PART – B (INDUSTRY ANALYSIS)

India's textile industry is one of the most seasoned businesses in the Indian economy going back a few
centuries. India's Textile industry fares amid FY 2017-18 remained at US$ 39.2 billion.

The Indian textile industry, evaluated at around US$ 150 billion, is expected to reach US$ 250 billion
by 2019. India's textile industry contributed seven percent of the business yield (in esteem terms) of
India in 2017-18. It contributed two percent to the GDP of India and utilized more than 45 million
individuals in 2017-18

Advantage in India
Robust Demand
The rise in income level is expected to drive demand in the textile industry. Growth in building and
construction will continue to raise demand for non-clothing textiles

Competitive Advantage
India has abundant availability of raw materials such as cotton, wool, silk, and jute. It also enjoys
a comparative advantage in terms of the skilled workforce and the cost of production

Policy Support
One hundred percent FDI is allowed in the Indian textile sector. To boost trade, exports, free trade
with ASEAN is allowed

Increasing Investments
Huge investments are being made by the government under the scheme for Integrated Textile
Parks(ITP) and Technology Upgradation Fund Scheme to encourage more private equity and to train
the workforce

Porter’s five force analysis

Bargaining power of buyers - Low

High Demand for apparels and home

textiles in the US and EU markets

Threat of new entrants – Moderate Competitive rivalry – High Threat of substitutes - High
No barriers in domestic market. New Product differentiation is high Competition from low cost producing
capacities coming up. Economies of nations like Pakistan and Bangladesh
scale is high Brand identity id high

Bargaining power of suppliers - Low

High availability of cotton

Low cost of Labour

Bargaining power of buyer(Low)
US and European markets rule the worldwide material exchange representing 64% of apparel and 39%
of the material market. Buyers concentration and volume is generally low. Also, the ability to backward
integration is very low. All this makes the bargaining power of buyer low.

Bargaining power of suppliers(Low)

India is the third largest producer of cotton in the world after China and the US and has the largest
area under cultivation. So the high availability of cotton and low cost of labor makes the bargaining
power of suppliers low.

The threat of new entrants( Moderate)

There are no barriers for the new entrants to enter the domestic market. The brand identity
of current companies is also very high. Also, the Capital requirement to establish national or
regional level operations is very high. Thus the threat of new entrants is moderate.
The threat of substitutes(High)
India’s export demand is facing a threat from other cheap textile industry of Pakistan and Bangladesh.
Players like Arvind Mills have already shifted to 'alternative sources,' which impacts their incremental
volume off-takes.

Competitive rivalry (High)

Due to the internalization of production in low-cost countries, the companies are increasingly
competing on price and also improving the quality of their products.
Both the product differences and brand identity is high in the industry. Therefore the Competitive
rivalry is high.