SWOT analysis of the Indian textiles industry: We now do a SWOT analysis of the Indian textile industry keeping in mind the global changes that have taken place in the post quota regime. STRENGTHS- 1. Abundant raw material 2. Low cost skilled labour 3. Presence across the value chain 4. Growing domestic market 5. Strong backward integration 6. Third largest cotton producer as well a the largest area under cultivation 7. Increasing presence across entire value chain 8. Cheap and skilled manpower 9. Sharp reduction in borrowing costs 10. Recent government efforts to promote the industry. 11.
Truly vertically integrated from raw material to finished products. 12. Steadily diversified its raw material base to include man-made fibres such as Polyester, viscose, acrylic, polypropylene etc. as well as other natural fibres 13. Flexible in terms of production quantity and lead time. WEAKNESS: 1. Fragmented industry 2. Effect of historical govt policies 3. Lower productivity and cost competitiveness 4. Tech obsolescence. Quality is not consistent 5. Caters mainly to the low-end class. 6. Low level of training. 7. The export-import policy of India changes too frequently due to which it becomes very difficult for importers to import goods. . Delay in delivering the goods at the right time. 9. Lack of economies of scale and advance processing capabilities. OPPORTUNITIES: 1. Huge demand for value added goods in all major countries. 2. Relocation from high cost economies. 3. Large and relatively untapped domestic market 4. Large Indian Expatriate community. Hence there is large demand for Indian Garments. 5. Rate of import duties is minimal. 6. Bilateral Agreements on Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to taxes on income and capital have further opened the Opportunity for higher export for the garment sector. 7.
Extensive commercial interactions have greatly helped in laying the foundation for the development of a multi-dimensional relationship between India and the US. 8. India appears to be a competitive and sustainable hub of production globally, and therefore manufacture-suppliers are investing in India as a growing market 9. India is also an emerging market for used and refurbished machinery. THREATS: 1. Competition in domestic market 2. Economic and social awareness 3. Regional awareness 4. Developed countries are bound to increase the non-tariff barriers like safeguard measures and anti-dumping duties to protect their domestic industries. . Creation of trade blocks on the lines of EU and NAFTA, which runs against the free and fair trade. 6. Tariff on most of the industrial items have been decreased by 38 percent as against 22 percent deduction in case of readymade garments. The tariff imposed by most of the developed nations is very high in case of textiles. 7. Not enough quotas to utilize its fullest potential. PEST Analysis: Political Factor: Uneven political conditions, deteriorating law and order situation and instability in gas and electricity prices are adversely affecting the textile sector, while government has hardly taken any step to give some elief or incentives to the mill owners. Textile mill owners and exporter have strongly denounced the recent increase in the gasoline prices and demanded from the government to withdraw the recent increase and take serious steps to help textile industry survive through difficult times According to the sources, if prices continue to increase at current rate, the textile industry would find it difficult to survive as the recent increase has already proven deadly and many mills have started to shutdown in the wake huge price increase.
It was also witnessed that due to prices increase in gas has not only adversely affected the productivity of the textile industry but has also caused sudden increase in the production cost and has badly affected the economy of the country. On the other hand, textile and the other exporters also facing a lot of challenges due to increase in the production cost of the specific export goods, while such hurdles badly affected the Indian exporters to meet the challenges and compete in the local and international markets.
Exporters are demanding that government should give them facilities to cope with the existing challenges and not get involved in favoritism. Economical Factor: Economical factors are also disturbing the all industries of India as well as the textile industry. Inflation rate has been increased. The last and current Government has been failed to control the economy. As the prices have been increased, the suppliers try to get and save more profit from their investments. That’s why prices are decided and put with a high return in terms of profit.
The main problem with the textile industry is shortage of electricity, gasoline and petroleum, due to which Textile industry is bearing too much cost that why they have to increase their prices to earn profit or for break-even. There are some companies which have their own electricity plants but they have to spend a lot of money to run them. Other problems which are facing by the textile industry of India are Not availability of skilled labors. Labors cost is increasing rapidly Loosing quality of its products in both markets domestically and internationally Poor monitory and Fiscal policies of the Govt. f India Uneducated people Investors are pulling out their capital from the market quickly Foreign Investments are not coming towards Textile industry These are the factors which are disturbing the textile industry strongly economically. Sociological Factors: Textile industry affecting the society and environment in number of ways, some of them are mentioned below. Polluting the air by pushing out ruins of chemicals. Different gases in air react with these ruins which become dangerous for human beings. No proper system to throw out the useless materials and chemicals.
Most of the useless materials and acids are thrown into the fields which are react or disturb the agricultural products seriously. Since the cost of the production and labor cost are increasing day by day. That’s why the final product cost is also increasing that’s why people are buying low quality products and not spending too much to purchase. Textile companies are firing the labors and employees as well because of high production cost and salaries that’s why the unemployment rate is increasing day by day which is not good for the industry as well as for the country.
Technological Factor: The technology has been improved and updated in the textile industry of India and some of the companies in textile industry are acquiring these technologies. By using new technology not only they improve their quality and efficiency but also improve their production as well as reducing the cost of production. PORTER Analysis: Bargaining power of Buyer: It has been seen from last 3 years that buyers are becoming anger and having problems to purchase the desired products from textile industry of India. The bargaining power of buyers is increasing day by day.
The buyers are demanding more and improved quality in very cheaper prices, whether customers are from foreign or are from local markets. The competition at international level has been increased too much. If we look at a glance to USA exports of textile industry from all over the world and especially from Asian countries then we can easily found that India is offering most less export prices to USA which is 1. 91 US dollars per meter. But other countries are getting more than these prices and in these countries; Bangladesh is on top that is getting 3. 15 US dollars per meter from USA. 5 Bargaining power of Suppliers: Bargaining power of suppliers is increasing of textile industry day by day. The Govt. of India is playing very important role in this activity. As we all know that inflation rate is running upwards like a rocket and utility costs are also increasing day by day. Couple of days ago, Govt. increased the prices of Gas . Now the cost of petroleum has also been increased due to which affecting the manufacturing costs of the companies. The costs of Yarns and chemicals which are used to dye the cloth and for sizing process have also been increased.
Textile companies are bearing too much manufacturing costs, if they come to increase their prices then there is a major threat that customers can move to other companies weather it is foreign marker or local market. Rivalry: The competition in the textile industry is becoming very tough. The Textile mills are competing with each other on the basis of their prices they offer, the quality which they produce. Competition at international level is very furious for India textile industry. In international Market:
China India Vietnam Bangladesh Korea Pakistan Iran And India is offering the lowest prices to USA as well as to other countries. But still India is lacking its quality and also loosing its customers. Foreign customers are moving to other countries for the best quality. Although their prices are high but they are exporting best qualities of their products. From these countries, Bangladesh is on the top that is getting 3. 15 US dollars per meter. 27 Threats of new Entrants: There is no threat of now entrance.
If some one wants to enter in this industry, that company has to face number of competitors which are the big giants of that industry. On the other hand they have to purchase the latest technology, Fuel prices, high labor costs, opportunity cost etc. and major issue is that inflation is increasing day by day and instability of India Govt. Threat of Substitutes: There is no threat of substitute. Because Textile products and cloths are the basic necessity of the human life and customers cannot move to other products by leaving textile regards Deepak agrawal