Why garmenting is not growing in Gujarat!

The textile state of India, industrial robust state, the largest producer of man-made fibre and denim… these diverse names aptly describe the industrial dynamism that Gujarat is known for so long.

The state, having a share of around 12 per cent of India’s textile exports, provides a plethora of advantages, whether it is in the form of industry-friendly policies, overall good infrastructure (right from roads to ports), 30 sanctioned textile parks, entrepreneurship, availability of all kinds of resources, etc. Right from cotton, yarn and fabric, to processing facilities, training facilities, Gujarat has the entire ecosystem within it which are a must to be successful in garment manufacturing. Besides, just 2 years ago, the State Government announced interesting subsidies under garment and apparel policy 2017 with the aim to generate 1,00,000 jobs at an investment of Rs. 1,600 crore in next 5 years. Despite all these positive factors, apparel manufacturing in an organised way has not increased well in the state, especially as per the potential.

Apart from Arvind Ltd., there is no corporate or top-level company with such large-scale garment manufacturing operations present in the state. Ahmedabad, Surat, Vapi (Valsad) are the major cities for textile production including garmenting. Welspun Ltd., Raymond, Aditya Birla (Grasim) and few more giants have their textile or allied manufacturing operations in the state but not apparel manufacturing. Even a few biggies who have entered into garmenting in the state by forward integration, have not been able to succeed. On the other hand, the aforementioned cities have thousands of SME apparel manufacturers and jobworkers and their number is growing. In discussion with various industry players, Apparel Resources explores the status of garment manufacturing in Gujarat and the reasons for the same.

Some of the major issues because of which garmenting is not an integral part of Gujarat are insufficient availability of mid-level management, indisciplined labour, lack of working culture required for apparel manufacturing, corrective measures required in policies. Moreover, growing challenges in apparel manufacturing make leading companies and corporates choose comparatively easy options to make money, be it their existing fabric manufacturing, share market, real estate, rather than investing in apparel manufacturing.

“It is right that there is no player like Arvind in the state as far as garment manufacturing is concerned and we cannot find an answer why this is so, despite all reasons you mentioned,” Vijay Purohit, President, The Gujarat Garments Manufacturers Association (GGMA)

To add fuel to the fire, all efforts towards skill development have not proved to be fruitful for Gujarat-based apparel manufacturers. For example, Trylo Intimates, Surendranagar (120 km from Ahmedabad), has a unit of 300 stitching machines and invests around Rs. 50,000 per operator to train them properly as the trainees have never seen a stitching machine before in their life. The company pays them from day one and it takes around 8 to 9 months to get proper efficiency from these trainees.

 

“We started apparel business in 1990 in Ahmedabad, but if I would have been in Bangalore or Delhi-NCR, the business could be 10 times more by now. There is no right culture here, right from top management to the worker. This is one of the main reasons that garmenting is not growing in Ahmedabad. When it comes to garmenting, owners don’t have risk-taking capabilities and they prefer to invest in other segments,” Sachin Shah, MD, Avadat Apparels 

Hurdles 

Not enough mid-level management

Unsuccessful skill development initiatives

Availability of other lucrative options compared to apparel manufacturing

Lack of willingness to take risk

Focus more on retail, distribution rather than on manufacturing

 Growing challenges 

Credit period from 3 to 6 months

Payment recovery

In India, irrespective of reasons, apart from a few exceptional cases, garment manufacturing is a business where the owner’s involvement is very much there. And Gujarat is not an exception. Some stakeholders are of the view that the state needs to be more professional to be successful in apparel manufacturing, especially to overcome the issues of getting trained professionals.

Mukesh, Director, Mudra Uniforms says, “Yes, in most of the places, there is a lack of professionalism, quality is not the focus area and this keeps away foreign clients from investing in the state. The majority of apparel manufacturers discontinue the job of mid-level professionals even if the business is slow even for 1 month; rather they should support them for PD and invest in their foreign trips too.” He uses CAD in his sampling unit and the rest all is outsourced. His company is into domestic as well as exports and expects at least 25 per cent growth. 

Factory owners claim that socio-economic issues related to skilled labour in Ahmedabad or even in most of Gujarat is another deterrent for manufacturing as labourers are not that sincere and dedicated especially compared to South India where the labourers are highly disciplined. Despite all kinds of soft and technical training, owners find it difficult to retain workers or to make them disciplines. Sources told that one of the leading companies in Gujarat is using mobile jammer to prevent workers from using their mobiles within the factory premises.

“As far as policies are concerned, many incentives are for new units, so we have not noticed any major benefits as a 22-year-old manufacturing unit in Gujarat. We started our factory here just because this is our native place. We are expecting 20 per cent growth, but overall, I don’t see that there is a bright future for garmenting in Gujarat because the state is better known for pharmaceutical, chemical and diamond industry. The entire ecosystem for garmenting is hard to develop,” Ritesh Patadia, Director, Trylo Intimates, Surendranagar

To take advantage of the policies, these units have to expand and most of them are not able to expand their manufacturing base due to the above specified hindrances as well as market dynamics. Even existing companies are not able to increase their productivity amidst lack of expert professionals which ultimately makes them non-competitive. The policy document says that expansion enterprise should have at least 150 machines and 300 employees. Such expansion is possible only if the existing enterprise has reached the utilisation level of the installed capacity to an extent of at least 75 per cent in any one of the immediately preceding two financial years. Many believe that looking at the past few years as well as the future trend of the garment industry, such terms are very difficult to be met.

Uday Rane, Business-Head, Denim, Ashima Ltd. believes, “To get benefits of policies in Gujarat, one has to guarantee employment which is not easy and no corporate wants to take this responsibility with regard to apparel manufacturing. This is why corporates of Gujarat are majorly investing out of the state.” 

Most of the Gujarat-based textile companies or giants have multiple businesses and garmenting is not a very lucrative business for them compared to other verticals that they have. Manufacturing and selling of fabric is comparatively very easy for them, so investment in garment manufacturing is like the last option for them. Many top companies including Arvind Ltd. haven’t replied to Apparel Resources’ emails in this regard.

As far as fabric support and its impact on costing or benefit to garment manufacturing is concerned, the apparel manufacturers outsourcing fabric (denim or whatever) do not get any significant benefit in terms of cost as they claim that fabric price is the same for a manufacturer, situated in Ahmedabad or Bangalore. Regarding the companies having their own denim fabric production, they are not very successful in garmenting as most of them insist to use their own fabric only, while other apparel manufacturers are open to use any fabric. This is despite the denim industry facing the issue of overcapacity. The situation is very alarming as the supply of denim in India is more than double the capacity that India can consume and even what it can export.

With 800 stitching machines, Avadat Apparels is one of the most respected names in Ahmedabad’s garment industry. Sachin Shah, MD of the company adds an interesting point here in terms of cost-effectiveness, “Indian retailers want perfect things from us as they used to get in Bangalore but they are not ready to pay the same price to Ahmedabad-based companies as they feel that we have less cost while this is not true. That is the mindset of buyers regarding Ahmedabad which is a challenge for us.” This challenge becomes severe as the export orders are shrinking and Gujarat-based companies are majorly focusing on the domestic market. Industry in Gujarat believes that the only major difference that Gujarat might have compared to some other states is its cheaper cost of living but this doesn’t have much impact on the overall costing of a garment.

Gujarat has fantastic infrastructure for apparel manufacturing and that covers all kinds of facilities. Visiting Devraj Industrial Area, Ahmedabad, Team Apparel Resources was impressed seeing the planned way it is constructed and has further scope for new units.

Avadat Apparels was the first one to start a garment factory in Devraj Industrial Area and gave employment to women near this area. All new and organised units are in the outskirts of Ahmedabad as land is cheaper there, and more than that, local workers are available from nearby villages. In GIDC Apparel Park SEZ in Ahmedabad (spread across 20 hectares at Khokhra), well-known companies like Artex Apparels are there, but many in the industry feel that companies are not interested to go there as the land is on lease.

Even Surat has Surat Apparel Park SEZ spread across 56 hectares, but there are not many units there apart from Banswara Syntex. Mumbai-based Ginza Limited also has its fabric, lingerie and allied manufacturing units in Surat.

“There is scope in Surat but the apparel park needs to be open for domestic manufacturers too. Running a unit for export only and maintaining compliance, quality for exports are comparatively difficult; so whoever could improve on these fronts survived. While for domestic market, small units are working well,” PA Khatwani, South Gujarat Unit, Surat, Textile Association of India (TAI) 

One of the relevant questions that arise here is that when Ahmedabad and Surat don’t have organised apparel units, what are the factors that Vapi has which makes it possess 15 good and big units and how the units there are succeeding in various issues. One answer can be that Vapi-based units are making basic garments which require comparatively less skilled labour. And labour is migratory in the city compared to the local labour in Ahmedabad. The proximity of Vapi to Mumbai (170 km) is also another reason that companies from outside are preferring to invest there. To mention a few, VIP Clothing, Kewal Kiran Clothing Limited (KKCL), Opera Clothing, Arsh Fashions, Permeshwar Creations etc. In fact many Vapi-based factories are working with global retailers or brands, unlike Ahmedabad or Surat.

“We tied up with an NGO for a training centre in our factory but there are no concrete efforts by them for training. ATDC did not prove fruitful for us; there is no benefit of any skill development scheme. Finally, we have started our own training initiatives,” Rajiv Thakkar, Director, Kruti Garment, Ahmedabad 

Prashant Mangukia, Director, Yamuna Machine Works, Vapi which has pan-India and global reach for its textile processing machines, informs that Vapi has garment manufacturing since 1985 while Surat and Ahmedabad are into fabric from day one. So Vapi is more developed compared to the other two hubs of the state.

 “Not only merchandisers, we even struggle to get result-oriented production managers, industrial engineers. NIFT Gandhinagar doesn’t produce good technical professionals. On the other hand, we have contacted all training centres of Ahmedabad and been a part of organised campus placements, but were not able to get even a single-skilled operator,” Murtaza Lokhandwala, Bubble Bee Export House, Ahmedabad 

It is pertinent to mention here that NIFT Gandhinagar has technical courses like Bachelor of Fashion Technology BFT (Apparel Production) and Masters of Fashion Technology (MFT), besides Garment Production Technology and Apparel Design (GPTAD) under Continuing Education Programmes

Gujarat is making all kinds of garments, right from Indianwear to westernwear. Known majorly for denim-based products, Ahmedabad is also attracting retailers for tunics or allied products which are the strengths of Jaipur. The retailers sourcing these product categories from Jaipur, wish to bring in newness and don’t want to depend only on one hub. Ahmedabad is a better option for them as it has all processing facilities which are less in Jaipur. The companies whom Apparel Resources met or discussed, shared that they are adding more in their product baskets like Bubble Bee Export House, which is primarily into Indo-western, is now adding westernwear for Chumbak. Few of the companies are also making safety garments like boiler suits. The city is making knitted as well as woven ethnicwear as this is based on cotton and viscose. Not to forget the already existing shirt and trousers factories producing a variety of shirts.

 “Gujarat is the largest producer and exporter of cotton in the country. It is the largest producer of denim in the country and the third in the world.  The state offers power tariff concessions for large manufacturing units, interest subsidy of 5 per cent for the period of 5 years and 7 per cent on new plant and machinery, which makes the tax structure favourable in the state for domestic manufacturing players like us. Apart from this, it also offers financial assistance for technology acquisition and skill development and a host of benefits for R&D and other crucial milestones. The state has a favourable ecosystem and infrastructure because of which many branded apparel and textile players have set up their manufacturing plants, some of them close to ports like JNPT for exports,”  Kewalchand P. Jain, CMD, KKCL

To make a variety of garments, all hubs of Gujarat have allied support like Ahmedabad has around 2,000 embroidery jobworkers, but nearly all of them are used to work for domestic market only. They don’t have that requisite skills needed in US or Europe market. Almost similar is the case with other allied services.

As far as semi-organised or unorganised garment manufacturing is concerned, there is a big reason behind these sustaining since years.

Many labels or brands having reach in few states and doing well, are dependent on job work since long and happily wish to continue with the same system rather than investing in manufacturing. It is because making garments in-house or outsourcing comprises a difference of just around 5 per cent in final costing. Hence, instead of taking advantage of policies and getting involved in managing labour, it is comparatively good to focus on retail/distribution. “We have maximum business for 6-7 months, so why should we incur labour cost when the factory remains idle for 4 months. In outsourcing, we can even increase our orders easily,” says Ketan Shah, SJ Clothing, Ahmedabad. Issues like quality and timely delivery are also manageable in outsourcing as these can be resolved by good and timely payments. Offering a variety of trousers and working with wholesalers who deal into quantity, SJ Clothing is also into indirect export to Gulf countries.

No platform for unorganised SMEs!

Ahmedabad has specific areas for particular products, like Kuber Nagar is known for leggings. The area (totally unorganised) produces 5 lakh leggings per day and the manufacturing units there have an average of 30 machines each. Doing business from last 10 years, Gulshan Bhagia, Bhagia Textile strongly insists that they don’t have a good platform to promote their products. “Over the years, we have developed expertise in making leggings and we use the same high-quality fabric which is being used by top global brands. But the issue is proper marketing to increase reach. The local sourcing event of Ahmedabad is mainly focused on menswear and kidswear, while we are into womenswear and that too in knitted products.”

Issues with workforce 

High absenteeism, lack of discipline and soft skills are big issues for companies. However, migratory workers are better to work with compared to local workers who give a tough time in terms of being dedicated to their work.

Fact File

As per state’s official data, Gujarat’s textile output grew at a CAGR of over 7 per cent.

Details of number of factories, employment, fixed capital, value of output & NVA

Industry	Years	No. of factories	Employ ment	Fixed capital (Rs.cr)	Value of output (Rs.cr)	Net value added (Rs.cr)
Mfg. of Textiles	2014-15	2,713	2,77,716	23,079	62,349	7,830
	2013-14	2,729	2,57,313	18,712	71,546	6,876

Source: Socio-Economic Review (2017-2018) of the state by Directorate of Economics and Statistics, Gujarat

Majorly groupwise – textiles; status-wise statistics (investment in Rs. cr.), 01-01-1980 to 30-06-2019

Total Projects

Commissioned

Under implementation

Sector

Projects

Investment

Employment

Projects

Investment

Employment

Projects

Investment

Employment

Textiles

514

1,97,973

2,55,407

140

746

26,146

267

1,82,971

2,01,594

Source: Industries Commissionerate, Gujarat

• The state has around 50 good and organised companies, having their apparel manufacturing units for westernwear.
• There are around 2,000 (mostly SMEs) apparel firms in the state. GGMA claims to have over 1,500 members from pan-India, those who mostly belong to Gujarat. The association doesn’t have any official figure about the overall garment business of its members or about the state.
• Technical textiles is one of the most fastest growing segments in Gujarat as the same has around 800 units in the state.

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