CHAPTER 6

SUMMARY OF FINDINGS,

CONCLUSIONS AND SUGGESTIONS

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Based on the review of the extant literature and findings of the study, it has been

unanimously recognized that textile Industry is globally one of the largest industries

and a key sector of the economy. India textile sector is undergoing radical changes in

its structure and dynamics of the industry. Majority of research studies examining the

textile exporting framework have found that textile exports are contributing

significantly in earning forex reserve for the country. Owing to its deep forward and

backward linkages, it has a strong multiplier effect and acts as one of the important

drivers of economic growth, with the gradual liberalization of the export sector in

India, the number of textile exporting units has grown progressively. It produces a

wide variety of products with different sub segments of textile industry i.e. cotton,

fiber, yarn, wool, silk, handlooms, handicrafts and jute industry etc. Indian textile

sector has become competitive after phase out of MFA in 2005 as result of liberal

export promotion schemes like Scheme of Integrated textile scheme, Technology Up-

gradation Fund, Export Promotion Capital Goods (EPCG) scheme, Duty draw back

scheme and Export Oriented Units (EOUs)/ SEZ/s Scheme. Moreover, liberalization

steps such as relaxation of foreign exchange and banking policies initiated by

Government of India. At present, the industry is witnessing positive outlook. Textile

firms in India are developing as global manufacturing hub so as to posit themselves as

global low cost competitors. However, Indian textile industry is still witnessing

uneven export profile due its heavy dependence on U.S.A, UAE and UK markets.

SECTION-A: SUMMARY OF FINDINGS

The extant literature reveals that as such no prior research was conducted into the

relationship of post-MFA scenario of Indian textile industry and the marketing

practices of textile exporting units to demonstrate the extent to which the existing

marketing practices affect the performance of these units along with the growth and

increased competition in this sector. On the whole, the present study considered two

dimensions of textile industry in relation to export, namely, post MFA scenario of

textile industry and existing marketing practices of the textile exporting units in India.

The present study also examined textile export marketing framework in the light of

foreign trade policy to improve textile export from India. The findings of the study are

as follows.

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6.1 Export Marketing Performance of Textile Exporting Units

6.1.1 Export Sales Turnover

Though Indian textile export has gained significantly in world market in post MFA

era but is heavily dependent on European market and has not been commensurate

with its expectation by any reasonable yardstick. The study found only 15 out of 150

units crossing the turnover of 250 crores to be considered as large size textile

exporting units (Refer table 5.3). Reason being, poor capabilities and resources that

inhibited it from moving beyond the level of other competing developing countries

and limited size of the Indian textile companies due to which they had neither the

resources and capabilities to respond to the global market requirements nor the

orientation to strategize with a long run view, to develop new geographical or product

markets and to sustain competitive efforts in spite of initial market difficulties. So

India’s performance in textile in world market is substantially inferior as compared to

other European countries.

6.1.2 Sector-wise Analysis of Textile Industry

Sector wise analysis of export performance of Indian textile sector reveal that, cotton

is the most important fiber from India in overseas market as indicated by the

respondents. It has been observed that 54.67 per cent textile units export cotton to

other countries (Refer table 5.2). So to achieve the export priorities appropriate

technology is a must. India has an inherent advantage in this sector because of

abundant availability of raw material, long tradition of craftsmanship and design and

presence across the entire value chain. Verma (2002) also suggests that the export

competitiveness of this sector is significantly affected by the cost and reliability of

power supply, logistic and transaction costs. Readymade garments were also found

most significant item in the basket of goods exported in the textile sector by India

(Refer table 5.2). The textile exporting units 32 per cent under study contribute major

share in the exports of readymade garments.

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6.2 Export Marketing Practices of Textile Industry

6.2.1 Promotional Channels for Overseas Markets

Promotional channels used by the exporting units were found very conventional and

no hybrid promotional channels are used. Most widely used promotional channels in

all type of textile units are export promotion cells/councils, international trade fairs,

and through internet, and TV commercials in foreign media, sponsoring international

events/games are least approved by all textile units. It has been observed that 61.2 per

cent respondents prefer international trade fair, 49 per cent respondents promotion

cells/councils, 44.7 per cent respondents through internet, and only 1.54 per cent

believe in sponsoring international events/games (Refer table 5.4(a)). Based on the

ranks given by the respondents from small, medium and large scale textile exporting

units international trade fairs and export promotion councils for small and medium

size textile units whereas internet websites/social media and international trade fairs

for large size units, are the first and second choice for promotion of textile products in

overseas markets. TV commercials in foreign media is least approved by small and

large scale textile exporting units and sponsoring international events/games is not

considered by medium size units for the promotion of their products in overseas

markets. So it can be established that small and medium industries give first

preference to international trade fair and large industries give first preference to

internet for their promotional activities (Refer table 5.4(b)). Because, E-market make

information flows more transparent, not only industry indices, but also precise trade

information for both seller and buyer should be updated constantly. The function of a

textile industry e-market is to provide quota and tariff information as well as textile

industry news to help marketers make the right decision. In addition to the industry

knowledge, textile trade fairs, shows, and events are services that should be provided

by e-markets. Not only are these trade events provide great opportunities for

companies to buy and sell but also to build network with other companies. The

findings of the study also statistically established that there is a significant difference

in term of promotion channel in small, medium, and large textile industry.

6.2.2 Distribution Channels Adopted for Selling the Product in Overseas Market

Most widely used distribution channel in all type of textile units are selling directly to

overseas customers followed by agents or buying agencies, and manufacturing setup

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in any overseas market, franchise mode, company owned showroom, overseas

distribution networks are least preferred distribution channels for the type of product

they sell in overseas market. However, based on the three categories of textile units,

it has been observed that small and large industries give first preference to agents/

buying agencies but medium type of industries give their first preference to directly

selling products to overseas customer (Refer table 5.5(b)). Also from a manufacturers’

point of view, the success of the organization depend on the closeness with which it is

related to the needs and liking of their target group of consumer. It has to be an

exporter’s endeavor, not only to attract the customer by offering what they perceive in

a favorable way, but also to have their patronage by satisfying their needs on a

continuous basis. Exporters feel that there is a long lasting relationship with the buyer,

which is possible only after being competitive at the global level. The findings of the

study also revealed that there is a significant difference in terms of using distribution

channels in small, medium, and large textile industry. The null hypothesis was partly

rejected and alternate hypothesis that there is significant difference between small,

medium, and large exports units in terms of distribution channels used by them, partly

accepted. Overall, distribution channels should be chosen well, and efforts should be

made to maintain good relations between the parties concerned.

6.2.3 Pricing Policy to Determine Price of the Textile Products

The Indian textile exporters use different types of pricing policy for determining the

price of their products in international market such as Keep out pricing , Skimming

pricing, Penetration pricing, Psychological pricing, Price lining, One price versus

variable price policy, Discrimination pricing, Competition oriented pricing, Cost

oriented pricing. It was observed that most of the respondents preferred discrimination

pricing policy (95), and competition oriented pricing policy (10) were the least

preferred among all the policies as considered under the study by the respondents

(Refer table 5.6(a)). The findings of the study also revealed that there is a significant

difference in terms of the acceptance of pricing policies in small, medium, and large

textile industry (Refer table 5.6(c)). The null hypothesis was almost rejected and

alternate hypothesis that here is significant difference between small, medium, and

large exports units in terms of pricing policy used by them, accepted.

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6.2.4 Strategies for Creating Brand in International Market

Textile exporters use different types of branding strategies for creating brand of their

product in international market. Present study found that mixed brand strategy was the

first choice of all the textile exporters followed by single brand product strategy and

multi product brand strategy (Refer table 5.13 (b)). . The respondents also opted for

private brand strategy and manufacturer’s brand as a strategy to face the competition

in the international market environment. The findings of the study also revealed that

all branding variables in small, medium, and large textile units are same, so it can be

said that there is no significant difference between small, medium and large units in

terms of strategy adopted for creating the brand in international market. This is proved

using Chi-square test on the respondents’ views about the brand strategies used by

them.

6.2.5 Primary Sources used for Collecting Market Information

Textile exporters use different types of primary sources for collecting the market

information. Present study found that electronic survey, followed by personal survey

and mail survey method as the top three measures adopted by all the three categories

of textile exporting units (Refer table 5.14 (b). Personal interview with individuals

and telephone interview are the other methods taken into consideration by the small,

medium and large size textile units. The findings of the study revealed a significant

difference in small, medium, and large industries in terms of using the primary

sources for collecting market information.

6.2.6 Secondary Sources used for Collecting Market Information

Textile exporters also use different types of secondary sources for collecting the

market information. It was found that on-line databases, followed by personal files/

internal documents and press and media directories were the top three methods

adopted by all the three categories of textile exporting units (Refer table 5.15 b).

Academic journals and newspapers, public libraries, government records/publications

and trade associations were the other techniques taken into consideration by the small,

medium and large size textile units. The findings of the study also revealed a

significant difference in small, medium, and large size textile units in terms of

secondary sources use for collecting market information.

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The present study also found a severe problem for small- and medium-sized firms in

India as they often lack the internal resources to acquire essential information, while

large firms frequently have special departments geared to gathering information and

promoting their products overseas. Furthermore, the average SME in developing

countries can neither digest nor use effectively the vast quantity of general

information and flood of statistical data that are routinely handed to them in response

to their enquiries. Many of them lack the ability to sift through this mass of detail and

pull out the parts relevant to their specific and short-term operations.

6.2.7 Competitive Advantages over other Exporters

As textile exporters always strive to have competitive edge over others, this study also

found that Indian exporters were having a number of competitive advantages. It was

observed that good product quality, followed by always on-time delivery are the top

indicators to take competitive advantage as expressed by the respondents, and close

(or old) association with your customer, well established brand name in overseas

market were not found significant predictors of getting competitive advantage in

textile exports (Refer table 5.12(b)). On the basis of the ranking given by the

respondents belonging to the small, medium and large size textile units (Refer Table

5.12(c)). The study could not reveal any significant difference in considering the

factors under study for getting competitive advantage in export business among the

three categories of textile units. Good product quality, always on-time delivery,

lowest cost of production, wide range of products manufacturing capability and fast

product development capability were the top most five factors considered by small

and medium size units whereas always on-time delivery, followed by good product

quality, wide range of products manufacturing capability, lowest cost of production,

and fast product development capability were the factors given top five ranks by the

respondents belonging to large scale textile units for taking competitive advantage.

Surprisingly, well established brand name in overseas market was the least considered

factor leading to competitive advantage by all the textile exporting units over the

rivals. Based on the analysis, it can be observed that Indian textile industry

desperately needs to understand how to develop core competence and competitive

advantage in them. This will help them bring out good product mix into the market

and will increase their confidence in building their own brands in international

markets. Also, they need to update their skills in computer aided designing (CAD)

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base garment designing, understanding lifetime value of customer and customer

relationship management which is becoming the decisive factor in export marketing

today.

6.2.8 Insurance Policy Adopted by your Organization in Textile Exports

Various type of insurance policy such as open policy, special declaration policy, duty

insurance policy, seller’s contingency policy are adopted by textile exporters. The

study found open policy, special declaration policy, and duty insurance policy as the

top three policies adopted by all the three categories of textile exporting units. The

findings of the study also show a significant difference in term of insurance policy

adopted by textile exporter in small, medium, and large textile industry.

6.3 Marketing Barriers in Textile Exports

6.3.1 Infrastructure Problems in Exporting Textile Products

The Indian textile exporters face various types of infrastructure problems in textile

exports in overseas market. The respondents considered cost of electricity, followed

by un-availability of good quality fabric/ raw material as the biggest infrastructure

problems. Telecommunication network and IT was given the tenth rank as

infrastructure problem in textile exports by the respondents. Movement of goods to

sea ports and airports, inland container depots, air cargo complexes and augmentation

of transport facilities especially for decongestion were also highlighted as the

infrastructure related issues in textile export business. Further, the infrastructure

problems were analyzed on the basis of the ranking given by the respondents

belonging to the small, medium and large size textile units. The study found

significant differences in experiencing infrastructure problems among the three

categories of textile units. Cost of power was ranked as the first and foremost problem

in textile industry by all the respondents from these three types of exporting units.

Product development capability was the second largest infrastructure problem for

small and large size textile units whereas un-availability of good quality fabric/raw

material was the second largest problem for medium size textile units. Outdated

garmenting technology was the third largest infrastructure problems by medium and

large size units whereas un-availability of good quality fabric/raw material was the

third largest problem for small size textile units. Augmentation of transport facilities

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especially for decongestion was considered at eleventh positioned infrastructure

problem by all the textile exporters. Movement of goods to sea ports and airports,

inland container depots, air cargo complexes etc. by small size, Telecommunication

network and IT by medium size and Red-tapism by the large size textile exporting

units were indicated as the least significant issue among the infrastructure problems

(Refer table 5.7(c)).

6.3.2 Documentation Problems Experienced in Custom Clearance

The textile exporters face various types of documentation problems while exporting in

overseas countries. The study found issuance of commercial invoice and issuance of

photo copy of income tax registration certificate as the major documentation problems

in textile exports. Issuance of photo copy of income tax registration certificate was

admitted by 32.8 per cent respondents and issuance of commercial invoice by 26.9

per cent respondents as one of the main documentation problem in their export

business (Refer table 5.8(a)). The other documentation problems were issuance of

copy of export license, issuance of packing list, issuance of foreign exchange

declaration forms. Based on the ranks given to these problems by the respondents

from small, medium and large scale textile exporting units, issuance of commercial

invoice for small and large size units was the first and for medium size units the

second problem encountered in their custom clearance process. Whereas issuance of

copy of export license was ranked first by medium size and second rank was given to

the problem by the small size textile units. Issuance of photo copy of income tax

registration certificate was realized as documentation problem at second rank by the

large size units under study which was at third position as experienced by the small

and medium size textile exporting units (Refer table 5.8(b)). The present study

establishes that issuance of commercial invoice was the biggest documentation

problem for small and large textile units whereas issuance of copy of export license

for medium textile units. Issuance of custom declaration forms was the least

considered documentation problem for medium and large textile units whereas

issuance of certificate of origin for small textile units. Lack of information about

export procedures is large marketing barrier for textile units. Often, the documents

are not properly completed, causing delay in payments and thus creating cash flow

problems for the exporter. So a firm that wishes to enter the export market or intends

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to increase its export activity has to acquire the knowledge and skill to deal with

administrative procedures.

6.3.3 Trade Barriers for Textile Exports

The textile exporters also face various type of trade barrier in exporting their products

to overseas countries. It was observed from the survey that regulation and standards,

followed by environmental requirements were the chief trade barriers for textile units.

Other trade barriers were testing and certification, corruption and theft, quality, label

and packing, and transport cost (Refer table 5.9(b)). Further, the trade barriers were

also analyzed on the basis of ranking given by the respondents belonging to the small,

medium and large size textile units, the present study found significant differences in

facing the trade barriers among the three categories of textile units. Regulations and

standards and environmental requirements of the countries where the textile products

are to be exported, are first and second big barrier for all type of textile units.

Transport cost is the least significant barrier for small and medium size textile units,

whereas testing and certification was the least significant barrier for large textile units.

6.3.4 Tariff and Non-Tariff Barriers for Textile Export

Indian textile exporters face various types of tariff and non-tariff barriers. These are

import quota, licensing, exchange and other financial controls, prohibitions,

discriminatory bilateral agreement, advance deposit requirement, antidumping duties,

subsidies and other aids, government procurement policies, and competition. Present

study found licensing and import quota as two big tariff and non-tariff barriers in

textile exports. Whereas advance deposit requirement and prohibitions were least

significant barriers as indicated by the respondents in textile export (Refer table

5.11(b)). Prohibition can be selective with respect to commodities and countries of

origin/ destination; it includes embargoes and may carry legal sanctions. Prohibition is

sometimes in the form of intrinsic specification of the products. The survey revealed

that a larger proportion of smaller firms faced non-tariff barriers than larger firms.

Similarly, a smaller proportion of firms with foreign affiliation faced some kind of

barrier compared to those firms that had a foreign affiliation. Further, these barriers

were analyzed on the basis of the ranking given by the respondents belonging to the

small, medium and large size textile units. Overall, the present study indicated that

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licensing is the biggest barrier for small and medium type of textile units, whereas

import quota is the largest barrier for large type of textile units.

6.3.5 Problems in Cross Border Transactions for Textile Export

The textile exporters face various types of problems related to cross border

transactions in textile exports. The findings of the study revealed that currency

convertibility, followed by Political instability and unfavorable attitude towards the

foreign buyers were the three big hurdles in cross border transactions faced by the

exporters. However, professional service, memorandum of understanding and treaties

with the destination countries and local management and partner were the three cross

border transaction problems least bothered by these sampled exporters (Refer table

5.16(b)). Based on the analysis, the researcher establishes that political stability and

currency convertibility are the top most problem related to cross border transaction for

all type of textile units, whereas economic growth is largest problem in cross border

transaction for small and large units, and attitude towards the foreign buyers is biggest

problem for medium textile units. Local management and partner was the least

significant problem in cross border transaction for small and medium textile units,

whereas Memorandum of Understanding and treaties with the destination countries

was the least viewed problem by large textile units. The problem related to

Professional service was least significant problem for all type of textile units (Refer

table 5.16(c)).

6.3.6 Commercial Risk for International Transaction in Textile Export

Indian textile exporters also face various types of commercial risks in textile exports.

Such as government regulation, country financial risk, currency interest rate volatility,

political and social disturbances, spread of epidemics like world flu etc. Product

quality and safety problem was the other commercial risk in international transaction

in textile exports. It was observed that government regulations, followed by country

financial risk and political and social disturbances were the three major commercial

risks as indicated by the exporters under study (Refer table 5.17(b)), whereas currency

interest rate volatility, product quality and safety problem, activist attack on global

brand, natural disasters, terrorist attacks and spread of epidemics like world flu etc.

were other commercial risks in textile exports in their respective order. A sound

financial position is one of the keys to secure price advantage in the target market.

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Many SMEs in developing countries run into problems for lack of timely and

adequate working capital, which not only adds costs but can also endanger the entire

production operation. The literature review also provides evidence for the importance

of financial barriers to exporting such as difficulty in acquiring the necessary funds to

initiate or finance export sales (Cardoso, 1980; Weaver and Pak, 1990; Kaleka and

Katsikeas, 1995; Dicle and Dicle, 1992; Frances 1987). Government regulation was

found largest commercial risk for small and medium size units, whereas Political and

social disturbances for large textile units as a major commercial risk.

6.3.7 Risk of Currency Fluctuation in Textile Exports

The Indian textile exporters face various type of currency fluctuation risk in textile

export such as unstable exchange rates, revaluation of exporter’s currency, and

unconvertible foreign currencies. The findings of the study found a significant

difference in terms of risk of currency fluctuation for small, medium, and large textile

size textile units. This was proved using Chi-square test on the respondent’s views

about risk of currency fluctuation (Refer table 5.21).

6.4 Trade Incentives Provided by Indian Government

6.4.1 Export Finance Schemes Offered by the Government of India

When the respondents were asked to indicate various types of export finance schemes

offered by the Government of India to textile exporters which they preferred. It was

found that on line credit to exporters (56.67 per cent respondents), finance scheme for

export of goods for exhibition and sale (54.67 per cent espondents), and advance

against retention money (42 per cent respondents) were the three top most schemes

rated by the textile exporters (Refer table 5.19). Interest rate subvention scheme

(38.67 per cent respondents), advance against export bills purchased, discounted, or

negotiated (29.33 per cent respondents), rediscounting of export bills abroad scheme

(23.33 per cent respondents), export credit guarantee corporation maturity export

factoring scheme (20.67 per cent respondents), advance against for duty drawback

receivable from government (16.67 per cent respondents), International export

factoring scheme (6.67 per cent respondents), advance against undrawn balances on

export bills (4.67 per cent respondents), gold card scheme (2.67 per cent respondents)

and Factoring/ forfeiting scheme for conversion of credit sale into cash sale (1.33 per

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cent respondents) were the other schemes considered by the respondents for getting

export finance assistance in their export business .

6.4.2 Market Access Initiative Schemes Availed/ Offered by the Government of India

The government continually support the textiles export sector through various policy

initiatives to enable the sector to increase market share in the global textiles markets.

The government is implementing various schemes for the development of the textile

industry in the country. Government has introduced several export promotion

measures in the union budget 2012 -13 as well as through schemes of Foreign Trade

Policy 2009 -14, including incentives under Focus Market Scheme and Focus Product

Scheme; enhancing the coverage of Market Linked Focus Product Scheme for textile

products and extension of Market Linked Focus Product Scheme etc to increase

India’s share in various countries (outcome budget 2012-13). The survey revealed that

84 per cent respondents agree with Focus Market Scheme (FMS), 42 per cent with

Market Linked Focus Product Scheme (MLFPS), 29.33 per cent with Special Focus

Market Scheme (SFMS), 26.77 per cent with Vishesh Krishi and Gramudyog Yojana

(VKGUY), and 25.33 per cent with Focus Product Scheme (FPS) (Refer table 5.20).

6.4.3 Schemes Availed/ Offered by the Government of India

Government of India offers different types of schemes for boosting the sales of textile

products in overseas market. Majority of the respondents 82.7 per cent admitted to

take government assistance for boosting the sales of their products (Refer table

5.10.1). The respondents indicated Export Promotion Capital Goods (EPCG) Scheme

and Duty Drawback Scheme as the most important schemes provide by the Indian

Government. However, 95.16 per cent respondents accepted export promotion capital

goods scheme and 73.39 per cent respondents opted for Duty Drawback Scheme

(Refer to table 5.10.2). Other important scheme offered from Government of India to

textile exporters are Development of Mega Cluster (DMS) Scheme (43.55 per cent

respondents), Generalized System of Preferences (GSP) Scheme (39.52 per cent

respondents), Annual advance license scheme (28.33 per cent respondents), Duty

entitlement passbook scheme (14.52 per cent respondents), and Textile Worker’s

Rehabilitation Fund (TWRF) Scheme (10.48 per cent respondents), and Duty Free

Replenishment Certificate Scheme (5.65 per cent respondents). Based on the findings

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of present study, it can be concluded that EPCG was one of the most successful

comprehensive schemes which facilitate the import of new and second hand

machines.

6.5 TUFS Scheme and Constraints Associated with TUFS Scheme

Textile Up-gradation scheme was found very popular among the textile exporters.

The findings of the study indicated that 57.3 per cent respondents accepted that

technology up-gradation fund scheme help the growth of textile industry, whereas

42.7 per cent respondents were also ignoring this view about this scheme (Refer table

5.22.1). Further, the study observed that 32.1 per cent of the respondents viewed that

interest grant/subsidies from government are not available for boosting the product in

overseas market and 28.4 per cent of the respondents admitted the problems of

documentation requirement, 15.2 per cent of the respondents indicated problem with

the availability of fund from financial institution (Refer table 5.22.2). The present

study found that finance facility availed under TUFS is far less as compared to

spinning and other segments of textiles. The reason is the haphazard growth of textile

industry. The textile manufacturers don’t have planned expansions and they buy small

machines and when they have large orders and they required it. So there was no

motive to avail funds under TUFS scheme. The fund requirement at a time is not very

large and can arrange the same through internal accruals or from regular commercial

banks. This is why there are no large capacities the way these are in China and other

parts of Far East Asia or even in Bangladesh. Interest grant and subsidies provided by

the Indian Government is not enough for growth of the textile sector.

6.6 ITP Scheme and Benefits of the Integrated Textile Parks (ITP) Scheme

Integrated textile park schemes are a leap step towards creating clusters with modern

amenities like electricity, roads, water and Effluent Treatment Plant (ETP). The

concept of creating integrated textile part is very model and should prove to be engine

in the growth of textile export from India. It is under establishment and soon will be

operational. But the response of exporters is very mixed and not all agree with the

success story it is expected to write. It has been observed from the survey 62 per cent

respondents disagree on this view that the integrated textile parks scheme gives the

world class infrastructure facilities. And it will be helpful in boosting the textile

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export from India. While approximately 38 per cent agree with the idea of integrated

textile part and are confident that they will be benefited with textile parks scheme

(Refer table 5.23.1). Under the benefits of the textile parks scheme the respondents

viewed that power, water and other utilities to the ITP, followed by tax exemptions

were the two main benefits where maximum exporters strongly agree to for the

growth of textile industry. Identification and procurement of suitable land, exemption

of stamp duty and flexible and conducive labor environment for the units located in

the ITP were the other benefits as viewed by many of the respondents.

6.7 Evaluation Criteria to Assess Potential of Export Market

Indian exporter were asked to assess different types of criteria for evaluating the

potential of export market such as market selection criteria, market potential, shipping

cost and time, potential competition, service requirement, and product fit. The finding

of the study revealed that market potential, market access are the major criteria for

evaluating the textile export market (Refer table 5.24 b). Market selection, potential

competition, shipping cost and time, and service requirement are the other criteria

used by these exporters. According to Lall (1991), a well designed and manufactured

product will not gain export markets unless it can be transported and delivered to

import markets safely, punctually, cheaply, and reliably. However, a product, which

sells well in a developing country, may not sell at all in a developed country. Based

on the analysis of extant literature and respondents’ views, the study observed that

quality is often indicated as one of the most important conditions for entering and

remaining in foreign markets. It concerns packaging, meeting importers quality

standards and establishing the suitable design and image for export markets. There are

different quality standards in India. However, many of the quality problems are the

result of inadequate knowledge about market requirements, product characteristics

and production technologies.

SECTION-B: CONCLUSIONS

In the post MFA phase era, Indian textile firms are becoming competitive in the

changed business environment. It has evoked diverse reaction from different textile

exporters. While majority of exporters were happy with the development, other is

getting cautious. Some are branching out while others are concentrating on niche

products. However, a majority of the exporters perceive that it will be positive

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outlook to India, as well as to their organizations. The present study was focused to

assess the attitudes of Indian textile exporters towards textile exports in international

market and to identify their key success factors and constraints. For this purpose a

questionnaire was prepared to collect significant information relating to various

export problems of the textile exporting firms. In questionnaire a series of 25

questions was prepared on four different categories of problems. Before conducting

the actual survey, a pilot test was carried out with the purpose to check whether the

questions within the questionnaire were clear and easily understandable in the way

perceived by the author. Finally, the actual survey was conducted and the respondents

were asked to gauge the importance of the problem by rating each problem item being

investigated by its importance. For this, a five point scale was developed ranging from

1; “Strongly disagree”, 2; “Disagree” 3; “Neutral”, 4; “Agree” and finally last 5;

“Strongly agree”.

The study concludes that Indian textile exports heavily dependent to European and

the US markets. Sector-wise analysis of the export performance of Indian textile

sector revealed that cotton is the most important fiber from India in overseas market.

So to achieve these priorities with appropriate technology is a must. India has an

inherent advantage in this sector because of abundant availability of raw material,

long tradition of craftsmanship and design and presence across the entire value chain.

The export competitiveness of this sector is very significantly affected by the cost and

reliability of power supply, logistic and transaction costs. Indian textile Industry some

inherent advantages like excellent resource base, availability of cheap labor, presence

in the value chain which is making textile exports globally competitive in comparison

to other countries. Indian Government is promotional in boosting textile exports from

country through various export promotion schemes like Scheme of Integrated textile

scheme, Technology Up-gradation Fund, Export Promotion Capital Goods (EPCG)

scheme, Duty draw back scheme and Export Oriented Units (EOUs)/ SEZ/s Scheme

yet there have been certain constraint in implementation issues that had restricted the

ability of Indian textile industry to harness its potential globally. The study outlines

the view of textile export units in terms of difficulty faced by them that restricts their

ability to compete globally.

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6.8 Factors Affecting Indian Textile Exports

6.8.1 Infrastructure

The most prominent problem existing for Indian textile export industry is of

infrastructure mainly due to scarcity and cost of electricity, distance from sea port,

unavailability of frequent freight trains, congestion at the port or procedural hassles at

different levels, there is definitely lack of coordination and commitment from

government department who provide vital support services to promote the export

from country. There is definite need to provide single window for all logistic

problems. Although private participation is initiated in this direction but results are

awaited and can only hope for better future prospects.

6.8.2 Supply Chain Management (SCM)

The Indian textile industry has one of the longest and most complex supply chains in

the world, with as many as fifteen intermediaries between the farmer and the final

consumer. Each contributes not only to lengthening of lead times, but also adding to

costs. By the time cotton reaches from farmer to the spinning unit, its cost inflates

many folds. By the time it reaches to the final consumer in overseas market, its costs

increased substantially. This creates hindrance factor to penetrate global market. The

industries would need to develop this SCM perspective and rationalize costs at every

stage in the entire supply chain, and not only within their firms, or between

themselves and their vendors and suppliers. The focus of the firms shift to apparel

industry did take this initiative, and has managed to shrink the supply chain in terms

of lead times, as well as costs. Supply chain in India is extremely fragmented chiefly

due to the government policies and lack of coordination between industry and relevant

trade bodies. It is noteworthy that the countries that are globally competitive are the

ones who have a significantly consolidated supply chain.

6.8.3 Low Labour Cost

India textile sector enjoys favorably across the developing countries in terms of low

labour costs and skilled workforce. However, empirical evidence suggests that low

wages are not always a factor of competitiveness particularly in case of good quality

designer garments. Quite often high wages are paid to skilled laborers as

remuneration for the high levels of skill and productivity which, in turn are important

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factors of export competitiveness. It is identified that export oriented garment unit pay

higher wages to their labour than the domestic market oriented units. This difference

in wage rates is attributed to the unique and Indispensable skills of designers, pattern

makers and craftsmen, as well as to better-trained cutters and tailors employed by

exporting firms.

6.8.4 Cost of Raw Material

Indian cotton prices have been lower than international cotton prices of comparable

varieties due to ban on imports and control on exports of cotton. Indian prices

reported to be lower than their international counterpart. This gave a cost advantage to

Indian textile exporters. Major issue with the textile exporters include uncertain

demand from clients, product life cycles are short and competitive intensity is high

6.8.5 Factor Cost

Despite technological advances, textile sector remains labor-intensive globally, and

hence its manufacturing is secularly shifting away from developed to less developing

countries. Textile production has seen considerable technology improvement, but that

has only partially restored the comparative advantage of developed countries in textile

manufacture.

6.8.6 Labor Laws Relates Issues Affecting Textile Exports

Strict labor laws in India make it virtually impossible for companies to shed labor. It

also introduces unfair discrimination against large companies who are forced to

comply with the labor laws relating to minimum wages, social security, contractual

obligations, nature of terminations, internal transfers/ job rotation, right to leaves and

regulations regarding working hours etc., while the smaller ones (like powerloom)

manage to evade compliance with such regulations. This introduces a competitive

edge to powerloom compared to organized mills, and has led to decline of mills and

proliferation of powerloom in India, with all its attendant adverse implications for

competitiveness of the textile and clothing sector chain.

6.8.7 Government Policy Framework for Textile Sector

Many researchers have recognized that the origin of a substantial number of exporting

problems is rooted in the external environment. The nature of these problems tend to

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vary widely: distinctive foreign consumer preferences, unfamiliar business protocols

and practices, the imposition of tariff barriers and regulatory import controls by

overseas governments, fierce competition, exchange rate fluctuations and limited hard

currency for international trade. Government of India is focusing toward textile export

products to make them globally competitive. Some of the government policies that

have a bearing on global competitiveness of the Indian textile sector are briefly

outlined below.

6.8.7.1 Excise Duty

The excise duties applicable to the textile industry are the Basic Excise Duty (BED),

Additional Excise Duty (AED) at the rate of fifteen percent applicable on cotton yarn

and on all man-made/ blended yarn and fibre and AED in lieu of sales tax applicable

on power processed fabric. However, the duty structure is biased since duty incidence

falls disproportionately on different segments of the Indian textile and clothing

sectors. However, government of India is looking to reform the excise duties in textile

sector in the current Union Budget.

6.8.7.2 Technology Up-gradation Fund

Owing to the impact of globalization, Indian textile exports have been forced to

compete with global players in terms of quality and pricing of products. While

abundant human resources have helped the industries to survive to a certain extent,

Indian textile manufacturers are realizing that product quality and economies of scale

can be reaped only with sophisticated manufacturing facilities. The TUF scheme has

helped overcome technological obsolescence in the textile industry by infusing capital

for modernization of the infrastructure and machinery, which in turn enhances local

sourcing options for foreign apparel retailers. Under the TUF scheme, manufacturing

units are eligible for long and medium term loan from IDBI, SIDBI and IFCI, at

interest rates that are 5 per cent lower than the normal lending rates of banks. The

utilization of funds under this scheme has been disappointing. However, the one

positive observation is that processing sector-which is the least modernized in the

entire value chain- is also among the largest recipients of the loans. In textile exports

special preference for the small scale industries prevents units for making significant

investments and expanding their businesses and during recession the large textile

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exporting firms were not willing to expand capacity. However exporters availing the

scheme issues in documentation and getting necessary documentation for the same.

6.8.7.3 Scheme for Integrated Textiles Parks

Though the Indian textile industry has its inherent advantages, infrastructure

bottleneck is one of the prime areas of concern. To provide the industry with world-

class infrastructure facilities for setting up their textile units, the Scheme for

Integrated Textile Park (SITP) was availed by small and medium firm to locate their

units in textile parks of international standards and project fit as potential growth

centers. Taking into consideration the response to the scheme and the opportunities

for the growth of textile industry in the quota free regime but documentation, red

tapism, rentals and stringent non flexible norms for the units located in the parks are

acting as bottleneck to generate its truly potential.

SECTION-C: SUGGESTIONS

Even after the implementation of various textile policies in India, textile sector is

facing increased competition from the multinational companies and survival of the

fittest has been the buzz-word against the backdrop and in the light of the present

study, the following strategies are recommended for the promotion of the textile

sector in India for achieving the export targets for each of the product groups as

outlined below.

6.9 Government Level Initiatives

A substantial increase in production capacities is required to avail economies of scale.

Hundred per cent depreciation may be allowed on capital expenditure on textile

machinery for income tax purpose so as to encourage fresh investment. Rising input

costs are a factor affecting exports of garments worldwide. Since India has the

advantage of having its own source of raw material, this advantage needs to be

leveraged so as to gain a competitive edge over other countries. The exports of cotton

and cotton yarn need to be regulated in a manner which protects the domestic

industries from the major fluctuations in raw material prices. A huge potential exists

for increasing exports by undertaking capacity building in this sector. The high

custom tariffs in the importing countries is an important limiting factor in expanding

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our exports. Efforts are required to negotiate with these countries to reduce the tariff

structure. Dispense with the requirement of maintaining the average export

performance under the EPCG scheme. Exempt capital goods supplied indigenously

under the EPCG scheme from Terminal Excise Duty (TED).One of important

problem faced by textile sector is that of finance. In order to overcome the problem,

specialized bank branches for textile industries are to be opened by the banks to

facilitate operation of large number of textile loan/credit account. Specialized

branches have to be set up in clusters having concentration of textiles. In this

connection Government of India has to establish the modernization program

assistance of soft loan schemes. Most of the entrepreneurs are not aware of the

incentives; assistance and subsidies provided to the various networking banking sector

units by the Central and State Governments. The government should give wide

publicity to ensure better awareness. There is also a need to encourage large-scale

production, particularly in manmade and garment sectors. Disbursement of credit,

supply of cheaper raw materials, supply of electricity at reasonable rates, promoting

better capacity utilization, flexible labor laws, easy entry exit norms for the firms are

some of the basic policy measures which would help the Indian textile industry

become more cost effective. Further, it would be prudent to focus on selected states

having comparative advantage in a specific industry. Such measures could help

convert the post MFA challenges into an opportunity rather than a threat.

Infrastructure plays a very important role in export of textile industry. The

government should give top priority for creating basic infrastructural facilities like

road, power, transport and communication to the backward areas of our country. The

problem of shortage of power is wide spread throughout the country and the textile

units are hit hard by this. The government should take care of this and assure

uninterrupted power supply as provided to the large scale units. State government

should ensure uninterrupted supply of electricity to these textile parks. For this state

government may invite private players for power generation and distribution. This

will ensure continuous supply to industry and government can concentrate on

domestic and agriculture sector. Also, power theft is very high in industry. State

government can shed off this segment and give it to private players. There are various

power generation companies in India who can do this job and sometimes the tariff is

even lesser than government tariffs due to better management practices. Almost all

units in textile sector carry on production with outdated and obsolete technology.

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Another major problem, facing the industry is the procurement of raw materials. Open

market purchase by the textile units leads to high cost of production and competitive

inefficiency. Allocation of raw materials to textile industries should be based on

capacity utilization. In a competitive environment the share of labor input is higher in

most of the product groups followed by capital, therefore the results emphasize the

importance of skilled labor component for the industry. Foreign direct investment

should be allowed through automatic route in textile sector. This is must for up

liftment for the textile industry. Although inviting FDI in textile sector would not be

an easy task. Indian infrastructure is too poor to build confidence in overseas

investors. International certification or textile industry is going to be compulsion in

times to come. In order to export textile products to Europe and US, it is likely to be

must to have certain international certification. Ministry of textile must encourage

textile units’ or rather whole textile industry to obtain this international certification.

This will build confidence in overseas buyers on compliance of various sensitive

issues. Ministry of textile should constitute an agency of international repute to

provide complete package on consultancy, audit and certifications. . There must be a

series of awareness programs among textile exporter on various hedging tools and

techniques to cover transaction risks and ensure safeguard from exchange rate

fluctuation. Banks could be major participant in this program. This will help exporters

enter into long term agreements and provide price stability which is must in

international trade. Governments do not solely impose these procedural requirements.

Also independent organizations such as banks, shipping organizations and insurance

companies, have their own procedures. As the intense competition in the international

textile product market grows each year, the high quality advantage and brand

advantage of textile exports will be a major element in marketing strategy. Under

TUFS scheme spinning sector has played dominant role in modernization process.

International certification recognized globally is required the industry create

confidence and trust among foreign clients. In order to export textile products to

Europe and US, it is likely to be must to have certain international certification.

Ministry of textile must encourage exporting to obtain these international

certification. This will build confidence in overseas buyers on compliance of various

sensitive issues. Ministry of textile should constitute an agency of international repute

to provide complete package on consultancy, audit and certifications.

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6.10 Firm Level Initiatives

Small and medium textile exporting firms need to focus on quality of products to

survive in global market. For the firms selling in the mature market where product

differentiation is small, the cost reduction will be acting as important differentiator.

Small and Medium enterprises need to focus on quality to act as important

differentiator. Large exporting firms can focus on subcontracting to make them more

competitive and will act in terms of cost reduction, quality and availability. Firms can

explore the opportunity to customize the textile product as per client required and

accordingly the localization of products should be done by exporting firms. Marketing

knowledge should be developed as it is dependent on the relevance and depth of

marketing information available to the firm. Textile firms that use relevant, accurate

and timely information are in a better position to respond to export problems.

Information about exporting and more specifically market information was mentioned

as the most serious problem of manufacturing firms in developing countries. Getting

concrete information on prospective foreign markets is essential before exporting can

occur. The study identified several other marketing barriers that can inhibit exporting,

for instance, pricing of the product in the international market. Textile exporters rely

on international competitive prices as a benchmark and do not ask for premiums for

exchange and extraordinary risks so premium can be charged by the firms to compete

globally and earn foreign earnings. Deficient advertising and promotion programs are

also mentioned as other factors that constrain export activities which needs to be

explored. There is significant cultural distance between Indian and western countries

so to be successful in a foreign market textile exporters should choose a lower control

entry mode when country risk is high. The textile firms exporting in overseas market

need to focus on cultural distance, making it a less salient challenge. Indian textile

exporters needs innovative in product and production techniques. This is the greyest

area of Indian textile industry. They need to be more innovative and start designing

new product mix right from the yarn stage. They must learn the chemistry of colors

combinations, adopt designs from nature, understands themes of designs which are

hot topics these days for designers. International designers do not speak the language

of designs; but of themes and follow the nature. Then they must respond at the speed

of electricity so that customers feel attended and must get your attention. Then third is

the quality consciousness. Manufacturers must consider the retail price at which this

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garment will be sold to ultimate consumer and not the price at which they are selling

it to retailer. There is huge difference in the retail price and buying price. Most of

times the price of garment at which garment is sold to retailer are mere forty per cent

or less than the retail price at which it is sold to consumer. The consumer must get

value for money it must be delivered through delivering optimum quality standards.

Lack of information about export procedures has been mentioned as an export barrier

in many studies (Haidari, 1999). A firm that wishes to enter the export market or

intends to increase its export activity will have to acquire the knowledge and skill to

deal with administrative procedures. Exporting requires knowledge about export

procedures. One of the most cited obstacles with regard to exporting concerns the

time and paperwork required to comply with foreign and domestic market regulations.

6.11 Scope for Further Research

Appreciation of these findings and their implications should be tempered by an

acknowledgment of certain study limitations. First, this research was conducted

within the particular perception of exporters in Indian context. Any attempts to apply

the present findings to other research contexts may be potentially misleading. To

assess the generalisability of the study conclusions, it is essential that international

marketing scholars conduct replication studies in other countries. Likewise,

extensions of this work to different industry sectors can enhance the external validity

of findings. Research can be explored in the area of to acknowledge that the elements

that make up textile export venture branding advantage are complex and multifaceted.

They are dependent on the export market on which the venture operates, the cultural

idiosyncrasies and attitudes of the target customers, the competitive mix of the

offering, and the functional attributes of the product and brand itself. Future studies

may be done to integrate the value, rarity, imperfect imitability and substitutability

attributes of the resources and capabilities available to the export venture into the

present textile export marketing framework. Further research can be done to explore

the role of textile export firms located in export clusters and parks located in SEZ for

changed competitive strategies in light of incentives provided by government.