Polyester Based Textiles to Bring the Next Big Change in Indian Textile & Apparel Industry

The world has tilted its fiber mix in favor of polyester fiber, India has remained cotton focused. Cotton accounted for nearly 55 percent of total fiber consumption in 2012. However, consumption of polyester fiber is gaining momentum due to various factors. Arindam Saha, Associate Director, Wazir Advisors, takes a look at the opportunities in polyester based textiles.
We feel proud to rank second in global trade of textile and apparel with 5.2 percent share in 2013. In textiles export our share is even higher at 7 percent in the same year. But is it the right market share considering all our strengths? Have we leveraged all our strengths to its fullest possible? We believe, if the Indian textile industry takes the right steps and gets adequate policy support from the Government, it can add another $400 billion by 2025 to its present size of $108 billion.
This may attract investment of US$ 200 billion and create job for another 35 million people in the same period. Our industry and Government need to take quite a few right steps together to achieve such high growth. Focusing on polyester based textile manufacturing will be the most significant one.
While the world has tilted its fiber mix in favor of polyester fiber, India has remained cotton focused. Cotton accounted for nearly 55 percent of total fiber consumption in 2012. However, consumption of polyester fiber is gaining momentum due to various factors; price fluctuation of cotton fiber is one of the major reasons.
In the global trade of Man Made Fiber (MMF) based textiles and apparel, India’s presence is insignificant. Out of total 864 MMF based textile and apparel commodities (at 6 digit HS code level) traded in 2012, India had less than 1percent share in 317 commodities. Collective trade of those 317 commodities was US$ 208 billion, while India’s trade was only US$ 385 million, which is just 0.19 percent.
A closer look at the table above reveals that except two categories (dresses, blouses, shirts and shirt-blouses), India had very low share in all other top traded MMF based apparel categories. Cut and sew operation of MMF based apparel is no different than cotton apparel. But unavailability of required MMF based fabrics in optimum quantity has forced our apparel and home textile manufacturers to remain cotton focused.
India needs to focus on this untapped opportunity not only for ensuring higher share in global trade but also to remain as a significant player. Failing this, Indian may even loose its present market share as we foresee increased consumption of polyester fiber at global level in coming time. Till 2000, global consumption of cotton and polyester were almost equal. Polyester has increased its share steadily since then and at present the world consumes much more polyester than cotton. The gap is going to widen further and by 2030 share of polyester will be more than double of cotton. If India remains cotton focused, it will miss out a much bigger chunk of business opportunity than now. In domestic market we are observing increased presence of global apparel brands and its dominance is going to only increase in coming time.
Sixty to seventy percent of their product basket is MMF based and polyester has about 90 percent share within MMF category. Due to policy framework and obvious business senses, the global brands are increasingly sourcing their merchandise from Indian manufacturers and this has pushed up consumption of polyester fiber at the mill level. Being the fashion leaders, those global brands influence fashion trends of the market. We may observe a significant change of fiber mix in the product basket of Indian brands very soon.
Women’s wear segment, which use more MMF compared to men’s wear, will be growing at a faster rate in domestic market and will have majority share (45 percent) by 2025. Growth of value retailing will also influence consumption of MMF positively. All points put together, demand of MMF and thus polyester based products will increase exponentially in domestic market. Our industry should better gear up to meet such demand. Otherwise, brands will find out alternative sources.
India is not only self-sufficient in polyester fiber and filament manufacturing but also exporting to other textile manufacturing countries. In spinning, India is globally  competitive. Our spinners can produce spun yarn of any blend if such demand arises. The bottleneck of the entire value chain is fabric production and processing. Both weaving and knitting sectors are still very much fragmented, small scale and use inferior technology. About 85percent of our total fabric production is from decentralized sector.
Most of our processing units use age old technology and have low capacity. Substantial investment is required in both segments, preferably as integrated unit, to achieve right scale and technology level. Till date India is manufacturing majorly low grade polyester fabrics where value addition is almost nil and thus the margin level is very low. Those fabrics are majorly supplied to the mass segment of domestic market through a long and complicated supply chain which lacks in service qualities. It is very much difficult to gain market share in global trade with such industry structure. We need big scale integrated set up with state of the art technology.
India needs to focus on value added polyester based finished fabric production.  Performance fabrics for active wear, swim wear, protective wear etc. have great potential in domestic as well as export markets. Fashion fabrics for women’s wear, blankets and quilts have very promising future for export business. Coated and laminated polyester based fabrics for automobile applications have high domestic demand as India has emerged as a major hub for automobile manufacturing. If our industry and Government focus on this untapped opportunity, India may start consuming more polyester fiber than cotton within next five years. Indian entrepreneurs are well aware about the opportunities in polyester based textile products but hesitating to invest due to lack of technical knowhow and market access. Korean, Taiwanese, Japanese and some of the Chinese companies are dominating this sector worldwide. Recently we met some of the leading MMF based textile manufacturers in those countries along with our strategic partner PCI Xylenes and Polyesters.
Those companies are looking out for next investment destinations beyond their own countries and India is one of the choices. Lack of infrastructure availability, complications in setting up of business and low level of understanding about the Indian companies are the road blocks for global companies to invest in India. Although, couple of successful JVs between Indian companies and global leaders will change the landscape totally. While the global player will bring in technical understanding and global market access; the Indian counterpart will help in establishing the business in India.
Understanding of the domestic market and existing network therein will be the other advantages which the Indian company will bring in. We have carried out a syndicated international research work for last 18 months to identify the investment opportunities and profile the possible partners who can join hand to set up MMF based textile manufacturing facilities in India. Hopefully this report will act as a catalyst and we will observe major investments in identified product categories.