marketing strategies of tirupur...
TRANSCRIPT
i
MARKETING STRATEGIES OF TIRUPUR KNITWEAR GARMENT
MANUFACTURING EXPORTERS
– AN ANALYSIS
I request you to kindly give your honest opinion for the following questions. Your
views and opinions will be kept confidential; your kind cooperation for academic pursuit
is solicited.
P.Suguna, Research Scholar, P.S.G.R.Krishnammal College for Women, Coimbatore.
PROFILE OF THE ORGANISATION 1. Name of the organization:
2. Are you member of TEA?
Yes No
3. Type of Exporter:
In house exporter Manufacturing Exporter
4. Type of the organization:
Sole proprietor Partnership Firm Limited company
5. Experience in the field:
Less than 5 Years 5-10 years 10-15 years Above 15 years
6. Type of the capital employed:
Own capital Own and borrowed capital
7. Sources of Finance:
Commercial banks Funding agencies Private financiers
Friends and relatives
ACHIEVEMENTS
8. Status acquired by the company:
No status
Export house Export trading house
Star trading house Super star trading house
ii
9. Specify your organization’s Annual Turn over:
Less than 5 crore 5 to 10 crore 10-15 crore above 15 crore
10. Specify your organisation’s turnover for the last three years:
Less than 25 crores 25-50 crores 50-75 crores above 75 crores
11. Specify the % of growth in turnover for the current year:
less than 10% 10 – 15% 15- 20 % above 20%
12. Specify the share of export turnover of your company:
Below 0.05% 0.05 %- 0.5% 0.5%-1% above 1%
II MARKETING PRACTICES ADOPTED - kindly tick your preferences appropriately
A. PEOPLE-
13. Who do you think will be important for an export business?
End consumer The buyer An exporter Manufacturing workforce
BUYERS POINT OF VIEW 14. What is the type of buyers you have contacted with?
Fashion oriented companies Specialty Stores Mass merchandisers
Chains stores Small importers
15. What do the buyers expect while pricing the product?
Price based on quality Price based on quantity Competitive pricing
16.w.hat traits from exporters are expected by the buyers? Rank them
Traits RankCommunication skill agility Quality consciousness Discerning Time management/timely delivery Relationship management proactiveness
iii
17.Which factors initiates the buyers to identify the source of the products:(Rank them)
Factors RankRight cost Logistic mgt Reliability & Relationship Corporate social responsibility Green Marketing Proximity to markets Technology Compliances mgt Timely delivery
END CONSUMER POINT OF VIEW 18.a. Is the customers habits and preference are essential?
Yes NO
b. If the customers’ habits and preference are essential for export of garments, what
are the features they look for?
Style Comfort Colour Design Quality of fabric
19. Rank the factors influencing customer’s perception on quality
Price Fashion & style Brand influence Performance
Ethical
MANUFACTURING WORK FORCE- POINT OF VIEW
20. Specify the percentage of stable employees employed in your organization:
Percentage of stable employees
Below 20%
20-40%
40-60%
60% and above
21. Do you have a marketing department?
Yes No
22. Specify the basis for recruiting your marketing personnel?
Technical back round Experience Commitment to serve the market
iv
23. How is your retaining capacity of your marketing people?
Excellent V.good Good Average Not good
FROM THE EXPORTERS’ POINT OF VIEW:
24. Why did you opt this business?
love for fashion inherited born in this city profitability
urge to be an entrepreneur social status
25. What do you expect from the buyer?
Flexibility Communicative
Dependability Consistency of orders
26. Specify the method of securing orders
Canvassing Walk in orders Contact established from past records
Web sites
27. Specify the nature of your export orders
Export orders throughout the year Orders of seasonal nature
28. Reasons for not getting orders throughout the year
Seasonal business Competition Market fluctuations
Independent preferences of the importers Rejection in the past
Non conformity with taste and fashions
29. Specify the corporate social responsibility strategy that you have followed.
code of conduct making commitments to the public
consultation with stakeholders environment friendly production and packaging
30. What is your perception towards fashion forecast and trends?
closely linked with business Difficult to understand and conceive
v
31. Is it comfortable for you to transform designer’s style to street wears or commercial
styles
Yes No
32. Does working for big brands increase your input costs which brings down your
profits relatively.
Yes No
33. Rank the risk associated with the export of garments
Non acceptance of goods by the buyers currency fluctuations
Quality related problems Payment related problems
Customs formalities related problems at buyers end Buyers country risk
Domestic policies of the government
B. AREA OF OPERATION (PLACE)
34. Why have you chosen this location for business?
Suitable Climate Pursuing family business
Available Infrastructural facilities A centre for all process
Availability of skilled work force availability of raw material /Existence of
hosiery environment
35. Specify your area of operation
Global market Global market and domestic market
36. Which part of the world do you export to?
USA EU Canada Far east countries Middle East Countries
Oceanic countries
37. Do you have an idea of penetrating new market?
Yes No
vi
38. To develop your market, do you have marketing collaboration abroad?
Yes No
39. Do you have any sourcing office for trims and raw materials abroad?
Yes No
C.PRODUCT
40. Specify the fabric material used in garment manufactured?
Cotton based Woolen based Cellulose fibre(bamboo-viscose)
Synthetic fibre (man made)
41. Specify the segment which you are concentrating (UVR) on?
High value Medium value Low value High & medium value
Medium & low value All
42. What do you export? State the category of your export.
category Men Women Girls Boys Children
Casual only
Causal & Fashion
Casual & Formal
Casual & Leisure
Casual & sports
43. Does your concern own any brands?
Yes No
44. Specify the reason for creating a brand name
Creation of corporate image Independence on the brands
creating identity
45. If not created the brand name, tick the reason
Lack of financial capability Lack of expertise high risk factor
working with buyers own brands Not interested
vii
46. Do you involve in collective branding?
Yes No
47. If not, specify the reasons.
Lack of clear strategy Lack of funds
conflict of interest with own brands and buyers brand Not interested
48. How frequently do you introduce a new product (new style) in the market?
Less than 3 months 3 to 6 months 6 to 1 year above 1 year
49. Specify the areas in which you would like to improve/ develop your product
Manufacturing process Design development
Introducing latest technical developments in yarn and fabric
50. How would you like to laterally diversify your products, please specify.
Home textiles Technical textiles Smart textiles
51. Do you like to include eco-friendly concepts in your line of product?
Yes No
52. If yes, specify the reason
To promote business To discharge corporate social responsibility
To satisfy the requirement of the buyer
Commitment towards our environment and sustainable world
53. Rate the quality parameters of the product
International standard requirement buyer’s standards Features
Aesthetics
54. Do you use recycling material for packing?
Yes No
viii
55. How do you develop your samples ahead of the seasons?
Based on buyer’s requirement Based on research department
Both
56. Specify the inspection personnel involved in your garment export business
SGS ITS Buying Agent In house inspection 57. Do you have any research and Development department?
Yes No
D. PRICING POLICIES
58. In your view what factors are important to determine the price? Competition cost of variable inputs Demand & supply
Tariff measures and non-tariff measures
59. Which method do you adopt to ascertain the selling price?
Cost plus Marginal costing Kaizan costing Activity based costing
60. What measures do you feel is important to bring down cost?
Total ERP system Backward integration
Introducing automation of the manufacturing process specialisation
61. Specify your pricing objectives
To capture order To increase the turnover To obtain UVR
To develop the market
62. Specify the pricing strategy that you have followed
Normal mode of pricing competitive pricing fixed margin pricing
63. Specify your terms of pricing
FOB CIF C&F
ix
E. PROMOTIONAL ACTIVITIES
64. How does your concern market the products directly?
Direct marketing representative agents Joint venture with foreign buyer
65. If through direct marketing, specify the techniques they have followed.
trade fair online marketing Direct meet
66. Which of the following promotional measures do you consider as important for your
export
E. PHYSICAL DISTRIBUTION
67. Mention the lead time that you required exporting your orders?
Less than 40 days 40-50 days 50 and 60 days 60 and above
68. How frequently do you use inland container facilities?
Frequent always sometimes never
69. How will you reduce the cost of transportation?
alternative choice (selecting new shipping company) Collaborative plan
Selection of route
Promotional measures Extremely important
Very important
Important Least important
Not at all
National fair, international fair
One to one marketing
Collaboration plan/joint venture
Cause marketing
Event marketing/sponsorship marketing
Advertisement through websites
x
70. Do you give any rebate to your buyer for delayed shipment?
Yes No
If yes, how much
Less than 5% 5-10% 10-15%
71. How do you prefer to choose your terms for shipment?
On a fixed contract with clearing and forwarding agents throughout the year
working on best rates with different forwarders
72. Do you have avail warehousing facility at a port of discharge?
Yes No
73. Please specify some suggestion to reduce transit time.
Choosing the right mode
Outsourced effective logistics management
F. PRESENTATION
74.How do you prefer presentation of your garment
Physical presentation Electronic presentation
Both
75. If through physical presentation, specify the methods
a) sending samples b) showroom presentation c) fashion shows
76. If through electronic presentation, specify the methods
a) CD-DVD b)Web sites c)e-mails
77. Do you think that visual merchandising has positive effect on sales?
Yes No
xi
IV. ROLE OF GOVERNMENT IN ASSISTING THE INDUSTRY
78. Rank the following government schemes do you consider as effective.
Schemes Rank
TUF(modernization)
TMC(Textile mission for cotton)
Interest subsidy in technical textiles
Assistance provided to apparel training institutions and trainees
Brand equity fund
Market development assistance scheme
79. Specify the subsidy/incentive availed by you, which was given by the government.
Duty drawback Advance/ Duty exemption entitlement scheme
EPCG with DEPB
80. Specify the export credit facilities availed by you from the commercial banks.
Packing credit Post shipment credit
Credit facility for importing capital good. (Second hand)
81. Specify the kind of attention required from the government for the following issues.
Issues High
attention needed
Normal Attention
needed
Less attention
Creating conducive environment for investment
Effective fiscal policy
Bilateral agreement with importing countries
Stable exchange rate policy
Priority to be given to garment industry
Initiative to establish more SEZ
Reduction in cost of energy
Cluster development
xii
82. Please help in identifying your SWOT by ticking the relevant columns.
III.SWOT: STRENGTH OF THE ORGANISATION
SA-STRONGLY AGREE, A-AGREE, DA-DISAGREE, SD-STRONGLY DISAGREE, NEU-NEUTRAL
WEAKNESS:
Weakness SA A DA SD NEU High capital cost
Technical backwardness
Lack of product specialisation
Limited fabric base
Labour intensive nature
Deficient Pollution control measures
Lack of professionalism
Difficulty in following non-compliances with
orders
Lack of branding capability
Ineffective Marketing information system
OPPORTUNITIES
Strength SA A DA SD NEU Availability of RM
Quality management system
Labour cost advantage
Skilled work force
Design capability
Capability in product development/ adaptation Adoptability to the latest innovation
Effective planning
Accepting the Delivery in small quantity
Communication skill
Strategic alliance
Supply chain management
Cost of finance
xiii
THREATS
83. What is your opinion will the future strategies that ought to be adopted for an
effective and a productive export business? Please tick the appropriate columns for both
the external and the organizational factors. A. EXTERNAL FACTORS
OPPORTUNITIES A SA DA SD NEU Exploring Niche marketing
Integration of information technology
Adoption of global sourcing-knitted garments
Product development and product diversification
Increased use of eco-friendly materials
Market shift towards branded readymade garments
Cluster approach
THREATS A SA DA SD NEU Competition from neighbor hood Changes in trend Environmental changes Fluctuation in exchange value Delay in Technology up gradation Lack of attention in the value added item Govt policy changes with regard to export Pollution problem
External factors SA A N D SD Capacity building consistent with social standards
Competitive market oriented approach
Technology up gradation
Currency fluctuation management –hedging
Market development
xiv
B.ORGANISATIONAL FACTORS
Organisational factors SA A N D SD
Human resource development
Productivity enhancement
Right quality at low cost
Compliance management
Effective ERP
Consistent SWOT analysis
Competitive pricing
Product Diversification
Consistent marketing research
Just in time- Inventory management
On time delivery
Product innovation
Design development
Building indigenous brands
Supply chain management
Business Re-engineering
Effective investment management
xv
LIST OF PUBLICATIONS
Impact of currency fluctuation on Garment Industry-profit Realisation and
competitiveness, Southern Economist, December 15, 2010-ISSN 0038-4046.
Impact of corporate social responsibility in Garment Industry, Economic Challenger,
April-June 2011- ISSN 0975-1351.
A Study on Strategies for Promoting Technical Textiles-Lateral Diversification,
PRERANA, Journal of Management Thought and Practice, April 2011.-
ISSN:0974-908X
xvi
IMPACT OF CURRENCY FLUCTUATIONS ON GARMENT INDUSTRY
(with reference to Tirupur knitwear Industries)
I. Introduction
The Textile industry in India plays a vital role in the economic development of the
country. The textile industry has been rated as a sunrise industry with the largest foreign
exchange earnings and 8% GDP contributions. The exports of textiles and clothing
products from India have increased steadily during the last 5 years from $13.5 billion in
2003-04 to $22.13 billion in 2007-08. In 2007-08, India’s export of garments had risen
by 9% ($9.69 billion) from the previous year’s exports. However due to Global
economic slowdown, rise in cotton prices, currency fluctuations, dwindling orders and a
decline in the export of textiles and clothing, the textile industry has fallen short of the
target for 2008-09. Against the target $11.62 billion set for the year 2008-09, the
industry could achieve only $8.78 billion in its exports, resulting in just 76% efficiency.
Further India’s clothing exports fell by 13% in January 2010 from that in January 2009.
Currency fluctuations play a major role on the country’s textile industry involved
in exports. The major drag due to currency fluctuations has brought about a drop of 20%
in demand from USA and EUROPE. Companies are however not prepared to quantify the
impact. Due to highly volatile and uncertain currency trends this industry’s cushion to
factorize on the risk is being narrowed, resulting in slowdown of orders as can be inferred
from the tables below, dealing with currency fluctuations against the Dollars and Euro.
CURRENCY FLUCTUATION AGAINST DOLLAR DURING JAN-2008 TO AUGUST 2010 (Bimonthly Fluctuation)
INCREASE /DECREASE IN RUPEE SWAP VALUE
Countries Jan 2008
Mar 2008
May 2008
July 2008
Sep 2008
Nov 2008
Jan 2009
value on 15thMarch
2009
Softening /hardening
Value on 15th August 2010
Softening /hardening
INDIA 39.39 1.52 7.24 -0.77 11.49 6.40 1.86 52.94 34% 46.617 6.32%
PAKISTAN 62.75 0%. 7.88 5.70 9.19 4.29 -2.98 80.17 28% 85.616 5.45%
BANGALADESH 69.80 0.07 -0.04 0.14 -0.18 0.84 -0.82 70.03 0.32% 69.69 0.34%
SRILANKA 114.10 -5.45 0.12 -0.12 -0.14 -1.19 -1.75 115.69 1.39% 112.5 3.19%
CHINA 7.20 -2.5 -1.15 -1.4 0.14 -6.86 7.2 7.56 0.5% 6.79 0.77%
VIETNAM 166.3 0.90 0.58 4.2 -0.18 2.5 3 177.25 9.25% 193.40 16.15%
SOURCE: APPAREL ONLINE April1-15, 2009, p.no.38
xvii
The table reveals the bimonthly currency fluctuations of rupee against dollar.
During the period of January 2008 to March 15th 2009, India’s rupee had softened by
34% but currencies of other countries like Bangladesh, Srilanka, China, and Vietnam
have remained almost the same against the US dollar. From July 2008 to March 2009 the
rupee value continuously softened by 27%. But Pakistan’s rupee had softened only by
13.3 %. While Bangladesh and Srilankan’s rupee softened by only 1.39% and 0.32%
respectively for the whole year. When the rupee swap value as on 15th August 2010
considered in about 18 months time the rupee has hardened by 6.32%. While Pakistan’s
rupee had softened by 5.45%. While currencies of Bangaladesh, Srilanka and China
hardened only by0.34%, 3.19%, 0.77% during the same period.
CURRENCY FLUCTUATION AGAINST EURO DURING JAN-2008 TO MARCH 2009
(Bimonthly fluctuation)
Increase/Decrease in Rupee swap value
Countries
Jan 2008
Mar 2008
May 2008
July 2008
Sep 2008
Nov 2008
Jan 09
value on 15th March 2009
Softening /hardening
Value on 15th August
2010 Softening/hardening
INDIA 58.23 8.2 5.8 -0.8 3.46 -5.3 -2.12
68.47 17.58% 59.88 12.5%
PAKISTAN 92.78 6.85 6.53 2.10 0.05 1.93 -7.2 103.70 11.76% 110.34 -6.64%
BANGALADESH 103.25 6.89 -1.39 0.11 7.47 -10 0.29 90.57 -12.28% 87.71 3.15%
SRILANKA 159.64 6.77 -1.2 -0.2 -7.1 -8.9 3.35 149.63 -6.2% 144.833 3.2%
CHINA 10.64 4.2 -2.3 -1.6 -7.0 -10.9 -0.1 11.08 3.45% 9.74 12%
VIETNAM 238.42 8.68 0.77 4.25 9.02 -8.38 6.70 229.71 -3.6% 248 -8%
SOURCE: APPAREL ONLINE APRIL 1-15,2009 Pno.38
The table shows the Bimonthly currency fluctuations of rupee value against Euro.
India’s Rupee value has weakened continuously compared to its neighboring countries’
currencies which were have been relatively stable. India’s Rupee value had softened by
17.58% from January 2008 to March 15th 2009. But the currencies of Bangladesh,
Vietnam and Srilanka became strong and increased in value by 12.28%, 6.2%, and 3.6%,
respectively. Currencies of Pakistan and China had weakened by 3.45% during the same
period. When the rupee swap value as on 15th August 2010 considered in about 18
months time the currencies of India, Bangaladesh, Srilanka and China had hardened by
xviii
12.5%, 3.15%, 3.2%,12% respectively. While currencies of Pakistan and Vietnam had
softened by 6.64% and 8%.
II. Foreign Exchange Rate System
Indian foreign exchange rate system was on the fixed rate model till the 90’s.
After liberalization of the economy since 1991 the rupee pegging system was switched on
to floating rate model Indian Apparel Industry, which held a competitive position in the
textile exports, has been adversely affected by the fluctuations in the value of rupee.
The volatility of the rupee impacted the shipments from India. During January to
June 2008, the apparel export dropped by 3per cent5 and the industry faced a decline of
4 per cent on UVR (unit value realization) due to 14per cent appreciation of rupee.
However 1per cent appreciation of rupee, profit has fallen by 1.2per cent.6 Many
exporters who had tried to hedge their currency risk by executing Forex derivative
contracts with banks, suffered huge losses on steep fluctuations in the value of rupee as
they were not experienced in finalizing such contracts with banks. Banks also had
increased their interest rate up to 40per cent on term loans.
Even depreciation of rupee did not support much, since the benefit was already
offset by the increase in input cost, processing cost and transaction cost by more than
15 per cent to 20 per cent, compared to the beginning of the financial year. The
approximate 12per cent depreciation of the rupee has been matched by 4per cent increase
in bank interest rates since1st October 2008 with a 3per cent reduction of Duty drawback
rate.
III. Statement of the Problem
Tirupur Garment industry is known for its dynamic entrepreneurs. US being the
major destination of India’s clothing exports account for 27.87per cent of exports. Orders
from US are mostly basic styles, in huge quantities like T-Shirts under garments, ladies
wear, men’s wear, kids wear, sports wear, leisure wear etc., Whereas orders from EU and
Japan are comparatively small but fashion oriented in which Indian exporters excel. Fifty
six per cent of India’s total knitwear exports from Tirupur have been based on the design,
product development and effective merchandising. Exporters in Tirupur cluster are
striving towards planning and marketing the products to leading apparel sellers’
xix
worldwide. They are recently revamping their knowledge gaining techniques by using
modern information technological systems. Though each and every aspect mentioned
earlier form the core of the industry one important and crucial factor is, every exporter
should upgrade his skill and knowledge on the forex area and the countries economy
which are always a major factor for any export oriented industry. At this juncture the
study aims at drawing an introspective view of the exporters on the impact of currency
fluctuations, and their competitiveness in the global market and to study the remedial
measures taken for the redressal of the issues by the exporters, government agencies and
other support service systems in India.
IV. Objectives of the Study To analyze the competitive position of Tirupur knitwear exporters.
To analyze the influencing factors those cause the forex market fluctuations.
To study the perception of the exporters towards currency fluctuations and the risk
management techniques adopted.
To study the satisfaction level of exporters towards the measures taken by the
Government of India.
To study the exporter’s expectations towards the measures to be taken by the government.
V. Research Methodology The study has been descriptive in nature and has drawn conclusions about the
reactions of the exporters with respect to currency fluctuations during global recession
clubbed with shift in competitiveness. There are nearly 686 registered exporters who are
currently registered in TEA (Tirupur Exporters Association). Of this 216 i.e., 32 per cent
of the total population has been selected as sample respondents by using convenient
sampling method.. A well structured close ended interview schedule with twenty queries
related to competitive position, influencing factors of forex market in India, reason and
impact of currency fluctuations, measures taken by RBI, measures to be taken by the
government and RBI have been framed to collect the primary data from the respondent’s
group. Study period extended to 20 months from 1st January 2009 to 15th August 2010).
The secondary data for the review were sourced from news bulletin of various textile and
research agencies, both official and unofficial newspapers, RBI and WTO reports.
Kendall’s coefficient of concordance was used to analyse the opinion of the exporters.
xx
VI. Results and Discussion The growth of India’s exports in 2006 was due to a boom in economies around
the world. In 2006, according to WTO, world export growth was around 8per cent but
from 2007export growth reduced to 6per cent due to World economic slowdown,
currency fluctuations and crude oil prices. Indian exports have been partially hit by the
slow down of the global economic pressures.
I Profile of the Exporters The profile of the 216 surveyed respondents is depicted in this section of the
research work.
Table 1: Profile of The Tirupur Knitwear Industry
Particular Respondents Percentage
Nature of Exporter
Manufacturering exporters – in - house 89 41.20 Manufacturering exporters 127 58.80
Years of Experience
Less than 5 years 94 43.52 5-10 years 68 31.48 Above 10 years 54 25.00
Type of Organization
Proprietorship 98 45.37 Partnership 109 50.46 Company 9 4.17
Turn Over for the Year
Below 5crore 72 33.33 5-10 crore 81 37.50 10-15 crore 43 19.91 Above 15 crore 20 9.26
Country Traded & Currency Accepted
Untied States (US Dollar) 125 57.87 Europe Other than U.K(Euro) 73 33.80 United Kingdom’s (Pound) 9 4.17 Japan (Yen) 7 2.78 Saudi Arabia (Riyal) 2 1.39
Source: Primary Data
The sample surveyed has revealed that
i) There has been more number of manufacturers (58.8%) than in house
(41.2%).ii) There is more number of new entrants into the business (43.52%) with <
5years experience, as compared to those with more than 10 years (25%) experience.
xxi
However, considering the risk involved in the export business, respondents with more
than 5 years of experience have constituted 56.48%. 95.83% (45.37+50.46) of the
respondents have either partnership firms or run a proprietary business and only 4% of
the respondents have been Private Limited Companies. 70.83% of the exporters
contacted, have an annual turnover of less than Rs.10crores, whereas those exceeding
Rs.10crores turnover target have been 21.91%. A very small proportion of 9.28% have > 15
crores annual turnover. The popular destination of Tirupur Knitwear industry has been the US
(57.87%) followed by non UK European countries (33.8%) and UK (a mere 4.17%)
II. Competitiveness of Indian Exporters and Factors Influencing Forex market The competitive position of exporters has been challenged by certain factors that
contribute to export market success. This section had dealt with these issues.
Table 2 Factors Reasoned for Competitive Position of Exporters
Features Total Score Mean Rank
Maintaining the Time Frame 1544 7.15 1 Competitive Price Quotation 1461 6.76 2 Conforming to quality standards 1239 5.73 3 Adoption of Latest Technology 791 3.66 4 Creative and unique designing 769 3.56 5 Optimal Production Capacity 766 3.54 6 Following Eco –Label Standards 702 3.25 7 Maintaining corporate social responsibility 504 2.33 8
Results of Kendall’s Co-efficient of Concordance
W S Chi-Square Value Table value
0.534 1045924 807.040 18.475**
** - Significant at 1% level Source: Primary Data In Table 2, 8 variables were ranked by the respondents as the main reasons for
establishing a competitive strategy among them. Total score has been calculated by
multiplying the points given for each rank. Mean values have been calculated by dividing
the total score by the number of respondents. Kendal’s coefficient has been calculated by
adding the ranks assigned by the respondents. Among the eight variables chosen most of
the exporters have ranked first (7.15) for the time frame to be maintained. Competitive
xxii
price quotation has scored the maximum mean next (6.76). Conforming to the quality of
goods exported as per their initial agreement has scored the next highest mean of 5.73.
The adoption of latest technology and creative and unique designing have scored the next
to mean of 3.66 & 3.56 respectively. Optimum production capacity (mean value 3.54)
has been considered as the next important factor. The next two highest mean value have
been 3.25 for maintaining corporate social responsibility and for following eco label
standards (2.33).
To ascertain the consistency with which the respondent exporters have stated their
priorities by meeting competitive standards in the market, Kendall’s Coefficient of
Concordance has been applied with the following hypothesis “Exporters opinion on the
competitive position of Indian knitwear industry significantly varies from one person to
the other”.
W value (0.534, which has been less than ±1) has shown a moderate level of
concordance among the respondents, though chi-square value has highly significant at
1% level of efficiency. Hence the hypothesis framed has been rejected. Thus the
exporters’ have similar opinion on the competitive position of Indian knitwear industry
with respect to the priorities held by the respondents.
Forex market is influenced by many external factors that contribute to the
strategies to be adopted by the respondent exporters. Table 3 has enumerated the
situations under which the foreign market is influenced.
Table 3. Factors Influencing the Forex Market in India Factors Total Score Mean Rank Price of crude oil 1861 8.61 1 Change in interest rate 1481 6.85 2 Fluctuations in export 1441 6.67 3 Inflow of foreign fund 1386 6.41 4 Government policy changes 1158 5.36 5 Changes in foreign exchange reserves 983 4.55 6 Economic data 980 4.53 7 Inflation 931 4.31 8 Foreign currency fluctuations 866 4.00 9 Natural calamities 793 3.67 10 Results of Kendall’s Co-efficient of Concordance W S Chi-Square Value Table value 0.274 1053938 532.292 21.666** ** - Significant at 1% level Source: Primary Data
xxiii
The exporters in Tirupur primarily believe that the fluctuations in the Forex
market has been due to current changes in the international crude oil prices which has
scored maximum mean of 8.61. The changes in interest rate by RBI have resulted in the
fluctuations in cost of operations which have impeded the competitiveness of export
market in the international scene. This factor being a core issue in entering the global
scene has been rated as the second most important influencing factor with a mean of 6.85.
The respondent exporter’s contribution to export market is entirely dependent on the
basic fluctuations in export caused due to rising prices and interest rates. This has carried
the weight age of 6.67 mean, establishing the fact that only slight change in policy
decisions can adversely affect the export market. The next highest mean (6.41) has been
assigned by the respondent exporters believes that inflow of foreign fund has cause the
market volatility. Changes in Government policies have been ranked fifth by the
respondent exporters with only a moderate mean of 5.36 indirectly recording the fact that
in India, in the current situation the government policies do not change adversely the
exporters functioning. The changes in foreign exchange reserves and economic data of
the country have been rated low with the low mean as these factors do not encroach into
the effective functioning of the exporters on specific grounds. However inflation as an
influencing factor, being a global factor has only affected moderately and with the
foreign currency and climatic fluctuations.
Kendall’s Coefficient has been applied to test the validity of factors influencing
the foreign market and the opinion of the respondents with the null hypothesis
“Exporters’ opinion on the influencing factors that cause the changes in the forex market
fluctuations considerably have differed from one another.”
W value (0.274, which has been less than ±1) has shown a low level of
concordance among the respondents, though the chi-square value has been highly
significant at 1% level, rejecting the hypothesis. Thereby the exporters’ opinion on the
influencing factors that cause the changes in forex market fluctuation has no similarity
with each other as opinion differs from person to person.
xxiv
III. Reasons for Currency fluctuations and its impact
Foreign currency exchange rates are a very significant tool in maintaining the
exporter’s business promotions. Foreign currency fluctuations can easily turn into a nightmare
for exporters’ when not planned well. Currencies do not move uniformly against each other.
The reason for currency fluctuation and its impact on the exporters in general and Tirupur
knitwear exporters in particular, has been the main focus in this section. Discussion has
emphasized the impact of rupee appreciation and depreciation individually.
The table 4 has quoted the reasons for rupee appreciation and the exporters’
opinion on appreciation of rupee in the recent times.
Table: 4 Reason for Rupee Appreciation
Reason Total Score Mean Rank
High foreign exchange inflows 922 4.26 1
Positive growth rate of GDP 854 3.95 2
Favorable balance of payment 807 3.73 3
Foreign debt services (ECB) 714 3.30 4
Positive Bilateral trade relations 635 2.93 5
Interest rate difference 604 2.79 6
Results of Kendall’s Co-efficient of Concordance
W S Level of Significance Table value
0.097 79270 104.854 15.086**
Source: Primary Data
According to the respondent exporters in Tirupur the rupee appreciation has been
due to high foreign currency inflow in to the country with the highest mean 4.26. The
high foreign exchange inflow has resulted in positive growth of GDP and favorable
balance of payment position which have been ranked high (mean 3.95 and 3.73
respectively) Fourth rank, as a factor influencing rupee appreciation, has been suggested
as ECB (external commercial borrowing), where as, positive bilateral trade relations have
been ranked next at 2.93. The respondents have ranked last the interest rate of
differences; perhaps due to the fact that the initial increase in interest rates have not
substantial affectation on rupee appreciation.
xxv
The consistency of opinion on factors influencing rupee appreciation has been tested
with Kendall’s Coefficient of concordance with the null hypothesis “the reasons ranked
for rupee appreciation by respondent exporters have no similarity”.
W value (0.097, which has been less than ±1) has shown a very low level of
concordance among the respondents though the chi-square value has given a significant
result at 1% level. Hence the hypothesis framed has been rejected, and the opinion of the
respondents has no similarity in reasoning the causes for rupee appreciation.
The effect of rupee appreciation on the day to day operations of respondent
exporters has been assured in Table No.5.
Table 5. Impact of Rupee Appreciation
Impact Total Score Mean
Ran
k
Changes in demand and supply 1415 6.55 1
Erosion in profit 1310 6.06 2
Decline in export growth 1101 5.10 3
Reduction in UVR (Unit Value Realization) 1010 4.68 4
High marketing cost 875 4.05 5
Increase in raw material cost 786 3.64 6
Reduction in working hours 678 3.14 7
Unemployment 601 2.78 8
Source: Primary Data
Changes in demand and supply have been the first reason attributed to rupee
appreciation with the highest mean of 6.55 (ranked first) and vice versa. Rupee
appreciation has also resulted in erosion of profits with a next high mean of 6.06
contributing to a decline in export growth of the respondents (5.10 mean). Reduction in
UVR as the fourth ranked factor (with the mean of 4.68) has been affected by rupee
appreciation, as stated by the respondents. High marketing cost and increase in Raw
material cost has also become the subject of changes due to rupee appreciation, which
have been ranked as 5th, 6th respectively. Adverse effects on rupee appreciation have
xxvi
been traced to reduction in working hours and unemployment as opined by the
respondents.
Currency fluctuation is double edged phenomena. Rupee appreciation directs the
economy towards growth on one hand, and other has reflected in steep depreciation,
almost bordering the free fall of Indian Rupee vis-à-vis US Dollar. During the period of
January 2008 to March 15th 2009, India’s rupee weakened by 34% but currencies of other
countries like Bangladesh, Srilanka, China and Vietnam have remained almost the same
against the US dollar. The impact of rupee getting weaker against dollar had a big role
in raising the UVR of cotton garment export form India. UVR of cotton stood around
$3.2 US during Jan-Sep ’08, but it was 4.4 during Sep-Nov-08, while the rupee rose by
more than 17% during the same period. A weak Rupee has definitely helped the Indian
garment exporters, especially in the US market, where Indian garment prices have fallen
even below the currency of Bangladesh in May 2008.
Table:6 and 7have depicted the opinion of the exporters on Rupee
deprecation and its impact on their business operations.
Table: 6 Reason For Rupee Depreciation
Reason Total Score Mean Rank
Appreciation of US Dollar 757 3.50 1
Rise in crude oil prices 604 2.79 2
Slow down in capital inflows( FII) 425 1.96 3
Slow bilateral trade 374 1.73 4
Source: Primary Data
The exporters who have faced the current volatile situation in the exchange rate
market are very uncertain about the future rates recoveries. The exporters in Tirupur have
considered the primary reason to be the appreciation of American Dollar (mean 3.50).
Rise in crude oil prices, slowdown in FII inflows and slow bilateral trade relations have
also impacted rupee depreciation.
xxvii
Table: 7 Impact of Rupee Depreciation
Impact Total Score Mean Rank
Increased competitiveness 522 2.42 1
Rise in volume of export 506 2.34 2
Realizing profit from exchange fluctuations 450 2.08 3
Rise in UVR (Unit Value Realization) 434 2.01 4
Source: primary data
Currency fluctuation in international market inevitably leads towards uncertainty
and risk which persuade them to adopt and practice risk management techniques. Table 8
has shown a few of the techniques adopted by the respondents for managing risks.
Table 8 Risk Management Techniques Adopted
Risk Management Techniques No.of Respondents Percent
Initiative from the government to educate and easening the norms 31 14.35
To go for Euro & other currency 58 26.85
Bank support(Hedging) 127 58.80
Total 216 100
Source: Primary Data The table indicates that 58.80 percent of the exporters have considered hedging to be
the best to manage and control the risk by signing of forward contracts to avoid currency
fluctuation. 26.85 percent of the exporters have opined that they should start trading in Euro
and other countries to avoid US Dollar fluctuations. The balance of respondent exporters
have sort government assistance through seminars, conferences to manage the risk.
The focus of trade policy reforms in India has been on liberalization, openness
and globalization with a basic thrust on outward oriented export promotion activity,
removal of quantitative restrictions, and improving competitiveness of Indian industry to
meet global market requirements. Getting a first hand information from the beneficiaries
on the satisfaction level delivered from the steps taken by government to overcome
currency fluctuations has been shown in Table no.9
xxviii
Table 9. Exporters Level of Satisfaction Towards Measures Takenby Rbi/Govt
Measures Total Score Mean Rank
Decrease in Repo rate 498 2.31 1
Intervention in currency market 492 2.28 2
Decrease in cash Reserve ratio 504 2.33 3
Easening currency regulation 504 2.33 4
Liberalizing export credit norms 357 1.65 5
Source: Primary Data The exporters in Tirupur are primarily satisfied with the reduction in Repo rates
i.e., bankers agreement to purchase the Bills of Exchange at a lesser margin, with the
basic aim of mitigating exporter losses due to currency fluctuations. The government
intervention in currency market to correct the price volatility has been a welcome sign for
the respondents. The flexibility of money supply has been achieved by reducing the Cash
reserve ratio. Easening currency regulation has provided greater satisfaction than
liberalizing export credit norms.
Most of the exporters have confirmed that the government should consider the
garment industry under priority sector (mean 2.62). The exporters have also suggested
that government should fix the value of rupee against dollar permanently suggesting a
single currency for whole world at the international market place. Exporters have opined
that the exchange rate policy should be calibrated to reduce the volatility of the exchange
rate. The respondent exporters have also suggested that the dual exchange rate is the
need of the hour i.e., 40% export proceeds realized may be converted into fixed exchange
rate while the balance 60% may be converted at a floating exchange rate. The respondent
exporters will be satisfied if the government shows positive approach with respect to
fiscal policies, incentive schemes and labor laws.
Conclusion
With an expected dual exchange rate, stable exchange rate against dollar, full
refund of all taxes and levies by State/Central Government / Corporation to the industry
as well as interest free loans for modernization along with zero duty import of capital
goods, and the concessional rate of export credit, the industry can bloom with wings to
expand production and employment as well as its foreign earnings.
xxix
IMPACT OF CORPORATE SOCIAL RESPONSIBILITY IN GARMENT
INDUSTRY
(with reference to Tirupur Knitwear Industry)
INTRODUCTION
Corporate social responsibility is a company's obligation to be responsible to all
of its stakeholders in all its operations and activities with the aim of achieving sustainable
development not only in the economical component but also in the social and
environmental dimensions. Company's stakeholders includes employees, customers,
suppliers, community organizations, subsidiaries and affiliates, joint venture partners,
local neighborhoods, investors, shareholders, and the environment are all those who are
influenced by and can influence a company's decisions and actions, both locally and
globally. Business promotion concerns on the role of business towards society, which has
been promoted by increased sensitivity to ethical issues. Such sensitive issues like
environmental pollution, improper treatment of workers, and defective production
leading to customers’ inconvenience or danger are the ethical issues to be considered by
business firms. Government regulations regarding environmental and social issues have
increased. Investors have begun to make investment decisions based on social
sustainability in addition to economics. Many buyers have become increasingly sensitive
to the social performance of the companies from which they buy their goods and services.
This obligation demands firms to operate in an economically, socially and
environmentally endurable way.
CORPORATE SOCIAL RESPONSIBILITY IN TIRUPUR GARMENT INDUSTRY
Tirupur the “Town of Export Excellence.” is the textile center of Western Tamil
Nadu, and is predominantly an export niche, the town gains its significance for its
updated technology and the quality of its macro economic environment. The industry is
booming for the past few decades in international market due to tremendous market
reform progress. Like the firms in other industries, garment industry is also realizing their
responsibility towards various stakeholders associated with them and the environment.
Generally, the situations of corporate social responsibility in garment industry are
improving. However, the ways by which different organizations choose to fulfill their
xxx
social responsibility might be different. Identifying stakeholders, their relevant issues and
managing the relationships, developing CSR policies and guidelines, trainings/sensitizing
company’s staff, benchmarking a company’s social responsibility program, establishing
CSR management system, social audit, keep the company abreast of latest issues in
development and social responsibility through publication, seminar, workshop and the
website. The various activities of CSR include building of hospitals, charitable
dispensaries, educational institutions, construction of roads, reducing the poverty,
controlling of pollution, etc. By adopting these welfare measures, the firms may attempt
to bring about a social change.
Many non-governmental organizations in Tirupur are engaged in such social
development and environmental development activities. These organizations are good
enough to support the industrial development by ensuring community participation. ILO,
Steering group consists of seven major trade unions and five NGO, SAVE, VALAM are
the organizations initiatively participating. With the support of these organizations the
garment exporters were implementing the corporate social responsibility more efficiently.
STATEMENT OF THE PROBLEM
Successful global business has the power to make a real difference. Economic
performance and social responsibility can go hand in hand, when there is a genuine
consideration of our impact on the community and the environment in which we live and
work. True global companies must foster good relations with customers, communities
where they operate and bear the responsibility of the impact of their activities on
environment and society. At this juncture the study has been taken to know the
effectiveness of corporate social responsibility in the garment industry in Tirupur.
OBJECTIVES
To know the vital role of CSR in developing corporate reputation.
To know the mode of implementing CSR.
To study the level of satisfaction towards the benefits derived through CSR
strategies.
To study the impact of CSR
xxxi
RESEARCH METHODOLOGY
The study being descriptive in nature and is expected to draw conclusion about
the reactions of the export community with respect to impact of Corporate social
responsibility in garment industry. 100 garment exporters have been selected as sample
respondents using convenient random sampling technique. A well structured close ended
interview schedule with queries related to mode of implementation of CSR, importance
of CSR and impact of CSR has been framed to collect the primary data from the
respondent’s group. Kendall’s coefficient of concordance, ANOVA and Chi square test
was used to test the exporters’ opinion.
RESULTS AND DISCUSSIONS
The community today needs external agency intervention in the alleviation of
many social problems like poverty, ill-health, unemployment, community education,
providing shelter and eco development programs. The Non Governmental Organizations
existing within the industrial location and closer to the community can better act as
moderators and facilitators in the realization of their social need and better environmental
protection. Table1 depicts the mode of implementation of CSR by both manufacturing
exporters and in-house exporters in the garment industry.
Table – 1 Mode of Implementation of Csr
MODE Manufacturing exporters
In house exporters TOTAL
Joined with NGO & government 9 10.23% 4 33.33% 13 13%
Maintaining separate team 16 18.18% 5 41.67% 21 21%
Joined with non-profit organization 63 71.59% 3 25% 66 66%
From the study, among 100 garment exporting units, 10.23% of the
manufacturing exporters and 33.33% of the In House exporters have joined with NGO &
government to implement CSR, 18.18% of the manufacturing exporters and 41.67% of
the In House exporters were maintaining separate teams to implement the CSR and
71.59% of the manufacturing exporters and 25% of the In House exporters were joining
with non-profit organizations to implement the CSR.
xxxii
CSR is very important to thoroughly understand the perception of the company.
Companies with high CSR standards are able to clearly demonstrate responsibility to
investors, shareholders, employees, customers and the general public. Therefore they
manage risk and enhance their corporate reputation. Table.2 explains the importance of
CSR in developing corporate reputation. The total score has been calculated from the
highest rank points given to assigned ranks from total respondents, multiplied by its
respective position of factor taken for consideration; mean value is obtained by total
score divided by number of respondents.
Table –2 Importance Of Csr In Developing Corporate Reputation
S.NO FACTORS TOTAL SCORE MEAN RANK
1. Increased Buyers interest 501 5.01 1
2. Social awareness 496 4.96 2
3. Growing investors’ pressure 476 4.76 3
4. Demand for greater disclosure 470 4.70 4
5. Globalisation & Market forces 455 4.55 5
6. Supplier relationship 433 4.33 6
7. Shrinking role of government 420 4.20 7
8. Competitive labour market 349 3.49 8
Among 100 garment exporting units, most of the respondents have ranked the
increased buyer interest (5.01) as first; social awareness (4.96) as second, growing
investor’s pressure (4.76) as third, fourth rank to the demand for greater disclosure (4.70),
fifth rank for the globalization & market forces (4.55), sixth rank for the supplier relation
(4.33), seventh rank for the shrinking role of government (4.20) and eighth rank for the
competitive labor market (3.49). Kendall's Coefficient of Concordance has been used to
find whether the ranks assigned by the exporters have any similarities. The Kendall’s (W)
vary between 0 and 1. Higher the value of (w) higher the similarity among the
respondents in assigning ranks. The Kendall’s (W) has been found to be 0.041, which has
indicated that there has been very low similarities among the exporters in assigning ranks
for the importance of CSR in developing corporate reputation.
xxxiii
Corporate Social Responsibility is the “continuing commitment by business to
behave ethically and contribute to economic development while improving the quality of
life of the workforce and their families as well as of the local community and society at
large”. Companies with rigorous corporate responsibility standards are also best
positioned to attract and retain high quality staff, thereby reducing employee turnover
rates and recruitment costs. Exporters of Tirupur realized the same as they implemented
the CSR strategies. Table 3 depicts the benefits derived through CSR strategies.
Table 3. Level of Satisfaction Towards The Benefits Derived Through CSR Strategies to Employees
S. No Benefits HS S N DS HDS Total
1 Increase workers productivity 26 32 18 16 8 352
2 Delivery of positive social, healthy outcomes 39 23 8 15 15 356
3 Increases loyalty 16 20 24 22 18 294
4 Increases retention 12 14 38 26 10 292
5 Improved recruitment 9 27 20 19 25 276
As per the Likert’s summated scale, from the total points obtained, it is observed
that most of the exporters were highly satisfied at the delivery of positive social &
community healthy outcomes, increase in workers productivity but where less satisfied in
the increase in loyalty, increased retention and improved recruitment. To ascertain if
there has been any difference in opinion among the exporter towards the benefits derived
through CSR strategies, a null hypothesis has been framed to apply ANOVA for within
group’s and between group’s.
Hypothesis: There has been no significant difference in opinion among the exporters
towards the benefits derived through CSR strategies.
Sum of squares df Mean
square F Table value
Between groups 180.8 4 45.2 0.5935
2.87 Within groups 1523 20 76.15
Total 1704 24
xxxiv
ANOVA have shown that there has been no significant difference at 5% level on
the opinion among the exporters towards the benefits derived through CSR strategies.
Exporters were in an urge to implement CSR towards environment which will
endure corporate reputation in the society. Table.4 depicts the level of satisfaction
towards implementation of CSR towards environment.
Table – 4 Level of Satisfaction Towards Implementation of CSR Towards Environment
S.No IMPLEMENTATION HS S N DS HDS TOTAL
1 Green procurement 26 45 9 12 8 369
2 Use of renewable raw material 32 16 24 10 18 334
4 Environmental management through certification
12 9 43 16 20 277
5 Better product durability and functionality
22 12 18 34 14 294
6 Integration of management tools with business plan
18 11 13 19 19 290
From the total points obtained, most of the respondents were more satisfied in
green procurement and use of renewable raw material, whereas are comparatively less
satisfied with the implementation of environmental management through certification,
better product durability & functionality and integration of environment management tools
with business plan. To ascertain that there is no significant difference in opinion among the
exporters towards the implementation of CSR in developing environment, a null hypothesis has
been framed to apply ANOVA for within groups’ and between groups.
Table-5 Impact of Corporate Social Responsibility
Benefits Before
implementing CSR After implementing
CSR
Same as before Has Increased
Productivity & Profitability 1 14 15
Reputation gained from buyers 4 22 26
Contribution towards society and environment
5 34 39
Recognition earned from employees, society and Government
3 17 20
xxxv
Implementation of corporate social responsibility is not effective in promoting the
business. Calculated value of chi square (19.7532) is much more than table value 9.488
and hence the result of experiment does not support the hypothesis. We can thus conclude
that the implementation of corporate social responsibility is important for promoting
corporate reputation. As an impact on promotion of corporate social responsibility; 13
respondents have found no difference in performance of business and environment before
and after implementing CSR, whereas the remaining respondents have found that CSR
has brought much of changes in their business and environment viz., contribution towards
society and environment, reputation gained from buyers, recognition earned from
employees, society and government and increase in productivity and profitability.
SUGGESTIONS
Every exporter has to maintain separate team to implement the CSR, can provide
more incentives and amenities to retain their employees, concentration in providing zero
discharge-pollution free environments. A well developed focus to be made for its
corporate responsibility on improving conditions in contracted factories, aiming for
carbon neutrality, and making sports available to young people across the world,
providing costly equipments to government hospitals, helping orphanages.
CONCLUSION
Both public & private CSR efforts must be extended to solve the identified
problems. Indian government may also look forward like Saudi Arabia compels the firms
to pay some portion of the profit to government to spend that amount where the money
needed within the country. Innovative strategies & methodologies will create win-win
situation for all, consultative & collaborative model of change works, which is really
profitable for all.
xxxvi
A Study on Strategies for Promoting Technical Textiles-Lateral Diversification:
With Special Reference to Tirupur Knit Wear Exporters Dr. Rameshwari Ramachandra P.Suguna N.Krishnaveni
INTRODUCTION
The technical textiles are one of the fastest growing segments of the textile and
apparel industry worldwide. The very distinctive feature of technical textiles is that it can
make value addition as high as 500 percent depending upon the application and end uses.
At the same time, it is a diverse and dynamic one, having wide range of materials,
processes, products and application.
With the growing demand of functional textiles and due to closing down of
conventional textiles owing to high cost of raw materials, market fluctuations, to meet the
global competition, to reach newer horizons of market, for new entrepreneurs who are
enthusiastic to enter into innovative vicinity, use of textiles in various fields like medical,
technical, agricultural and protective clothing etc., promotion of ecofriendly textile
products, product diversification that focuses to widen the scope of technical textile
market and rather than importing such functional textile material, a diversification of the
textile industry by manufacturing these products in our country with available skilled
labour and resources, are the reasons for selection of the opportunities open for technical
textiles.
A Technical textile is a textile product manufactured for non-aesthetic purposes,
where function is the primary criterion. It is a huge and growing sector and supports a
vast array of other industries. Technical textiles include textiles for automotive
applications, medical textiles (e.g., implants), geotextiles (reinforcement of
embankments), agrotextiles (textiles for crop protection), and protective clothing
(e.g., heat and radiation protection for fire fighter clothing, molten metal protection for
welders, stab protection and bulletproof vests, and spacesuits).
Technical Textiles offers new ways, means and opportunities to the Indian textile
industry to sustain the present growth and thrive in near future. It would offer not only an
opportunity to augment growth, but also a new direction for advancement of the industry.
The field of technical textiles had not received adequate importance in Indian context so
xxxvii
far; however, it is a potential area where the textile industry can excel. Traditional textiles
today are unable to cope with cost of production for various reasons like fast
technological obsolescence, high cost of modernization, increasing cost of power etc.
Present product mix of traditional textiles is not remunerative enough and therefore more
and more ideas of value-addition to textile products are gaining momentum. Technical
textiles, in this context, are just perfect.
India has enough of bleached cotton, polypropylene and polyester viscose yarn
and resources. But high-tenacity polyester, specialty flame retardant, and ballistic
protective materials like Kevlar, Nomex, and broad spectrum antimicrobials incorporated
textile products are to be imported. They are mainly required for defence and medical
applications. The government should consider their zero-duty import. Vigorous push
needs to be given to the use of locally available coir and jute in a big way to produce
environment-friendly products.
STATEMENT OF THE PROBLEM
At present, India is importing $5 billion worth of technical textile products such
as composite leather, sanitary napkins and diapers to meet the domestic demand, which
has been growing at 8 per cent a year. This has led to the development of Rs.150-crore
zone—that is planned to be established on 200 acres during the 11th Plan under the cluster
development programme of the Textiles Committee. This will be a boon for the small and
medium enterprises in the region to switch from conventional textiles to value-added
technical textiles. Small and medium enterprises in the Tirupur region are set to flourish
as technical textiles manufacturing zone that will come up near Tirupur sooner.
At this juncture this study aims at drawing an introspective view of the existing
conventional textile exporters of Tiruppur; on the reasons for choosing the technical
textile sector, opportunities, contribution of government and the strategies to be adopted
for sustainable development.
REVIEW OF LITERATURE
Nonwovens are most widely used in diverse applications of technical textiles due
to their unique characteristics, performance and cost advantage. Behnam Pourdeyhimi
xxxviii
(2009) presented in his lecture that nonwovens are not only replacing traditional textiles,
but are also creating new markets for new value added products.
The application of hot-melt products for the production of functional technical
textiles are necessary for developing of new solutions and systems for the required fields
such as for the automotive industry, for interlinings, medical textiles, and other clothing
applications and to meet the high demand on technical textiles for the protection of
human, environment, and machinery, as well for special textiles for functional
applications such as roofing systems, geotextiles, building textiles, and textiles for
airplanes. Owing to recent advancements in medical procedures and textile engineering;
single use materials used in the operating theatre have found a greater use. To meet the
fashion requirements and comfort rather than covering body, latest technology and
sophisticated machines are inevitable to enter into new areas like medical, protective,
filtration, transmission, transportation, structural and many non conventional
applications. To avoid the risk contamination by pesticides, protective clothing is useful
to give some degree of protection for agricultural workers who are at a risk contamination
by pesticides, insecticides and herbicides. The design, manufacture and applications of
textile composites in space and aerospace have become one of the most predominant
aspects in present day textiles. (Abreu et al., 2003; Andrea Glawe et al., 2003;
Anita Desai 2005; Kumar et al., 2005; Ragavendra Pavan et al., 2009)
The Government of India has come up with several positive schemes to support
the growth of the non woven and technical textile industry. Center for Excellence in
Technical Textiles is likely to be set up in Surat very soon or which details are been
worked out by the Government of Gujarat in collaboration with South Gujarat Chamber
of Commerce and Industries. These units will manufacture medical textiles, geo textiles,
parachute textiles, laminated fabrics; application in agriculture etc., similarly in an earlier
scenario, the Pakistan government has removed the 5% customs duty on import of textile
machinery in the annual budget of 2005-06, to overcome the troublesome situation of
home textiles. The State Economic and Trade Commission of China have recently
approved 115 textile technical renovation projects in three groups, estimated to cost 14.71
billion Yuan (US$1.8 billion), with 9.76 billion Yuan of bank loans (Asia pulse news
2000; Seshadri Ramkumar and Appachi Arunachalam, 2009; Chandan Chatterjee 2010).
xxxix
The second international exhibition of machine tools and automation industry was
conducted at Karachi Expo Centre in September 2006. The event had attracted more than
60 local and foreign companies, which encouraged foreign investors to invest
in technical textile sector and other machine tools. Pakistani exporters were provided to
avail the facility of testing their products in 19 internationally accredited labs
within Pakistan. These labs have successfully participated in 35 international proficiency
testing schemes for the quality of technical textile raw materials and products (Pakisthan
Press International 2006; Zawdu Felleke, Trade Related Technical Assistance Programme
of United Nations Industrial Development organization, 2008).
Changing pattern of Chinese textile market was identified with a growing focus
on technical innovations and the significant relocation of manufacturing and service
centres to Asia. To meet the growing International competiton, US companies followed the
strategies to relocate some operations offshore (Owen and Phil, 2005; Ting Chi, et al., 2005).
OBJECTIVES OF THE STUDY
The study is expected to draw conclusion about the opinion of the exporters to
enter into technical textiles to meet the domestic as well as international needs.
• To study the features that influences the lateral diversification
• To analyze the exporters’ choice of preference towards the technical textiles sector
• To know the exporters’ opinion towards the schemes of the government
• To study the strategies to be focused to promote the technical textiles
METHODOLOGY
Manufacturing Exporters of garment industry were chosen for the study.
Sampling unit may be a geographical one such as state, district, village etc., so in this
research sampling unit is Tirupur Garment units. The study being descriptive nature, 33
small and medium exporters of total population have been selected as sample respondents
by using convenient sampling technique. Interview schedule has been used as instrument
to conduct this research. A well structured close ended interview schedule with queries
relating to: reasons to choose technical textile sector, application oriented areas of
technical textiles, an outlook about the government schemes, strategies to be focused for long
term development, has been framed to obtain primary data from the respondent’s group.
xl
The secondary data for the review were sourced from news bulletin of various textile and
research agencies, both official and unofficial newspapers. The study period extended for
about twelve months from October 2009 to October 2010. In order to analyze the
objectives of the study, several statistical methods and tests were used. Percentage
analysis, Chi square test, ANOVA, Kendall’s coefficient of concordance was used to test
the relationship among the variables taken for study.
ANALYSIS
This section presents the analysis of the data that was collected from the
respondents. The profile of the 33 surveyed respondents is depicted in this section of the
research work.
Table 1 Profile of the Tirupur Knitwear Industry
Particulars Respondents Percentage
Experience
Less than 5 Years 15 46%
5-10 years 11 33%
Above 10 years 7 21%
Sources of finance
Own capital 3 9%
Borrowed capital 8 24%
Own and borrowed capital 22 67%
Turn over
Less than 10 crore 16 48%
10 to 20crore 8 24%
Above 20 crore 9 28%
Application areas
Agro Tech 5 15%
Medi Tech 18 55%
Home Tech 10 30%
There are more number of new entrants into the business (46%) with less than 5
years experience, as compared to those with 5-10 years experience (33%). However,
considering the risk involved in the export business, respondents with more than 10 years
of experience have constituted only to about 21%. 9% of the exporters invested their own
money in the business. 24% of them have taken up the risk of borrowing money from
external sources to run the business whereas 67% of the respondents have sourced their
own and borrowed capital. 46% of the exporters contacted, have an annual turnover of
xli
less than Rs.10 crores, while those exceeding Rs.10 crores turnover target have been
11%. A very small proportion of 7 % have more than 20 crores annual turnover.
15% of the respondent exporters had chosen Agro tech which includes technical
textiles used in agriculture, horticulture (include floriculture), fisheries and forestry. 55%
of them invested their capital in the Meditech which covers technical textiles used in
hygiene and medical facilities. Home tech is manufactured by 30% of the exporters
which includes technical textiles used in household activities like furniture components,
mattress components, upholstery and interior furnishing, stuffed toys, etc.
Reasons for preference of technical textiles: India is an emerging economy and their
textile markets are bound to grow on globalization hence technical textiles can be
indigenized. Downstream processes generate relatively more employment and are
influenced by labour cost. The labour cost in India is competitive compared to developed
countries. Indigenization of technical textiles will not only minimize import and achieve
strategic self sufficiency in sensitive and emerging areas of applications like defense,
aerospace, sustainable development, waste management etc. but also provide new
avenues of value added exports. Growth in Asia is expected to be more than 6.5%, with
the projected growth rate being merely 2.2% in the developed countries Promoting
technical textiles as a tool of value addition for survival and revival of Indian textile
industry hold a high potential of success. The table 2 has quoted the reasons for the
preference of technical textiles and the exporters’ opinion about the basis for choosing
the technical textiles rather than conventional in the recent times.
Table 2 Reasons for preference of Technical Textiles
Reasons Total scores Mean Rank
Passion towards new business venture 208 6.30 1
High rate of consumption 183 5.55 2
Suited for small and medium size industries 167 5.06 3
Changing nature of conventional textile industry 155 4.70 4
Rising price of cotton 140 4.24 5
Availability of cheap and skilled labours 122 3.70 6
Opportunity to cater both domestic and export market 118 3.58 7
Create additional employment opportunity 95 2.88 8
xlii
Among the eight variables chosen most of the exporters have selected technical
textile sector driven due to a passion towards entering new business venture (mean value
6.30). High rate of consumption has scored the next maximum mean (5.55). As the
industry is best suited for small and medium sized industries it scored a mean value of
5.06. Changing nature of conventional textile industry has scored the next highest mean
of 4.70. Rising price of cotton and availability of cheap and skilled labour has scored the
next mean of 4.24 and 3.70 respectively. Opportunity to cater both domestic and export
market is considered as the next important factor (mean value 3.58). The next highest
mean value has been 2.88 for creation of additional employment opportunity.
Kendall’s Coefficient has been applied to test the validity of factors influencing
the technical textiles and analyse the opinion of the respondents with the null hypothesis
as “Exporters’ opinion on the influencing factors that leads to choice of technical textiles
considerably have differed from one another”.
W value 0.0711 (which has been less than ±1) has shown a low level of
concordance among the respondents, though the chi-square value has been highly
significant at 1% level, rejecting the hypothesis. Thereby the exporters’ opinion on the
influencing factors that leads to choice of technical textiles has very low similarity with
each other in assigning the ranks.
Contribution of government in promoting technical textiles: Government of India
during its 11th five year plan i.e., April 2007-March 2012, has initiated positive schemes
to support the growth of technical textile industry. National Mission for technical textiles
was launched by Prime Minister Dr. Manmohan in the texsummit conference on
September 2007 in New Delhi. The main aim of the mission is to expand the current
technical textile industry to a size of around 12-15 billion dollars by 2012. The mission
will be divided into 4 mini-missions which will focus on creating awareness, human
resource development, capacity building of the non-woven and technical textile industry
and related machinery industry, establishing centers for research excellence and support
with testing and standardization. Exporters’ opinion on the schemes of the government is
showed in the table 3.
xliii
Table 3. Opinion about the schemes
Schemes Excellent Good Fair Total points
TUF- 10 % subsidy for new machinery - 5% interest subsidy 19 10 4 81
Drop down of custom duty on imported technical textile machinery - from 10 % to 5%
22 8 3 85
R and D infrastructure -20 centers of excellence in research on non-woven and technical textiles in next five years
12 14 7 71
Setting up of Technology information and forecasting assessment council (Kumaraguru College of Technology- Coimbatore for South India)
10 15 6 66
To ascertain if there has been any difference in opinion among the exporters’
towards the awareness about the schemes of government of India, a null hypothesis has
been framed to apply ANOVA for within group’s and between group’s as; there has been
no significant difference in opinion among the exporters towards the awareness about the
schemes of the government towards the growth of technical textiles.
ANOVA TEST
Sum of squares df Mean square F Table value
Between groups 236.17 2 118.08 7.08
4.26 With in groups 150.06 9 16.67
Total 386.23 11
ANOVA table shows that there has been significant difference in the opinion
among the exporters towards various schemes taken for study that are proposed by the
government at 5% level.
Strategies for promotion of Technical Textiles in Tirupur: Although various quarters
of textile industry have started identifying the concept and composition of technical
textile and related products, still there are prevalent apprehensions to venture into this
field. Strategies are required to be put in place as early as possible. This has been shown
in the table 4.
xliv
Table 4 Strategies for promotion of Technical Textiles
Strategies Need Immediate focus
Need to be Focused
Total score Mean
Improving manufacturing facilities 22 11 55 1.67
Market Development 21 12 54 1.63
R and D and Centre of Excellence 20 13 53 1.60
Identifying the application areas 19 14 52 1.58
Focus on backward integration 18 15 51 1.55
SEZ to be extended 17 16 50 1.51
Literature, Standards and Information technology 17 16 50 1.51
Textile manufacturers venturing into the area of technical textiles need to focus on
the level of their in-house technologies, know-how and competence and make concerted
efforts to modify them to the requisite level. If it is inescapable to import technology in
high-tech areas of technical textiles, it is essential that efforts should be aimed at
acquiring the state-of-the-art technology as far as possible and to be prepared to invest,
assimilate, innovate and improve the technology. Hence improvements in manufacturing
facilities have scored the maximum opinion with a mean score of 1.67. Success of a new
technical textile product will essentially depend on the user of the product. It will be
necessary to have close interaction between textile technologists and technical personnel
users, viz., engineers, doctors, etc. who will use such technical textiles. Product
development and production of technical textiles will succeed only if simultaneous
market development is also carried out to sustain demand (mean score 1.63). Research
and development, consultancy, quality management, testing and evaluation hold the key
to the success of capturing a substantial share of the competitive global market of
technical textiles. According to exporters’ substantial investment in R and D will be
unavoidable. Strong world class testing facilities for accurate and relevant evaluation of
technical textile must be made available in India to satisfy the stringent and critical
requirements of performance related product parameters in the global market. Thus R and
D and developing a Centre of Excellence has scored a next highest mean (1.60).
�Identifying the products with different application areas with a strong potential in the
domestic market, and which will in the long run, help exports have gained a mean score
xlv
of 1.58. Initially such items should be selected for which there exists know-how,
production facilities, raw material etc. Such products may be on the lower end of
technology but should have a big impact in terms of volume, value addition, etc. The
existing production capacity / capability with incremental addition to the facilities may be
focused. It will create a favorable psychological impact and climate for future investment
in more demanding products. Focus on backward integration scores as the next important
factor with a mean value of 1.55 as to reduce the supplier power and to minimize the
cost. Exporters opined that SEZ benefits are to be extended to more number of areas to
enjoy the tax exemption benefits and concessions which has a mean score of 1.51. Many
of the specifications like directives, literature, books, etc. are very costly and most of the
manufacturers will not be able to afford them. Also IT facilities to be created centrally for
dissemination to the concerned users is the strategy to be focused (mean score 1.51).
To establish the authenticity of the relationship between the Experience and
Strategies to be followed, a chi square test was applied with the null hypothesis, that there
has been no significant relationship between the Strategies and Experience of exporting
companies. To find the relationship Table 5 was prepared.
Table 5 Strategies for promotion of Technical Textiles
Experience / Strategies Less than 5 years
10-20 years
Above 20 years
Improving manufacturing facilities 2 2 1 5
Market Development 3 2 1 6
RandD and centre of excellence 3 3 1 7
Identifying the application areas 3 1 1 5
Focus on backward integration 2 1 1 4
SEZ to be extended 1 1 1 3
Literature, Standards and Information technology
1 1 1 3
15 11 7 33
xlvi
The calculated value of Chi-square has been (0.4277) which has been less than the
table value (21.026) and hence there has been no significant relationship between the
Strategies to be adopted and Experience of the exporters. It depends upon the exporters’
objective, willingness to enter into novel field, technical know-how, investment capacity,
market development, and government support, not merely on the experience of exporters.
DISCUSSION
The rationale of this research was to highlight the scope and strategies for the
promotion of technical textiles in Indian Scenario. Respondents’ opinion for choice of
technical textiles and their perception towards government schemes were analyzed. The
findings are as follows; Kendall’s Coefficient has been applied to test the validity of
factors influencing the technical textiles and the opinion of the respondents analyzed, the
exporters’ opinion on the influencing factors that leads to choice of technical textiles has
very low similarity with each other in assigning the ranks.
The profile of respondent exporters reveals that 67% of the respondents have
sourced their own and borrowed capital, from commercial banks to enter into the
technical textiles. The State Economic and Trade Commission of China has recently
approved 115 textile technical renovation projects in three groups, estimated to cost 14.71
billion Yuan (US$1.8 billion), with 9.76 billion Yuan of bank loans (Asia pulse
news,2000). Such capital sources and loans from banks encourage more exporters to
enter in to technical textiles. 15%, 55%, 30% of respondents have chosen Agro tech,
Meditech, Home tech as their choice of the filed in technical textiles respectively.
Various applications of technical textiles in different fields as functional textiles,
meditech, protective clothing, Geotech etc., have been revealed in other countries also.
(Abreu et al., 2003; Andrea Glawe et al., 2003; Anita Desai 2005; Kumar et al., 2005;
Ragavendra Pavan et al., 2009).
Reasons for the preference of technical textiles and the exporters’ opinion on their
inclination for choosing the technical textiles rather than conventional textiles were
studied. Among the eight variables chosen most of the exporters have selected technical
textile sector driven due to a passion towards entering new business venture as the reason
for their preference towards technical textiles. Similarly other reasons were ranked.
xlvii
Changing pattern of Chinese textile market was identified with a growing focus
on technical innovations and the significant relocation of manufacturing and service
centres to Asia. To meet the growing International competiton, US companies followed
the strategies to relocate some operations offshore (Owen and Phil, 2005;
Ting Chi, et al., 2005). Preference of choice for the diversification into technical textiles
varies among the exporters.
It was observed from the ANOVA table that there has been significant difference
in the opinion among the exporters towards various schemes taken for study that are
proposed by the government at 5% level. The Government of India has come up with
several positive schemes to support the growth of the non woven and technical textile
industry. TUF subsidy, drop down of custom duty to 5% by the government have
encouraged exporters. Similarly the Pakistan government has also removed the 5%
customs duty on import of textile machinery of home textiles. The State Economic and
Trade Commission of China have recently approved 115 textile technical renovation
projects through bank loans. The study shows that 20 centers of excellence in research on
non-woven and technical textiles are planned, and a technology information and
forecasting assessment council has been formulated. A technical textiles Expo organized
by Pakisthan government at Karachi encouraged FDI and 19 internationally accredited
labs were set up to test the quality of technical textile products.
In the present study a Chi-square analysis has shown that there is no significant
relationship between the Strategies to be adopted for promotion of technical textiles and
experience of the exporters. It depends upon the exporters’ objective, willingness to enter
into novel field, technical know-how, investment capacity, market development, and
government support, not merely on the experience of exporters.
CONCLUSION
Government may provide subsidy and extended support facilities, to encourage
the technical textile manufacturers for increasing their export potential for various
products and expanding the domestic markets. Awareness programmes are to be
conducted for more number of exporters to enter into this field. R and D facilities for
indigenous development of raw materials and diversification of products, Centre of
xlviii
Excellence for standard testing facilities are to be set up. End users may be educated
about the functional properties which will enhance their life style. Empowerment of
human resources is possible by creating skill-oriented employment opportunities. Lateral
diversification opens up wider market potential in the global scale. To fulfill the social
objectives of providing cheaper and efficient products like shelters, protective clothing
etc. to the masses in the event of disasters like flood, draught, earthquake and the like,
transparent and effective policy matters are to be formulated by the government to
encourage the exporters who ventured into technical textiles and recognize such ventures
as knowledge based industry. Thus a scheme of planning should be made to ensure the
inputs and to offer a congenial environment, both regulatory and fiscal, to achieve greater
share in the global technical textile market in future.