a quarterly report by - Technopak

perspective
a quar terly repor t by
Volume 02 / 2009
| Volume 02
sportswear, weather-proof outerwear, foundation garments, suits, socks, infant wear and a whole host of
other products for all ages. Production of made-ups includes a wide variety of bed, bath and table linen,
kitchen accessories, etc.
• Flexibility: In addition to this, the industry has consistently remained flexible in terms of production quantity
and lead time. While typical production runs are governed by fabric color minimums, India presents the
possibility of producing quantities as low as a few hundred pieces. This capability is especially critical
in an unpredictable market where retailers and brands are looking to source ever-smaller quantities of
product, increasingly closer to the season.
•Cost Advantage: Certainly, an abundant low cost base of labor has been one of the Indian industry’s
advantages. Research works by organizations like Kurt Salmon Associates, Werner among others have
highlighted India’s cost advantage, as well as the long-term sustainability of this advantage.
What is more important is that, among this abundant workforce, the fabric or garment-making skill is very
high as entire communities have participated in the trade and sustained and refined workmanship. It is
Exhibit 6
50
40
30
20
10
0
12 11
Mexico
Bulgaria
27 27 25 28 26
Estonia
Latvia
Lithuania
Poland
Slowakia
Europe Middle East
& Africa
Labor Cost: Percent of US Labor Cost (2008)
6
Egypt
17 15 12
Morocco
S. Africa
Tunsia
35
Turkey
2
Bangladesh
11
China Costal
Asia & Oceania A. America
this existing base of needlecraft that has enabled the Indian industry to retain its position as one of the
key suppliers of apparel and textiles, and also add new products to its portfolio by rapidly learning the
techniques.
•Specialists: Also, building on top of the textile engineering base which began in the 1950s, the 1990s
have seen growth of “fashion management” studies, including marketing and merchandising, garment
manufacturing technology, design management, fashion communications management etc. Simultaneous
growth of the organized branded market within India, as well as the entry of larger companies sourcing
from India, has given these fashion management graduates the playing field on which to further hone
their skills, and provide a pool of management talent to Indian as well as global companies like Gap,
Target, JC Penney, Nike, Reebok, Tesco, Next, Asda, Wal-Mart etc.
In addition to the advantages offered by the Indian textile and apparel sector, the government has been
very proactive in developing investor friendly policies and several other initiatives:
• Foreign Investment Policy: Foreign investment is permitted in virtually every sector, except those of
strategic concern such as defense and transport. Foreign companies are permitted to set up 100%
subsidiaries in India. No prior approval from exchange control authorities RBI is required, except for
certain specified activities. Under current policy, FDI can come into India in two ways:
» Automatic Route: FDI in sectors/activities to the extent permitted under the automatic route does not
require any prior approval either by the Government or RBI. The investors are only required to notify
the proper regional office of the RBI within 30 days of the receipt of inward remittances and file the
required documents with that office within 30 days of the issue of shares to foreign investors.
8
China Inland
5 5
Inidia
Indonesia
9
Malaysia
3
Pakistan
36
S. Korea
45
Taiwan
10
Thailand
3
Vietnam
26
Argentina
20
Brazil
14 12
Colombia
Peru
FDI : A Catalyst for Growth of the Textile & Apparel Industry |
36
Uruguay
36