 8% Cotton based items predominate in India’s export to the world. 5

Snapshot of Textile Statistics (Contd….) India’s Position in the World Textile Economy Largest producer of organic cotton Largest producer of jute Second largest producer of raw cotton Second largest producer of cellulosic fiber / yarn Second largest producer of cotton yarn Second largest producer of silk Largest Exporter of Cotton Yarn (in Value) Second largest Exporter of Cotton 6

Spinning (in millions) Textiles Capacity – Global and Indian Installed Capacity -2011 World India Share in world India’s Rank Spinning (in millions) 1. Spindles (Cotton system) 205 48 22 % 2 (China) 2. Spindles (Wool) 15 1.0 7 % 3 (China) 3. Rotors 9 0.8 8 % 4 (Russia) Weaving (in millions) 1. Shuttle Looms 4.5 2.3 51 % 1 2. Shuttleless Looms 1.6 0.15 9% 4 (China) 3. Handlooms 3.6 2.4 67% Total Looms 9.7 4.85 50% India has the second largest textile manufacturing capacity globally. In bracket is first rank country. Source: ITMF reports and Govt. of India publications 7 7

Yarn & Fabrics Production Production of Spun Yarn (Billion Kgs)   2005-06  2012-13 % CAGR (2006-13) Cotton 2.52 3.56 4.4 Blended 0.59 0.83 4.3 Non Cotton 0.35 0.46 3.4 Total 3.46 4.85 Production of Fabrics (Billion Sqm)   2005-06  2012-13 % CAGR (2006-13) Cotton 23.9 33.8 4.4 Blended 6.3 9.3 10.1 Non Cotton 18.6 17.6 -0.7 Total 48.8 60.7 2.7 Cotton drives growth both in Yarn and Fabrics production Source: O/o Textile Commissioner, Mumbai 8 8

Fabrics Production of Different Sectors ( Billion. Sqr. Mtrs) Production of Fabrics (Sector Wise) Fabrics Production of Different Sectors ( Billion. Sqr. Mtrs)   2005-06 2006-07 2007-08    2008-09 2009-10 2012-13 % CAGR (2006-13) Mill Sector 1.7 1.8 2.0 2.8 6.6 Handloom Sector  6.1 6.5 6.9 6.7 6.8 1.5 Decentralised Sector (not composite with spinning) 30.6 32.9 34.7 33.6 36.6 36.7 2.3 Hosiery Sector 10.4 11.5 11.8 12.1 13.6 14.3 4.0 Grand Total 48.8 52.7 55.3 54.2 58.9 60.7 2.7 Source: O/o Textile Commissioner, India Grown at a CAGR of 2.7% during 2006-13, mainly driven by mill , power-loom and hosiery sectors 9 9

India’s Textiles & Clothing Exports Value in US $ Billion Year World Exports India's Exports India's Share 2008 618.27 21.94 3.55% 2009 527.67 20.56 3.89% 2010 619.06 27.19 4.39% 2011 728.74 32.64 4.48% 2012 710.85 32.88 4.63% Source: WTO/GTIS 10

India’s Textile Exports Value in US $ Billion Year World Exports India's Exports India's Share 2008 253.36 10.45 4.12% 2009 211.05 9.11 4.31% 2010 283.78 16.57 5.83% 2011 337.17 19.18 5.69% 2012 323.65 19.93 6.16% Source: WTO/GTIS 11

Value in US $ Million Year 2008 2009 2010 2011 2012 2012/ Yarn 1801 India’s Export of Cotton Textiles  Value in US $ Million CAGR Year 2008 2009 2010 2011 2012 2012/ Yarn 1801 1304 2820 2700 3190 15.36 % Fabrics 1126 1091 1350 1872 2020 15.73 % Made Ups 2109 2560 3220 3918 4300 19.49 % TOTAL 5036 4955 7390 8488 9510 17.23 % Source: WTO/GTIS 12

Strengths of Indian Textile Industry 13

Strong fundamentals for robust manufacturing activities Strong and Diverse Raw Material Base: 12% of world’s production of textile fibres and yarn Second largest producer and exporter of cotton and yarn: 28.14 % share in world cotton yarn exports in 2012 Strong presence in entire textile value chain: vertically and horizontally integrated – from Fibres to Home Textiles and Fashion. Unique blend of tradition and technology 14

LESSER KNOWN FACTS ABOUT INDIAN TEXTILE INDUSTRY Extremely low overheads - a tiny fraction of the overheads of similar size companies in any other industry. Five decades of benchmarking of production and cost data has helped the textile industry remain competitive. Most mills follow ‘Lean Manufacturing’ - even if they do not know the concept! Evolved labour involvement techniques like QC , Kaizen etc have been adopted 30% higher operating machine speed in spinning & weaving when compared to other major competing countries. 15

LABOUR PRODUCTIVITY Productivity level and efficiency of workers in India is as good as the best in the world. Almost all exporting companies across the various sectors have In-house training facilities, capable of converting unskilled, uneducated, even malnourished workers into world class operatives who can operate very sophisticated state of art machines, that too within three months 16

EQUIPMENTS & MODERNISATION From an out dated industry in the late 1990’s, the textile industry has rapidly  transformed itself into  a very modern one with a fair degree of automation and mechanization, thanks to initiatives taken by the Government and the Industry. Most of the world class machinery manufacturers have set up manufacturing bases in India and are offering world class cutting edge technology machines at Indian prices in the Spinning sector. In the area of Weaving, Knitting and Processing , even though there is a good improvement in machinery availability in India, there is a huge potential for European machinery manufacturers to set up joint ventures in India. Notwithstanding the down stream disadvantages in availability of certain types of domestically made machinery , India has reached international competitiveness, as our competing countries with lower costs also suffer similar disadvantages but to a larger extent ! 17

Large acreage ,second largest in the world under cotton cultivation Cotton advantage Large acreage ,second largest in the world under cotton cultivation Fair price to farmers , floor prices fixed by a committee that takes into account all input costs and ensures fair return to farmers All the cotton produced in India is in reality a ‘Fair trade cotton’ India has seen per acre yield going up sharply whenever a new technology gets introduced Quantum jump in yields over the past few years 18

Cotton advantage (contd) Large acreage ,second largest in the world under cotton cultivation More appropriate mix of natural and synthetic fertilizers will happen soon as the government is considering reaching farm subsidies directly to the farmer instead of through synthetic fertilisers and make cotton farming more sustainable with stable yields Increased competition among seed producers is forcing many seed companies to take up farm extension activities as a value added service , this is rapidly increasing best practices dissemination to farmers— Better Cotton Initiatives , as happening naturally in India India therefore will remain a cotton surplus country even when our spinning Industry grows at double digit growth rates 19

Yarn advantage India is a surplus producer of all raw materials , be it Cotton , Polyester or Viscose India has a very large producer of world class machines which maintains a very fair price for its machines , substantially below global machinery prices .This is forcing all International machinery producers to make cutting edge technology machines and sell them at Indian prices With minimum wages going up across all sectors including agriculture thanks to government’s rural employment guarantee schemes , Textile Industry is increasingly being seen as the most important vehicle to absorb the redundant farm workers and create inclusive growth Provincial governments which have cotton surplus are encouraging the setting up of spinning mills 20

Advantages of Sourcing Fabrics from India 21

Fabric advantage Given the huge advantage of having very high quality yarns at less than global prices, it is a natural corollary to have a vibrant fabric production base. 22

Woven Fabrics from India India has a fairly strong shuttle less weaving capacity in all widths. Most of them are sub 5 years old and all of them are less than 10 years old. Acceleration in weaving capacity addition is anticipated. Most air jet looms in India run at 30 to 40 % higher speed than air jet looms in other competing countries. The number of hours and days run per year is also high in India. Labour costs and real interest rate ( rate of interest after setting off the currency depreciation) is much lower in India as Indian currency depreciation offsets a seemingly higher interest rate in Rupees. 23

Woven Fabrics from India (Contd….) When spinning and weaving is done at the same place , there are several cost advantages. 100% inspection of fabrics helps deliver the approved fabrics alone , eliminating the occasional faults that appear in fabrics due to yarn defects. The interest cost , handling costs etc , when Fabric is bought instead of Yarn becomes a source of additional savings for the European importers. 24

Knitted fabrics from India Fabrics when knitted show up , all the small yarn faults very prominently. However as most of the spinning mills are also manufacturing knitted fabrics, yarn used for knitting in India is Quality controlled , thereby delivering almost defect free knitted fabrics. Buying quality controlled Knit fabric completely eliminates all yarn related fabric issues. India has a huge population of Imported knitting machines , many of them installed in spinning mills. 25

Knitted fabrics from India (Contd….) Knitting becomes extremely cost competitive when knitting taken place in composite factories which recycle packing costs and have traceability within the factory to reduce yarn oriented defects immediately. Fully inspected knit fabrics can give better quality assurance. The savings in time , logistics cost and interest costs etc (as in woven fabrics) is an added advantage. 26

Processed fabrics More and more large sized units are coming up with marine disposal of treated water and India will soon become competitive in processed fabrics too India is very strong in Dyes and Chemical manufacturing and is also emerging as a major supplier of Dyes and Chemicals to different countries .This is also an added advantage for the processed fabric industry Not withstanding the higher costs of processing ,the huge advantage upto grey fabrics is helping our processed fabric exports to go up too 27

Import of Textiles & Clothing into EU and India’s position 28

EU(27) IMPORTS OF TEXTILES & CLOTHING EU27 (External Trade) Imports of Textiles & Clothing Rank Country Million US $ % Growth 2011   2012   Jan-Jun 2012 Jan-Jun 2013   World  130,945.09 114,112.59 -12.85% 55,052.92 55,255.53 0.37% 1 China  52,591.30 44,634.67 -15.13% 19,985.36 18,954.16 -5.16% 2 Turkey  17,088.82 15,379.57 -10.00% 7,640.68 8,211.22 7.47% 3 Bangladesh  11,132.14 11,074.88 -0.51% 5,505.09 5,887.67 6.95% 4 India  10,334.67 8,085.37 -21.76% 4,421.68 4,477.46 1.26% 5 Pakistan  4,551.80 3,637.99 -20.08% 1,808.10 1,991.52 10.14% 6 Tunisia  3,774.62 3,083.59 -18.31% 1,693.66 1,594.37 -5.86% 7 Morocco  3,326.58 2,847.26 -14.41% 1,432.55 1,563.27 9.13% 8 Vietnam  2,673.93 2,552.78 -4.53% 1,133.08 1,147.02 1.23% 9 Indonesia  2,404.78 2,050.45 -14.73% 1,014.09 959.15 -5.42% 10 United States  1,963.08 1,890.99 -3.67% 938.20 984.95 4.98% Source of Data: Eurostat EU(27)’s total Textiles & Clothing imports declined by (-) 12.85% from US $ 130.95 Bn in 2011 to US $ 114.11 Bn in 2012; whereas the imports grew marginally by 0.37% during the first half of the current year 2013. Though India’s exports (being 4th rank) declined by (-) 22% in 2012, it has picked up with a growth of 1.26% during current year 2013. 29

India’s position in EU market EU (27) as a combined market is the largest market for export of T & C from India. Export from India to EU in the year 2012 has declined at a much higher rate than all other top 10 supplying countries as well as percentage decline in total import. First 6 months of the current year shows a positive growth, albeit not reaching to the level of trade in the year 2011. Tariff advantages granted to other competing countries, such as Pakistan, Turkey, Bangladesh, Sri Lanka etc is the major deterrent for increasing India’s export to EU. 30

Import of Textiles & Clothing into France and India’s position 31

IMPORTS OF TEXTILES & CLOTHING into FRANCE France Imports of Textiles & Clothing Rank Country Million US $ % Growth 2011   2012   Jan-Jun 2012 Jan-Jun 2013   World  31,825.05 28,169.82 -11.49% 13,912.08 13,881.51 -0.22% 1 China  9,045.44 8,077.13 -10.70% 3,673.06 3,506.81 -4.53% 2 Italy  3,163.77 2,797.47 -11.58% 1,396.34 1,405.95 0.69% 3 Bangladesh  1,920.39 1,713.70 -10.76% 813.79 938.45 15.32% 4 Turkey  1,892.89 1,656.76 -12.47% 867.13 898.33 3.60% 5 India  1,603.89 1,261.47 -21.35% 738.77 720.44 -2.48% 6 Germany  1,422.57 1,226.75 -13.76% 640.49 585.57 -8.57% 7 Tunisia  1,386.30 1,209.21 -12.77% 651.78 654.80 0.46% 8 Morocco  1,238.18 1,086.71 -12.23% 567.77 580.33 2.21% 9 Belgium  1,235.13 997.56 -19.23% 501.34 468.36 -6.58% 10 Portugal  791.88 730.73 -7.72% 382.53 380.71 -0.47% Source of Data: Eurostat France’s total Textiles & Clothing imports declined by (-) 11.49% from US $ 31.83 Bn in 2011 to US $ 28.17 Bn in 2012; the imports during the first half of the current year 2013 also declined marginally by (-) 0.22. India’s exports (being 5th rank) declined by (-) 22% in 2012 to US $ 1.26 Bn and imports during the first half of the current year 2013 also declined by (-) 2.48. 32

India’s position in French market France is the 3rd largest market within EU for supply of Indian Textile & Clothing (next only to UK and Germany) Like other countries in the EU, France also imports more of Clothing and less of Textiles. Even though some of the French Brands have tie up with Indian garment suppliers, the Council is keen to take the partnership to the next stage by inviting increasing participation of French Brands and Designers to work together with Indian manufactures. The Council is keen to be associated with important Associations and Designing Institutions in France so as to continuously keep in pace with changing designing requirements in the EU market thereby increasing our market share in supply of Textiles. 33

Business Opportunities with India Invest in setting up vertically integrated large scale units . Invest in India to manufacture Weaving, High end Knitting and Processing machinery. Enter into marketing joint ventures with Indian companies. Investing in India Partner with large Indian companies having credibility in terms of capacities and quality. Knitted Fabrics, Woven Fabrics and Home Textiles have ample opportunity, given India’s cost competitiveness. Sourcing from India Cotton Textiles, MMF, technical textiles and specialty products have increasing scope Trade with India

Conclusion India’s advantage in Raw Material; Labour Productivity; continuous Modernization in Manufacturing, world class Quality Standards delivered by Indian suppliers, increasing Investments in Capacity addition in the entire Textile value chain etc makes it a highly competitive supplier of Textiles & Clothing. In spite of Tariff advantage enjoyed by other major competing countries, India is able to show impressive growth in export to major markets around the world. Increasing demand for Textile and Clothing in the domestic market makes India an attractive destination for leading international brands. We have 92 Indian exhibitors in this edition of TEXWORLD Paris. We are sure all the Indian exhibitors as well as visitors from EU and other countries have a fruitful discussion in this 4 days event for mutual growth in business. 35

Thank You The Cotton Textiles Export Promotion Council (Sponsored by Government of INDIA) Engineering Centre 5th Floor, 9 Mathew Road, MUMBAI – 400 004 Tel: (022) 2363 2910 to 12 Fax: (022) 2363 2914 E-mail: info@texprocil.org Website: www.texprocil.org.in 36