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Cover Story | April 2017

Opportunities for India in technical textiles

Opportunities for India in technical textiles The fastest growing middle-class population with higher disposable income is one of the biggest key growth drivers in India for rise in technical textiles consumption, opines Avinash Mayekar of Suvin Advisors.

Textile industry has its presence in India since ancient times. It is contributing 14 per cent of total industrial output and directly employing about 45 million population. Though textile industry has its huge contribution in terms of export earnings, industrial output and employment generation, when it comes to investment initiatives, Indian entrepreneurs are not that positive to this sector for past few years. Entire world was expecting tremendous growth in investments in India. Let’s analyse why most of the Indian entrepreneurs are not considering textile industry as a preferred potential investment sector.

Conventional textile is highly capital and labour intensive sector with bottleneck profit margins and this is the reason, most of the existing textile entrepreneurs are looking for diversification into other sectors. Today, if we look at the mindset of the most of the Indian entrepreneurs, they are looking for investment options with low risk factors as well as higher ROI but at the same time they are not ready to explore new opportunities into textile sector. In Indian convectional textiles, generations to generations are involved into the same business but today’s scenario is totally different.

In spite of growing demand of domestic and international markets, convectional textile sector is highly made competitive due to strategic thinking of retailers. It is facing challenges such as high power tariff, high inflation rates, less control over price index, availability of skilled labours and overall decrease in profitability levels. So textile entrepreneurs have no other alternative than diversifying into other business. But why can’t they think of technical textiles as potential investment sector which is very near and dear to their own textile industry?

What are technical textiles?

Technical textiles are highly engineered products manufactured based on its functional properties for specific use, they are high value-added products, so they fetch good returns to manufacturers with profit margins. Technical textiles is a very vast and diversified sector. Depending on the product characteristics, functional requirements and end-user applications, the variety and the range of technical textile products have been grouped into 12 categories, i.e., agrotech, meditech, buildtech, mobiltech, clothtech, oekotech, geotech, packtech, hometech, protech, indutech and sportech. Each category has wide application area.

Market size

Global technical textile market that was worth $147 billion in 2014 is all set and expected to reach up to $179 billion. by 2018. Indutech, mobiltech, packtech, buildtech and hometech are the five major applications, which represent two-third of world technical textile market.

Whereas Indian technical textile market is pegged at Rs 92,499 crore by 2015-16 and is projected to grow to Rs 116,217 crore by 2017-18. Technical textiles are introductory phase and has tremendous growth potentials in developing country like India.

Opportunity for India

The fastest growing middle-class population with higher disposable income is one of the biggest key growth drivers in India for rise in technical textiles consumption. The middle class is well educated and receptive to the many technical textile products particularly the disposable products. This combined with the growth of organised retail in the country is a key growth driver for technical textiles used in consumer products. The average age of Indian population is around 25 years. Significantly over 50 per cent of the population is below 25 years. Indian population is receptive to new technology and new products. They are faster in adopting global trends, so most of the global manufacturers are targeting India as a market. But Indian entrepreneurs are lagging in tapping this market potential. So, it is very necessary to understand market potential of technical textiles and first step towards it is to understand what are technical textiles.

The Indian culture is showing paradigm shift towards westernisation, so the new generation entrepreneurs should think of untapped market segments. As we are moving towards globalisation, our needs and market demands are changing and the products like wet wipes, disposable home textiles, travel kits, air bags, high end sports textiles and disposable medical textiles will be products of daily consumption in near future.

If we go 20 years back, products like sanitary pads, baby diapers or wipes, were hardly used by mass population. But today, these products are reached to rural parts of India. So time has come to change our mindset from conventional textiles to high value added technical textiles as investment options. Investors need to direct themselves from basics to high engineered niche products. Major chunk of technical textiles are manufactured by nonwoven technologies. These are compact technologies and give much higher production and are emerging technologies to produce complex products. As the process is very short, the utility consumption is much lower and due to huge production, the operating costs are minimal. Moreover, there is hardly involvement of human beings and hence quality is determined by technology and very less chance for human interference. In India only 12 per cent of technical textiles products are manufactured by nonwoven technology as compared to 24 per cent of usage in the world. So India still has long way to go to meet global requirements of nonwovens.

Cotton industry grew in India due to abundance of cotton. India is supplying conventional cotton products to the world since centuries. India is the second largest producer of cotton in the world after China accounting 18 per cent of the world cotton production. Total cotton cultivation area is around 12.2 million hectare. Total consumption of cotton in India is 64 per cent of total production and most of consumption accounted by conventional textiles. But if we look at the conventional textiles market, it is over saturated. So it is necessary for Indian entrepreneurs to diversify the product mix.

We should identify huge potential of cotton based technical textile products like wipes, cotton pads, healthcare products, layers in diapers and sanitary napkins in domestic as well as global markets. Global market of medical textiles including hygiene products was at $10.7 billion in 2016 and expected to reach $11.7 by 2018 with CAGR of 4.5 per cent. Though India is second largest producer of cotton fibre, Indian market was estimated at value of $0.64 billion and expected to reach $0.84 billion by 2018 at a CAGR of 9 per cent.

    Problems faced
  • •Mindsets of textile players: Major textile industry players are producing only easily saleable products having assured market. They are not looking for global opportunities to invest into innovative products. It is very much necessary for industry players to carry out thorough market research for each and every category of technical textile products to arrive at demand-supply gap and forecast future demand. In fact, certain products like woven technical textiles can be manufactured with their existing infrastructure with minor changes e.g. filter fabric, tarpaulin fabric, glass fabrics, etc. Consultant like us, who know these markets and technologies, and having full knowledge of each and every technical textile product categories can assist in devising market strategy with the realistic approach.
  • •Lack of R&D: R&D is an integral part of technical textile segment. Each and every product is highly engineered product and technical specification changes with end use and final applications. Slight deviation in technical parameters can lead to failure so it is necessary to be cautious at every stage of manufacturing. Right technology, right quality raw material, right process and skilled work force are the keys to manufacture right technical textile product. In India, we lack in R&D, so it is necessary to focus on this aspect.
  • •Support from financial institutions: Surprisingly, a major criterion for financial institutions for financing the project is past record of the industry and based on few NPA’s from textile industry in past, they tend to develop negative image of overall textile industry. So, it is necessary to highlight the market potential of technical textile products in bankable reports. It is equally make them understand that though technical textile is part of the textile industry, how different they are from conventional textiles.
  • •Availability of right raw material: Right kind of raw material is very essential for production of technical textile products. However, India is yet to develop a huge range of raw materials, which is suitable for various applications and usage. In fact, we need to target international markets at this stage for supply of raw materials even though these markets are yet to be developed in India.
  • •Old marketing techniques: We have to shift our approach from selling products in existing markets to exploring new market segments. It is necessary to study the market thoroughly with SWOT analysis, competitor analysis, PEST analysis and five force analysis to arrive at unique market strategy. Moreover, we need to understand requirements of the end user and accordingly make changes in our products. Sampling plays very important role in devising market strategy for technical textile products.
  • Roadmap for India

    Time has come to position India as manufacturing hub for technical textile. In order to position us in global market, we need to understand technical textiles thoroughly. We need to create awareness amongst each verticals of textiles industry. The government is already taking initiatives to promote technical textile among the value chain, but efforts taken by government are not enough. So, first step into positioning India as technical textile hub is to carve out market strategy and action plan. We need to map out existing technical textile demand and future growth rate in each of the 12 technical textile segments in domestic as well as global markets. Once demand assessment is done, we need to analyse our current potentials in terms of raw materials, infrastructure, technology level and human resource.

    The assessment of additional raw material, infrastructure and technology level and skill development is required to match the global and domestic demand and make India as leading global player. The demand-supply analysis will gives us clear picture of enormous opportunities available in technical textile segment and we can device our market strategy for technical textile segment.

    Thus we can definitely position India as potential hub for technical textile provided, we develop world-class infrastructure, technology level, skill development programme and government policy framework, which will support our vision. However, we need to have entrepreneurs with new mind set to explore innovative marketing skills and manufacturing techniques… which is the prerequisite!

    I am sure, the way things are happening recently in India; we are all set to create a new horizon in the global market, encashing on our strengths and resources to give honour to the entire nation as one of the prominent players in the global technical textile market.

    The article is authored by Avinash Mayekar, MD & CEO, Suvin Advisors.

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