Apparel Industry- An opportunity for the investors

Introduction

Indian textile and apparel manufacturers have been drastically evolved in terms of improving the distribution channels, innovating radically, evolving supply chain and moving towards responsible and sustainable manufacturing. And, as being the second largest in the world it is carrying the potential with it to grow by 10% in the coming five years. For the years India’s strength have been into the traditional textiles and natural fibers globally. Also, India is the largest producer of cotton and second largest producer of polyester and silk in the world. Since 2005, globally every year there is an increase of 4% CAGR in apparel trading.

Benefits of investing

Encompasses complete manufacturing value chain

India having access availability and variety of raw materials and flexibility of the supply chain that enables apparel manufacturers to mix and match various components and continuously develop new and innovative designs. Abundant and low-price supply of raw materials combined with the availability of low-cost skilled labor provides a significant advantage to the Indian textile industry in terms of increased productivity at lower costs. Hence, Indian manufacturers are often the first choice for large retailers to outsource production.  

Ample availability of raw material

India is having a huge base covering all types of natural and synthetic fiber materials like cotton, jute, silk, wool and man-made fiber that’s one of the reasons India is having a good presence globally in textile market. Also, in the year 2020 India is the second largest cotton producer in the world with the approx of 21% of the global cotton production and material name Viscose is another key textile fiber which is majorly produced by India globally. Many other Asian and African countries are relying and dependent on importers but India stands self-reliant in fulfilling its raw material requirements.

Availability of Skilled manpower in large

As of year, 2020 India carries one of the youngest populations in an ageing world. Around 90% of its population is under the age of 60, of which 35% is under 19 years old. Such a young population ensures a potential addition to the working age group in the coming years. Also, government is taking various initiatives to develop the skill manpower in India. 

Competitive cost of manufacturing   

India can’t be said as a low-cost manufacturing destination but remains competitive due to various factors like wage cost, in India compared to Bangladesh the wage cost is higher but compare to China and Vietnam is lower. In compared to Asian countries other than China, power cost is lower. As India’s rank has been improving in ease of doing business and strengthens its position the cost of capital compare to other countries are comparable as support for the textile industry has been provided by the Indian government.   

Huge and Increasing domestic market

In last decade, Indian domestic market has performed better than the largest consumption regions such as US, EU and Japan, where depressed economic conditions led to lower demand growth. The domestic apparel consumption of India has grown at a robust CAGR of 8% since 2010. Due to presence of strong fundamentals; the domestic market size of India is expected to reach a level US$ 220 bn by 2025.

Conclusion

Apparel industry is the type of industry which is essential and necessary. As people won't stop buying clothes, in fact it will grow with the growing population. In addition to that India has been gifted with the natural raw material grown and produced in India so it becomes easy for the manufacturers to procure raw material in huge amount by spending comparatively less. Other than that, benefits of skilled manpower and full value chain availability make it more feasible to invest in apparel Industry.


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