Industry Overview:
Textile Industry

Global textile and apparel industry is estimated around US$ 550 billion and is expected to reach around US$ 700bn by 2010 and US$ 805bn by 2015 at a CAGR of 7% (FY09-15E). Indian textile and apparel industry is estimated around US$ 61billion and is estimated to reach around US$ 110billion by 2012, a 22 % CAGR (FY09-12E). India's strong fundamentals like growing young population, rapid urbanization, rising disposable incomes and the inception and success of organized retailing are expected to boost the local demand. Domestic market is projected to increase from US$ 40billion in FY09 to US$ 60 billion by 2012 at CAGR of 15%. Textile exports are expected to grow at a CAGR of 34% during FY09-12E (from US$ 21 billion to US$ 50 billion).During the FY09 readymade garments constitute 49% of total Indian textile exports. (Source: Prabhudas Lilladher) Indian textile industry contributes about 14% to nation’s industrial production, 4% to the nation’s GDP and 16.63% to export earnings. The biggest employment generator after agriculture sector and is expected to generate 12 million new jobs by 2010. The sector targets US$ 6bn FDI by 2015 to be invested in green field units in textiles machinery, fabric and garment manufacturing, as well as technical textiles.(

Growth Drivers:

        Rising Income Level: Income levels in India have seen a marked increase in the past few years. As income         levels continue to rise, though possibly at a slower pace versus the past few years, this should give         consumers more means to go out and spend their disposable income. Household income is expected to grow         by 40-45% by 2012 over 2007 levels, leading to a rise in disposable income. (Source: Nomura Research)

       Increased Urbanization: According to UN Population Division, India’s urban population is projected to rise        from 29% of total population in 2005 to 41% by 2030. The annual population growth in India’s rural areas has        been declining since reaching a peak of 1.9% during 1980-85. It will record declining growth rate by 2025. In        comparison, the urban growth rate reached a peak of 3.9 percent during 1975-80 and has been declining        since, yet will remain above two percent till 2040.(Source: Nirmal bang Research)


       Growth in Organized Retail Industry: The Indian organized retail industry is estimated at about US$300        billion and is expected to grow to US$ 427 billion in 2010 and US$ 637 billion in 2015. In retail market, India        today is the second fastest growing economy of the world after China. Indian market has become the most        lucrative market for retail investment in the world. According to Italian Trade Commission, apparel today has        the largest share of the modern organized retail in India i.e. 20% of the current market of INR 56,000 Crores        and this is expected to grow at a constant rate of 20% over the next 4 years.(Source: Nirmal bang Research)


       Indian logistics industry is fragmented, consisting of individual truck owners, small truck-fleet operators and        single office logistics providers. In 2007, organised players accounted for only 6% of the total US$ 100 billion        Indian logistics industry. (Source: Government of India). The most important logistics functions for Indian        companies still are transportation and warehousing.

       The most important segment of Indian logistics industry is the warehousing business which accounts for        around 20% of the industry. The growth in international trade has led to high demand for warehouses. The        market is presently valued at US$ 20 billion with organised warehousing having a capacity of approximately 80        million tons and growing at 35 to 40% per annum. (Source: Signature Group)

       The underlying demand for superior infrastructure and logistics growth is directly linked to India’s continued        growth. The Government is planning to invest US$ 475 billion into infrastructure during this 11th five year plan        ending in 2012 making for huge Public Private Partnership (PPP) opportunities. (Source: Signature Group)

       An investment of approximately US$ 500 million is being planned by various logistics companies for the        development of about 45 million square feet of warehouse space by 2012, along with approximately 110        logistics parks are likely to come up in India by 2013. (Source: Signature Group)

       Types of warehouses:

  • Private Warehouses - These warehouses are owned and operated by big manufacturers and merchants to fulfill their own storage needs.
  • Public Warehouses - These warehouses are specialised business establishments that provide storage facilities to the general public for a certain charge.
  • Bonded Warehouses - These warehouses are licensed by the Government to accept imported goods for storage until the payment of customs duty.

Growth Drivers:

       FDI in Warehousing:India’s logistics sector remained unorganised and devoid of investor interest till quite        recent past. The increasing role of organised players and sustained growth in the industry has started        attracting investor interest. 100% FDI under automatic route for Special Economic Zones (SEZ) and Free        Trade Warehousing Zones (FTWZ) is allowed subject to Special Economic Zones Act, 2005 and the Foreign        Trade Policy.

       India as a global manufacturing base: India is gradually acquiring a position of low cost high quality        manufacturing base for a host of products like cars (particularly small cars), motorcycles, auto parts etc. This        creates a huge demand for warehousing industry.

       Growing Foreign Trade:
       Globalisation has led to a much higher level of import and export of goods and services. This is leading to        increased logistics infrastructure.

       Commodity Exchanges:
       Setting up of commodity exchanges has spurred the demand for professional warehouses.

       Organised Retailing:
       As logistics-savvy retail firms will move towards multi-source strategies, pre-distribution of products at point of        origin and proactive management of the inbound movement of cargo, 3PL providers will have a greater        opportunity to create more flexible transportation and distribution networks for the Indian retail industry.

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