The year 2017 had been one of the most challenging ones for the textile industry in over a decade, for manufacturers and sellers alike, as GST was introduced in mid-2017 following the wave of demonetization that had already left the industrial sector of the country perplexed. Improper ground work laid by the Government before the introduction of this drastic change caused a chaotic situation, as a result of which customers preferred not to go ahead with any modernization or investments because the course of events was not clear even to the most experienced minds.
The major impact of these reforms was on the unorganized sector. Places like Surat and Bhiwandi where most of the small-scale and medium-scale industries are located, took a long time to recover and get the legal registrations done.
However, these barriers have not changed the path which A.T.E. Enterprises Private Ltd. is on. Over the past few fortunate months the industry has stabilized and the orders have picked up so much so that it partly compensated for the loss of business caused by the couple of months immediately after GST implementation. In the backdrop of a challenging year, A.T.E.’s performance was satisfactory. Some of the business divisions of the company performed well enough to even surpass the overall performance of the year 2016 making it a quite satisfactory year for the company.
Two of the segments that contributed the most to the company’s success were spinning and processing. Three of the business divisions, namely, spinning, spinning accessories and processing, contributed to the excellent overall performance of the textile engineering division.
The company’s fabric forming division comprises warp knitting, weaving preparation and circular knitting where the warp knitting division experienced a setback as it was done in small and medium-scale industry based in Surat and near around.
On the other hand, warp preparation business progressed and received extremely good demand for warping and sizing machines as the medium-scale industries that work on contract basis with the big players are upgrading to the latest shuttleless looms that require a good warp preparation system in order to function at their full potential and that has given this division a big business boost.
The spinning sector in India has always been dominating over weaving and processing, but due to the recent events and the prevailing market uncertainties people have now realized that to harness the textile industry’s full potential, advancements would have to be made in the other two sectors as well. Investments in weaving started three years back with the import of the latest technology high-speed weaving machines whereas the investments in processing started as late as in 2016. Improved fabric quality demands better processing and finishing. This has attracted continuous investment in this area. The trend has so formed that the big players are increasing their capacity in processing and finishing as they have realized that this will be the key area if Indian textile industry wishes to progress in value addition.
One of the most successful sectors in India is home textiles, which has been blooming in the past three years. A lot of big players are operating in this sector and have created huge capacities with time. The apparel sector in India has also experienced growth; similarly denim consumption is increasing by 12% per year in the last few years.
Apparel consumption and production growth can secure much larger market share for India if some areas like finishing improve. Countries like China had apparel as their growth engine, and if India follows the example its share in the world market could improve as well. To bring in such a revolution the capacities of production would have to be increased.
In India, the garments sector was, however, reserved for small-scale industries in the past and therefore even the big players had many smaller capacity factories. Some of the low value adding sectors are vacated by China, the advantage of which is taken by countries like Vietnam and Bangladesh due to lower labour cost and better & large manufacturing facilities in apparel making.
The downside that India faces is due to the delays in delivery of goods in the wake of various bottlenecks because of which many buyers are reluctant to engage in trade with India. Companies like Shahi Exports have realized the importance of adding capacities and creating a large manufacturing base to take advantage of the available opportunities in garment exports.
According to Mr. G.V. Aras, Director, A.T.E. Enterprises Pvt. Ltd., when recently China vacated the apparel throne, India had a brilliant chance to take that place but due to the small size production capacities in the country that opportunity slipped. An event that India can take advantage of is the dissolving of the Trans pacific partnership (TPP) that occurred post-US elections due to which the big advantage of shifting to Vietnam is no longer present. He also said: “India has to really work hard for FDAs, and we are lagging behind in striking proper arrangements with the European Union that Bangladesh and Pakistan enjoy.”
Along with the proper measure that the Government has to take to create trade pacts with these markets, big players would have to enter the field and expand their capacities to capture a larger global market share. Not only will this benefit the Indian economy financially but will also create a huge number of jobs. Big garment export manufacturers can create ten times more jobs when compared to any other industry, which is one of the crucial needs of the country in the present time.
If India wants to create jobs and improve the global market share, it has to focus on the garment industry and invest in its infrastructure because everything is available in the country but has not yet been harnessed to its full potential. States like Orissa, Jharkhand and Bihar are comparable to Bangladesh in terms of the ground situation. The apparel industry could be expanded through these areas.
In the words of Mr. Aras, “India has educated people but not skilled people,” only with proper training to the labor, the productivity of such facilities will increase to maximum.
The latest Union Budget, India is a very prominent one as it is the first one after the GST implementation. The Government focuses on job creation for which the apparel industry could play a very significant role. Mr. Aras added: “The apparel industry should be encouraged; incentives should be given for skill training of the labor. The Government is also focused on increasing infrastructure which will directly ensure the better working of the overall exports facility.”