Financial Issues Within The Textile Business

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This research is really of import for all those people who are engaged in fabric concern and for those besides who wish to get down their ain concern in this sector. It shows the issued related to the industry and give the recommendation to this sector. New houses can develop new schemes for Chinese and Indian fabric industry with the aid of comparative advantage which highlighted in this research. Firms can procure and bring forth goods harmonizing to sell in domestic market and international market.

Global trade in this industry is now at US $ 350 billion and is expected to be in the scope of US $ 600 billion by 2010 and US $ 800 billion by 2014. ( ASSOCHAM,2010 ) . USA and European Union ( EU ) together are the major consumers of fabrics. They accounted for about 64 per cent of vesture and 39 per cent of fabric ingestion in 2004. Among other states, Japan, Australia and New Zealand are important consumers of Indian fabrics. Export of fabric is projected to turn at 22 per cent between 2007 and 2012 and expected to make US $ 55 billion by 2012.

Production of fabric narration witnessed a compounded one-year growing rate ( CAGR ) of 3.6 per cent between 1996 and 2006. Finished fabric has witnessed a higher CAGR of 4.1 per cent during the same period. This growing outperforms the planetary production, which experienced a CAGR of 2.25 per cent ( both narration and fabric ) . Most of this growing is contributed by non-cotton narration, which grew at 6 per cent CAGR in 2006. Fabric exports have witnessed a CAGR of 11.8 per cent in 1996-2006. Man-made fabrics have shown maximal growing and witnessed the highest CAGR at 14.5 per cent followed by Ready-made Garments ( RMG ) at 12.4 per cent. USA and EU are the major markets lending about 80 per cent to textile exports.

1.1. History of the Textile Industry

Throughout the history of the fabric and vesture industry in the development states, there has been stiff competition from the fabric industry in the developed states. Bilateral allowance, protectionist guidelines, colored duties, etc. have been the cardinal arms used by the developed states to maintain their place intact. All this lead to conceal costs imposed on the export sectors of these developing states. Though GATT came into being in 1947, the fabric industry operated on these liberalised understandings till 1994.

1.2.INDIAN TEXTILE Industry

In the last three old ages, the sector has attracted a entire investing of US $ 5,770 million. The cumulative Foreign Direct Investment ( FDI ) made in this sector between 1991 and 2007 has been US $ 575 million, stand foring 1.22 per cent of the entire FDI attracted by the state.[ 1 ]

1.2.1. Position of India in the planetary sphere

China is the leader in the planetary fabric sector with India on the 2nd place. India contributes a sum of 8 % of the export: 4 % of the entire fabric exports and 3 % of entire dress exports in the universe ( Report by Indian trade name equity foundation, 2009 ) . The production installations in India which have helped India in making at this competitory place are as follows:

1 ) Highest figure of looms- 1.8 million bird looms ( at 45 per cent of planetary capacity )

2 ) Shuttle-less looms- 200,000 shuttle-less looms ( at 3 per cent of planetary capacity )

3 ) Hand Looms- 3.9 million manus looms ( at 85 per cent of planetary capacity ) .

4 ) Spindles- 40 million spindles ( at 23 per cent of planetary capacity ) .

India ranks foremost in jute production ( at 1,900 million kgs ) , 2nd in silk production ( at 15 Million kg of natural silk ) , 2nd in cotton exports ( at 2,000 million kgs ) , 2nd in cotton production ( at 2,700 million kgs of cotton fiber ) , 5th in semisynthetic fibers ( at 2,000 million kgs ) and ranks eighth in the entire production of wool ( at 51 million kgs ) in the universe ( Report by IBEF, 2009 ) .

1.2.2. Overview of Textile sector in the Indian economic system

In footings of investing, production and employment the Indian fabric garment industry has emerged as most valuable sector. This sector is straight linked with the rural and agricultural sector of India. It is been said that one in every six family depend on this sector whether straight or indirectly ( Dhanabhakyam and Shanthi, 2008 ) .

This industry has plentifulness of growing chances and good established which basking high demand non merely in domestic market but besides in International market. Its capacity of bring forthing goods is increasing twenty-four hours by twenty-four hours. Economies of graduated table are the most of import factor for this industry to accomplish the growing. In India there is a complete value concatenation of the fabric with the production capacity of narration, cloth, fiber and readymade garments.

Harmonizing to Ministry of Textile ( 2008 ) , textile sector of India is lending about 4 % in entire Gross Domestic Products ( GDP ) . It besides contributes 10.9 % to index of industrial production ( Singh,2007 ) . Textile sector is the 2nd largest sector for employment supplier ( Ministry of Textile, 2008 ) . Around 50 million people are engaged in this sector straight or indirectly. Indian fabric industry is worth of US $ 47 billion in which 30 billion is of domestic market and remainder of 17 billion is of exports ( Report by ASSOCHAM, 2010 ) .

1.2.3. Sub-Segments

Fabric industry is vertically integrated which set about all constituents in fabric concatenation, starts from fiber, narration, cloth to all dress. It is said to be extremely interrupt up sector that involves little graduated table industry, not incorporate industry in weaving and whirling and fabricating garments. We can split the fabric sector on two sections i.e. organized sector and un-organized sector.

1.3. Significance OF THE STUDY

As the fabric industry is still in the growing stage and the competition is huge, this survey will analyse the fight of the two key participants in this industry- China and India severally. Surveies have been conducted to analyse the single competences of the two states, but my research will concentrate on the impact of the Chinese fabric industry on its rival, i.e. , the Indian Textile Industry. This survey will clearly reflect the advantages that the Indian Textile Industry holds over the world-wide fabric industry, particularly over the Chinese Textile Industry. It will besides measure the cardinal drawbacks in the Indian Textile Industry which hinders its advancement to accomplish a more outstanding topographic point in the planetary scenario.

1.4. Aim OF THE STUDY

In malice of the fact that the Indian industries are extremely competitory in the universe right now, the chief disadvantage is the inordinate competition that the Indian market is confronting due to the inundation of Chinese merchandises fluxing in its economic system. The cardinal aims of this survey are:

To analyze the Indian fabric industry.

To measure the market chances and the function of understandings on Indian fabric industry in international market.

To analyze the international market fight and impact of Chinese fabric on Indian market.

To analyze how Indian fabric industry confronting diminution and lost to competitory advantage to China.

3. RESEARCH METHODOLOGY

“ Somewhere, something unbelievable is waiting to be known ”

-Dr. Carl Saqan

This chapter describe the overall methodological analysis used while researching for this research. It fundamentally begin with the informations aggregation beginnings and designation of primary research method used ( Riley et al, 2000 ) .

FRANCIES RUMMER defined “ Research: It is a careful enquiry or scrutiny to detect new information or relationship and to spread out or verify bing cognition. Research is the solution of the job, whether created or already generated. When research is done some new result will come so that the job ( created or generated ) to be solved.

3.1 RESEARCH DESIGN AND PERSPECTIVE:

The Research Design is based on the exploratory method as I have merely used Secondary informations to measure the aims and analyze the information available. This research besides incorporates elements of Case Study design and Comparative Design. The Case Study attack has helped me to carefully analyze the in-depth advantages and disadvantages of the Chinese and Indian Textile Industries separately. The Comparative Case Study Approach has helped in analyzing the relationship between the two competitory states industries. These include Books, Journals, Internet beginning, Associated Chamber of Commerce and Trade of India.

3.1.1. Associate Chambers of Commerce and Trade of India

First and of import beginning of information is collected from Associate Chambers of Commerce and Trade of India. I collected some utile informations and figures from them. Some information has been besides collected from the research which has been done by “ Textile Industry of India ” .

3.1.2. Books and Diaries

Information is besides collected from the books and diaries articles which are published by many research workers and academic practician. This type of information is rather safe and they are published peer- reappraisal procedure ( Sapsford and Jupp,2006 ) .

3.1.3. Internet

Although, books and diaries are rather good to roll up informations but Web besides provide entree to a wider scope of cyberspace publication which can non be easy available in the books. Government sites besides provide of import and utile informations to finish the research ( Sapsford and Jupp, 2006 ) .

3.2 RESEARCH DATA COLLECTION METHOD AND ANALYSIS:

This research is based entirely on Secondary Data collected from books, web sites, magazines, booklets and diaries. The chief ground to utilize secondary informations for the intent of rating and analysis was the easy handiness of informations. The usage of questionnaires and interviews for this research was non executable as this research is based on the fabric industries of two different countries- China and India. As it is a general subject which does non affect two specific fabric industries in the two states, people to be contacted and interviewed could non be specified. Datas on the industry statistics and the consequences of the authorities policies on the industry have been easy available through authorities web sites and reputed newspapers and diaries.

3.2.1 DATA ACCESS

The information required for this research was readily available in books like Dicken P. “ Global displacement ” which have been a rich beginning of information on the general fabric industry worldwide and specifically on the two states being evaluated. The functionary websites which publish authorities policies in mention to the fabric industry are easy available on the cyberspace. Hence informations aggregation was non a major issue in readying of this research papers.

3.2.2 DATA ANALYSIS

I have used descriptive measures analysis to reply my research aims. In order to follow this analysis I have made extended usage of charts, tabular arraies and diagrams which help in easy rating of informations and reading of the same.

3.2.3 LIMITATIONS

As I have used secondary informations for this research and my subject merely focuses on the overall fabric industry of China and India in comparing to one another, my research end product can non be used specifically for a company or maker in the fabric industry. The assorted regulations, ordinances and position point of persons on the whole subject have been attained from books, web sites, diaries etc which might hold elements of personal likes and disfavors.

4. Analysis/ Discussion/ Recommendations:

The research which I have done will convey out the consequence of fight of Indian garment industry equal to china, followed by the jobs included in China and India. India has to concentrate on domestic market every bit good as planetary market. With the aid of this research Indian houses can place its strength and split its failings and could avoid its menaces ( Barney and Hesterley, 2006 ) . By the aid of external and internal environment mill garment and fabric industry in India can more develop their schemes.

4.1. Factors finding competitory advantage of India and China

4.1.1. Labor: preparation, Productivity and Laws

In India and China cheap labor can be easy available which provides them Competitive advantage particularly in fabric industry India is bless with the extremely trained managerial labor. However, it does non give them professional and proper preparation to the labor at the lower degree. So, the accomplishments are curtailing to the available procedures. The preparation and educational substructure is non develop till now. They are taking stairss to develop it but still they are missing behind. The capacity of work force in nucleus engineering is merely 4-4.5 million people but the demand is for 5 million people ( Report by ASSOCHAM, 2007 ) . The Indian authorities is gauging to give preparation to about 1 million people every twelvemonth to finish with the demand ( Ministry of Finance- Government of India, 2008 ) . Training is given to the people who are working in some peculiar country but they need developing till the root degree.

“ Both states have unskilled workers, they work and become skilled ” – ( Director, Firm C )

“ Indian authorities merely tries to develop pattern shapers or Masterss, or certain machine operator ” – ( Director, Firm B )

“ Government in China provides support for preparation of workers. In India there is a authorities organic structure but it does non travel till the root degree to develop the work force ” – ( Director, Firm G )

“ The houses in China provide more preparation installations ; therefore the people working at that place have more proficient cognition ” – ( Director, Firm E )

Chinese houses are supplying developing to the people in harmonizing to the modern engineering. They provide developing with the proficient instruction programme which is long lasting and will be good for the hereafter. On an norm, Chinese houses try to give preparation 70 hours each twelvemonth to a experiences worker. On the other manus India provide merely 10 hours developing each twelvemonth to the worker ( Chandra et al. , 1988 )

The public presentation of every company is depends upon the public presentation of its work force. The quality of labor and work force is non up to the demanded grade. The most of import ground for the low productiveness in garment industry is lack of subject among the laborers.

“ The work force in India is non work oriented. They take work merely for granted ” – ( Director, Firm G )

“ The chief factor China is better is their work force. It is much more productive, and efficient. It is proactive ” – ( Director, Firm B )

“ Due to big population in China, there is development of workers. There are deficient occupations available in mills for consumption as compared to the people necessitating occupations ” – ( Director, Firm F )

“ Many migratory workers come for occupations… they are exploited by employers in China to work more. They need to subject their ID ‘s and sometimes even lodge something ” – ( Director, Firm C )

“ Given a occupation to bring forth 100 garments to workers in China is completed without the demand of supervisors. But it is non completed in India even in 2-3 yearss until multi-layer direction is deployed ” – ( Director, Firm G )

In China there are higher handiness of work force. The occupations are less and work force is more. Therefore, the people who come to china for work paid less and the companies push them to work more to run into the demand. Thus their cost of production lessenings by this. These migratory workers do non hold residence licenses in metropoliss they are forced to populate in the adjustment which is provided by the employer on his premises. Although, these topographic points are really soiled and crowdy but they have to populate at that place. The workers has to manus over their ID ‘s to the employer because employer called them on work visa and the labor are in debt. The employer paid all the disbursals of work visa in progress. The study by Oxam- “ Trading off our rights ” adult females are working 150 hours overtime in garment industry every month ( Raworth, 2004 ) . Out of them, about 60 % have no contract and 90 % have societal insurance. The standard working hours in China is 10 – 12 hours per twenty-four hours but sometimes it can be extended to 15 – 16 hours a twenty-four hours with one or two twenty-four hours off in a month ( Wong,2005 ) . All China Federation of Trade brotherhood ( ACFTU ) found that more than 62 % worker forced to work 7 yearss a hebdomad and out of them 25 % did non acquire their rewards on clip ( Raworth,2004 ) . The pay rate of Chinese fabric industry is less than every bit comparison to other industry in China ( Kurt,1999 ) .

“ In China all the mills are in the suburbs. And all the large mills have really large country of land. The labor works at that place, and slumbers at that place. When they work, they are truly working. But in India the mills are really near to the metropoliss, and labor is all in a haste to travel place. In India all labors are remaining outside the mills. They might go forth for house, and might non turn up for 3 yearss. Indian labor is non really sincere to the occupation ” – ( Production Manager, Firm H )

“ In our state ( India ) , everything affects this industry, there is holi, there is diwali, or any other festival. Lot of vacations are at that place in India. When the harvest season starts, most of the labor goes to their topographic points to work in this field, and in China this is non the instance. They go for merely 1 New Year vacation. It is about 2-3 hebdomads or so, and that ‘s it for the whole twelvemonth ” – ( Director, Firm A )

The fight of industry is besides depends upon yhe labor Torahs which helps to cut down and increase the production cost. Assorted stiff labor Torahs are established in India which are impacting the development of the industry. World Bank conducted a research of degree of rigidness in which they gave tonss out of 100 for fire and hiring regulation of different states. In this India scores 48 which is rated as most stiff state as comparison to china which mark merely 30 ( Basu,2005 )

“ To alter labor in China is easy. If they hire 50 workers today, they can fire 20 workers the 2nd twenty-four hours. It is up to you. But in India, it is non possible. There is no policy. If they are non working expeditiously, you can non merely allow them travel ” – ( Production Manager, Firm H )

4.1.2. Structure

Changes in the construction if industry is relate the operation of whole industry. Indian fabric stretched in corporate construction which increases the cost and lead clip besides. This is dominated by little graduated table industry which is unorganized. This creates the deficiency of co-ordination between trade organic structures and industries which comprises to provide claim. Every procedure is independent in their work nature. It included separate entities like cotton produces spinner weaver, dyers, finished knitter and garment manufacturer. They all can non finish on their individualism but there fight is depends upon their supply claim. So, they have gto be more effectual in their supply ironss procedure to finish each other. To unify all these industry is a really ambitious occupation for the authorities of India. This merge is really of import to command the cost, recognizing the benefits of economic systems of graduated table, decrease in labor job, natural, stuff and increase the export market. Due to this India cost is increasing as production of assorted constituent is scattered. On the other manus, China did non hold any job like this because there supply concatenation is effectual and there sections are fewer and less paper is involved in it. In india workers lives really far from the on the job topographic points but in China they live in mill premises and all constituents which are needed in fabricating available in the same topographic point.

“ We have to cover with different companies for procurance of natural stuff. But it frequently happens that our production ( in India ) agenda gets delayed due to late bringing of natural stuffs from subsidiary providers. This causes higher lead clip and increases the cost ” – ( Director, Firm E )

“ The deficiency of individual window clearance from authorities ( in India ) causes holds in puting up new installations and exporting. But, turnaround clip in puting up a installation in China is relatively really less. Same is true for exports ” – ( Director, Firm B )

“ In India, labor is working at one topographic point and life at other topographic point. That consumes batch of clip.

In China, all the labor of a company stay together, they work and sleep. They stay at the mill premises ” – ( Production Manager, Firm H )

“ In China, everything is produced in the same topographic point ” – ( Director, Firm C )

Karandikar ( 2005 ) supports their research country. For india competitory states such as China, Meleagris gallopavo, Korea and Mexico have significantly unify supply ironss. Transportation system cost and distribution web still enforce barrier between the states ( Rousslang and To,1993 ) .

4.1.3. Infrastructure:

If we compare the substructure installations of China with India so we can state that China ‘s substructure is much better than India. Electricity and transit barriers are more in India which is a major menace for the growing of this sector. The transportation is besides a job of India. This is really expensive. It is really dearly-won to direct garments from India to US as comparison to the other Asiatic states. In China, companies are more profitable due to good substructure than India, hence they cut downing their cost and turnaround clip. This besides supported by Silk and Malish ( 2006:106 ) , Friedman ( 2005 ) , Porter ( 1985 ) who put substructure into secondary activity in value concatenation and value system.

“ Ports in India are non equipped with fast handling of lading. The cost is more. The lead clip is shorter in China because of better connectivity ” – ( Director, Firm I )

“ The power installations, the port installations, the conveyance installations, are cheaper and better in China than in India ” – ( Director, Firm B )

“ Buyers prefer China because their lead times are shorter, their substructure is much better than India ” – ( Marketing Executive, Firm D )

“ China is developing its substructure at a faster rate than India ” – ( Director, Firm G )

Indian route web is the biggest web in the whole universe but still national main road consist merely 2 % which consist 40 % entire traffic in the whole state. China due to efficiency in handling of stuffs benefits 13 % in the entire transportation garments from Shanghai to US as comparison to India ( Karandikar, 2005 ) . This is besides a disadvantage for India by adding farther cost in complex supply and merely in clip stocks ( WTO, 2007 ) in whole universe.

Another job faced by India is electricity job. Fabric industry is the 1 of the most energy consumer in footings of power per unit.

“ Runing the mills on ‘generators ‘ ( in India ) , increases the cost by 2.5-3 times. Power in China is available subsidized and these jobs of deficits and high cost are non at that place ” – ( Production Manager, Firm H )

“ Government in China has supported in the sense that their substructure cost is much lesser as compared to India. The electricity cost is less over at that place ” – ( Director, Firm E )

“ All the major companies of the universe are in China today because the land is inexpensive, labour is inexpensive, electricity is inexpensive, and automatically everything is inexpensive. That is the ground, the production is cheapest ” – ( Director, Firm G )

As we earlier discussed deficit of electricity is at that place in India which rendered to be uncompetitive in the international market. This is impacting more on little graduated table industry which automatically result in high cost of merchandise and fails to supply the goods on clip ( study by ASSOCHAM, 2007 ) .

4.1.4. Technology:

The Indian authorities started a little strategy of Technology Up step Fund Scheme ( TUFS ) in which houses will be given subsidies and low involvement rate to upgrade their engineering ( G. Thomotharan ) . Harmonizing to this scheme 5 % subsidy will be given to the houses to implement upgradation of new machinery. The authorities is besides believing to increase TUFS from US $ 124 million in 2006-2007 to US $ 211 million in 2007-2008 ( G.Thamothan ) .

“ The machinery used is non a major difference between these two states. China makes and India imports ” – ( Director, Firm F )

“ As China is presently a developing state and has limited fiscal resources, it does non introduce ” – ( Director, Firm I )

“ China is better in copying the engineering instead than introducing. They mass produce the copied engineering and hence manufacture the machinery involved for fabricating a garment at a cheaper cost ” ( Director, Firm B )

“ China is non a good pioneer. The research and development cost is besides much less because they do non affect excessively much resources for invention. Their machinery manufactured might non be every bit good as the best engineering available like that in Japan but it is really good at the inexpensive monetary value it is available, so people buy it ” – ( Marketing Executive, Firm D )

“ Today all mass production of machinery is from China or Taiwan ” – ( Director, Firm C )

“ China is utilizing its ain machines on itself. As they produce merchandises, they know better than you know, or I know ” – ( Production Manager, Firm H )

4.1.5. Natural Material:

India has really rich beginnings of natural stuff. It is specialise in resources fibre like polyster, cellulose xanthate and silk. India is largest manufacturer of man- made cloth. China is largest the largest manufacturer of cotton in whole universe and there cotton is better than India ( Sud, 2008 ) . Chinese industrialist can acquire finance at really inexpensive involvement rate. As in China, engineering is more effectual than India so its silk and polyester is better and cheaper.

“ Cotton, you know, is much cheaper in China. Polyester, silk… .. most of it is produced by China. India besides produces it in big measures ” – ( Production Manager, Firm H )

“ Quality is better in China because the machines are most of automatic. We still have handloom and powerloom type machines. We have lesser figure of automotive machines ” – ( Director, Firm E )

“ The assortment of accoutrements available in China is non at that place in India. Buttons, cotton tapes, different manners neckbands are imported. Their garments are pieces of attractive force because of good labelling and wadding ” – ( Director, Firm A )

4.1.6. Economies of Scale:

In today ‘s competitory epoch economic systems of graduated table are necessary in production every bit good in selling of merchandises. Most of the garments produced in India are from little medium endeavors. Economies of graduated table is achieved merely if they have big financess and sufficient in bring forthing big measures of goods.

“ If 216 pieces of garments are made of one form here ( in India ) , the disbursals is the same. China makers 10,000 pieces. If, we have to acquire 200kg of fabric dyed, they have to acquire 2000 kilogram. Then in every facet, the costing differs ” – ( Production Manager, Firm H )

“ Merely those garments that are mass produced are made in China. All manner and expensive garments are made in India ” – ( Director, Firm B )

“ The mills in China are larger in size and have immense production capacity. They produce garments in highly big measures ” – ( Director, Firm F )

“ China has an unfastened market system which is nowhere of the same sort in the remainder of the universe ” – ( Director, Firm E )

Cost advantage to the houses can be obtained by economic systems of graduated table ( Barney and Hesterley, 2006 ) . When the volume of production additions so automatically the production cost decreased. China is holding big production capacity mills, which when collaborate with less rewards and high efficiency degree of workers so it leads to an first-class combination ( Porter,1990 ) .

4.1.7. Foreign Direct Investment ( FDI ) :

In Chinas more foreign states are interested to put as comparison to India. The graduated table of production is high in China because inexpensive labor that why more FDI traveling to China. The present authorities policy in India allows them to put 100 % in FDI in fabric sector. But, still, foreign investings are less.

“ Since the market ( in India ) is non organised and there are really little participants with really low turnarounds, they do non pull FDI ” – ( Director, Firm I )

FDI plays a critical function in the success of an industry ( Kee, 2005 ; Alfaro et all, 2003 )

“ In garment industry we see, India and China already have the engineering and resources. There is no demand for FDI from any other state ” – ( Director, Firm E )

“ Foreign direct investing is non of import for this industry in India ” – ( Director, Firm B )

Most of the garment fabricating units are Small scale industries. So they can easy acquire loans from the Bankss. Much machinery is import by China and India which dominates the production of machinery. No uncertainty the size of garment fabrication houses is increasing but they did non lend in FDI.

4.1.8. Turning Domestic Market:

China and India are diversified in size, quality and measure, cost and fabric demand. For the stylish and new tendencies domestic market is extremely sensitive to advance industry in both states. They have possible to big domestic and international market.

“ India and China have advantages that same mills industry merchandises for domestic and export market ” – ( Director, Firm E )

“ Batch of Multinational companies with large trade names are coming up, so there are good chances for development of India and China ” – ( Director, Firm C )

4.1.9. Iconic trade name:

Now a yearss, the purchaser giving penchant to other states while purchasing the goods. India is losing its trade name individuality. All this happened due to the grounds which are discussed earlier. In assorted sectors Indian garment industry losing iconic trade name image which is impacting the whole sector. In all over the universe India is known for its celebrated sectors like Information engineering, Auto and FMCG. To beef uping this industry, publicity of “ Brand India ” is a really of import measure. India has a really good industry for vesture and manner so one think it should be promote.

4.1.10. Rival or Compliment each other:

China and India both is biggest rival for each other and besides complimentary to each 1. But China is good plenty as comparison to china in many ways. As I discussed earlier China is good in efficiency so it is going the first pick for the purchasers which is giving bad consequence on India as it increases the gross revenues volume for Indian garment fabrication markets.

India and China both importation and exporting natural stuffs to each from each other. China imports cotton from India because Indian cotton is really good in quality and cheaper every bit good. China has already given order to India for cotton in progress 2 old ages.

4.2. Future Prospects of India and China:

Some executives believe that in approaching future both the states would provide the market of garments on different waies. The opportunity of India is more on the mass market and China ‘s focal point will be on manner market. China is specializing in bring forthing garments on inexpensive monetary values and on clip because they have good installations like substructure, inexpensive work force and better machinery. However, India has advantage to bring forth goods in the little measure by trying and multi-process.

“ India and China will hold a different market wholly. China will be more focussed towards the large shops and importing companies. India will hold more for manner industry, more originative work, and smaller narrations ” – ( Director, Firm C )

“ You can ne’er see manner wear in Chinese apparels ” – ( Director, Firm G )

“ We can make good design in India, what used to be produced in Europe, are shifted more or less to India. Furthermore, a European or American client wants an instigated design in embellishment which merely can be produced by India. China is besides making but they do n’t make such instigated ” – ( Marketing Executive, Firm D )

Indian merchandises are appreciated in foreign market. Many international based companies are giving orders to India. Most companies based in Europe more or less switching to India because of handicraft installations and installation available of trained seamsters. USA and Europe wants embellishment in their apparels this is merely available in India so many other states are impacting because of these in many ways ( Macmillan and Tampoe,2000 ) .

Cheap labor and high foreign direct investing handiness has engrafted China as a major power station for garment fabrication. Population is high in China and everyone is looking for the work. Most of the major machinery fabrication workss are set up in China due to its inexpensive labor. Political and legal system of China is non every bit good. This is a failing for China and this is a great concern for investors. China is holding the policy of one kid which is non good in future. As labour force will shrivel in few old ages because most of the people will retire and immature population is low as per the demand. This all will ensue in less development of labor and hence, decrease will come in efficiency, productiveness and higher cost of production. These sorts of political alterations will impact the cultural and societal environment of administration behavior. These positions are supported by many research workers and writers like Hitt et Al ( 2003 ) , Morden ( 2007 ) , Macmillan and Tampoe ( 2000 ) , and Luffman et Al ( 1996 ) .

“ It is right that a garment was earlier manufactured cheaper in China, but the quality produced was lower than India ” – ( Director, Firm J )

“ Chinese goods are considered as inferior to Indian goods ” – ( Director, Firm B )

“ The merchandises in China are ne’er considered to be of high quality ” – ( Director, Firm E )

“ Garments produced in China are ever considered usage and throw ” – ( Director, Firm A )

“ Before 4-5 old ages, companies such as Gap, Nike did non outsource the production of their garments to India. Earlier they thought that India would non be able to supply the appropriate quality. However, now if the two merchandises are compared, the quality of the garment produced in India would be better than produced in China ” – ( Marketing Executive, Firm D )

“ The purchasers of garments now find it cheaper to secure goods from India than from China due to currency fluctuation ” – ( Director, Firm C )

“ China ‘s currency has risen and India ‘s currency has come down ” – ( Director, Firm G )

In past, large trade name companies like Nike and GAP did non look to be suited sourcing state for their garments. But now the clip has changed. They are switching towards India because of the inexpensive labor and good fabrication of garments. Therefore, the tendency of production from China is switching towards India. Hence, India is going more attractive than China in procuring garments.

4.3. Schemes for Integrated Textile Parks ( SITP )

In July 2005, the strategy for Integrated Textile Parks has been approved to supply world- category substructure to India by making new fabric Parkss. This strategy is unfastened by unifying the Apparel Parks for Export Scheme ( APES ) and Textile Centre Infrastructure Development Scheme ( TCIDS ) ( Press Information Bureau – Government of India, 2007 ) .

The aim of both merged Parks was to make adept zones for fabrication and to overhaul and make full the spreads in current substructure to take the hindrances of productions ( Press Information Bureau – Government of India, 2003 and Export Promotion Council, 2002 ) .

To implement this strategy assorted stairss has been taken to protect this strategy from assorted public sector immoralities. All the support is given by Government of India. The strategy is limited to merely 40 % of undertaking cost to a ceiling of Rs. 40 crores. All this is done through Grant or Equity ( Apparel Export Promotion Council-1, 2008 ) . Each and every fabric park is given the installations like preparation Centres, proving research lab, design and trade Centres, show Centres, natural stuff sections and warehouse installations ( Apparel Export Promotion Council -2, 2008 ) .

Government has sanctioned 30 fabric Parkss in 10th Five Year Plan. The estimated cost of the undertaking is Rs. 2893.42 crore but the investing is merely made of 15258 crore. This undertaking will bring forth the employment to about 5.45 lakh people and the one-year production will be 24024 crore ( Press Information Bureau – Government of India, 2007 ) . Government in his 10th five twelvemonth program provided 150 crore for this strategy. Subsequently on this sum will be revised to 545 crore ( Report by ASSOCHAM, 2007 ) . To do this Scheme successful, there is demand of minimise the troubles which will come while clearance of undertaking and this is depends upon the authorities ( Report by ASSOCHAM, 2007 ) .

Appendix

Acronym

APES – Apparel Parks for Export Schemes

ASSOCHAM – The Associated Chambers of Commerce and Industry of India

ATC – Agreement on Fabrics and Clothing

CLA – Contract labour Act

EU15 – European Union Comprising of 15 states

FDI – Foreign Direct Investment

FMCG – Fast Moving Consumer Goods

IDA – Industrial Disputes Act

ITP – Integrated Textile Parks

JIT – Merely in clip

MFA – Multi Fibre Agreement

MRP – Materials demands be aftering

PEST – Political, Economic, Social and Cultural, Technological

SEZ – Particular Economic Zones

SITP – Scheme for Integrated Textile Parks

SME ‘s – Small-Medium Enterprises

SSI – Small Scale Industries

TCIDS – Fabric Centres Infrastructure development Scheme

TUA – Trade Unions Act

TUFS – Technology Upgradation Fund Scheme

USA – United States of America

WTO – World Trade Organisation83