About ATIRA

The Objective

TO HELP THE INDIAN TEXTILE AND ALLIED INDUSTRIES, ESPECIALLY ATIRA'S

MEMBERSHIP ORGANISATIONS TO BECOME INTERNATIONALLY COMPETITIVE
THROUGH:

• Application oriented scientific studies.

• Promotion of professional approach and striving for highest standards of
excellence in technology, engineering and management.
• Proactive initiatives to meet challenges and to prepare frontier areas

The Science and Technology activities of ATIRA extend over a wide field. The
R&D activities include:

• Process Optimization for improved processed control, leading to better quality, cost
reduction and export promotion.
• Development of New Products, Processes and Design of New Instruments,
Equipments and Machinery with emphasis on Industry/user collaboration/sponsorship
as far as possible.
• Supportive studies in areas of Environmental Pollution, Management, Human
Relations and Policy Aspects.

The Extension Activities Include:

• Consultancy: Consultancy in Technical and Managerial Areas in Spinning, weaving,
Chemical Processing, Textile Chemistry, Instrumentation, Machine Design, Energy
Conservation, Air-Conditioning, Work Study Pollution Control, Management
services, Financial Analysis, Modernization Viability and Profitability Studies, Inter-
Firm Comparisons, Business Environment Scanning.
• Training: Covers different levels from workers to top management and is of three
types: (i) General (ii) tailor-made (iii) In-house.

-1-
• Testing: Spans a wide spectrum, backed up by sophisticated Infrastructure and
specialist staff, ensuring authenticity, accuracy and confidentiality.
• Dissemination to Industry: Through ATIRA Publications - Research reports,
Technical Leaflets, Papers in Journals, Own Periodicals (ACT and UPDATIRA),
Booklets and Books. Also through direct interactions at Seminars, Conferences,
Workshops and Training Programes.

-2-
 INTRODUCTION TO WTO

Textiles Monitoring Body (TMB)

The Agreement on Textiles and Clothing

Since 1 January 1995, international textiles and clothing trade has been going through
fundamental change under the 10-year transitional programme of the WTO's Agreement
on Textiles and Clothing (ATC).

Before the Agreement took effect, a large portion of textiles and clothing exports from
developing countries to the industrial countries was subject to quotas under a special
regime outside normal GATT rules. Under the Agreement, WTO Members have
committed themselves to remove the quotas by 1 January 2005 by integrating the sector
fully into GATT rules.
While the WTO is still young, the multilateral trading system that was originally set up
under GATT is well over 50 years old.

The past 50 years have seen an exceptional growth in world trade. Merchandise exports
grew on average by 6% annually. Total trade in 2000 was 22-times the level of 1950.
GATT and the WTO have helped to create a strong and prosperous trading system
contributing to unprecedented growth.

The system was developed through a series of trade negotiations, or rounds, held under
GATT. The first rounds dealt mainly with tariff reductions but later negotiations included
other areas such as anti-dumping and non-tariff measures. The last round — the 1986-94
Uruguay Round — led to the WTO’s creation.

-3-
CREATION OF WTO

The WTO Secretariat, based in Geneva, has around 600 staff and is headed by a
director-general. Its annual budget is roughly 160 million Swiss francs. It does not have
branch offices outside Geneva. Since decisions are taken by the members themselves, the
Secretariat does not have the decision-making role that other international bureaucracies
are given.

The Secretariat’s main duties are to supply technical support for the various councils and
committees and the ministerial conferences, to provide technical assistance for
developing countries, to analyze world trade, and to explain WTO affairs to the public
and media.

The Secretariat also provides some forms of legal assistance in the dispute settlement
process and advises governments wishing to become members of the WTO.

OBJECTIVE OF WTO: -

• The objective of the WTO is to help trade flow smoothly, freely, fairly and
predictably.

FUNCTIONS OF WTO: -

• Administering trade agreements

• Acting as a forum for trade negotiations
• Settling trade disputes
• Reviewing national trade policies
• Assisting developing countries in trade policy issues, through technical assistance
and training programmes
• Cooperating with other international organizations
•

-4-
STRUCTURE: -

The WTO has nearly 150 members, accounting for over 97% of world trade. Around 30
others are negotiating membership.

Decisions are made by the entire membership. This is typically by consensus. A majority
vote is also possible but it has never been used in the WTO, and was extremely rare under
the WTO’s predecessor, GATT. The WTO’s agreements have been ratified in all
members’ parliaments.

The WTO’s top level decision-making body is the Ministerial Conference, which meets
at least once every two years.

Below this is the General Council (normally ambassadors and heads of delegation in
Geneva, but sometimes officials sent from members’ capitals), which meets several times
a year in the Geneva headquarters. The General Council also meets as the Trade Policy
Review Body and the Dispute Settlement Body.

At the next level, the Goods Council, Services Council and Intellectual Property
(TRIPS) Council report to the General Council.

Numerous specialized committees, working groups and working parties deal with
the individual agreements and other areas such as the environment, development,
membership applications and regional trade agreements.

-5-
AGGREMENTS RELATED TO TEXTILES:-

• Multifibre Arrangements (MFA) 1974-1994

• Agreement on Textile and Clothing (ATC) 1995-2004
• Under the Agreement, WTO Members have committed themselves to remove the
quotas by 1 January 2005 by integrating the sector fully into GATT rules.

MFA: -

• The Multifibre Arrangement was a major departure from the basic GATT rules
and particularly the principle of non-discrimination.
• This provided for the application of selective quantitative restrictions when surges
in imports of particular products caused, or threatened to cause, serious damage to
the industry of the importing country

ATC: - The ATC is a transitional instrument, built on the following key elements:

• The product coverage, basically encompassing yarns, fabrics, made-up textile

products and clothing
• A programme for the progressive integration of these textile and clothing
products into GATT 1994 rules
• A liberalization process to progressively enlarge existing quotas (until they are
removed) by increasing annual growth rates at each stage
• A special safeguard mechanism to deal with new cases of serious damage or
threat thereof to domestic producers during the transition period
• Establishment of a Textiles Monitoring Body (“TMB”) to supervise the
implementation of the Agreement and ensure that the rules are faithfully followed
• Other provisions, including rules on circumvention of the quotas, their
administration, treatment of non-MFA restrictions, and commitments undertaken
elsewhere under the WTO's agreements and procedures affecting this sector.

-6-
Four steps over 10 years

The schedule for freeing textiles and garments products from import quotas (and returning
them to GATT rules), and how fast remaining quotas should expand.

The example is based on the commonly-used 6% annual expansion rate of the old Multifibre
Arrangement. In practice, the rates used under the MFA varied from product to product.
Step Percentage of products Percentage of products
to be brought under GATT to be brought under
(including GATT (including
removal of any quotas) removal of any quotas)
16% 6.96%
Step 1:
(minimum, taking 1990 per year
1 Jan 1995 (to 31 Dec 1997)
imports as base)
Step 2: 17% 8.7%
1 Jan 1998 (to 31 Dec 2001) per year
Step 3: 18% 11.05%
1 Jan 2002 (to 31 Dec 2004) per year
Step 4: 49% No quotas left
1 Jan 2005 (maximum)

>Full integration into GATT (and final

elimination of quotas).
>Agreement on Textiles and Clothing
terminates.
The actual formula for import growth under quotas is:
by 0.1 x pre-1995 growth rate in the first step;
0.25 x Step 1 growth rate in the second step; and
0.27 x Step 2 growth rate in the third step.

GENERAL IMPLICATIONS OF WTO ON TEXTILE INDUSTRY WORLDWIDE

-7-
 Exports of textile products will be quota free and will only be based on market
considerations, namely product attributes, pricing, promotion such as advertising,
brand building and other sales promotion means and physical distribution its cost an
logistics decisions, the market will be purely competitive.

 It may be unlikely that the developed countries will open their doors after MFA phase
out. The restrictions on imports into these countries may come in many forms such as
• Non-tariff barriers based on environmental health, labor standard related
issues and so on.
• Formation of regional trade arrangement, which implies higher degree of
labialisation among the regions as compared to rest of the world, for E.g., EU,
NAFTA.
• Initiating anti dumping and countervailing measures.

 In the wake of WTO regime, one needs specialization and the

globalization is impending to take place as to produce where it is cheap and will sell
where it is profitable. FDIs and technology transfer may take place in the developing
countries.

 Removal of quotas will increase market access and thereby

stimulate exports from the developing countries like India, but it will also increase
competition amongst exports, with the prospects that there could be both winners and
losers among the exporters.

 There is a likely emergence of “outward processing” concept by

manufacturers in advance countries on their attempts to counteract the textile
suppliers from countries like India which could be termed as dislocation of
production.

 It would be observed that there is increasing role of NGOs in

influencing trade related issues across countries.

-8-
  There would be increasing clout of developed countries as evident
from reports on ministerial levels meetings of WTO, in pursuing their interests.

IMPLICATION OF WTO ON INDIAN TEXTILE INDUSTRY

 Due to the removal of quota restriction as per WTO agreements on

market access, import of woven fabrics, mainly synthetics are on the increasing trend.
Imported textiles already have a large presence in the retail network across the
country. Powerloom sector with largest synthetic predominance will have to face
these imports. Further due to reduction in import tariffs added textiles from developed
countries and low-end fabrics from low cost production countries into India may
affect domestic production

 In the apparel sector, Ludhiana, Tirupur, Delhi, Bangalore,

Mumbai and Chennai are all remarkably unique and dynamic centres of production
and developing as a textile hub center, this gross generalization is only indicative of
the relative strengths of the various locations, as individual companies with
comparable or greater strengths do also exist outside this organsation.

-9-
 SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY

STRENGTH

 India has a huge; relatively inexpensive and skilled labour force.

 It has impressive design expertise

 It is among the world's largest producers of fabrics and it produces a wide range of
apparel articles and is considered a particularly competitive source for home textiles
(bed linens, towels, etc).

 One of the largest producers of cotton yarn, jute, silk and man made fibers. Presence
of entire chain of manufacturing e.g. in cotton, from growing, ginning, spinning,
weaving, processing to clothing garments/made-ups and also presence of vibrant
Textiles machinery sector and support Institutions as NIFT

- 10 -
WEAKNESS

 A major gap in Indian industry is its fragmented industry structure with a dominance
of small scale. The fragmentation of supply base also creates barriers in achieving
true integration between the various links in the supply chain. This creates issues of
lack of control and lack of consistent or reliable performance. The huge geographical
spread further complicates this issue.

 Low productivity at all levels, from growing to ginning to spinning to weaving

(capacity utilization as low as 50% in most of the sub-sectors), poor infrastructure-
both externally (basic infrastructure ports, roads, power etc) and internally (90% of
units being very small or in tiny sector), absence of productive economy of scales in
most sub-sectors, absence of VAT, too much regulations and control on dynamics of
sub-sectors, restrictive import regime and trade policy environment, technological
obsolescence and lack of term strategy.

 Lack of transparency in legal requirements and complicated paperwork" which led to

an increase in producer costs and necessitated the appointment of a broker instead of
the much-preferred direct-dealing with manufacturers

 Problems such as excise and other tax imbalances. The political diversity of India's 35
states and Union Territories, and a coalition of ruling parties has led to slow progress
in rationalizing these imbalances due to debate and discussion

 The Indian RMG sector is still largely dependent on the powerloom sector and the
independent process houses, for their input requirements, which do not always meet
the international quality standards. “The RMG sector has to gain control of its
production processes, to have control over quality, and delivery schedules, areas
where it is sadly lacking in the international market.

- 11 -
OPPORTUNITIES

 The global textile trade has been rather muted for a few years now is set to triple to
$856 Billion over the next decade. This growth would be driven by dismantling of
quotas in January 2005, as mandated by WTO. The biggest beneficiaries of this
growth would be cost competitive manufacturers in china, Mexico, Turkey and India
(whose share of global trade is a minuscule 3%). Market share of other countries such
as Italy, Germany, Korea and France on the other hand would fall form the current
level of 25%

 With the phasing out of restrictive trade policies- MFA and other QRs, substantial
increase in size of the markets is expected. Besides the developed countries, new
markets would be opened up in developing countries. Post GATT, the trade of
Textiles and clothing is expected to rise by US$ 24 Billion per year

 One of the biggest opportunity in the export trade in home textiles. The market which
is estimated to grow from US $9 billion in 2002 to US $23 billion in 2010

 The Federated Group, Wal-Mart, Target, Russell Corp, Sears Roebuck and The
Limited figure are among American retail majors that are looking for additional
orders from India

 With overseas companies increasingly realizing the need to diversify their sourcing
basket and not focus on one or two countries like China, the Indian textile industry is
all set to reap major dividends

- 12 -
THREATS

 ‘Non-Tariff Barriers’ (e.g. in the name of anti-dumping, consumer safety, eco-

labeling etc.) are fast replacing ‘quotas’. Phasing out of Quotas also mean countries to
export on their comparative advantage only; Competition in international market to
increase manifold

 The domestic turf too would be threatened by increased imports as custom tariffs fall

 The big markets of the world are increasingly becoming inaccessible to India due to
the proliferation of regional/bilateral arrangements that exclude India from the
preferential benefits accorded to other ‘member’ countries
 Threat from countries like China, Pakistan and Bangladesh are major competitor for
the supply of textiles.

- 13 -
Interesting facts about Indian textiles

• About 6% contribution to GDP

• Second largest employment providing sector after agriculture and providing
employment to about 35million people.
• Constitute only 3% of the total world textile exports.
• Currently Indian textile export is 13 $bn and target of 50 $bn by2010
• Constitute 27% of India's total exports and 35% of the gross export earnings.
• A ready-made garment contributes to 41% of the total textile exports and about 15%
of the country's total exports.
• Indian textile exports are increasing at the rate of 20% annually.
• Contributes to almost 14% of the industrial production
• Organized mills constitutes just bout 3.1% of total production of textile
• Highest area under irrigation for cotton in the world about 9million hectares (26% of
the world total growing area) and productivity is 300kg/hectare as compare to 550
kg/hectare average of the world, third largest producer of the cotton.
• First largest producer of cotton yarn and jute in the world
• Second largest producer of the raw silk after the china
• Fifth largest producer of polyester yarn.
• Out of 1227 cotton/man-made fibre mills, 188 mills are in public sector, 124 mills in
cooperative sector and 915 are in the private sector.
• 37 Mn spindles accounted 23.6% of the world, largest spindle capacity in the world
• 1.78 Mn power looms accounted 43.63% of the world's and highest in any country
• 3.9 Mn handlooms accounted 84.78% of the world and highest in the world

India has the second largest spinning capacities in the world. Also, this is continuing to
grow and modernize - the current strength is at around 38 million spindles and 400,000
rotors.

- 14 -
RESEARCH STUDY

This topic deals with the issues related to the research study
 Research objective
 Research methodology
 Research methodology adopted

Research objectives: -

The aim of this research is to develop appropriate marketing systems for the organized
textile mill sector in India in the wake of WTO.

Objectives
 To study the marketing systems of organized textile mills and their preparedness
to deal with threats and opportunities posed to them by WTO.
 To find the overall impact of Agreement on Textiles and Clothing (ATC) on
Indian organized textile mill sector.
 To suggest the effective measures needed to be taken by them to dominate the
world textile market.
 To disseminate this information to smaller and weaker textile units who are still
ill prepared or unaware of the current situation.

Research methodology: -

Our study is of exploratory type in the sense that it involves large part of secondary data
about what different organized mills are doing in the wake of WTO. Also it includes
some depth interviews of experts and relevant people who are directly involved in the
situation. Our questionnaire includes a large part of open-ended questions needed for our
study. The hypothesis we have used is that the mills are preparing significantly to take
advantage of removal of quota restrictions.

- 15 -
We admit that there are few quantitative questions in our questionnaire but that were
included mainly for creating the base of comparison of responses.

Research instrument – structured non-disguised questionnaire

Methods of sampling used: -

In our study we have used convenient sampling as a non-probabilistic method of

sampling.
This is because our study includes all the types of organized mills in Ahmedabad, which
have varying parameters like size, product mix, organization structure, markets and
approach. Thus this solves purpose of our study. Also we have mills like Arvind mills,
which is one of the largest mills in its category, which can serve as a model for other
mills. Also this study includes questionnaire to be filled in by top management of the
mills given the limited time constraint.

Sample size – 4 mills

Data collection method: -

We have used both primary as well as secondary data for out study.

 For understanding WTO and related issues: secondary data- websites and books.
 For studying implications of WTO on Indian textile industry: secondary data
websites and some books and periodicals.
 Quantitative data related to textiles: secondary data - websites and journals.
 Studying Marketing systems of organized mills –
1. Primary data- questionnaire and interview
2. Secondary data – websites and annual reports.

- 16 -
Role of government in the past and in present

1. Regulatory disadvantages

One of the most insidious is the historical reservation of manufacturing for very small
companies. While the original political intention might have been to spread self-
reliant industry across a large political base, this reservation has created the
fragmentation that shackled the competitiveness of Indian textile industry.

Most of the sectors have not been de reserved and entrepreneurs and cooperates are
investing significantly sums of money in setting up new, large factories or expanding
their existing manufacturing plants

2. Foreign Investment

The government has in the past kept foreign investment out of textile an apparel
manufacturing. It has gradually removed these restrictions and has also brought down
import duties on capital equipment creating grounds for foreign investor to set up
manufacturing plants competitively in India

3. Excise and Tax

Some of the other problem remains such as excise and other tax imbalances. The
political diversity of India’s 35 states and union territories and the coalition of ruling
party has led to slow progress in rationalizing these imbalances due to debate and
discussions. However a framework of VAT in beginning to be put in place through in
fits and start5s, which sill clear those imbalances once it is implemented fully and
create truly unified economic space.

- 17 -
 4. Labour Laws

Labour laws are still seen to be relatively unfriendly to business with companies
having less than ideal flexibility to follow a hire and fire policy. To avoid any
potential trouble with unionization of labour companies have often broken their
business down into small units, which have in turn, lost the efficiencies of economic
of scale. In recent years, these are been movement towards labour reform and one
hope that this will make the business environment even more conductive.

Step proposed to safeguard the domestic textile industry

1. Tariff and non- tariff barriers

In the wake of WTO quota regime doesn’t mean abolition of tariff completely, but the
purpose to reduce the quota so that free trade across the country is possible. India can
protect the domestic industry in the form to non-tariff barriers such as health, safety
and labour standards, environmental friendliness, rules of origin and so on.

2. Anti dumping

If a company exports a product at a price lower than the price it normally charges on
its own market it is said to be dumping the product. India ahs a major threat from
neighbor country like china, which would dump the product to destroy domestic
market so, antidumping law should have to be strengthened.

3. Irregulated trade

Import of cotton is not possible for small-scale organization in large quantity. So,
Indian government should have to play a role of intermediary to help the small-scale
industry and reduce regulated trade.

- 18 -
4. Open data source

Indian government should have to create the facility to access the proper data from
global like price, demand of the product and disseminate to the domestic industry. So,
they can be prepared well according to that

- 19 -
 PRIMARY DATA- Feedback from mills

NO. Particulars Company A Company B Company C Company D

1. Effect on mills To large extend To some extent Long term-to Favourable to

in wake of favourable favourable large extent some extent
WTO favourable
Short term-to
some extent
favourable
2. Technology Essential No because Yes No because
Upgradation already already
upgraded upgraded
3. Price cuts Possible, Yes No Wait and watch
indispensable depending on policy
after quota market scenario depending on
removal scenario
4. Import of Yes No Yes No
textiles as
threat to
domestic
industry
5. Change of To some extent No No No
marketing
structure
6. Pricing model Perceived value Target return Perceived value Perceived value
7. Change of No change No change According to No
credit system market
determined
forces
8. Advertising No change No change - -
expenditure
9. Increase Yes Depends on Planning to No

- 20 -
 distribution need but increase
channels currently no
10. Steps proposed  Quality Product  Quality  Quality
by mills in standardizati development improvement improvement
wake of WTO on Niche  Price quality  Modernisatio
 Cost marketing match n of old
control Reduce  Concentrate machinery
Improve production cost US for fabrics  To satisfy
networks customer
11. Steps Indian  Changes  Create  Check -
government in labour level pricing dumping
should take to laws field  Provide
safe guard  Further  Reduce proper data
Indian textiles relaxation in input costs about price
taxes  Can and demand
form PTA  Resort
and RTA to bilateral
treaties
12. Product line to 100% cotton Cotton fabric Mainly Cotton yarn of
be focused after and blended garments medium count
2004 fabrics
13. Market Apparel and Medium to Mainly high EU
segment to be made ups higher range end US and EU
targeted RMG customers
manufacturers
14. Countries likely China but China, China -
15. to resort company would Indonesia,
dumping remain Thailand
unaffected in
short term
16. Effect of PTAs Not much Not favourable May have
and RTAs in long term negative effect
17. Effect of trade They will ease Nominal - To certain

- 21 -
 blocks out and diluted extent
18. Effect of They may delay May not affect Ill effects Nominal
various codes formalities much industry on an
of conduct whole

Marketing Intelligence Systems for the mills:

Particular No of
mil
ls
A Arranging a meeting with sales force of the mills
1. Formal meeting at regular interval 1
2. Informal meeting 3

- 22 -
B Involving distributor, retailer and intermediate in decision making
1. Getting feedback about products 3
2. Involving in general meeting 1
3. Asking any suggestion to improve product 3
4. Getting information about new products in the market 3

C Compare competitor’s products, strategies and systems with

company products,
1. By purchasing competitors products and analysis 2
2. Attending open houses and trade fairs 3
3. Reading competitor’s published reports and journals 1
4. Talking to employees, dealers, distributors, suppliers and 3
freight agent of the competitors

D Others
1. Services of consultant and external agencies to get information 3
2. Customer advisory panel 3
3. Getting information by encouraging staff 3

- 23 -
 FINDININGS

1. Product mix

Now as demand of Indian textile products is going to be increased so mills have need
to consider providing varied products with better quality. For this considering the
global demand of the products accordingly the mills are preparing to offer new and
better product mix.

2. Technology Up gradation

In the global market quality plays important role so, since exports as well as domestic
trade would be crucial in quota free market. So major emphasis would be on quality
of product with competitive pricing. In survey we find that most of the mills have
upgraded their technology in advance.

Price cuts in wake of competition

We find that most of mills adopt the wait and watch policy now. In the global market
of the textiles price is very crucial and most of the producers of textile products it
may not consider for price cuts in short run. Still Indian mills have to constantly
monitor prices of other cheaper products available in market. Mills under our survey
may not think of price cuts in wake of WTO.

Pricing models to be adopted by mills

Generally mills deciding pricing model according to the price and quality match and
they are looking for perceived value pricing model after the removal of the quota.

- 24 -
Effect of quota removal on mills

In general, Quota removal has substantial effect on all mills. Most of the mills have
major product like fabric and yarn while some of the mills are involved in RMG. We
found that they have favorable to some extent with removal of quota but in long term
have very good opportunity. Since quota restriction would be removed and Indian
textiles products particularly garment sector export increases in a large part of EU and
USA market.

Dumping of textile products

China is most feared nation for dumping of its textile products in Indian markets,
which may cause damage to small textile units. But large organized mills need not
consider them as a threat because of their superior quality and large exports by them.

Promotional tools for exports

Generally textile exports orders are being obtained through direct contacts with the
agents and customers. Catalogues and quotations are sometimes being send to the
new customers. Besides trade fairs and exhibitions also can contribute a little for
contacting customers. Our survey group is no exception to that.

Steps to be taken by mills in wake of WTO

Most the mills under survey are concentrating on quality improvement continuously
and new product design based innovation to beat competition and increase exports.
Besides they also try to decrease in costs of production.
They are focusing on USA and EU to find the new customer

- 25 -
Distribution system for the textile products

Now since quotas are going to be diluted it would be key for textile mills to improve
their distribution system and ensure that they come in eyes of their potential
customers especially in quota countries USA and EU. They need to open more
trading centers or create strong network with agents or other intermediaries in quota
countries.
Mill under our survey could take the initiative in this field to ensure better exports in
quota countries.

3. Effect of PTAs and RTAs

Preferential trade agreements and regional trade agreements can have substantial
effect on Indian textile exports in long term. PTAs and RTAs can act as a tool to
protect interests of favoured nations and can act as barriers for Indian textile exports.
Indian government can take steps to safeguard India’s interest in long run.

4. Effect of Codes of conduct introduced by importing nations

Codes of conduct necessary for exporting companies may not be a threat for
organized larger textile units but for smaller units it may be a hurdle as importing
countries may reject them on this basis for a cause.
Overall it may have an ill effect on Indian textile exports.

5. Capacity expansion in wake of WTO

Since now we know that exports are going to be increased for Indian textile products
and focus would be on fabrics and RMG so Indian companies should gear up their
production facilities and if possible install new capacities considering industry and
company scenario. It is assumed that the sales of Indian textile products would be

- 26 -
tripled in next five years. So more and more intermediaries and final products would
be needed to cope up with the demand.
Some of the major mills have already started expansion of their capacity. But other
mills may consider this if they are to take this opportunity.

- 27 -
 Recommendations

From the data we have collected from the primary and secondary sources we can
recommend few of the things in general to the mills.

Since hypothesis of our study is proved that removal of quotas will have positive effect
on Indian textile industry on an average we can suggest following things as under:
 Fabrics and ready made garments can be main products for exports considering
their demand.
 Price quality match will be effective in future scenario. That is perceived mills
can follow value pricing.
 Target upon US and EU markets as main destination for textile exports.
 Increase the capacity in the wake of WTO to meet with increasing demand.
 Focus on quality would be eminent for Indian mills to gain advantage after
removal of quotas.
 Establishing more networks in EU and US can work for textile mills to increase
exports.

- 28 -
 Limitations

As we know that the marketing systems are core for any organisation’s success.
So doing this research we had to work under several constraints. Some of the key
limitations are:

 The survey has been done only in Ahmedabad considering the time constraint.
But still we have tried to take mill of each category, which can be ideal for
other mills. Also we have collected significant secondary to support our study.
 Convenient sampling was used for the study as the study involves interviewing
of top management of the firm and it was tough to contact them within time
constraint.
 Sample size is small so the data cannot cover all the points but still we have
tried to cover most of the important points through whatever data we got from
primary and secondary sources.
 Respondents may not have given totally biasfree answers to some of the
questions, as they may be confidential for them so there can be possibility of
error in reporting.

- 29 -
ANNEXURES

 Questionnaire
 Graphs of production and exports of Indian textile industry
 Category wise / Year wise production of textile production in India

- 30 -
 SECTION 1- WTO RELATED QUESTIONS

1) What will be the effect on your mills in the wake of WTO?

To large extent To some extent

Favorable
Unfavorable
No effect

2) Is it necessary for your mills to undergo technology up gradation once the trade
restrictions are removed?
 Yes
 No

3) Do you consider price cuts indispensable after removal of quotas to beat global
competition?
 Yes
 No

4) Can the import of textiles be considered as a threat to Indian textile industry in

general and to your mills in particular?
 Yes
 No

5) Are you planning to change marketing structure in the wake of WTO?

 Yes
 No

6) Which pricing model would you adopt after removal of quota?

 Mark Up
 Target Return
 Going Rate
 Perceived value

7) Do you propose to change in existing credit system in the wake of WTO by

 Increasing credit sales and credit period
 Increasing credit sales and decreasing credit period
 Decreasing credit sales and increasing credit period
 Decreasing credit sales and credit period
 No change

8) After the removal of quota would you

 Increase advertisement expenditure
 Decrease advertisement expenditure
 There would be no change in advertising expenditure

- 31 -
9) Would you increase number of distribution channels?
 Yes
 No

10) What steps will be proposed by the mills to face the challenges in the
international market in the wake of WTO?
1)
2)
3)

11) According to you what steps should Indian government take to safeguard
the Indian textile industry?
1)
2)
3)

12) Which product line will be focused more after the removal of the quota?

13) Which market segments are you planning to target after removal of quota?

14) What would be effect of changes in the tariff (Customs duty) levels for textiles in
the WTO?

15) Should non-tariff barrier adopted to protect the domestic industry? If yes, how?

- 32 -
16) Which countries would resort to dumping the textile products and will be effects
on the domestic markets/your mill?

17) What would be the effects of PTAs and RTAs on Indian textile exports and your
mills?

18) What would be the effects of Trade Blocks on the exports?

19) What would be the effects of various codes of conduct introduced by the
importing countries on the textile exports?

- 33 -
 SECTION – 2

Marketing Intelligence System

(a) Are you arranging any meeting or get-to-gather at regular intervals with your
sales force? If yes, how frequently
 Weekly
 Monthly
 Quarterly
 Yearly

Are you involving distributors, retailers and other intermediaries in decision

making? If yes, how
 Getting feedback from them about our own products
 Involving them in general meetings
 Asking them for any suggestions to improve upon
 Getting information about new products in the market

(b) Do you compare your competitor’s products, strategies and systems with your
company’s products, strategies and systems in decision-making?
If yes, how
 By purchasing your competitor’s products and analyzing
 Attending open houses and trade shows
 Reading competitor’s published reports and journals
 Talking to employees, dealers, distributors, suppliers and freight
agents of the competitors.

(c) Do you take services of consultants and external information providing

agencies?
 Yes
 No

(d) Do you have any customer advisory panel?

If yes, how many customers form representative group.
 None
 Less than 5
 5-10
 More than 10

(e) Do you encourage your staff to scan the information from various external
sources?
 Yes
 No

- 34 -
GRAPHS

1. Production of Fibres for the year 2002-03 (in Mn Kg.)

16.21
47
914
Raw Cotton - 71%

Manmade Fibre - 28%

2312 Raw wool - 0.96%

Raw silk - 0.04%

As shown in the figure cotton production is highest as India is an agrarian economy and
has highest area under cultivation for cotton in world.

2. Production of fabric variety wise for the year 2002-03 (in Mn Sq Mt)

Cotton
16289
19296 blended
Non-cotton
Slice 4

5877

3. Sector wise production of cloth

- 35 -
 19%
hoisery sector
17%

powerloom 63%
sector 61%
2002-2003
2001-2002
handloom 14%
sector 18%

4%
mill sector
4%

Total production of textile products by organised mill sector is very less (4%) compared
to unorganized sector. So we can say that India has highly fragmented textile industry.

4. Major exporting countries for the Year 2002-03

14%
12%
China
10%
US
8%
Korea
6%
Hong Kong
4% India
2% Japan
0%
Share in total world exports

Though India has one of the largest manufacturing capacities and one of the cheapest
quality producers of textile products its exports are mere 3% of total world exports. This
is attributed mainly due to quotas imposed on Indian products. But with removal of
quotas we have great opportunity in exports of textile products.

4. Commodity wise Indian textile exports

- 36 -
Inspite of various quotas prevailing by major importers of textiles India has significant chunk of
textile exports in terms of readymade garments (41%) and cotton textiles (28%).

- 37 -
BIBLIOGRAPHY

Books

Shankar RM., Status and performance of Textile Sectors in Gujarat. ITCTI, ATIRA,
2004.

Shankar RM., An introduction to set-up, functions, authority, benefits and implications of

WTO. ITCTI, ATIRA, 2003.

Shankar RM., Powerloom fabric Exports Guide and Exporters Survey.ITCTI, ATIRA,
2004.

Shankar RM., EMERGING trends in Production and trade in Textile and Clothing.
ITCTI, ATIRA, 2003.

Rampal M.K. and Gupta S.L., Project report writing. New Delhi : Galgotia Publishing
Company, 2001.

Rao S.S., writers and editors. AMA publications, 2002.

Websites

http://www.debtonnet.com/

www.indiabudget.nic.in

www.cleanclothes.org

www.tieasia.org

- 38 -
www.econ.uiuc.edu

www.itd.org

www.somo.nl

www.gdnet.org

www.textilescommittee

www.pdexcil.org

www.ficci.com

www.in.kpmg.com

www.indiabiznews.com

www.texprocil.com

www.dgft.delhi.nic.in

www.arvindmills.com

www.cii.com

www.indiainfoline.com

www.emergingtextiles.com

- 39 -
www.valuenotes.com

www.aeco.ttu.edu

www.gdnet.org

www.phrasebase.com

www.bseindia.com

www.wto.org

www.arvindmills.com

www.somatextiles.com

www.mafatlalindustries.com

www.atira.com

ww.itcti.com

www.ficci.com

www.myiris.com

www.txcindia.com

www.mhmills.com

- 40 -
- 41 -