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The Textile Apparel & Clothing Industry in India
Market Research 2009

Market Research on
Textile Clothing & Apparels
Prepared for

Italian Trade Commission,
Trade Promotion Section of the Consulate General of Italy
Mumbai

By

ACE GLOBAL PRIVATE LIMITED
NEW DELHI, INDIA

Table of Contents
1.

Introduction................................................................................................................... 1
1.1 Objectives ................................................................................................................... 1
1.2 Coverage ..................................................................................................................... 1
1.3 Methodology ............................................................................................................... 2
Secondary Research ...................................................................................................... 2
Primary Survey .............................................................................................................. 2
1.4 Draft Report ................................................................................................................ 3

2.

Market Characteristics................................................................................................... 4
2.1 Market Size ................................................................................................................. 4
2.2 Assessment of Demand and Market Potential in India ................................................. 5
2.3 Demand Projection ...................................................................................................... 6
2.4 Key Market Drivers – Domestic market....................................................................... 7
2.5 Market Structure and Segmentation ............................................................................. 8
2.5.1 Market Segmentation by Price .............................................................................. 9
2.6 Regional Characteristics of the Market ...................................................................... 11

3.

Consumer Behavior and Preferences ........................................................................... 12
3.1 Characteristics of Indian Consumer ........................................................................... 12
3.2 Purchase Pattern of Textile Products.......................................................................... 13
3.3 Preferred Brands........................................................................................................ 14
3.4 Factors that Influence the Choices of Consumers ....................................................... 15
3.5 Degree of Elasticity of Demand................................................................................. 16

4.

Production in India ...................................................................................................... 17
4.1 Evolution of the Industry ........................................................................................... 17
4.2 Industry Status........................................................................................................... 17
4.3 Local Production ....................................................................................................... 18
4.4 Growth Trend by Production Category.................................................................. 19
4.5 Key Players ............................................................................................................... 23
4.6 Product Range ........................................................................................................... 25
4.7 Major Concentration Areas for Production ................................................................ 25
4.8 State of Technology................................................................................................... 27
4.8.1 The Textile and Apparel Supply Chain ............................................................... 27
4.8.2 Apparel Sector .................................................................................................... 30
4.9 Availability of Raw Materials & Semi-processed Fabrics .......................................... 32
Domestic Production of Raw Material and Semi-Processed Fabric .............................. 34
Import of Raw Material and Semi-processed Fabrics ................................................... 35

5.

Structure of Foreign Trade........................................................................................... 38
5.1 Import Scenario ......................................................................................................... 38
5.2 Export Scenario .................................................................................................... 39

6.

Competition................................................................................................................. 43
6.1 Characteristics ...................................................................................................... 43
6.2 Product Range, Brand and Category...................................................................... 43
6.3 Main Competitors - Market Shares........................................................................ 44
6.4 Competition by Segment....................................................................................... 45
6.5 SWOT Analysis .................................................................................................... 46
6.6 Growth Prospects.................................................................................................. 47

7.

Potential for European Companies in India.................................................................. 48
7.1 Volumes and changes in the market for European textile clothing and Apparel ..... 48
7.2 Main European producers present in India ............................................................ 50
7.3 Indian buyers / consumers of European products................................................... 52

8.

Regulatory Framework and Legislations...................................................................... 53
8.1 Sector specific Regulations ................................................................................... 53
8.2 Foreign Direct Investment (FDI) Policy ................................................................ 54
8.3 Business Structure Options ................................................................................... 55
8.4 Practical aspects of doing Business in India .......................................................... 57
8.5 Investing in Existing India Companies .................................................................. 57
8.6 Taxes and Tariffs .................................................................................................. 58
8.7 Protection of Intellectual Property (trademarks, patents, etc.) ................................ 58

9.

Marketing and Distribution Structure........................................................................... 59
9.1 Trade channels ...................................................................................................... 59
9.2 Key trends in the Retail sector............................................................................... 61
9.3 Trade Margins and Commercial terms................................................................... 62

10.
Opportunities for Italian companies to enter the Indian market ................................. 64
10.1
Positive Experiences / Perceptions about Italian Products .................................. 64
10.2
Increasing trend in Imports from Italy................................................................ 64
Raw Material and Semi-Processed Fabrics .................................................................. 64
Import of Finished Products ........................................................................................ 68
10.3
Demand for Italian products .............................................................................. 69
10.4
Market opportunities ......................................................................................... 69

Market Research on Textile Apparels & Clothing
___________________________________________________________________________________

1. Introduction
This research study on Textile Clothing and Apparels sector in India has been commissioned by
Italian Trade Commission (Trade Promotion Section of the Consulate General of Italy), Mumbai.
Ace Global Private Limited, a consultancy company based in New Delhi, has been appointed to undertake the study.

1.1 Objectives
The main objectives of the market research are to:


Carry out market analysis of the production and distribution of textiles for clothing and apparels in India, geared to the Italian entrepreneurs interested in the Indian market.



Identify potential buyers of products/ operators in India, interested in Italian fashion products. •

Identify concrete forms of industrial cooperation, both with local firms of equal size (small and micro enterprise) and market bracket (high range) and with suppliers of raw materials
(yarn, woven silk, cotton and cashmere).



Examine the various aspects of law in commercial matters (procedures for opening a credit line in India, general rules on the procedure of customs clearance of goods, customs duties and other payments, rules of certification).



Check the main features of competition and the increasing needs of local consumers.

1.2 Coverage
The research covers the following aspects of the sector:


Market Characteristics



Consumer Behaviour and Preferences



Production in India



Structure of foreign trade



Competition



Potential for European companies in Indian market



Regulatory framework and Legislations

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Marketing and Distribution structure



Opportunities for Italian companies to enter the Indian market

1.3 Methodology
The methodology followed for the research work constitutes both secondary and primary research.
The details of the research work have been provided below:
Secondary Research
The secondary research has been carried out to obtain the information on:
-

Macro-economic scenario of Indian economy

-

Sector specific government policies and regulations including taxes and custom duties

-

Present status, growth trends, and the future outlook for the sector

-

Import-Export data

-

Sector specific details and relevant information

The main sources of the information were:
-

Government of India websites related to economy and trade like Ministry of Finance,
Department of Commerce, Department of Central Excise and Customs etc.

-

Import and Export data from Directorate General of Commercial Intelligence and Statistics
(DGCI&S), Govt. of India.

-

Company Websites

-

Catalogues of Indian manufacturing and marketing companies

Primary Survey
Primary survey was conducted to assess the market structure, size, and growth trends of the sector in India. The primary survey was carried out through interviews based on structured questionnaires, with manufacturers, importers, retailers raw material/semi-finished goods suppliers, and industry bodies in Delhi/NCR, Ludhiana, Coimbatore/Tirupur, Chennai, Mumbai and Ahmedabad.

A list of organizations covered through the primary survey is annexed. It is pertinent to highlight here that although most of the respondents were cooperative, some companies did not agree to

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meet the consultants while some shared only part of the information. In such cases, effort has been made to compile as much information as possible from secondary sources.

1.4 Draft Report
This Draft Report has been prepared based on the compilation and analysis of all information/data collected through secondary and primary research.

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2. Market Characteristics
India’s textile clothing and apparels sector has opened up significantly with the dismantling of quotas. Global apparel market is gradually shifting from western countries to Asia on account of cost competitiveness. India has also the added advantage of low labor cost along with other countries like Bangladesh, Indonesia and China.

2.1 Market Size
Apparel is the second largest retail category in India. There are a number of factors that have contributed to a definite swell in apparel market size. The rising affluence of the middle class due to rising disposable income and strong per capita income have considerably helped the industry to move ahead from a commodity level garment purchasing to a life style or a branded level product.
India’s domestic market for clothing is currently worth Euro 20,219 million in 2008. It has registered a steady compounded annual growth rate (CAGR) of 13.6% in the past 5 years. Volume wise, apparel market has grown from 4.8 billion units in 2004 to 5.9 billion units in 2008 at a CAGR of 5.3%.
India's Apparel Market Size
Category

2004

Volume
(million
units)

2005

2006

2008
(estimates)

2007

Value
Volume Value
Volume Value
Volume Value
Volume Value
(Euro
(million (Euro
(million (Euro
(million (Euro
(million (Euro
Million) units)
Million) units)
Million) units)
Million) units)
Million)

Menswear 1,328

4,450

1,379

4,975

1,443

5,605

1,516

6,381

1,600

6,938

Women’s wear 1,368

3,856

1,443

4,433

1,523

5,106

1,609

5,923

1,676

6,414

Unisex apparel 466

1,014

486

1,152

519

1,461

548

1,695

579

1,816

Kids’ wear

1,222

1,836

1,269

2,045

1,323

2,333

1,381

2,702

1,468

2,975

Uniforms

423

991

457

1,199

498

1,461

543

1,797

581

2,077

Total

4,807

12,147

5,034

13,803

5,306

15,966

5,597

18,498

5,905

20,219

CAGR By Volume: 5.3% ; By Value: 13.6% (Conversion Rate: 1 Euro = 64 Indian Rupees)
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India's Apparel Market Size: By Volume
7,000

Qty in Million

6,000
5,000
4,000
3,000
2,000
1,000
0
2004-05

2005-06

2006-07

2007-08

2008-09
(estim ates)

Mensw ear

Year
Wom ensw ear

Unisex apparel

Kidsw ear

Uniform s

Total

India's Apparel Market Size: By Value

Value in Euro Million

25,000
20,000
15,000
10,000
5,000
0
2004-05

2006-07

2008-09
(estim ates)

Mensw ear

Year
Wom ensw ear

Unisex apparel

Kidsw ear

Uniform s

Total

2.2 Assessment of Demand and Market Potential in India
Indian textile clothing and apparel industry has been one of the worst affected under the impact of financial meltdown that has impacted the economies of US and EU. As a fall- out, India’s domestic textile and apparels market suffered some set-back.
However, India’s economy during the past 2/ 3 months has shown signs of recovery. Government of
India has projected GDP growth rate of 6.5% for 2009-10. This is much better economic situation when one compares with the developed western countries.

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Future Outlook for Clothing and Apparels sector
Apparel, is the second largest retail category in India. Retail boom in India continues to stimulate consumer demand for apparels and is estimated to grow at the rate of 12-15 per cent annually in terms of growth in rupee value. In fact, reflecting the huge opportunity in this segment, AT Kearney's
'Retail Apparel Index' ranks India as the third most attractive market for apparel retailers.
According to the Confederation of Indian Industry–Ernst & Young Textiles and Apparel Report 2007, the Indian sourcing market is estimated to grow at an annual average rate of 12 per cent from an expected market size of US$ 22 billion-25 billion in 2008 to US$ 35 billion-37 billion by 2011. More international brands have started queuing up to source from India, through vendors or whollyowned units. German kids wear brand Kanz, Ireland's biggest linen manufacturer Baird McNutt, and
Finnish textile major Ahlstrom are buying into the India garment story.
Consumer spending on apparel in India has grown over the last five years, touching the global benchmark of 5 per cent of the total income, according to Consultancy firm MCKinsey. Growth in consumer spending has been sustained on the strength of macro-economic fundamentals,
Economic recession has, however, indirectly helped India to retain some of its exports in the EU and
US market. The latest import data from both the countries seem to substantiate the fact. In the wake of depression, US which was earlier sourcing from Mexico and Central and Latin America is moving to Asian countries particularly from China and also India and other countries. EU which was concentrating mainly from other EU countries has also taken the same strategy of moving towards
Asian region.

2.3 Demand Projection
The domestic demand is projected to go up at a CAGR of 10.5% by value over the next 3 years. In volume terms the growth rate is expected to be 5% per year in the next three years.
Demand Projection Apparel Market: By Volume

7,000

6,835

Qty in million

6,800
6,510

6,600
6,400

6,200

6,200
6,000

5,905

5,800
5,600
5,400
2008-09
(Base Year)

2009-10

2011-12

CAGR: 5%
Year

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2010-11

Market Research on Textile Apparels & Clothing
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Demand Projection Apparel Market: By Value

Value (Euro Million)

30,000
25,000

24,688
20,219

27,280

22,342

20,000
15,000
10,000
5,000
0
2008-09
(Base Year)

2009-10

2010-11

2011-12

CAGR : 10.5%
Year

2.4 Key Market Drivers – Domestic market
Changing demographic profile works as a major stimulus to market development. India has a young consumer profile with over 65% of the population below 35% years of age. The composition of the
Indian population is shifting more towards the age–group 20-49, viz, the working population with purchasing power. It seems to indicate that consumer life style and preferences are changing fast which is a prominent driving factor.
Rising Income Level
A large number of households are getting added to the consuming class with growing income levels.
This has been a significant rise in high income group households from 5.5 million in 1995 to 18 million households in 2005 and from 18 million households to 31 million households for high middle income group. There has also been increase in the nuclear family structure, a growing number of educated and employed women, media proliferation and growing consumerism, have all contributed to the growth of organized retailing.
There is increase in awareness of the tier II cities and this is eroding the difference between the metros and the tier II cities in terms of urban aspirations.
Retail Space
Quality retail space has been one of the key hurdles for the development of organized retail. In 2007 there were 375 shopping centers / malls covering 90 million sq.ft quality retail space. Even though this still constitutes a small fraction of total retail in India, this growth in quality retail space is expected to impact the growth in the apparel market as there will be considerable change in the shopping habits. Impulse shopping is expected to go up up to 40% of total mall shopping. Awareness and sensitivity of brands will also be heightened.

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Mall Culture
The emergence of mall culture and rapid development of malls would act as a catalyst in this retail growth story.
Drivers of Exports




Rising outsourcing budgets of retail giants
Indian companies evolving from mere converters to vendor partners of global buyers
Large outsourcing orders helping Indian companies build capacities, lower their per unit cost and become more competitive

2.5 Market Structure and Segmentation
Indian apparel market is vast, and fragmented and yet growing, characterized by presence of large number of players, widely dispersed across the country. The market is segmented in three different ways: -

Segmentation by User category
Segmentation by Use
Segmentation by Price

Market Segmentation: User Category

Men’s wear

Women’s wear

Unisex

Kids’ wear

Market Segmentation – by USE

Formal
Wear

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Casual
Wear

Active
Sportswe

Traditional
Wear

Uniforms

Market Research on Textile Apparels & Clothing
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The market, well dispersed and fragmented on considerations of quality and price may be classified under three broad categories.






The low end market: Lower and economy (marginally improved product segment in relation to the lower category), solely volume driven, products are mostly unbranded and dominated by large number of manufacturers. The manufacturers operating in these segments are beset with problems of high competition, limited capacities, inadequate logistics and paucity of funds. Essentially the manufacturers are regional or even local players.
The mid-range market: This segment features medium range of products, though primarily volume driven, caters to diverse sections of Indian consumers across all regions, Its quality is by and large acceptable to all sections. Majority of manufacturers, large and medium, have products on offer for these categories of consumers.
The high end market: MNCs and large Indian players operate in the premium and superpremium product categories. Exclusivity in product features such as high quality raw materials, embellishments, design developments and above all branding of products for years make the products very special. Elitist categories of consumers pay for the products on demand. 2.5.1 Market Segmentation by Price
MENSWEAR
Product
Category
Shirts
Super
Premium
Premium
Medium
Economy
Low

Average Price
(EURO/ Piece)
Entry Level

Product
Category

18 – 27+
12 – 17+

Ethnic wear
Super
Premium
Premium
Medium

7 – 11+
5+

Economy
Low

28 and above

Trousers

Super
Premium
Premium
Medium
Economy
Low

WOMEN’S WEAR
Average Price
(EURO/ Piece)
Entry Level

25 – 35+
16 – 24+
8 – 15+
5 – 7+

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Ace Global Private Limited

Super
Premium
Premium
Medium
Economy
Low

Product
Category

Average Price
(EURO/ Piece)
Entry Level

34 – 60+
17 – 33+

Jeanswear
Super
Premium
Premium
Medium

26 – 56+
14 – 25+

9 – 16+
4 – 8+

Economy
Low

7 – 13+
3+

61+

Sarees

36+

UNISEX APPAREL

116
60 - 115+
26 – 59+
9 – 25+
2 – 8+

Woolens:
Sweaters,
Pullovers,
Cardigans
Super
Premium
Premium
Medium
Economy
Low

57+

34+
20 – 33+
7 – 19+
4 – 6+
2 – 3+

Market Research on Textile Apparels & Clothing
___________________________________________________________________________________

MENSWEAR
Product
Category

Average Price
(EURO/ Piece)
Entry Level

Formal Suits,
Jackets,
Blazers*

Super
Premium
Premium
Medium
Economy
Low

Nightwear,
KurtaPyjama
Super
Premium
Premium
Medium
Economy

Low

Product
Category
Petticoats

Average Price
(EURO/ Piece)
Entry Level
1+

226+
137 – 225+
97 – 136+
58 – 96+
25 – 57+

T-Shirts
Super
Premium
Premium
Medium
Economy
Low

WOMEN’S WEAR

23+
15 – 22+
9 – 14+
4 – 8+
1 – 3+

31+
21 – 30+
14 – 20+
6 – 13+

Blouses

1+

T-Shirts
Super
Premium
Premium
Medium

9 – 13+
7 – 8+

Economy

3 – 6+

Low

1 - 2+

Tops (Woven)
Super
Premium
Premium
Medium

14+

17+
10 – 16+
8 – 9+

Economy

3 -7+

Low

1 – 2+

Western
Suits, Coats,
Blazers

37+

2 – 5+

Product
Category
Casual
Blazers,
Jackets
Including
Leather
Super
Premium
Premium
Medium
Economy
Low

Active
Sportswear
Super
Premium
Premium
Medium
Economy
Low

13+

Average Price
(EURO/ Piece)
Entry Level

73+
39 – 20+
21 – 38+
8 – 20+
3 – 7+

55+
23 – 54+
10 – 22+
4 – 9+
1 – 3+

Socks

Super
Premium
Premium
Medium
Economy

Low
Trousers,
Skirts

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UNISEX APPAREL

4+
2 – 3+
1 – 2+
1+

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