Project Report – Ready Made Garment Manufacturing Unit

Sector:
Textiles
Project Title:
Ready Made Garment Manufacturing Unit
Project Description
Readymade Garment (RMG) industry in India has seen resurgence in the recent
times. The industry has witnessed sluggish growth in the past decade, however
the scenario has changed substantially due to globalization initiatives by WTO
and subsequent phasing out of quotas by United States (US) and European
Union (EU), the key export destination. Ample opportunities are there for Indian
garment manufacturer, to tap in the international market.

To assist in this endeavor the Government of Madhya Pradesh (GOMP) proposes

to establish an export oriented RMG unit in the State. The proposed unit would be
a high-end fully automated manufacturing facility and would employ State-of-the-
art machinery for producing high quality apparels especially shirts and trousers
for men and women.

The unit would be set up on 5 acres of land and would be housed in multistory
buildings. It would be an integrated facility and would have adequate operations
functions from raw material (fabric) processing to final packaging and quality
control to warehousing.

Further the center would have quality control and testing laboratory to monitor
compliance of manufactured product with stringent international standard,
imperative for exports. The unit would have a modern warehouse with hi-tech
facilities such as grading, bar-coding, RFID etc.

For the envisaged project the GOMP invites participation from the leading
garment manufacturer in the Country. The project is also opened for foreign
investor as the sector is opened for 100% FDI.

Project Rationale
Madhya Pradesh has a prominent place as a leading textile center of the Country.
The State has a thriving textile cluster in the southwest region (Malwa). Since the
Malwa belt has a large cotton growing area, large number of textiles mills are
clustered around Indore, Ujjain, Burhanpur etc.

At present there are around 51 textiles units in the State. From production of raw
material, to the final manufacturing of RMG, the State has significant strength
across the entire value chain. The presence of some of the leading textiles
players in the State provides testimony to the significance of MP in the domestic
textile industry. Some of the key textiles players present in the State are

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Project Report – Ready Made Garment Manufacturing Unit

Bhilwaras, Indo-Rama, Bhaskar, Oswals, S-kumar’s, Maikal, Parasrampuria etc.

Despite of this, MP has not been able to take full leverage of its position.
Presently the State’s share in the total apparel exports from the Country is less
than one percent. The key reason attributed to this is the high degree of
fragmentation and lack of modern infrastructure facilities. The State Government
has initiated several reforms aimed at modernization of existing unit and
development of high end infrastructure facilities in the State.

There is an urgent requirement to upgrade the existing facilities and add new
capacities of international standard to assist Indian textile industry tackle the
rising competition and realize newer opportunities.

Proposed Facilities
The unit would employ the following key machinery:

Wrinkle Free Machine Steam Irons

Fusing Machine Electric Boilers
Needle/ Metal Detector Form Finishers, Topjet & Rotor
Cabinets
Clot Inspection Machine Vacuum Tables
Auto Cleaning And Thread Sucking Machine Embroidery Machines
Cutting Machine Quilting Machines
Intermediate Finishing Machine & Steam Dry Cleaning ,Machine
Process
Industrial Sewing Machine CAD Software

The unit would have the following facilities:

9 Manufacturing Unit
9 Design center
9 Quality Control Lab
9 Warehouse

Market Potential and Demand Dynamics

The total market for RMG in 2004-05 was estimated around USD 20.4 bn and is
expected to rise to USD 38-40 bn by 2009-10 with a CAGR of 13-14% per
annum. With a share of more than 68% in the total sales revenue generated in
2004-05, domestic market has significant impact over the health of textile sector.
The total value of domestic RMG market in 2004-05 was around USD 14bn and is
expected to grow to USD 24 bn by 2009-10 with a CAGR of 10-11%.

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Project Report – Ready Made Garment Manufacturing Unit

The Ready Made Garment sector is Estimated Market projections

the biggest segment in the India’s
textile export basket contributing over
46% of total textile exports and a little 14.4

USD Bn
over 12% of the total export of the
Country. The exports of RMG have 6.2

grown over the past one and the half

13.8 23
decade at a CAGR of 13%.
2004-05 2009-10

Currently exports accounts for 31% of Exports Domestic Sales

the total revenues of RMG sector. In

2004-05 the total exports market was estimated at USD 6.4 bn and is expected to
become USD 16 bn opportunity by 2009-10 growing with a CAGR of 18-20%.

US and EU are two key exports

destinations for Indian RMG Region-Wise exports of RMG
Companies. Currently with an
export value of USD 2.1bn India USA , 30%
Others, 34%
has a share of 3% in total US
apparel imports (in terms of Sq.
mt) and is expected to increase
to 6% by 2010. The value of
total exports from India in 2009- Canada, 4%

10 would be expected around UA E, 8% EU, 24%

USD 6.8 bn. The growth in

apparel exports to the US market would be largely driven by apparels made from
cotton, the segment where India has natural advantage.

The quotas imposed over the exports from the low-cost manufacturing countries
like India under the Multi-fiber agreement (MFA), were the key impediments that
had hindered the growth of domestic RMG companies. During the quota regimen
exports grew by a moderate CAGR of 6.3% from USD 4.6bn in 2000-01 to USD
6.2 bn in 2004-05. With the abolition of quotas exports are expected to grow
exponentially with an estimated CAGR of 18-20 % to reach nearly USD 16bn in
2009-10.

At present, the textile export from MP is around USD 250 mn which is less than
1% of the national exports. MP textile sector has the potential to attract a total
investment of approximately USD 2.2 bn in the next 5 years. For this, the GOMP
has initiated a series of reform measures to promote the textile sector in the
State. Since garment industries have the tendency to flock in clusters, especially
nearby the sources of raw material, the State is focusing on cluster development

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Project Report – Ready Made Garment Manufacturing Unit

around sectors of strategic advantages by developing infrastructure in and around

these areas.

Why Madhya Pradesh?

Key advantage offered by the State:
• Easy availability of raw material (cotton)
• Large no of ginning and pressing units
• Ample availability of skilled and semi-skilled manpower
• Strategic central location facilitate cost effective logistics functions
• Peaceful labour environment
• Separate incentives to the textile industry
• Established cotton and textile clusters
• Presence of prominent textile players in the State

Location Analysis
The project is proposed to be set up in the envisaged textile
cluster at Ujjain. It would enable the RMG unit to realize higher
Ujjain
growth avenues arising within the cluster.

Government Support
Highlights of Special Incentives Given to Textile Industry
• Special Incentives to Readymade Garment, Power looms and Made-up
Garment industries:
• Benefits under Government of India’s schemes such as Apparel
Park Scheme, Textile Centre Infrastructure Development Scheme
(TCIDS)
• Modernization of units of this sector through Technology
Upgradation Fund Scheme (TUFS), Group Work Shed Scheme.
• Exempted from the binding of minimum wage fixation on a daily
basis.
• An Apparel Training Institute would be set up with the assistance of
Apparel Export Promotion Council in the State, so that maximum number
of trained worker could get employment in the Ready-made Garment
industry.
• Efforts to establish a national level fashion designing technology institute in
the State in order to facilitate textile industry of the State regarding the
information for design development and to provide forecasts.
• In order to accelerate the pace of modernization of the unorganized power-
loom sector, modern power loom clusters would be developed at
Burhanpur, Indore and Ujjain with financial assistance sought under
Government of India’s Group Shed Scheme.
• Development of the process house through private participation by
providing necessary facilities and if required their cases would be

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Project Report – Ready Made Garment Manufacturing Unit

considered by the committee for Mega Projects.

• The provision related to labour laws declared for Special Economic Zone
will be made applicable to the projects / special areas established such as
Apparel Park, Garment Complex and unit established/being transferred
under Group Work Shed Scheme.
• Cotton ginning and pressing units would be provided high quality cotton
and they would be encouraged for modernization under centrally
sponsored schemes with the help of their recognized associations.
• Construction of tar roads for smooth transportation to Cotton Mandi and
construction of cement platform for storage of cotton, using Mandi Board’s
fund would be taken up on priority basis.
• Units purchasing yarn produced within the State would be given a "set off”
of 2% (Two percent) on Commercial Tax would be given.

Proposed Capacity
The unit would have the capacity of around 3500 pieces per day.
Proposed Investment
The total capital investment is estimated around USD 5.5 mn or INR 25 crores.
Returns
The Internal Rate of Return from the project is estimated in the range of 15 –
18%.
Coordinating Agency
Madhya Pradesh State Industrial Development Corporation