Factors behind increasing competition in Indian textile industry and strategically approach to gain competitive advantage globally.

The textile industry plays a pivotal role in the Indian economy. The country has produced legends such as Dhaka muslin, which was woven so fine and light that it could pass through a finger ring. But what is significant today is that this sector contributes substantially in providing employment and earning foreign exchange. The country is rich in natural resources such as cotton, jute and silk. The textile industry is the second largest employer, after agriculture, with a total workforce of around 35 million. India is next only to China among the world's largest producers of textiles and garments. The industry is the largest foreign exchange earner, as the import content is insignificant compared with those of other major export products. Its contribution in exports is nearly 20 per cent. How many of us know that 85 per cent of the handlooms in the world are produced in India? The number of handlooms in the country is four million. The activities in textiles range from the production of natural raw materials such as cotton, jute, silk and wool to the manufacture of quality products such as cellulose fibre, synthetic filament and spun yarn. This is, perhaps, the only industry that is self-reliant and complete in value addition — from raw materials to the highest value-added products (Warrier, 2007).

The textile industry occupies a unique place in our country. One of the earliest to come into existence in India, it accounts for 14% of the total Industrial production, contributes to nearly 30% of the total exports and is the second largest employment generator after agriculture. Textile Industry is providing one of the most basic needs of people and the holds importance; maintaining sustained growth for improving quality of life. It has a unique position as a self-reliant industry, from the production of raw materials to the delivery of finished products, with substantial value-addition at each stage of processing; it is a major contribution to the country's economy. Its vast potential for creation of employment opportunities in the agricultural, industrial, organised and decentralised sectors & rural and urban areas, particularly for women and the disadvantaged is noteworthy (www.economywatch.com).

Against all these merits, an expert’s lament goes: "It is difficult to find such a large-scale industry in the country that is so disorganised as the Indian textile industry". The industry is often plagued by obsolescence, unhealthy regulations and problems of labour. This emphasises the need for strengthening the management mechanism in the industry, to face the emerging international challenges. Common sense administration has its in-built constraints in a world where scientific management decides the destiny of industries in the modern global scenario (Warrier, 2007).

The textile industry in India will face intensified competition in both their export and domestic markets. However, the migration of textile capacity will be influenced by objective competitive factors and will be hampered by the presence of distorting domestic measures and weak domestic infrastructure in several developing and least developed countries (www.economywatch.com).

The challenges from global competition demand a scientific approach from properly trained management professionals who have specialised in this sector. Sickness and inter-sector contradictions that are a bane of the industry have to be solved through a wise approach and well-calibrated steps, to ensure healthy growth. Managers who are trained in traditional management disciplines will take a long time to get themselves familiarised with the special problems of the textile scene. A strong and competent cadre of trained mangers will help the continuous upgrading of knowledge and skills, fulfilling the need for maintaining a cutting edge in the world of intense competition (Warrier, 2007).

AIMS AND OBJECTIVES

The proposed research intends to examine the increasing competition in Indian textile industry by focusing on the factors that have led to intense competition in the industry and formulate strategies that would help firms in the industry to gain competitive advantage at the global level.

The key objectives of the research are identified as following:

• to identify the factors that have increased competition in Indian textile industry;
• to examine the nature of competition in Indian textile industry;
• to develop competitive strategy and provide recommendations to firms in Indian textile industry, so as to sustain the competitive edge in the global market.

LITERATURE REVIEW

Competitiveness: Definition

"Competitiveness is a widely used term and there are many definitions of it. The approach taken to competitiveness in this report is a pragmatic one, with the general idea that competitiveness means success in markets that translates into general increases in welfare"(National Competitiveness Council Secretariat, 2006, p.1). The main concerns with respect to competitiveness arise from the developments of world markets. The main tendencies in international trade include rapid growth, globalisation, the growth of regional blocks, and the growth of foreign direct investment (National Competitiveness Council Secretariat, 2006).

For the company, competitiveness is the ability to provide products and services as or more effectively and efficiently than the relevant competitors. In the traded sector, this means sustained success in international markets without protection or subsidies (Porter, 1990).

India's competitiveness

Over a decade has passed since India embarked on liberalisation. There has been no dearth of fervent declarations affirming India's determination to acquire the capabilities that will add to its competitiveness and enable it to be counted among other recognised global players (Gupta, 1998). However, has India been able to cash on inherent and acquired advantages in terms of competitiveness? Three different bodies assign three different grades to India:

• The 1999 World Competitiveness Year Book, compiled by the Switzerland-based International Institute for Management Development (IIMD), shows that India's ranking in international competitiveness, evaluated by applying 287 criteria, has gone up by two points from being 41st out of 46 countries in 1998 to 39th out of 47 countries in 1999 (Nancy, 1999).
• The survey conducted by the Geneva-based World Economic Forum (WEF) for 1999 puts India in 53rd position of 59 countries in its Global Competitiveness Report, down from 50 in 1998, and 45 in 1997 and 1996. It uses 179 indicators under eight heads (openness, government, finance, infrastructure, technology, management, labour and civil institutions).
• The World Bank, which appraised the competitiveness 46 countries in 1999, places India in the 40th rank.

In all these three evaluations, the rankings on certain specific parameters are more worrisome than the overall figures. India's weakest areas in all the surveys include: uncertainty in government policies; infrastructural deficiencies; unsatisfactory corporate and financial management of both private and public sector enterprises; inept corporate boards; insufficient attention to human development; low productivity; undependable quality; inadequate customer orientation; and negligible investment on R&D, with special reference to information technology.

India is the fifth largest country in terms of gross national product (GNP) and purchasing power parity (PPP). It constitutes one of the fastest growing markets in the world and is counted among the richest with regard to cheap skilled labour, scientific and technological resources, and entrepreneurial talents. Therefore, the above image of India is quite enviable.

To improve the competitiveness of Indian organisations on product design, quality and on-time delivery it has become necessary for them to look for innovations that produce maximum efficiency both within and beyond their operations (Sahay, 2000). Supply chain management is an integrating philosophy to manage the total flow of a distribution channel from supplier to ultimate customer. It is the management of upstream and downstream relationships – both within and beyond their operations – with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole. Effective supply chain strategies for creating competitiveness revolve around the on-time delivery of competitive quality goods and services, at a reasonable cost, involving the right business partners (Easton, 2002).