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Recommendation Date : 21-Jun-2010 Last Update Date : NA
Textiles :

Estimated to be the second largest in the world the Indian textile industry accounts for almost 30% of the total exports. The importance of textiles as a sector can be gauged from the fact that it generates the highest number of jobs only next to agriculture. Estimates suggest that approximately 12 million jobs are created by various segments of the textile sector annually. Another most important factor that goes in favour of the textile sector is the availability of raw materials. Be it cotton, polyester, silk or viscose, the availability of these materials is abundant in India. Why is the sector so important? Textiles were looked upon as the next big thing especially after the dismantling of the quota regime. International brands flocked the Indian shores for outsourcing their global supplies as well as to source materials. The government too has been supporting the sector well. It has lent its support to this sector through the technology upgradation fund scheme (TUFS) which provides a focal point for modernization efforts through technology upgradation.  With a stable government at the centre the future of the sector looks even brighter. The new government has already committed a fund of around $5 billion exclusively for the sector. With recessionary pressures easing considerably one sub sector which is likely to benefit from the thrust laid out by the government in the progress of this sector is textile machinery manufacturers. The following factors lend strength to our bullish conviction on this sector:

      ·  India is a country rich in resources including raw materials required by the textile sector. It is one of the largest producers of cotton in the world.

        · Trained manpower in large numbers which keeps the overall labour cost on the lower side is also another advantage that the Indian textile industry has.

         ·  The capability of Indian spinning is highly regarded globally with an across the board presence in the value chain.
· The availability of huge tracts of land with older players in the textile industry adds strength to the fundamental view on this sector. 

Why are we bullish on textile industry?

Part of the core industries of the Indian economy, the textile industry in India has the absolutely right growth ingredients. Its spinning and weaving capability as well as capacity to manufacture internationally acceptable quality of readymade garments provides it the global appeal. This global appeal is what is attracting a huge number of international brands to the Indian shores. The Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested a five year policy to revitalize and restructure the Indian textile industry. Accordingly a steady growth target of 15% for the domestic industry and 20% a year for exports has been set.  It is expected that this growth would result in the textile industry assuming an overall size of $106 billion by 2015 with exports at around $66 billion. All this signals to the good times that the textile industry is likely to witness going forward.

Recommended Companies:
Company Name
Aarvee Denims & Exports Ltd
Arvind Ltd
Bombay Dyeing & Manufacturing Company Ltd
Bombay Rayon Fashions Ltd
Raymond Ltd
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