19-12-2012, 02:35 PM
INDIAN GARMENTS INDUSTRY -AN OVERVIEW
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BACKGROUND
Earlier, most of the population of India was engaged in agriculture (about 90%) this was in 1950’s and the Indian agriculture was mainly dependent on rains for irrigation except a few isolated pockets being irrigated through canals and tubewells. People hardly used chemicals and pesticides and even the major agricultural operations life ploughing, planking, etc. were carried down by million of bullocks. As a result, India could not produce enough to feed its 370 million people, despite 135 million hectares of land under cultivation. To meet the excessive demand, heavy expenditure was incurred on import of food grains. Import of food grains proved a compulsive drain on scarce foreign exchange reserves of our country. All this initiated Indian government to give highest priority to development of agriculture in its five-year plan programme.
INTRODUCTION TO INDUSTRY
THE BEGINNING.
Indian Garments Industry took birth in 1959-60 when the first Garments-manufacturing unit was established. However, this industry found a firm footing only after the turbulent period of 1968-74, during which the acceleration which should have emerged from the upsurge in demand generated by the Green Revolution was navigated by large-scale imports of fully built Garments and screw-driver assembly of CKD (Completely Knocked Down) kit by a number of operators who entered with de-licensing in 1968 for making a quick buck. By 1973-74 when imports were banned, 22 manufacturers remained.
It is in an environment of intense competition between 11 manufacturers that our Garments industry has grown during the last 30 years. During this period, it has become not only a major segment of our engineering industry but with a population of 1,30,000 Garments in 1990, our country became the second largest Garments producer in the world. There could be no better index of the intensity of competition than the fact that all makes of Garments have been available off-the-shelf for the last 2 decades and market share of no single manufacturer exceeds 20%.
CRITICAL PARAMETERS FOR GROWTH OF GARMENTS INDUSTRY
AGRICULTURAL CREDIT
Nearly 90-95% Garments are purchased with the help of bank credit. It plays an important role in determining the demand for Garments.
PRICING OF GARMENTS.
The financial inability of the Indian farmers makes the pricing a critical parameter. Companies that managed to keep their costs low are the ones that managed to survive during the reversionary period.
MONSOONS AND CROP PRICES.
The farmers have to pay say 15% of the total price of the Garments, in cash, at the booking stage; Consequently, if the farmer is faced with bad monsoons and low crop prices, he will not be able to make the initial down payments.
GOVERNMENT POLICIES
To enable a farmer to purchase a Garments against these odds, the government introduced subsidies in this sector. During the union budget of 1994-99 the government exempted excise on small HP Garments I. e. below 1800 cc. In the budget of 2007 all the Garments were exempted from excise duty.
IMPORTS
The industry has managed to reduce its dependence on imports, as many players have indegenised their inputs, which were earlier Imported.
PRIORITY TO RESEARCH & DEVELOPMENT
Even though all Garments-manufacturing units, except the Venus , were initially set up with foreign collaboration, Garments industry has been on its own for the last decade. Al Garments have been nearly 100% indigenous and almost all product improvement and new products have come through indigenous Research and Development (R&D). Capital R & D investment by industry today exceeds Rs. 22 crores and the recurring annual expenditure is at the level of Rs. 7 crores. Emphasis on R & D is in the steady increase in the number and price range of competing models available to customers to choose from.
GARMENTS MARKET – A CYCLICAL TREND
Contours of the crash in the farm income due to unprecedented stretch of poor monsoons have slowed down the sales of domestic Garments industry. As a result, our Garments industry after its milestone of 273,000 Garments in FINANCIAL YEAR 1999-2000 nose-dived below 1,60,000 in 2002-03. Capping a down cycle that began in July-Sept. 1999, last year’s fall of 60,000 Garments even from the 2005-2006 shrunken base of 2,18,000 shows the steepest annual fall in the Garments industry’s chequered 40 years history