Does integration equal export victory? A look at Tamil Nadu's textile model

1. TOPIC: FEATURE Does integration equal export victory? A look at Tamil Nadu's textile model Meta Description: How does an integrated textile ecosystem benefit exports? Is it the only key to success? Examine Tamil Nadu &Tiruppur's model. While Tamil Nadu continues its reign as the top textile exporting state in India, a closer examination of the data reveals an interesting picture regarding its leadership across all textile and apparel (T&A) export sectors. While the state holds a significant overall share, it unequivocally leads in all categories requires a more detailed analysis. Moreover, the question of whether an integrated ecosystem, from yarn to apparel, is the sole determinant of export success warrants exploration with evidence from various states. In FY 2024-25, Tamil Nadu contributed $7.99 billion to India's total textile exports of $36.61 billion (26.81 per cent). While this is a dominant position, the country-wise break-up indicates that readymade garments constitute the largest share of exports ($15.99 billion), followed by cotton yarn/fabrics/made-ups & handloom products ($12.06 billion), and then man-made yarns/fabrics/made-ups ($4.87 billion). Table: Estimated state-wise break-up for FY 2024-25 Estimated readymade garments ($bn) Estimated cotton yarn/fabrics/made-up s & handloom products ($bn) estimated man-made yarns/fabrics/made- ups ($bn) State Tamil Nadu ~4.28 ~2.90 ~0.58

2. Gujarat ~2.73 ~1.85 ~0.37 Maharashtra ~2.05 ~1.39 ~0.28 Karnataka ~1.23 ~0.83 ~0.17 Uttar Pradesh ~1.10 ~0.74 ~0.15 Based on these estimations, while Tamil Nadu likely holds a position in readymade garment exports due to its strong manufacturing base in areas like Tirupur and Chennai, it's not definitive that it leads in all categories. For instance, Gujarat, with its strong base in cotton processing and synthetic textiles, might have a larger share in the cotton yarn/fabrics/made-ups & handloom products or Man-Made Yarns/fabrics/made-ups sectors relative to its overall export value. The role of an integrated ecosystem in promoting apparel exports The success of Tamil Nadu's textile exports is often attributed to its well-integrated ecosystem. Having a strong base across the value chain, from raw material sourcing to finished garment production, offers several advantages. Reduced lead times: Proximity of different stages of production minimizes transportation time and coordination challenges. Cost efficiency: Local sourcing of raw materials and in-house processing can reduce costs. Quality control: Closer oversight across the value chain allows for better quality control at each stage.

3. Responsiveness to market demands: An integrated system can be more agile in adapting to changing fashion trends and buyer requirements. Tiruppur, the knitwear hub Tiruppur, often referred to as the ‘Knitwear capital’ of India’ exemplifies the benefits of an integrated ecosystem. The region boasts a concentration of spinning mills, knitting units, dyeing and printing facilities, and garment manufacturing units. This close proximity enables efficient production and quick turnaround times, making it a preferred destination for international buyers of knitwear. As A Sakthivel, Chairman, Federation of Indian Export Organisations (FIEO) Southern Region points out, the integrated nature of our textile industry in Tamil Nadu, particularly in clusters like Tiruppur, gives us a significant advantage in meeting the demands of global apparel markets. The seamless flow from yarn to garment ensures both quality and speed, which are crucial for exports.However, relying solely on an integrated ecosystem as the answer to promoting apparel exports might be an oversimplification. Success in the global market is influenced by a multitude of factors beyond just the production chain. However, relying solely on an integrated ecosystem as the answer to promoting apparel exports might be oversimplification. Success in the global market is influenced by a multitude of factors beyond just the production chain. Factors beyond integration influencing apparel exports ● Market access and trade agreements: Preferential trade agreements and access to key markets play a crucial role. ● Design and innovation: The ability to create innovative and trendy designs is essential for capturing consumer interest. ● Branding and marketing: Establishing strong brands and effective marketing strategies are vital for higher value realization. ● Logistics and infrastructure: Efficient port facilities, transportation networks, and warehousing are critical for timely delivery.

4. ● Policy environment: Government policies related to tariffs, subsidies, and ease of doing business significantly impact export competitiveness. ● Sustainability and ethical practices: Growing global awareness of environmental and social issues necessitates adherence to sustainable and ethical manufacturing practices. Against sole reliance on integration Bhiwandi in Maharashtra is a major powerloomcenter producing a large volume of fabrics. However, the apparel manufacturing sector in the region is not as integrated. While it produces fabric, a significant portion is sent to other centers for garmenting. Despite being a large fabric producer, Bhiwandi's direct apparel exports might not be as high as regions with more integrated units. This suggests that simply having fabric production capabilities doesn't automatically translate to high apparel exports without a strong garmenting ecosystem and focus. As experts point out, while a strong manufacturing base is important, just having an integrated system doesn't guarantee export success. Focus on design innovation, building brands, and accessing international markets effectively also need focus. Without these, even the most efficient production chain might not yield optimal export results. Indeed, Tamil Nadu's lead in overall textile exports is undoubtedly supported by its well-established and integrated ecosystem. However, it does not lead in all textile export sectors. While an integrated ecosystem offers significant advantages, it is not the sole determinant of apparel export success. Factors like market access, design capabilities, branding, logistics, policy support, and adherence to global standards are equally crucial. The experiences of other states like Gujarat and Maharashtra highlight that different strengths and strategic focuses can lead to varying levels of success in different segments of the textile and apparel export market.