The Textile and Apparel Supply Chain

The Textile and Apparel Supply Chain comprises diverse raw material sectors, ginning facilities,

spinning and extrusion processes, processing sector, weaving and knitting factories and garment

(and other stitched and non-stitched) manufacturing that supply an extensive distribution channel

(see Figure 1). This supply chain is perhaps one of the most diverse in terms of the raw materials

used, technologies deployed and products produced.

This supply chain supplies about 70 per cent by value of its production to the domestic market.

The distribution channel comprises wholesalers, distributors and a large number of small

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Cotton

(Farms)

Jute/Wool/Silk

(farms)

Polymers

(Petrochemical

Plants)

Ginning

Spinning

Processing/

Finishing

Garments &

Accesories

Other Textile

Products

Distribution

Channel

(Export &

Domestic

Markets)

Man-Made:

Filament

Extrusion

Process

Composite

Mills

weaving,processing)

(spinning,

Stand-Alone

Weaving(midsize)

Powerlooms

(small)

Handlooms

Figure 1: The Textile and Apparel Supply Chain

Grey

Yarn

Cloth

Cone

Hank

Cloth

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retailers selling garments and textiles. It is only recently that large retail formats are emerging

thereby increasing variety as well as volume on display at a single location. Another feature of

the distribution channel is the strong presence of ‘agents’ who secure and consolidate orders for

producers. Exports are traditionally executed through Export Houses or

procurement/commissioning offices of large global apparel retailers.

It is estimated that there exist 65,000 garment units in the organized sector, of which about 88

per cent are for woven cloth while the remaining are for knits. However, only 30–40 units are

large in size (as a result of long years of reservation of non-exporting garment units for the small

scale sectors – a regulation that was removed recently). While these firms are spread all over the

country, there are clusters emerging in the National Capital Region (NCR), Mumbai, Bangalore,

Tirupur/Coimbatore, and Ludhiana employing about 3.5 mn people. According to our estimate,

the total value of production in the garment sector is around Rs.1,050–1,100 bn of which about

81 per cent comes from the domestic market. The value of Indian garments (eg. saree, dhoti,

salwar kurta, etc.) is around Rs.200–250 bn. About 40 per cent of fabric for garment production

is imported – a figure that is expected to rise in coming years.

The weaving and knits sector lies at the heart of the industry. In 2004-05, of the total production

from the weaving sector, about 46 per cent was cotton cloth, 41 per cent was 100% non-cotton

including khadi, wool and silk and 13 per cent was blended cloth. Three distinctive technologies

are used in the sector – handlooms, powerlooms and knitting machines. They also represent very

distinctive supply chains. The handloom sector (including khadi, silk and some wool) serves the

low and the high ends of the value chain – both mass consumption products for use in rural India

as well as niche products for urban & exports markets. It produces, chiefly, textiles with

geographical characterization (e.g., cotton and silk sarees in Pochampally or Varanasi) and in

small batches. Handloom production in 2003-04 was around 5493 mn.sq.meters of which about

82 per cent was using cotton fibre. Handloom production is mostly rural (employing about 10

million, mostly, household weavers) and revolves around master-weavers who provide designs,

raw material and often the loom.

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Weaving, using powerlooms, was traditionally done by composite mills that combined it with

spinning and processing operations. Over the years, government incentives and demand for low

cost, high volume, standard products (especially sarees and grey cloth) moved the production

towards powerloom factories and away from composite mills (that were essentially full line

variety producers). While some like Arvind Mills or Ashima transformed themselves into

competitive units, others gradually closed down. In 2003-04, there remained 223 composite

mills that produced 1434 mn. sq. mts. of cloth. Most of these mills are located in Gujarat and

Maharashtra. Most of the woven cloth comes from the powerlooms (chiefly at Surat, Bhiwandi,

NCR, Chennai). In 2005, there were 425,792 registered powerloom units that produced 26,947

mn. sq. mts of cloth and employed about 4,757,383 workers. Weaving sector is predominantly

small scale, has on an average 4.5 power looms per unit, suffers from outdated technology, and

incurs high co-ordination costs. Knits have been more successful especially in export channels.

Strong production clusters like Tirupur and Ludhiana have led to growth of accessories sector as

well, albeit slowly. The hosiery sector, on the other hand, has largely a domestic focus and is

growing rapidly.

The spinning sector is perhaps most competitive globally in terms of variety, unit prices and

production quantity. Though cotton is the fibre of preference, man-made fibre (polyster fibre

and polyster filament yarn) is also produced by about 100 large and medium size producers.

Spinning is done by 1566 mills and 1170 Small and Medium Enterprises (SME). Mills, chiefly

located in North India, deploy 34.24 mn. spindles and 0.385 mn rotors while the SME units

produce their yarn on 3.29 mn spindles and 0.119 mn. rotors producing 2270 mn kg of cotton

yarn, 950 mn kg of blended yarn and about 1106 mn kg of man-made filament yarn every year.

Worsted and non-worsted spindles (producing woolen yarn) have also progressively grown to

0.604 mn and 0.437 mn respectively. Spinning sector is technology intensive and productivity is

affected by the quality of cotton and the cleaning process used during ginning.

The processing sector, i.e., dyeing, finishing and printing is mostly small in scale. The largest

amongst these would dye and finish about 5000 m/day. The remaining are independent process

houses (or part of composite mills) that use automated large batch or continuous processing and

have an average scale of about 20,000 m of cloth daily. About 82.5 per cent or 10,397 units are

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hand processors who dye cloth or yarn manually and dry in open sunshine. Of the remaining

(and these use automated and semi-automated equipment), 2076 are independent process houses.

Cotton remains the most significant raw material for the Indian textile industry. In 2003-04,

3009 mn kg of cotton was grown over 7.785 mn acres. Other fibres produced are silk (15742

tonnes), jute (10985000 bales), wool (50.7 mn kg) and man-made fibres (1100.65 mn kg).

Cotton grows mostly in western and central India, silk in southern India, jute in eastern and wool

in northern India. Significant qualities of cotton, silk and wool fibres are also imported by the

spinning and knitting sectors. (Except for garments, all data in this section was obtained from

OTC 2004 and Texmin 2005.)

Managing such a complex supply chain requires coordination through excellent managerial

practices, technology and facilitating policies.