Time it is to change our mindset from ‘conventional textiles’ to high value technical textiles as investment options. Investors need to direct themselves from basics to high-engineered niche products. The wide range of applications of technical textiles, lack of competition, and growing consumer and industrial demands make them a big opportunity area, contends leading consultant AVINASH MAYEKAR
The ‘Make in India’ efforts by Prime Minister Narendra Modi is going to be a big success and a real growth driver for the Indian manufacturing sector. I am sure our textiles industry would be one of the front-runners and core segments of the Indian manufacturing industry contributing 14 per cent of total industrial output and employing about 45 million people directly. Though the textiles industry has its huge contribution in terms of export earnings, industrial output and employment generation, when it comes to investment initiatives, Indian entrepreneurs are turning their backs on the sector.
If we look at the mindsets of most investors, they are looking for higher profit margins, lower gestation periods, sustainability, faster returns and easy returns of debts. Most conventional textile businesses are very labour and capital intensive, which is why most existing textiles players are looking for opportunities to diversify into other businesses.
My questions to all these investors are: whether you have figured out all opportunities available in your own industry? Have you done enough research to find out which are the upcoming market trends in the textiles sector globally? What are current shifts of the Indian textiles market and which are the prospective textiles growth sectors? The answer is “no”.
India has a strong history of conventional textiles. It is a traditional industry where generations have been involved in the same conventional business. But today’s scenario is different. In spite of growing demands of domestic and international markets, the conventional textiles sector is highly saturated. It is facing challenges such as high competition levels, high inflation rates, less control over prices, being labour intensive, and overall decrease in profitability levels. Textiles entrepreneurs have no alternative other than diversifying into other business. But why can’t they think of “technical textiles” as a potential investment sector which runs parallel to the conventional textiles industry?
Technical textiles: Opportunity for India
Unlike conventional textiles, technical textiles (TT) have a huge potential in India, as the sector is in an introductory phase as of now. The Indian TT industry has witnessed a significant growth of 16 per cent from 2001-02 to 2009-10, and is expected to grow at the rate of 20 per cent year-on-year to reach a market size of $36 billion by 2016-17.
The income of the Indian consumer is also growing fast. This will enable them to make more discretionary spending on TT products viz. hometech, clothtech, mobiltech, sportech and meditech. India’s per capita income is projected to soar by 10.4 per cent to `74,920 in 2013-14 as the country becomes a $1.7 trillion economy. The middle class of 300 million with higher discretionary income is expected to increase to 520 million in another five years. The middle class is well-educated and receptive to many TT products, particularly disposable products which have a huge market in Western countries. This, combined with the growth of organised retail in the country, will be a key growth driver for TT used in consumer products.
Over 50 per cent of the country’s population is below 25 years – the vibrant segment for any market. Also, India leads the world with the highest confidence index (it was highest in India for a 7th straight quarter) – showing optimism among consumers in the economy.
Their (technical textiles) wide range of applications, lack of competition, and growing consumer and industrial demands make it a big opportunity area and an attractive option to invest in. Moreover, factors conducive for the growth of manufacturing and consumption of TT are also available within the country. Though India is the second largest textile economy in the world after China, its contribution to the global TT industry is only 9 per cent of the total consumption. Currently, there are very few market players in the TT segment.
As TT products are high-engineered products manufactured on the basis of functional properties for specific uses, they are higher value products; so, they fetch higher returns to manufacturers giving good profit margins. The Indian culture is showing a paradigm shift towards Westernisation; so new generation entrepreneurs should think of untapped market segments. As we are moving towards globalisation, our needs and market demands are changing, and I am sure products like wet wipes, disposable home textiles, travel kits, air bags, high-end sports textiles, and disposable products like medical textiles will be products of daily consumption in the near future.
If we go back 10-20 years, products like sanitary pads, baby diapers or wipes, were hardly used by the masses. But today, these products have penetrated even into rural areas. So, the time has come to change our mindset from “conventional textiles” to high value “technical textiles” as investment options. Investors need to direct themselves from basics to high-engineered niche products. The major chunk of TT are manufactured by nonwoven technologies. These are compact technologies, and are emerging technologies to produce complex products as well. As the process is very short, the utility consumption is much lower; and due to mass production, operating costs are minimal as well.
Moreover, there is hardly any involvement of human beings, and hence quality is determined by technology and there are less chances for human interference. In India, only 12 per cent of TT products are manufactured by nonwoven technology as compared to 24 per cent in the world. India still has a long way to go to meet global requirements of nonwovens.
Technical textiles: Positioning India
The time has come to position India as manufacturing hub for technical textiles (TT). In order to position us in the global market, we first need to understand TT thoroughly. We need to create awareness among each vertical of the textiles industry. The government is keen on taking initiatives to promote TT among the value chain, but efforts taken by the government are not enough. So, the first step into positioning India as a TT hub is to carve out a clear vision, strategy and action plan for TT. We need to map out existing TT demand and future growth rates in each of the 12 TT segments in domestic as well as global markets.
Once the demand assessment has been done, we need to analyse our current potential in terms of raw materials, infrastructure, technology level and human resources. The demand-supply analysis will give us a clear picture of the enormous opportunities available in the TT segment, and we can frame our vision for the TT segment. The assessment of additional raw material, infrastructure, technology level and skill development required should match the global and domestic demands, and make India a leading global player.
Each and every state of India can be mapped out for type, quality and quantity of fibres produced, and what percentage of fibre produced is directly exported. Based on this data, we can work out how much is the potential to produce the finished product instead of selling it as raw material. This value addition into TT will not only give higher returns, but also fetch good profit margins for entrepreneurs.
Once we map out raw materials, we will be able to figure out additional investments required and the level of infrastructure required. Thereafter, the role of government would be to introduce government schemes and policies favourable for the investment in the TT sector. This will create a conducive environment among investors. e.g. mandatory use of fire retardant fabric in all common places like halls, theatres, malls, etc,; or mandatory use of disposable medical textiles at hospitals, hotels, etc.
As TT is a high-engineered product, it requires high-skilled labour at par with international standards. It is necessary to check whether existing educational programmes are capable of creating such high-skilled human resources. Educational seminars and training programmes can help create good human resources. In fact, there are international consulting firms who are specialists and have experience in training textile experts as well as labour. Such kind of training programmes can develop a skilled workforce. The government can support such skill development programmes and training centres for growth of the TT segment.
Technology advancement plays a crucial role for growth of the TT segment e.g. if our vision is to double market share in the next five years, but we do not have state-of-the art technology to produce international standard goods, then we can never achieve this vision. In TT, product specifications are stringent. With obsolete machineries, we cannot achieve desired norms and standards of products competitive at international standards. We have to update ourselves with the latest state-of-the-art technology. The government had launched the TUFS scheme to support technology development, which is an appreciable initiative. However, it needs efficient implementation and promotion across the value chain. More such government schemes are needed to bring about technology advancement.
Last, but not the least, is a government policy framework. Government policies and schemes should be in tune with our vision. Various central and state government schemes can help to boost investment in the TT sector. Benefits like tax exemption, tax holidays, and capital and interest subsidies should be given to promote the TT sector. Subsidies on machineries of TT would be helpful. Similar to a textiles park concept, ‘Technical Textiles Parks’ can stimulate a positive environment for the growth of the TT sector.
We can definitely position India as a potential hub for TT, provided we develop world class infrastructure, technology levels, skill development programmes and a government policy framework which will support our vision. We also need to have new entrepreneurs with new mindsets to explore innovative marketing and manufacturing techniques.
Abundant raw material
Steady increase in infrastructure development
Real estate growth
Consideration for geo-textiles in SOR by central ministry
Growth in automotive sectors
Increase in awareness of healthcare and hygiene products
Stringent laws on waste management
Popularity of various sports
Lack of awareness on technical textiles
Poor policy framework
Lack of skilled workforce
15-point roadmap to become global leader
Create awareness across the country: Awareness on technical textiles in India is not much among existing players. In order to create awareness, conferences and seminars should be held by various government organisations. This will not only create product knowledge, but also help in understanding market potential of TT.
Ensure availability of right type of fibres: Availability of right type of raw material is essential for growth of any sector. As TT are high-engineered products, raw materials play a very important role in their manufacturing. Raw materials must meet all standardised norms specified by industry, which will ensure that the quality of the final product is as per industry requirements.
Promote tie-ups with global leaders: As product knowledge is very limited, tie-ups with global leaders in the TT sector will help in the growth of the industry. Most automobile companies have followed the same strategy in the past. This will benefit Indian players to both gain product knowledge as well as capitalise the market.
Encourage FDI: Vast market potential for future, skilled man power and abundant availability of raw material gives a cutting edge advantage to India as an investment hub for the TT sector for foreign players. Encouraging FDI in the sector will help in growth of the sector in India as well as provide employment opportunities.
Value addition in existing setup for woven technical textiles: Due to lack of product knowledge, investors are hesitant on investing in TT. They can think of diversifying into TT using existing capacities so that they can test the market. After gaining full confidence, they can subsequently get into full-fledged investments.
Establishment of knowledge-sharing centres: It is necessary that product knowledge of TT reaches out to grassroot levels. This can be done by setting up knowledge-sharing centres in each and every textile hub in the country. These centres would facilitate matters for new entrepreneurs.
Replace existing conventional products with technical textiles: For many of the individual and industrial uses, TT products offer better options over conventional products. These products are much more beneficial over conventional products in terms of their performance. e.g. roof insulations.
Create concept selling for TT products: Concept selling can be an influential way in promoting TT products in India. e.g. sportech offers benefits like easy movement, stretchability and comfort to swimmers which can help them improve their performance.
Mandatory use of disposable medical textiles: Just as awareness of health and hygiene is increasing in India day by day, so is it in the case of medical textiles. Strict rules on use of disposable medical textiles will increase the overall demand of medical textiles in the country and help in growth of the segment.
Mandatory use of protective textiles at all common places: Strict laws on use of protective textiles like fireproof materials in public places can avoid many tragic fire accidents and will reduce overall losses because of such accidents. This will help in promoting protective textiles in the country.
Use of geo-textiles for all roads: In most foreign countries, use of geo-textiles is mandatory in infrastructure projects. In India, infrastructure is increasing at a steady rate. Stringent government laws for use of geo-textiles will promote the segment.
Promotion of agro-textiles to avoid wastage of food: Agro-textiles are extremely beneficial to farmers, but unfortunately in India awareness on agro-textiles is very limited causing huge wastage of food every year. A national farmers’ education programme will help in creating awareness about agro-textiles in agriculture.
Creation of infrastructure like special mini-textile parks for technical textiles: Mini textile parks for technical textiles will help in creating support infrastructure for setting up TT units.
Brand – Made in India: Creating a strong ‘Made in India’ brand will promote Indian TT across the globe especially for products where we can differentiate.
Futuristic strategy to meet demand-supply gap: We need to frame our vision, strategy and action plan by correct assessment of the demand and supply gap, and position India as a strong player in the international market for supply of TT.