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(Last updated: 22 July 2008)
Trends and opportunities
The market
Australia is the largest supplier of wool to India. Although India’s woollen textile and clothing industry is relatively small in comparison to the cotton and man-made fibre based industry, India is still the third largest importer of Australian wool.
As a large exporter of textile and apparel products, imports of wool are crucial to the Indian textile industry in terms of export revenue as demand continues to rise. In 2006-07 over 99 million kilograms of raw wool (Merino/New Zealand-Greasy/Scoured) was imported into India compared to almost 73 million kilograms in 2001-02.
India’s textile product portfolio is diverse, ranging from textile intermediates to finished textiles, garments, knitwear, blankets, carpets, with a growing presence in technical textiles. Most of the wool produced indigenously (1.8 per cent of the world’s production) caters to civil and defence requirements for warmer clothing. Close to 85 per cent of this wool is of coarse quality used mainly in the manufacture of hand-knotted carpets. Five per cent is apparel grade and 10 per cent is coarse grade used mainly for production of blankets.
India is heavily dependent on imports for its requirements of good quality wool, including apparel grade wool. A large quantity of wool from Australia, New Zealand, China, the Middle East and other countries is increasingly being imported.
The woollen sector plays an important role in India by linking the rural economy with the manufacturing industry and provides employment to over 270,000 people. It is widely spread throughout rural and urban India, mainly in the states of Punjab (40 per cent woollen units), Haryana (27 per cent), Rajasthan (10 per cent), Uttar Pradesh, Maharashtra and Gujarat.
The woollen industry is broadly divided between the organised and decentralised (unorganised) sectors.
Organised industry:
- Composite mills
- Combing units
- Worsted and non-worsted spinning units
- Knitwear and woven garment units
- Machine-made carpet manufacturing units
Decentralised industry:
- Hosiery and knitting
- Powerloom
- Hand knotted carpets, drugget, namadahs
- Independent dyeing and processing houses
For statistics on the textile industry in India please see the textiles industry overview sourced from the Ministry of Textiles website.
Opportunities
Wool ranging from 17.5-25.5 microns constitutes the bulk of India’s imports, with 20.5, 21 and 22.5 microns being in greatest demand.
Wool is also imported by mills for manufacturing products for the domestic market. This market has been in decline for several years, mainly due to climate changes (shrinking of the winter season) and a lack of awareness about technological developments in wool. However, with rising affluence among consumers and growing awareness in the industry, this trend is witnessing a change.
As the Indian textile industry matures and the consumer becomes more brand conscious, a large number of Indian apparel brands are keen on using wool as a differentiating factor. This has also led to an interest in fine quality lower micron wool, as against the higher microns that traditionally constitute the bulk of India’s raw wool imports. Although this is an emerging trend, it is expected to gather strength over the medium term.
Australian wool export to India (July–June)
In order to boost the export of textiles and garments, several concessions have been given on import duties on specified textiles and garment machinery including woollen machinery. This will encourage the manufacture and export of garments (including woollen) from India and lead to an increase in the demand for wool from Australia. The import duty for apparel grade raw wool has been fixed at five per cent. Lower import duties will encourage import of wool and Australia, being the largest wool supplier to India, will benefit from this increased demand.
In the Foreign Trade Policy 2002-07, the threshold for obtaining ‘Export House’ status has been lowered to Rs. 50 million for the small scale industry (SSI) sector. This will encourage development of centres of economic and export excellence such as Tirupur (Tamil Nadu, South India) for hosiery and Ludhiana (Punjab, North India) for woollen knitwear. The woven readymade garments sector has been de-reserved from the SSI sector to encourage foreign direct investment inflow. Keeping in view market trends, the Ministry of Textiles is also promoting blending of products by encouraging R&D activities for blends of wool with other natural fibres and also the specialty woollen fibres, ie. pashmina and angora.
Competitive environment
Australia is the market leader in the Indian wool industry and supplies more wool to India than any other country. Besides Australia, New Zealand, China and the Middle East are key suppliers of wool to India.
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