Finance Wanted.

By Atul Pandey

India is one of the major producer and exporters of textiles. The current value of the Indian textile market is $36 billion and it constitutes about 5% of the GDP. However its share in the total global textile trade is just 3.5%. Indian textile exports grew by 14% in 2004-05 over 2003-04. It is expected that by 2010, India's share in the world textile export would be $40 billion. About 35 million people in India are directly employed in textiles & garments sector and it is the second largest employer after agriculture. To encourage this sector Government of India has allowed 100% FDI through the automatic route.

Speaking about the structure and organization of this sector, the Indian textile industry is dominated by only a few large (organized and numerous small and medium (unorganized) companies. The small and medium players though competitive yet they have no global presence. The competitiveness of cost can be attributed to the ready availability of raw material and low-cost manpower .Cotton and synthetic fiber is available in large quantities. Many international brands, such as GAP, Wal-Mart, Tommy Hilfiger, Benetton, G Star, Levi's and Marks & Spencer, are using India as a sourcing hub.

The domestic and the export market are expected to grow at a very high rate. According to estimates, the industry is expected to reach $83 billion in the coming five years. The domestic market growth is driven by a larger consuming class and increasing per capita consumption (currently only 3 kgs. of fiber per capita: 1/3rd of world average). India is hoping to become the second largest exporter of apparel among LCCs by 2010, next only to China

After the end of international quota regime, India will convert its cost advantages into a larger share of the global market. Foreign investors interested in Indian market can also exploit India's large and growing consumer market with increasing spending power.

India's cost advantages of manufacturing textiles and garments derive from- Abundant supply of inputs at competitive prices and Low cost labor with a range of skill levels - from unskilled labor to fashion design.

Special Economic Zones will build on these advantages by:

� Absence of domestic taxes or import duties

� 5 year income tax holiday followed by income taxes at 50% of the normal rate for as long as 10 years

� Reduced transaction costs

� Better infrastructure

Government is also planning to set up 25 integrated textile parks. There are over $30 billion worth investment opportunities for capacity expansion and modernization. Recently, Carrera Jeans has announced its Jeans manufacturing plant in India with an investment of over $110 million.

http://theindiaeconomy.blogspot.com/2008/06/investment-opportunity-in-textiles.html