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Introduction to Apparel Industry :
Apparel is one of the basic necessities of human civilization along with food, water and shelter. The Apparel Industry reflects people’s lifestyles and shows their social and economic status. The Apparel and Textile industry, is India’s second largest industry after IT Industry. At present, it is amongst the fastest growing industry segment and is also the second largest foreign exchange earner for the country. The apparel industry accounts for 26% of all Indian exports. The Indian government has targeted the apparel and textiles industry segments to reach $50 billion by the year 2015 . China on the other hand, has already reached their target of $52 billion in 2004, and therefore, it is very possible for India to reach its target soon.
One of the most interesting features of the apparel industry is that, it migrates from high cost nations to the low cost nations. The growth of the domestic demand for clothing in India is linked with the success of the retailing sector. India presently has entered the second phase of growth and is witnessing a massive rise in the domestic demand. This is primarily due to the rise in the standard of living caused by the rise in the middle-income groups. In our present economic world of demand and supply, price and quality are the key factors, which determine the success of any business. The key element here though, is the cost of labor. India and China have a comparative advantage in this industry though, their vast labor forces and the relatively low cost of labor.
Since, India and China have the advantage of making textiles and so fabric costs are lower than in other countries, they have become the Apparel sourcing choice for many international companies. Sourcing choices arise from profitability. This includes considering costs, such as, buying factors of production, like land, buildings and machines versus factors affecting revenues, including pricing, marketing, and distribution. The issues of labor, material, shipping costs and tariffs structure also affect the sourcing choices. Since, apparel production is a labor-intensive activity, wage rates are also a major factor in sourcing decisions. This gives immediate competitive advantage to producers in countries like India and China to export to more developed and high cost countries like the United States and the European Union.