Slide 1

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 2

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 3

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 4

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 5

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 6

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 7

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 8

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 9

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 10

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 11

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 12

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 13

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 14

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 15

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 16

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 17

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 18

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 19

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 20

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 21

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 22

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 23

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 24

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 25

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 26

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 27

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 28

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 29

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
26

Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
27


Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
28
 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
29
 India’s dependence on monsoons for cotton crop


Thank you

30


Slide 30

Cotton & Textile Industry of India &
Development prospects for the future.
Presented By :
Mohit D. Shah
Director

Gill & Company Pvt
Ltd.
Mumbai, India
Sept 17, 2007
(Full Version)
1

Structure
 Indian

Textile Industry – at a glance
 Share of cotton v/s MMF
 Indian raw cotton scenario
 “ Future Trends”

2

Indian Textile Industry
- at a glance









Directly employs approximately 35 mn people
14% share in India’s total exports earnings
14% share in national industrial production
5.5% contribution to the GDP
4% share in the global textile trade
3% share in the global apparel market
25 % share in world trade of cotton yarn
Thus making it the second largest exporter of
cotton yarn in the world after Pakistan
3

On the Raw Cotton Front
Approximately 9.5 mn hectares of area under
cotton cultivation largest in the world & is
approx 27% of the world area under cotton
 2nd largest producer of raw cotton
 2nd largest consumer of raw cotton
 Poised to become 2nd largest exporter of raw
cotton after USA


4

Mills And Installed Capacity In
Organised Sector
Year 2005-06
No Of Mills
Spindles Installed (MN)
Rotors (000)
Shuttle Looms (000)
Shuttle Less Looms

2953
37.51
395
73
9788

5

Reasons









MFA that had governed textile trade between nations since 1974
expired on 31st Dec 2004
Economic liberalisation in the last decade made the industry
globally competitive in terms of price and quality
Removal of fiscal distortion in excise duties in the entire supply
chain of textile industry
Subsidy to industry by the Govt at 5% interest rate on capital
expenditure for modernisation and expansion under Technology
Upgradation Fund (TUF) for a period 10 years
Export boom for cotton yarn aided expansion of capacity
Emphasis on technology and sophisticated machinery

6

Summary
India has a high scope of producing quality
yarn and fabric
 A tremendous future growth potential lies due
to :


 Strong raw cotton base
 Strong entrepreneurial class
 Flexibility in production of small order lots
 Adequate labour supply at relatively competitive

wages
 Cultural comfort with US and Europe
 Growing domestic market
 Buyers preference for India after China
 English speaking population a language advantage



India will continue to be a major and
dominant player in textiles

7

Share of Cotton
v/s
Man Made Fibers

8

Consumption of Textile Fibers
(in ‘000 Tons)
Cotton

Non –
Cotton

Total

Percentage
Share
Cotton

MMF

( Thousand Tons)

2001-2002

2701

1833

4534

60

40

2002-2003

2699

2003

4702

57

43

2003-2004

2652

2092

4744

56

44

2004-2005

2886

2133

5019

58

42

2005-2006

3222

2136

5358

60

40

2006-2007

3580

2341

5921

60

40

2011-2012

5914

5914

11828

50

50

9

Footnote
 Share

of MMF & Cotton has remained
around 40% & 60% in 2006-2007
 However it is expected that share of
MMF will increase to 50% by 2011-2012

10

Reasons









In absolute terms, cotton consumption will rise but
its share in the total fibre/filament basket decline
Consumption of MMF will rise on account of
consumer preference due to easy-care properties,
durability and lesser maintenance cost
Prices of MMF have been relatively less volatile than
cotton
Infact prices of MMF (mainly polyester) have been
lower than comparable cottons
Productivity of manufacturing units is higher when
MMF is blended with cotton or when 100% of MMF is
used
Easy and adequate availability of MMF all year round

11

Summary


Despite the increasing trend of MMF vis-a-vis
cotton, India will still continue to be one of
the largest and major consumer of raw cotton
in the years to come

12

Indian raw cotton scenario
 Area
 Yield

 Production

and Consumption
 Exports & Imports
 Cotton balance sheet

13

Area
( in mn hectares )

10
8
6
4
2
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

14

Reasons
Steadily rising over the last three years from
8.79 mn hectares in 2004-05 to 9.16 mn
hectares in 2006-07
 Will increase to 9.5 mn hectares in 2007-2008
 Cotton prices have been generally
remunerative for farmers in comparison to
other cash crops such as rice, wheat, chilies,
ground nut, soyabean and tobacco
 Large portion of area, where farmers have no
alternative but to plant cotton


15

Yield
( in kg. / hec. )

600
500
400
300
200
100
0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

16

Reasons

Dramatic increase
 From 399 kgs per hectare in 2003-2004 to 521kgs
per hectare in 2006-2007
 Forecasted to rise to 550 kgs per hectare of lint
cotton in 2007-2008
 Although still much lower compared to the world
average of 740 kgs/ hecter


Reasons for increased yields.
 Phenomenal spread of hybrid and Bt. Cottons
 Nearly 70 % under bt cotton in 2007-2008
 Adoption of scientific agronomic practices by farmers
 Increase in area under irrigated cotton
 Augmented development of good quality seeds by
private sector
 Development efforts by Technology Mission on
17
Cotton, East India Cotton Association and other NGOs

Production & Consumption
( in mn bales of 480 lbs )
25
20
15
10
5
0
2002-03

2003-04

2004-05

2005-06

production

2006-07

2007-08

consumption
18

Reasons
Production
 Has posted sharp increase during the last three years
 From of 17.90 mn bales in 2003-2004 to 28.00 in
2006-2007 mn bales & forecasted at 31.5 mn bales
2007 – 08
Reason for sharp
 Favourable climatic conditions
 Increased area under cotton cultivation
 Dramatic improvement in productivity from bt cotton
 Better seed management
19

Consumption
 Also increased significantly From 16.88
mn bales in 2003 – 04 to 23.5 mn bales
in 2006 – 07
 Forecasted at 25.5 mn bales 2007 – 08

20

Imports and Exports of Indian Cotton
Over Last Five Years
(in mn bales of 480 lbs)

6

4

2

0
2002-03

2003-04

2004-05

Imports

2005-06

2006-07

2007-08

Exports
21

Reasons














New paradigm shift
From being a net importer to a net exporter (second largest in
the world)
Large exportable surplus to continue in the years to come
India is the only Country producing all kinds of cotton for
spinning with a wide range of counts from 10s to 100s
82% of the total crop is Rollar Ginned
Modernisation of Ginning & Pressing Factories / Market Yards
under TMC schemes
Spinning value of Indian cotton fibre is far better because of
manual harvesting and gentle processing which minimises the
damage to fibre
Geographical proximity leading to advantage in transit cost and
transit time
Indian varieties well established in all major consuming markets
like China, Pakistan, Bangladesh, Turkey & the Far East
Demand for imported cotton will also grow but will mainly be
confined to els cottons like US pima, Egyptian an Cis
Imports currently take place with a customs duty of 10%
22

Cotton Balance Sheet
( in mn bales of 480 lbs each )
2002-03
(Oct-Sept)

2003-04
(Oct.–Sept)

2004-05
(Oct.-Sept)

2005-06
(Oct.-Sept)

2006-07
(Oct.-Sept)

2007-08
(Oct.-Sept)

% world

World
2007-08

3.125

1.875

1.640

5.625

4.062

3.804

10.625

13.828

18.984

18.828

21.875

24.576

1.380

0.507

0.950

0.390

0.429

0.546

40.08

15.130

16.211

21.575

24.843

26.367

28.928

214.65

11.126

11.738

12.811

14.062

15.625

17.187

Non-Mill user

1.154

0.781

1.131

1.484

1.562

1.171

Small Scale Units

0.908

1.015

1.294

1.562

1.171

1.562

Exports

0.065

10.351

0.714

3.671

4.296

4.687

13.255

14.570

15.950

20.781

22.656

24.609

1.875

1.640

5.625

4.062

3.711

4.320

Supply:
Opening Stock as on
1st October
Estimated Crop
Imports

Total Availability

56.79
20.9%

117.18

Demand:
Consumption :
By Mills

Total Off-take
Carry over as on 30th
September

13.5%

127.78

11.8%

39.7

167.48
8.4%

51.56

23

Summary


The cotton balance sheet reveals
 The is a large carry over for last three years is

declining
 India has been a major exporter of cotton due
large surplus
 In 2007-2008 India’s % share in World production
will be 20.9%, consumption13.5% , exports11.8%
and ending stocks 8.4% repectively

24

Future Trends

25

FutureTrends In Cotton Production And
Consumption (in mn bales of 480 lbs)
35
30
25
20
15
10
5
0
2007-08

2008-09

Production

2009-10

2010-11

2011-12

Consumption
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Reasons
Production forecasted to increase from 24.2
mn bales in 2007-2008 to 32.00 mn bales in
2011-2012
 Consumption forecasted to increase from
19.90 mn bales in 2007-2008 to 31.00 mn
bales reducing thus wide gap between
production & consumption
 Momentum gained by Indian cotton sector in
recent years will be maintained with
continued focus on further improvement in
quality and sustained increase in productivity
atleast to the world average by the year 2010
 In short term, i.e. in next 3 years, India is
likely to have surplus cotton available for
exports
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

Future Trend of India in the
Global Textile & Clothing Market
Current global textiles and clothing industries a $480
billion is expected to grow to about $700 billion by
the year 2012
 Based on 9% economy growth
 India’s Textile & Apparel sector in the global textile
export trade likely to grow from 4% in 2005 to 7%
in 2012
 India’s textile exports is likely to grow from $20
billion in 2006-07 to $50 billion in 2011-12
 Increase in per capita fiber consumption in the
country as disposal incomes rise in the middle class
the size of the domestic market estimated to grow
from $30 billion in 2006-2007 to $43billion by 20112012
 Employment likely to grow from 35 mn in 2006 to 40
mn in 2012
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 Total spindles likely to increase from 37.00 mn in


Homework to be done & Areas of
concern

Improvement required in the Govt labour policy
 High transaction & power cost
 Fabric/ Processing still to gear to meet international
standards
 Rupee appreciation against the dollar over last two
months by about 10%. Among our major competitors
Sri Lanka, Bangladesh & Vietnam witnessed
depreciation of their currencies and countries like
China & Indonesia had negligible currency
appreciation
 Rising interest rates
 Possible rise in Inflation
 Competition from other emerging markets such as
Brazil, Russia, China, Pakistan & Bangladesh
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 India’s dependence on monsoons for cotton crop


Thank you

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