ludhiana ds
TRANSCRIPT
2009
Prepared for
Small Industries Development Bank of
India
UNDER SMEFDP
A - 2 4 6 , O K H L A , P H A S E - I , N E W D E L H I - 1 1 0 0 2 0
APEX CLUSTER DEVELOPMENT SERVICES
LUDHIANA KNITWEAR AND APPAREL CLUSTER
Contents
Executive Summary ......................................................................................................... 4
CHAPTER I - BACKGROUND AND CLUSTER PROFILE........................................... 8
1.1 Methodology and Objectives .................................................................................... 8
1.2 Sector Analysis ......................................................................................................... 8
1.3 Global Environment.................................................................................................. 9
1.4 Ludhiana Knitwear Cluster - cluster Profile ......................................................... 11
1.5 Geographical Spread of the Cluster ....................................................................... 12
1.7 Turning Point .......................................................................................................... 14
1.8. Institutional Set Up in Ludhiana............................................................................ 19
1.9 Industry Associations ............................................................................................. 23
1.10 Financial Institutions ............................................................................................ 24
1.11. Production Process.............................................................................................. 25
Value Chain Process - Woollen ................................................................................ 25
Value Chain process - Hosiery ................................................................................. 26
1.12. Value Chain T- shirt ....................................................................................... 27
1.13 Cluster Map .......................................................................................................... 29
1.14 Determinants of Ludhiana Cluster Dynamism ..................................................... 30
15.4.5 The Diamond Model-Ludhiana .......................................................................... 35
1.16 SWOT Analysis ..................................................................................................... 35
1.17 Need for Business Development Service Providers (BDS) ................................... 38
CHAPTER – II STATUS AND DEMAND FOR BDS SERVICES................................ 39
2.1 Core Cluster Actors ................................................................................................ 39
2.2 Demand for BDS Services....................................................................................... 51
CHAPTER III - STATUS AND SUPPLY OF BDS ........................................................ 61
3.1 Status of Business Development Service Providers in the Cluster........................ 61
3.1.7 E- Readiness Centre/ ICT adoption .................................................................. 64
3.1.12 . Financial Services ......................................................................................... 66
3.2 Who Does Who Pays Matrix: Ludhiana Knitwear Cluster (Annexure - II)............ 67
3.3 Supply of Business Development Services in the Cluster ....................................... 67
CHAPTER - IV CONCLUSIONS AND RECOMMENDATIONS ................................ 74
4.1 Challenges before the Industry .............................................................................. 74
4.2 Areas of Intervention ............................................................................................. 75
4.3 Major Pressure Points ............................................................................................ 80
4.4 Cluster Vision ....................................................................................................... 81
4.5 Strategy ................................................................................................................... 81
Annexure II BDS Analysis – Who does, who pays? ................................................... 83
Annexure-III Knitwear and Apparel Manufacturers Association of Ludhiana (KAMAL) ........................................................................................................................ 87
Annexure IV Estimated BDS Usage and size................................................................ 88
Executive Summary
Located in the Northern state of Punjab and known as “Manchester of India”
Ludhiana Knitwear cluster manufactures the entire range of winter and summer
wear for people of all age groups. Further, it contributes to almost 80% of the total
woollen/acrylic output of the economy. The product range includes gents, ladies and
children garments including T-shirts, sweat shirts, pullovers, jackets and grey fabric
clothes of hi-fashion quotient. The cluster The Ludhiana is highly labour-intensive
and the labour is mostly migratory, unskilled labour though there is skilled and
semiskilled labour workforce also. Indirect labour activities include tailoring,
embroidery, packing, retailing and marketing etc. and some of these are BDS
(Business Development Service) activities.
The cluster value chain is rather long but Knitwear manufacturers are at the core of
the value addition cycle. Activities post knitting of the yarn, and upto the garment
manufacturing stage constitute about 62% of the total value addition in the ex-
factory price. While spinners, dyers and sub contracting knitting units provide
backward process support, Dye manufacturers, machinery manufacturers and
accessory suppliers extend the raw material feed to various processes. In domestic
markets the sales and marketing process is facilitated by BDS Providers like
intermediate agents, wholesalers and retailers. Similarly, in the export markets,
merchant exporters, buying agents and buying houses assist the firms. Sub-
contracting is a major critical attribute of Ludhiana cluster with a large number of
small and micro knitting and knitwear firms extending production and manufacturing
support to the bigger firms and direct exporters.
Though the cluster started off as a woollen knitwear cluster, it is gradually getting
transformed into a highly diversified knitwear cluster on account of market dynamics
extending better margins and market reach.
To stand up to the expectation level in the face of global competition, production
systems need to be improved, skill of the workforce needs to be upgraded, quality
control system should be strong, system should be in place to get right information
at appropriate time, value chain should be strong in terms of technical capability, &
delivery time, while inter firm co operation should be good.
This requires lot of support from the service providers who can advise and establish
the system to achieve the goal. A primary survey was conducted with the value chain
firms to assess the BDS demand side. The survey revealed that the cluster has
number of service providers in functional areas to address routine business needs
like accounting, auditing, taxation ESI & PF accounting, logistics, documentation etc.
However, as regards both availability and competence of service providers in
strategic areas like productivity improvement, quality improvement, waste
minimization, system implementation, design development, and energy
conservation, an interventionist approach in the cluster market is required. Thus to
simulate BDS activity in strategic areas, project support will have to butt in as an
incentive factor to kick start the activities which alone can demonstrate the gainful
benefits to the firms.
The survey also revealed that though there is a large network of institutions in
Ludhiana most of these are riddled with government control and bureaucratic
interference becoming a big obstacle in skill development in the cluster and which
needs to be mapped to the industry’s requirements. Prominent institutions in the
cluster are Industrial Training Institute, Government Training Institute for Women,
Textile Committee, National Small Industries Corporation, Northern India Textile
Research Association and Sportking Institute of fashion Technology.
Besides, there are a host of financial institutions that provide various kinds of
financing facilities including foreign exchange transactions. These institutions are
mainly the nationalised and private banks operating through their branches in
Ludhiana. To name a few, Small Industries Development Bank of India, National
Small Industries Corporation, Punjab National Bank and many more. However,
efficient working capital management for stocking requirements is a major critical
success factor for these units as efficient delivery schedules need to be matched with
market order books to cut the market reach time. So there is an urgent need in the
cluster of BDS services to plan the supplies at the backend and match them with the
delivery schedules required by the market, and also suggest the required working
capital (finance) withdrawals/limits based on such a real time flow scenario.
The supply side assessment was done through another primary survey with the
leading BDS providers. It revealed that the private sector BDS providers have a very
significant role to play in the export markets. They can act as middlemen between
the buyer and exporter by procuring order from the buyer and by identifying the
right supplier for the order and by coordinating. Considering the high degree of
controls & bureaucratic procedures in international trading arena, these BDS
providers would have a critical role to play and need to be induced to diversify
themselves to areas like pricing strategy from their current specialisation in
documentation, legal and procedure related services. Similarly, there is little
emphasis on branding in the cluster largely reducing the margins for the MSMEs.
Brand value and its utility as a marketing tool needs to be percolated to the cluster
stakeholders effectively through this BDS project. There is also visibly very little
participation in domestic & international trade fairs so the cluster remains bereft of
the current and future market trends. Small and micro firms need to interact more
with the marketing agents to expand their markets.
The machinery manufacturers provide important information dissemination on
technology and operational issues. However, they themselves suffer from
technological obsolescence and require capacity Building through training,
Consultancy, and bridging information gaps
The demand side survey also revealed that currently, not many units are avail testing
services due to less emphasis on quality control which done mainly on buyers’
demand rather than being mandatory. IWS needs to be involved in the licensing of
the “woolmark” in the cluster. It provides guidance on best manufacturing practices
and supports industry by providing them with information on latest trends at
international level with regard to fashion, marketing strategy and new technologies.
There is a dearth of Professionally qualified designers in the cluster. Rather,
entrepreneurs or knitting masters assume this Role. The professional designing
institutes can be collaborated in various other issues also apart from these
mentioned here, like those concerned with forecasts and international trends.
Efficient Inventory Management is an important function in order to avoid delays in
the delivery schedules to customers. Inefficiency in this area also negatively impacts
retailer and distributor relationships, thus diminishing brand loyalty. An inventory
levels in excess of customer demand result in inventory write-downs. Conversely,
due to an underestimated consumer demand, raw material manufacturers may fail
to timely supply at the last moment. Use of such inventory planning and
management BDS needs to be inculcated in the cluster.
And last but not the least, the cluster stakeholders require good interface with the
environment and energy efficiency BDS. This is not only important to cut private
costs but also avoid social costs which emanate from such negligence. These two
initiatives will leave a positive mark on the export markets in view of WTO norms.
The interventions in the BDS project need to propel the private BDS providers to fill
in the gap left by the govt. agencies. Sustainability is another issue that will have to be
addressed, and is an area where earlier projects have failed. So most of the issues
addressed earlier continue to hover around the cluster stakeholders in the absence of a
local body taking over charge. In all probability, the umbrella Association FEKTAA
will need to be enthused with some new strategies to take on this challenge.
CHAPTER I - BACKGROUND AND CLUSTER PROFILE
1.1 Methodology and Objectives
The potential of Micro Small and Medium Enterprises (MSMEs) in contributing to the
development process at the local, national and global levels has received substantial
recognition the world over, during the last quarter of a century. However, small being small as
they may be in size, there are limitations to leverage all the available support instruments for
them. It is, therefore, necessary to understand the value of networking towards accrual of
greater benefits to SMEs through collective action, which implies closely working with all firms,
industries and institutions with strong linkages, whether vertical, horizontal or institutional.
The competitive advantage for MSMEs is becoming increasingly dependent on three critical,
impacts, viz., cost reduction, higher efficiency of working and innovations (CEI) in business
processes. Business development Services (BDS) significantly impact on CEI. Therefore these
can definitely play an important role in improving competitiveness of the firms. The present
diagnostic study on the textile sector at Ludhiana in Punjab (India) is aimed mainly at
understanding the existing level of BDS usage in the cluster and to evolve an action plan to
improve the MSME productivity with better use of BDS.
A Primary Survey was conducted in the cluster - township of Ludhiana in the month of May
2009. As a part of the study, a questionnaire was administered to MSMEs, technical
institutions, support organizations and local associations. The basic purpose was to assess
the demand and supply of Business Development Services in the cluster.
1.2 Sector Analysis
Though textile and apparel form nearly 15 per cent of the Indian exports and 45 per cent of
this is knitwear though the share of knitted garments in terms of value is much less
compared to the volume of total garment exports. Knitwear is emerging as the fastest-
growing segment of Indian garment exports as compared to all other segments, including
woven garments and the mill-made garments. In the textile industry, the role of hosiery or
knitwear sector is increasing day by day. Knitted garments are preferred over woven
garments the world over due to comfort, stretchability and easy breath ability built within
the knitted fabric structure.
The important centres of knitwear industry in India are listed below:
1. Ludhiana in Punjab for woollen and synthetic knitwear
2. Tirupur in Tamil Nadu for cotton knitwear
3. Delhi (Gurgaon & Noida included) for synthetic knitwear
4. Bangalore for cotton and synthetic knitwear
5. Mumbai for cotton and synthetic knitwear
1.3 Global Environment
The garment industry all over the world is at the threshold for far - reaching institutional
changes. Over the past three to four decades, trade dynamics, especially - price and
quantitative restrictions have come to play a major role in the patterns of the sector’s
development. The removal of quantitative restrictions has brought about important
implications. It has thrown open both opportunities and threat, especially for the low-
income economies seeking to industrialize through promotion of the garment sector.
Internationally retailers are concentrating on their core business, which is selling to the end-
consumer. Many are turning to “lean retailing”, or cutting down inventory to the minimum,
as a means to achieve this. Reducing stocks requires fast and on-time delivery from the
manufacturer. Shipments become smaller but more frequent, with point-of-sale data
transmitted directly to the manufacturer, who gets alerted when to produce and ship
garments.
More and more clothing manufacturers are becoming service providers to retailers. With
lean retailing and the evolution of electronic solutions, retailers are giving up more
responsibilities, which manufacturers who want to remain competitive have to take up.
Refer Figure 1
FIGURE 1
From product development to fabric and trim sourcing, these developments create new
challenges for garment manufacturers in the cluster, over and above those they faced
earlier. To stay competitive, manufacturers need to find innovative solutions that go beyond
just manufacturing good-quality products.
Retail Business in US , UK and other countries of Europe is down by 25% (2008), there is
general trend among on price sensitivity . Most of the sourcing companies are pushing
manufacturers for more discounts. The problem is more chronic for large manufacturers as
they have very limited choice. Those who had set big Manufacturing facilities for these
specific clients don’t have any other option other then accepting it. Wal -Mart has asked its
suppliers to give 5% discount on last one year supplies. Higher value items slowing down
globally. Bangladesh & Vietnam are posing sever competition to Indian apparel export
business by supplying at low prices. In view of the last years’ exports Bangladesh exports
increased by 11% while India exports was down as Compared to 2007. Productivity in
Indian Companies’ is at about 50% of global Standards where as in Bangladesh its 70-80%.
Even on tax front Duty Draw Back Structure on Cotton Garments
INDIA: 8%,
China 17%,
Buyers’Increasing Expectations
Time 2005
Production Production
Production & Supply Production & Supply Management Management
Production Supply and Production ,Supply and Design development Design
Development Development
Complete Complete Solution Solution To take care of
complete Value Chain
1970
Vietnam 15%
Bangladesh 14% which is also an advantage on there part.
Some big exporters from India are even contemplating to set up factories in Bangladesh.
1.4 Ludhiana Knitwear Cluster - cluster Profile
Knitwear is a diversified industry in India. While in cotton knitwear, Tirupur is the most
famous cluster in India, in the case of acrylic/wool knitwear, Ludhiana is way ahead of any
other cluster. Over four-fifths of the nation's output of woollen/acrylic hosiery comes from
this region. With a daily factory employment of 55 workers per 1000 population, compared
to 11 for India as a whole, and 19 for Punjab, Ludhiana district is clearly Punjab's knitwear
hub and is also known as Manchester of India.
Knitwear industry uses various types of yarns. However Ludhiana, which is famous for
woollen knitwear, uses acrylic fibre substantially while pure wool is used in lesser quantities.
This is primarily because wool as a raw material is produced mainly in Australia, South Africa
and New Zealand. The industry in India mainly imports wool either in its fibre stage, yarn
stage or old woollen rags, which is then recycled. For a common user, acrylic and woollen
seem to be similar and therefore Ludhiana is most commonly known as the Woollen
Knitwear cluster. These days ,the Ludhiana knitwear industry manufactures the entire range
of winter and summer wear for gents, ladies and children. The product range includes hi -
fashion garments, T-shirts, sweat shirts, pullovers, jackets and grey fabric. So in order to
cater to the market requirements, the cluster has now a diversified range of cotton,
synthetic and wool -based yarns.
Knitwear manufacturers (including manufacturers-cum-traders/exporters) are at the core of
the cluster. Spinners, dyers and subcontracting knitting units provide backward process
support. Dye manufacturers, machinery manufacturers and accessory suppliers provide
requisite raw material backup to various processes. On the domestic front forward linkage is
provided by intermediate agents, wholesalers and retailers. Exports are being affected either
directly or through merchant exporters, buying agents and buying houses. A number of
technical support institutions are also present in the cluster.
1.5 Geographical Spread of the Cluster
Ludhiana is an important knitwear centre located in the Northern state of Punjab, around
300 kms from Delhi. Ludhiana, as part of two major industrial belts of Punjab, viz., Ludhiana-
Jalandhar and Ludhiana-Amritsar, has a budding industrial support system/infrastructure.
Along with Jalandhar, it forms two of Punjab’s principal industrial hubs, dominated by
textiles and light engineering goods industries, respectively. Major products emanating from
Ludhiana are bicycles, sewing machines and sweaters (pullovers).
Ludhiana has a population of about 40 lakh and accounts for 21 percent of Punjab’s small
firms, 28 percent of its medium and large firms, 32 percent of its total industrial output, and
in 2007 accounted for 70 percent of Punjab’s industrial exports.
The main hosiery knitting centres in Ludhiana are geographically centred within the city only.
According to industry concentration, the places within Ludhiana can be divided into the
following four blocks:
1. Purana Bazar/ Madhopuri, Sundernagar and Shivpuri
2. Industrial area
3. Bahadur Ke Road
4. Focal Point (Dhandari Kalan)
About 20% of the firms each are concentrated in the designated Industrial Area(s) like the
Industrial area and Focal Point (Dhandari Kalan), and another 10% in the Bahadur Ke Road
area. In the undesignated area (s), viz., Old city Area (Sunder Ngr, Purana bazar, Dal bazar ),
and Civil Lines another 40% of the firms are located. The remaining 10% of the firms are
scaterred across the cluster. While the concentration of the firms in the designated
Industrial Area (s) is due to Infrastructure facilities provided by govt for industrial setup, the
40% concentration in the undesignated area (s) as mentioned above is more of Micro level
industry which has evolved due to clusterisation of the traditional setup for associated
industries in the said location (s).
The Ludhiana knitwear industry is highly labour-intensive. The labour available is migratory
labour and is mostly unskilled. The cluster units mostly use manually- driven flat knitting
machines, which are in excess of 50,000 and the industry employs about 4 lakh people
directly and indirectly including large industries. The direct employment generated includes
skilled, semi-skilled and unskilled workers as well as those earning their livelihood indirectly
through this industry. These indirect activities relate to the forward and backward linkages
within the industry such as tailoring, embroidery, packing, retailing marketing, etc.
Having such strong employment strength through generation of direct and indirect activities
and its ability to foster so many backward linking sub-activities, this cluster forms the
backbone for the local economy of Ludhiana and its surrounding areas. Total No
of MSME 14000 (Regd. & Un Regd ) which cam be divided into MICRO, SMALL & MEDIUM
as follows. Micro 9800,(70%) Small 2800(20%), Medium 1400 (10%) . Turnover of the
Cluster is approx Rs.5000 Crores (2007-2008) Including exports of 1000 crores.
The turnover and employment statistics of the cluster can be summarised as per table below
based on sizewise firm classification :
S. No. Size of the firm Approx. Turnover (in Rs,
crore)
Approx. direct & indirect
Employment
1 Micro 800 215000
2 Small 3200 90000
3 Medium 1000 55000
4 Large 4500 40000
Note : The estimates of turnover quoted in the diagnostic study of Rs.5000 crore
pertain to Micro, Small, & Medium industries
1.6 History and Evolution
Knitwear’s origin in Ludhiana can be traced to many
decades back when migrants from Kashmir settled in
Ludhiana after a famine in Kashmir in 1933. These
migrants brought with them the skills of weaving fine
woollen fabrics and embroidery. Their skills were
commercialized by the local traders who sought
markets within Punjab and beyond. In 1935, the
industry saw its first change with the introduction of
circular knitting machines. They started manufacturing sweaters on these machines with
cotton as raw material. The second turning point in the history of this cluster was the
introduction of flat knitting machines during the 1940s. During the same period the industry
started importing wool for manufacturing woollen products. The cluster formation around
Ludhiana knitwear industry became evident during the Second World War when the woollen
jerseys were in great demand. Till 1947, the Muslim population, who subsequently migrated
to Pakistan during the partition of India, owned most of the machines. Local and immigrant
population from Pakistan post -1947 sustained this trade and the industry grew smoothly for
the next four decades. Burma ( Myanmar) was a very important market for Ludhiana
knitwear till 1950, before the Burmese Government imposed import restrictions. In the
same year the Government of India also imposed restrictions on import. Most of the inputs
(machinery, needles, etc ) at that time were being imported and the import restrictions
induced local manufacturers to manufacturer local machines locally.
1.7 Turning Point
Before the break- up of Russia into CIS, it was the largest export market for the woollens
from Ludhiana. Russia’s disintegration forced the cluster units to search for alternative
markets. During the period of 1980s, the industry saw another change with the introduction
of automatic and computerized knitting machines supported by the State Government
which set up a modern knitwear centre with technical and financial assistance from UNDP
and UNIDO. Post - 1980s, as the cluster was looking for newer markets for woollens for
sustainability, many old stalwarts could not sustain in the changing business environment,
and gradually a new generation of manufacturers cropped up. The latter took a cue from
Tirupur, Delhi and Bombay industries and diversified their product - mix from wool based
garments to that of summer wears. As a result, Ludhiana’s product - mix shifted to a
predominant bias for cotton and summer wears, while retaining its dominance in the
woollens’ manufacturing.
Most local large enterprises in the 1970s and 1980s, apart from serving the Soviet market,
also maintained a strong presence in the middle-end domestic market, to mitigate the
market risk from Russian markets. Most importantly, operating in two very different markets
helped local enterprises to nurture varied skills. While catering to the Soviet market
depended on scale- oriented and low cost manufacturing and could earn profits through
cost-cutting skills, the domestic market induced cluster firms to address other qualitative
concerns, e.g., shifts in demand, quality-related issues, new trends in design, etc.
Development of this flexibility in operations proved to be rewarding in the 1990s when most
local enterprises had to shift their exports towards the western markets, the latter being
quality and design sensitive.
This made local producers skilled at multi-task management. Meanwhile, firms started to
explore Western European markets and succeeded in getting short-term and small-scale
orders. The small time orders from the Western markets fed the cluster through back- to-
back feedbacks leading to improvisations in quality and processes. These embedded services
imbibed into the cluster an important learning function from seemingly petty orders,
nonetheless very valuable for the cluster as a whole. It also enabled the cluster to de-risk the
market uncertainties for achieving sustainability.
1.7.1. UNIDO’s Cluster Development Programme
The objective of UNIDO intervention in Ludhiana cluster was to address poor endowment of
human resources, weak international market linkages, and to respond to a stagnating
domestic market, low level of competitiveness and weak institutional framework. Through
these efforts, the project aimed at enhancing the capability of the cluster to rapidly respond
to the changing demand pattern of consumers.
The strategy of the intervention was to convince the units about the scope for stronger
cooperation in business enhancing capacity. The pressure towards experimentation was
created through benchmarking of the cluster.
The various cost -cutting and productivity improvement measures introduced in the cluster
led to an estimated savings of US$ 1.3 million in nearly 100 units. New market ventures the
national and international levels led to an increased sale of US$ 34 million by around 25
firms. Around 50 units made additional investment to the tune of US$ 6.25 million in new
equipment. 45 new yarns were also introduced in the cluster.
Five new training programmes were introduced, training around 400 people and benefiting
around 75 firms. Of these, 300 were women of which 70 per cent gained employment post
training. Deeply entrenched socio-economic issues related to poverty and women
empowerment were thereby addressed by employing women workers in the formal
knitwear units. During the UNIDO programme, new techniques to raise competitiveness like
energy saving, store management, better washing, etc. were introduced in the cluster as
also new marketing tools like BSM were made a part of the curriculum. Joint participation in
trade fairs was encouraged and an export consortium was created. A cluster resource
centre was too initiated during UNIDO’s CDP.
A self-sustainable exporters’ association – Apparel Exporters’ Association of Ludhiana
(APPEAL) was launched during the same project. Further, a local association of knitwear
manufacturers – Knitwear Club was guided towards developmental activities and an
umbrella organization – FEKTAA was constituted in the cluster.
1.7.2 Project Vikas Microsoft, along with the NMCC and other stakeholders, through “Project Vikas”- a five- year
project strived to make SMEs more competitive. This dedicated and scalable multi-divisional
programme was projected to harness skills and build capacity cover knowledge creation and
dissemination, and enable linkages in the cluster ecosystem.
The objective of Project Vikas was development of soft skills including cluster level
networking & common challenges using ICT thru creation of R&D linkages, capacity
building with regional training institutes, sharing of best practices and enabling linkages
within the SME cluster ecosystem.
Project Vikas was successful enough in achiveing the above mentioned objectives but due
to less penetration of IT from the beginning in the cluster the price at which the solutions
offered were not affordable to the firms in Ludhiana. Most of the firms are keen on investing
in systems for tackling their problems of excess inventory, inadequate order planning and
tracking and procurement but at a affordable price for the SME's. Such interventions can be
taken up under the BDS implementation Project by offering to provide customised solutions
through local software vendors (BDS) which can be then found affordable on a SaaS
(Software as a service) platform.
1.7.3 SBI Uptech
Project Uptech was a intiative taken by the SBI (The State Bank of India) for
Ludhiana cluster development. It was focused on facilitating techno-managerial
consultancy services to the individual units to upgrade the technology. The other
issues tackled in the project were skill development of workers, financial support to
the SMEs, preventing obsolescence, energy conservation, and enhancing global
competitiveness & exports.
Most of these issues like skill development, technological obsolescence, and energy
conservation have been touched earlier but sustainability lacks. As such, on the exit
of the earlier projects, the problems still find equal relevance in the current context.
As such, all these problems, thus, find way into the BDS Implementation Project’s
agenda and will have to be addressed in a phased manner.
1.7.4 Textile Committee The objective of this program was capacity building of SMEs, through a cluster based approach, by improving the existing support system and by enhancing the collective efficiency of SMEs so that the opportunities coming up as a result of globalization can be fully utilized. The salient initiatives under the project have been :
1. Facilitation of consortia of 6 local manufacturers – Launched brand ‘wee’ 2. Exposure visit to other cluster to study best cluster practices 3. Energy audits of firms with PCRA 4. Awareness Session(s) on overview of Indian Apparel Industry and Quality
Testing 5. Training Seminar(s) on Defects causes and remedies for fabrics
6. Training Seminar(s) on quality improvement through motivation and Inspection 1.7.5 Major On-Going Programmes & Scope for complementarity a) PUNJAB APPAREL PARK Punjab Apparel Park, a joint venture of PSIEC (Punjab Small Industries and Export Corporation Ltd) . and APPEAL (Apparel Promoters and exporters Associaton of Ludhiana, is a special Purpose Vehicle (SPV) being set up to develop a 100 acre Aparel Park with a total investment of Rs 355 crores at Doraha Distt, Ludhiana under the Apparel Park Scheme of Ministry of Textile, Govt. of India. To Facilitate the industry the proposal includes facilities like exemption from stamp duty & registration fee, Sales tax ,continuous power supply, single window clearance etc for the units set up at Park. Besides the BDS requirements of the member units of the park, a host of BDS services will be required in-house within the park as a clustered set up. Such
requirements can be mapped for propogation of BDS services within the park, in order to achieve the economic scale of activities within the proposed park. b) LUDHIANA INTEGRATED TEXTILE PARK The endeavour is a brainchild of of Knitwear Club has always been to ensure betterment of Knitwear/Textile and Allied industry. The knitwear club formed a special purpose vehicle (SPV) namely Ludhiana Integrated Textile Park Ltd. as it was a pre-requisite for developing a Textile park under the Government of India Ministry of Textiles scheme, namely “scheme for Integrated Textile Park’s” (SITP). Punjab Government’s empowerment committee for mega projects granted its approval in 2006 for setting up of Textile Park and allowed certain concessions such as waiver of stamp duty etc. Simultaneously Infrastructure Leasing and Financial Services (IL&FS) - a consultant agency for preparing and submission of detailed project report (DPR) to Ministry of Textiles, Government of India was engaged. For the purpose, land measuring 57.18 Acres was registered in the name of the company for development of the Textile Park. The park now stands approved and grant sanctioned by Ministry of Textiles. The main features of the project are as under.
1) The park to be developed on around 60 acres of land with the provision of further extension if possible.
2) A cluster of about 80 units of Knitwear/Textile industry envisaged under the park
3) A Total investment in the cluster to the tune of Rs. 1500 Crores. 4) The cluster to provide direct and indirect employment to about 1,25,000
persons. 5) The project to have the provision for excellent Roads, Lights, Effluent
Treatment Plant, Sewerage, Storm Water, Captive Power Plant, Trade Centre and Sophisticated Research & Development Centre.
6) The compact functioning of the park envisaged to change the unorganised functioning in the cluster. Necessary state of the art conference infrastructure will be an important component of the with the top class facilities available. This will brace up the cluster for national and global competitiveness.
Knitwear Club is a part of FEKTAA, and the project has an MOU with FEKTAA for various initiatives. FEKTAA will also function as a MESO organisation in the cluster for the furtherance of the BDS implementation objectives once the project exits in Oct. 2011. Being a lead project partner, a lot of BDS initiatives in various areas can be dovetailed into the Knitwear Club plan for Ludhiana Integrated Textile ParK. CETP (COMMON EFFLUENT TREATMENT PLANT)
A proposal for Common effluent treatment plant for Dyeing units is under consideration with the state government. The proposal is based on public-private partnership. Small dyeing units don’t have space and funds to set up their own ETP. So a proposal of Joint ETP is proposed to the govt. for the project. The cluster Dyeing units have pooled about Rs 3.15 crores for the project till now. The total project cost is about 15 crores. CETP facility can be utilised for linking Environmental and Pollution related BDS to a large chunk of firms.
1.8. Institutional Set Up in Ludhiana.
1.8.1 MSME Institute
It is a govt. of India centre dedicated to provide technical support to the small sector
companies that cannot afford to have in-house R&D. The institute also provides training
support to the industry in addition to conducting entrepreneurship development programs.
The institute also hosts a modern machining centre that houses expensive machines and
where the industry is unable to invest large amounts , the services of these machines is
offered on a no profit basis. The institute also has a small test house and a large auditorium
that is made available to the industry associations for conducting workshops for the industry
benefit at a very nominal fee.
1.8.2 Industrial Training institute
There are two ITI’s In Ludhiana, one for Women and the other for Men. The ITI for Men has
training programs majorly related to the bicycle and engineering industry, while the ITI for
women mostly has training programs on knitting, embroidery and garmenting that are all
related to the knitwear and apparel industry of Ludhiana. The ITI has both elementary and
advanced level courses in garment related trades. The maximum duration of the course is
three years (it is an advanced version of the two year course).
1.8.3 Govt. polytechnic for women (GPW)
It was established in 1995 under a World Bank aided program focused on creating
employment opportunities for women in Punjab. The institute is running courses on
garment manufacturing technology, diploma in engineering, computer science etc. All the
courses are of three year duration. The polytechnic was rated to be the best in northern
India in 2000 and has also won several accolades in the field of sports. The polytechnic has
entered into a MOU with the industry (APPEAL) and is conducting the Industry –sponsored
course on stitching and linking in their premises
1.8.4 Govt. Institute of Textile Chemistry and Knitting Technology (GITC&KT)
This is one of the oldest institutes in Asia on knitting technology and wet processing. It has
three-year diploma courses in both the fields and additionally runs a six-month course for
workers. The institute is supporting the industry sponsored training program on skill up
gradation of supervisors employed in the knitwear industry. This has now taken the shape of
programme at unit level.
1.8.5 Textiles Committee
It is a statutory body of the Ministry of the Government of India for rendering services such
as testing, certification and assistance to exporters, ISO consultancy, GSP issue, market
research studies etc. They are also running short- term courses for training and
development of Lab technicians.
1.8.6 AEPC
Incorporated in 1978, AEPC is the official body of apparel exporters in India that provides
invaluable assistance to Indian exporters as well as importers/international buyers who
choose India as their preferred sourcing destination for garments.
1.8.7 Sportking Institute of Fashion Technology
With the objective of assisting apparel/textile industry to meet the industrial
competitiveness at the global plane and to focus on fashion as a professional career,
Sportking Institute of Fashion Technology facilitates collaboration between the
industry and the Institute with the Sportking Group of Industries as the mentor. The
Institute is offers seven courses at present. The Institute is running three undergraduate full
-time diploma courses (FD, KD and APM) and one undergraduate part -time degree course
(B.Sc. FT) which can be pursued along with a regular full time course at a nominal University
fee. It allows the flexibility of a degree from a recognized University along with a full -time
diploma to the students.
1.8.8 ATDC
The mission of ATDC is to create skilled human resources for rapidly growing exports
and domestic market. Founded in 1991, ATDC is a society under the Societies Registration
Act sponsored by AEPC and supported by Government of India. The key objective of ATDC
is -
i) to provide skilled manpower to the industry in order to improve the technical edge in
manufacturing as per international parameters.
ii) to upgrade the technical skills of the human resource employed in the industry .
ATDC is running various certificate and diploma courses on quality, pattern making, garment
manufacturing, IT, knitwear manufacturing, etc.
1.8.9 JD Institute of Fashion Technology.
JD Institute of Fashion Technology, a strong network of more than 20 centres in India and
abroad, was established in 1988 to anticipate and fulfil the ever-changing requirements of
the fashion world.
The institute is running various one or two year diploma courses in Fashion Designing,
Interior Design, Garment Manufacturing Technology. Visual Merchandising and Export
Management.
1.8.10 Pinnacle Institute of Fashion Technology The institute s offers various courses in
Fashion Designing/ Merchandising / Quality / Production related to knitwear industry.
1.8. 11 INIFD Ludhiana was launched in 1997 by a team of first- generation entrepreneurs,
consisting of academicians with rich experience in diverse fields at the national and
international levels. Since its inception, INIFD, Ludhiana has come a long way and is the
most sought-after institute in the region offering career- oriented courses in the Fashion
Designing , Textile Designing and Interior Designing fields on the one hand and MBA course
in Design Management on the other, thereby bridging the gap between designers and
business managers.
1.8.12. NIIFT Centre Ludhiana apart from being a significant textile cluster, NIIFT Centre is
engaged in the production of hosiery, knitwear and readymade garments. To move into the
global main -stream of intense economic competition and reckoning with requirements of
India's fashion industry in totality and Ludhiana industry particularly, NIIFT, in August 2008,
achieved another milestone by opening a new centre at Ludhiana. Since then, NIIFT,
Ludhiana has emerged as a premier institute and strives to impart knowledge comparable
with international standards.
1.8.13 Central Tool Room
Set up as another common facilities centre for the burgeoning metal -based industry , it
supports the knitwear and other industries as well. It is equipped with a modern tool room
and latest facilities on CAD CAM. It also provides training support to the cluster.
1.8.14 Mechanical Engineering Research & Development Organization (MERADO)
MERADO was set up with the objective of providing rich R&D- based inputs to the metal-
based industries in Ludhiana. This centre developed high -speed stitching machines among
other knitwear related machines. All the technologies developed by MERADO were
commercialized, but the local manufacturers were, however, forced out by cheaper imports
from Taiwan and Japan. There have not been many takers for technologies developed by
MERADO since then, but the organization is competent to develop newer machines if placed
with a specific requirement.
1.8.15 Northern India Textile Research Association (NITRA)
One of the four textile research associations located in different parts of the country, NITRA
was established in the year 1975 with the objective to carry out scientific research in
the field of textiles as well as to promote and foster scientific research studies for the
extension of knowledge related to or connected with the textile industry.
NITRA is providing consultancy on power, ISO certifications, technical issues, knitting and
dyeing problems. It also provides Diploma courses for operators of circular knitting, flat
knitting & embroidery machines. But due to lack of infrastructure and ICT -related issues,
NITRA is not very much popular in Ludhiana.
1.8.16 Punjab Agriculture University ( PAU) Home Science Department has started a
fashion designing course for two years to cater to the industry needs. PAU is actively
involved in research and other field related studies.
The expected growth rate of the BDS providing capacity is estimated at 5-10% during the
next two years. A mapping exercise was done with some leading institutions, the status of
which is projected as under :
S. No. Name of the
Institution
No. of instructors with
the institution
No. of BDS capacity projected
after 2 yrs of our
development programme
1 ATDC 6 7
2 NIFD 8 9
3 Pinnacle Inst of
Fashion Designing
7 8
4 JD institute of
Fashion Technology
6 7
5 Sportking Institute of
Fashion Technology
20 23
6 Govt Polytechnic for
Women
18 20
1.9 Industry Associations
There are around 70 associations in Ludhiana representing various interest groups such as
exporters, dyers, readymade hosiery manufacturers, spinners, knitters etc. There are very
few associations which are active in the cluster and take initiatives. 13 of these active
associations have joined hands to form an umbrella association called FEKTAA.
1.9.1 FEKTAA
Federation of Knitwear, Textile and Allied Industries Association has been conceptualized
with the support of UNIDO, Cluster Development Programme. FEKTAA ‘s main objective is
to work towards the needs of shared vision, synergy in effort, active participation of the
complete value chain ,i.e, spinning, dyeing, knitting, garmenting, exports, etc, and to achieve
collectively what is not possible alone. The main associations who are members of FEKTAA
are given in the box.
All associations that look
after the interests of
their respective segments
and work for their
betterment. APPEAL and
KNIDGRO were formed as
a part of UNIDO’s cluster
development programme
and have been quite
active. The Knitwear Club
which looks after the
broader areas as its
members are from all the
segments.
It has been the endeavour of all the associations to strengthen FEKTAA and some of the
ongoing projects with various member- associations, which have been shifted to this
platform such as Apparel Park, exhibition centre and resource centre. It has represented
Ludhiana at various forums and efforts are on to increase its member
1.10 Financial Institutions
All the major nationalized banks have branches in Ludhiana providing credit and other
banking facilities to the cluster. Many banks have International banking divisions to
promote exports from the cluster.
1.10.1 Small Industries Development Bank of India (SIDBI)
1. Knitwear Club
2.Readymade Hosiery Manufacturers Association (REHMA)
3.Apparel Exporters Association of Ludhiana (APPEAL)
4.Knitwear Development Group
5.Knitters Association
6.Bhadur Ke Textile and Knitwear Association
7.Shawl Club
8.Dyeing Factories Association (Regd.)
9.Garment Machinery Manufacturers and Suppliers Association
10.Ludhiana Dyeing Associations (Cotton Division)
11 KNIDGRO
SIDBI was established on 2nd April 1990. , The Small Industries Development Bank of India
Act 1989 is envisaged to be the principal financial institution for promotion, financing of
developing industries in the small -scale sector.
1.11. Production Process
Value Chain Process - Woollen
· It starts with
spinning of raw
wool, acrylic or
other fibers that
are sourced from
outside Ludhiana.
Scouring, a
cleaning
operation is
carried out locally
for wool by
medium or upper
end of small scale
spinning units
before spinning
the yarn.
· This yarn is then
supplied to the
industry for
further
operations. The
larger hosiery units buy the yarn from spinning units directly or through traders and
then send it to dyeing units for dyeing in different shades. Small units buy different
shades from traders who stock these for retail.
· Yarn is wound over cardboard cones. Knitting the yarn into fabric is done through
hand operated flat knitting machines, semiautomatic or fully computerized knitting
machines. Different designs are made on the fabric through these knitting machines
manually or mechanically depending upon the machine used. Generally a master
craftsman is employed for making designs for flat machines (hand driven and
Raw Fibre
Cleaning
Spinning
Fibre Dyeing
Yarn Dyeing
Winding
Knitting
Winding
Fabric Dyeing
Finishing
Garmenting
Packaging
mechanical both). In computerized machines, design inputs are fed through
available software programs.
· The fabric then undergoes milling process in which fabric is dipped in chemicals and
soap. This process softens the fabric. It then gets ready for cutting and tailoring
which is generally done in-house by most of the hosiery units on piece rate basis.
After cutting and tailoring, manufactured garments undergo washing or dry-
cleaning. Visual checking is done before packing them into boxes.
Value Chain process - Hosiery
Hosiery production process is segmented into three broad categories viz.:
· Spinning units (provides yarns as raw material)
· Dyeing units (yarn dyeing for knitwear manufacturers and spinners)
· Knitwear garment manufacturing (fabrication, cutting and tailoring, finishing
and marketing) as the industry at the core
1.12. Value Chain T- shirt
Sweater
Value Chain of a sweater Y
DOMESTIC AGENTS
2-3% OF C
EXPORT AGENTS 3% OF B
FINISHED GARMENTS
( A ) 17-18% OF A
SPINNING 16-17 % OF A
KNITTING 6 - 8 % OF A
DYEING 10 % OF A
Brand percentage value addition in business processes for Tshirts A=Ex-factory cost of garments B= Price at another country C = Price at domestic outlet
RAW MATERIAL 15 % OF A
GARMENTING 35 %OF A
WHOLESALERS 7-8 % OF C
RETAILERS 35-40% OF C
IMPORTERS 60-65%OF B
RAW MATERIAL 12-15 % OF A
Brand %age value addition in business processes (Sweaters) B= price at another country C = price at domestic outlet
SPINNING 12- 15 % OF A
DYEING 16- 17 % OF A
KNITTING 20 % OF A
DOMESTIC AGENTS 2-3% OF C EXPORT AGENT
3% OF B
1.13 Cluster Map
Cluster Map
KnitwearClub
Manf. Domestic (500)
Manf. Exporters
(70)
WoolImporters (50)
YarnDealer (200)
Dyers Spinners
Mach. Manf. Traders (140)
Acc. Suppliers(300)
OverseasBuyers
Domestic Market
Agent
ExportAgents
Buying Houses
LDA LSA
RetailChain
Association of Buying Houses
GMMSA
APPEAL
GPW GITC&KT SISI SBI SGS Thermax
KNIDGO
FEKTAA
SIDBITC
1.14 Determinants of Ludhiana Cluster Dynamism
In this section , Michael Porter’s Competitiveness of Nations model (1990) methodology is used
for assessing competitiveness of Ludhiana cluster on the scale of 5. The methodology has been
used widely to measure the competitiveness of clusters. The assessment is highly subjective.
However, the competitiveness indices of the cluster under different conditions are prepared
with the support of opinion- makers and leaders of the cluster to make it as realistic as possible.
1.14.1 Factor Conditions
· Effective entrepreneurial skills of Ludhiana industry stakeholders result in better
management of orders and their negotiations and also help in direct control of
operations resulting in cost- effective competitiveness of the industry.
· Support services are fairly affordable. The cluster is actively supported by an array of
supportive activities in the value chain, located within the cluster. These activities relate
to the forward and backward linkages within the industry such as tailoring, embroidery,
Packing, retailing and marketing etc.
· Telecommunication facilities are very good in the cluster.
· Connectivity is a major problem as there is no airport in the city and hence the overseas
buyers are usually unwilling to travel to Ludhiana.
· The recent government scheme ( employment guarantee) in some of less developed
states of India like Bihar, is very effective in terms migration from these states. This has
impacted on the supply of workforce in industrial clusters such as Ludhiana. Even
during the recession period, companies have displayed wanted labour boards outside
their factories. Getting skilled workers is a major challenge but getting unskilled labour
is also becoming difficult day by day.
· Workplace environment and quality of living conditions do need upgradation.
· Infrastructure in the cluster is very poor, especially erratic electric power supply and the
increasing pressure on the roads has put considerable strain on the growth of this
cluster. Lack of required infrastructure renders the city unsuitable for visits by foreign
buyers or as a venue for any high-level conference.
· The cluster is so big that there are no proper ways of information exchange. The use of
ICT including the Internet is very limited. Even the website of some of the proactive
association like FEKKTA has not been updated for the last one year. This also shows that
lack of an exhaustive website/information portal for locating a vendor, BDS or a buyer
or any new technology is not available.
· Awareness about various government and institutions aided schemes for the benefit of
the industry in terms of optimum utilization of each and every resource is missing.
· The winter production is seasonal in nature and also the way it is sold to distributor/
suppliers and the industry is largely unorganized; so are the organizations. There is very
little inventory management; stock details of various accessories are not kept and there
is low- capacity utilization.
The cluster requires effective linkages among firms and the institutions for skilling of the
unskilled labour on an on-going basis. Generally the labour hired is mostly unskilled and the
skilling exercise is done through on the job training. But such an exercise goes waste as the
churn out rate of such in-house trained labour is very high, and the stay period on the average
does not last more than 3-4 months (one season). The so called semi skilled labour switches
jobs rapidly in pursuit of higher remuneration for new skilled acquired. A high rate of skilling
of local labour all round by the cluster based institutions would tend to stem this instability in
labour retention and needs to be attended.
Similarly, professional organisation of distribution orders and supply chain linkages w.r.t.
market demand based mapping with sourcing of various resources for production is required.
BDS intervention in such issues will go a long way addressing mismatch situations in the
supply chain flows. Inventory management is an integral component of cost effective supply
chain charting of various activities. Consultants in this domain would need to be utlised more
intensively and extensively so that the cluster achieves cost efficiency parameters on a global
scale.
Last but not the least, integration and compacting of the supply chain is required in this sub-
contracting driven cluster using ICT tools like internet which paves way for faster information
exchange.
1.14.2 Demand Conditions
· The change in weather conditions has put a strain on the demand of flat knit sweaters .
· In Ludhiana cluster, there is no distinction between a manufacturer and a marketer.
There are very few firms who are selling directly through their own retail outlets. Many
units are doing job work for big brands.
· There is no emphasis on branding and this largely reduces the margin because
maximum value addition in the value chain at this stage.
· There is very less participation in domestic trade fairs while the international ones are
seldom visited to get a feel of the market trends. The marketing in the export sector is
targeted mainly at the buying houses. There are very few units which are directly
marketing in the international market.
· 95% of the domestic demand for woollen knitwear is fulfilled by Ludhiana industry
alone. The export markets include USA, European Union and the CIS (erstwhile USSR).
The domestic segment consists of both high-end (such as Delhi, Ahmedabad, Mumbai,
Lucknow, and Kanpur) and low-end middle-income mass markets (comprising of
Tibetans/Nepalis).
· Another major market for the industry is Government purchases (primarily for Armed
Forces and other departments) which is done through tendering by the respective
government departments.
For sustainability in terms of BDS intervention, two core issues of more intensive branding
strategy, and more frequent participation in
trade fairs are required for better market
related sensitivity of the firms. Initiatives that
lead to addressing these core bottlenecks in
improvisation the demand conditions stand
out in terms of immediate implementation.
1.14.3 Strategy, Structure and Rivalry
· Widely present specialized job shops
and firms perform a large number. of
routine as well as highly sophisticated
tasks for the MSMEs. This permits the
firms to operate with a low fixed
capital, and allows quick entry and
exit of new firms in the cluster
leading to razor -thin competition.
· Low capital base requirements also allow easy shifting of the production lines and faster
product diversification to curtail market risk whenever necessary, thus increasing intra -
cluster rivalry.
· Exporting firms largely do certain basic
processes in-house. But dyeing,
cutting and stitching are generally
subcontracted leading to collaborative
production with complementary
synergies.
· Increased pressure of quality demand,
along with firm deadlines for delivery
dates for export markets have induced some firms to set up composite units. This allows
multi -skill use of labour, and provides for scale/cost advantages.
· A bunch of skill-development centres in the cluster along with multiple state and Central
Government programmes have increased the potential for considerable information
spillovers between firms. Sharing of complementary knowledge has resulted in
enhancement of cluster productivity.
The development strategy needs to capitalise on the low capital structure of the firms,
permitted by a high ratio of outsourced work of firms directly connected to the market. This
clubbed with product diversification flexibility enabled by the technical competence of the
firms to quickly switch product lines makes things simpler for catering to the markets. So low
capacity utilisation appears more of an illness emanating from poor information on fast
changing market patterns. So infusion of market research consultants on a continual basis
with the cluster firms is an imminent requirement in the cluster for long term sustainability..
1.14.4 Related Supporting Industries
· Large outsourcing results in low initial capital costs. The presence of specialized job
shops and firms that perform a wide range of routine as well as highly sophisticated
tasks for the firms have permitted the firms to start production from rented sheds with
the bare minimum in-house machinery, practically every process can be outsourced to
specialized firms in the cluster market. This flexible specialization has further helped in
fast entry and exit of new firms in the cluster and also helps in shifting of the production
line whenever a shift in demand warrants such a strategy, resulting in revenue
sustainability/ increase.
· Since there are a large number of activities being outsourced in the cluster,
coordination of the various supply chain activities becomes time consuming and tends
to prolong the cycle or turnover time.
· Work in the field of R&D is very low. There is not much design development and
especially export houses rely on the overseas buyers to give them the prototype sheets
to develop. Professional management is not perceptible in the cluster.
· A large number of machines are outdated. Even where new machines are added, there
is huge dearth of trained operators for the same. The cost of installing completely
computerized machines is too high and as the demand keeps changing after every few
years, it seems risky to the exporters.
As regards BDS intervention for related supporting Industries, two things stand out. One,
cutting the time to the market with better information experts & systems, an area where ICT
can play a major role. Second, is the increase in BDS usage intensity for the technological
upgradation and maintenance/operations of the machinery.
15.4.5 The Diamond Model-Ludhiana
The overall picture of Ludhiana in terms of competitiveness suggest that the cluster has very
strong factor conditions , however related support services including Business Development
Services in the cluster are very weak.
Most of the cluster based programmes/ schemes are still not been utilised by the cluster
especially in the areas of infrastructure. FEKTA’ s efforts for setting up of a Textiles Park may
take some time. The dyeing units are still in struggle phase and are far from any sustainable
solution. There is likely increase in the cost of processing with adoption of cleaning technologies
by dyeing units. The current suitable factor conditions are likely to become less supportive due
to decline in the migrant
workers in the cluster. The
current recessionary
situation especially in
export market is partly
covered by strong
domestic demand. With
the formation of cluster
based marketing networks
like KAMAL the overall
demand conditions are
likely to remain strong.
On the whole the cluster is likely to attract more investment and better technology with strong
joint actions, which will make firm strategy ,structure more favourable for the development of
cluster.
1.16 SWOT Analysis
1.16.1 Strengths
1. The products have a good image in the minds of the customers. In addition to the
domestic popularity, the products also benefit from the international demand as well.
2. The industry enjoys a well- established financial base. There are good banking facilities
available in the cluster.
3. The production process is strengthened by closely connected value chain existing in the
cluster.
4. Substantial production capacity of the industry units work to its advantage.
5. The entrepreneurs are innovative. They replicate and customize the product and
machinery very easily.
6. Manufacturing in small lots and catering to niche markets as per customers
specifications is a huge advantage of the Ludhiana industry.
1.16.2 Weaknesses
1. The retailing methods used in the industry are terribly unorganized and not linked to
market patterns. Also branding is not paid much attention in the cluster killing the value
addition for the manufacturer.
2. Majority of the industrial units still operate on the old technology which do not befit the
global requirements in a scenario where WTO standards have made both quality and
cost based competition very stringent.
3. Though the industry artisans are able to easily adjust to the new patterns and
techniques developed in other clusters, research and development is not practised
within the industry. As a result, new innovations and technological developments are
rare in the industry.
4. The industry has been facing serious dearth of skilled and unskilled labour. There is a
fast migration pattern of the in-house trained labour.
5. Unhealthy market competition prevails in the industry due to low collaborative
marketing initiatives.
6. High electricity tariffs and erratic power supply has been major hurdles as it forces many
small- scale units to close operations.
7. There are improper linkages between SMEs and institutions and most of the firms have
a myopic view of the returns to training by institutions.
8. The unorganized nature of the industrial units makes things more difficult which makes
collaborative approach quite improbable as there are returns to be had in an
unorganised set up by way of cutting short the official loop and tax avoidance.
9. Foreign buyers are apprehensive about their visit to Ludhiana as there is no air linkage
available here.
10. Lack of adequate infrastructure is hampering the growth and performance of the
industry.
1.16.3 Opportunities
1. Tapping the new and unexplored foreign markets could help the industry to bring in
huge foreign exchange earnings , especially in view of the unstable political situation
prevailing in the neighbouring countries like Pakistan and Sri lanka .
2. Opening of large retail stores has created an opportunity for the industry .
3. There is a huge scope for product diversification in the knitting industry of Ludhiana,
especially with respect to Technical textiles. Also, research and development activities
could be undertaken to create new designs, thus adding value to the industry products.
4. Subcontracting opportunities are also extensive in the cluster and as such the cluster
has an inherent potential for supply chain linkages through ICT - based software for time
and cost efficiencies.
5. Availability of government and institutional support can help the industry to a great
extent.
1.16.4 Threats
1. The industry has been facing constant threats from the cheap Chinese goods that have
been entering the markets in large volumes.
2. Countries like Bangladesh and Sri Lanka have emerged as new supply bases with fast-
paced techniques of knitwear manufactures.
3. Ludhiana importers have to bear a heavy import duty on inputs such as wool, machinery
and spare parts. This increases the market price of the products.
4. Absence of public –private partnership to promote R&D for value- added production
and new markets is a big threat to the industry.
5. Due to increasing competition, cluster entrepreneurs have been witnessing declining
profit margins.
6. It is difficult to adopt latest technology without upgrading the skill base of the workers.
7. The present technological level is short of effectively meet the international
competition.
1.17 Need for Business Development Service Providers (BDS)
The cluster is actively supported by an array of supportive activities in the value chain, located
within the cluster. These activities relate to the forward and backward linkages within the
industry such as tailoring, embroidery, Packing, retailing and marketing etc. There are about 50
spinning units producing yarn for this industry in and around Ludhiana district most of which are
modern in terms of technology configuration. As such, good quality knitting yarns are available,
though these require colouring, dyeing, washing & blending for industry use. As the industry is
growing and becoming globalized and competitive , the demand and need for BDS
providers is increasing. So far, the industry was relying on traditional and conventional
practices of management and production. With globalisation, now buyers are demanding
various certifications and professional environment to do business with them, which in turn
is an opportunity for various BDS providers to act in this market.
CHAPTER – II STATUS AND DEMAND FOR BDS SERVICES
2.1 Core Cluster Actors
2.1.1 Spinning Units
In Ludhiana there are about 55-60 spinning units varying from 1500 to 3,50,000 spindles. Out of
these 50 are modern units in terms of technology configuration. These units are producing 100%
cotton and polyester- cotton blended yarns for exports as well as for local markets. Some units
are also producing fancy yarns with different blends.
The commonly used BDS by spinning units are yarn agents, transporters and testing labs. Agents
get new business for the units on commission basis and help in resolving any disputes related to
quality and payments. They also help spinners in procuring raw material like cotton. Agents are
easily available and their working style is very traditional. Majority of the business is done
through verbal commitments. Another critical service for spinning units is provided by testing
labs which are required to test and certify their products.
The spinning units need more business from International markets. So international marketing
consultants or buying agents, who can help them in getting export orders and elevate their
products to export quality, are required in this area. They also require guidance regarding new
blends and innovations in yarns to cater to the growing demand of the industry.
2.1.2 Knitting Units
There are about 8000 knitting units in the cluster. Most of the knitting units are small with the
number of machines varying from two to sixty machines. Machines includes high- speed circular
knitting machines, (for knitted fabrics ) and hand flat & power flat knitting machines (for
sweaters). Major brands of circular knitting machines are MAYER and FAKUHARA. The
knitting units mostly undertake job orders for exporters as well as domestic manufacturers.
Some exporters and domestic manufacturers have in-house set -up of knitting . The price of
knitting varies from Rs. 15 to Rs 35./kg depending upon the availability of machines and
quantity of fabrics.
Knitting units need yarn agents, testing labs, certifications, transporters and software vendors as
support services. Certification providers are not very much in demand by knitting units. Only
very few units who are interested in standardising their products are interested in certifications
like ISO and Oeko-tex. Transporters and agents are easily available in cluster. Testing labs like
SGS, Textile Committee and others are able to serve testing requirements of the cluster.
A sensitisation and awareness in knitting units to get certification and standardization of there
products is required. Moreover their data base to get more designs and new developments is
very limited. Thus, services of research textile engineers are required which can help them in
developing new products as per international standards to tap new markets.
2.1.3 Dyeing and Processing Units
There are nearly 200-250 dyeing and processing units in the cluster. Most of the units are on
Bahadur Ke Road , Industrial Area and Focal Point Area. They are under pressure from Pollution
Board for installation of ETPs. Dyeing units have conventional set- ups and don’t have space to
install ETP in their premises. The proposal of the Common ETP (CETP) for dyeing units is under
consideration with the Government. 15 industries have sent a proposal to government for
helping them in establishing a common dyeing plant for exporters . The proposal is lying with
the government for approval.
Testing labs, Pollution control advisors and technical experts are the prime BDS required by
the dyeing units. The major problem is to dispose water after dyeing. For this the requirement
of consultants for effluent treatment, consultants for new technology and machinery and plant
layout are required within the cluster. Technical experts are required for minimizing waste and
to improve dyeing quality. Testing labs purpose can be served either from Ludhiana or from
Delhi.
The dyeing units also require consultants who can guide them in standardization of the
processes as dye lot variation is a major problem in the dyeing industry. Although this service is
extended to the cluster by the chemical suppliers through regular seminars and workshops on
usage of dyestuffs and international acceptance levels. However, these are not enough for the
dyers as they require more in-depth consultancy on up gradation of their units.
2.1.4 Printing
Number of printing units in the cluster is estimated at 100-125. Printing is used both by
exporters and domestic garment manufacturers. Exporters demand a good quality of printing
with chemicals used, as per international norms. Exporters prefer to outsource the printing
services since the investments on such high -end technologies are high and they may not have
continuous orders to fully utilize their installed capacity. There are nearly 125 fabric printing
units in operation. They have an association of their own for the promotion of the business of
their members. The working conditions in these units are generally poor and unhygienic.
Working hours are 10 – 12 hours per day, depending upon the orders running in the unit.
Normally printing units work as subcontractors or job workers. They mostly get their business
by reference. Most of them are listed in the yellow pages but do not feel that it significantly
contributes to their business generation.
The BDS whish can help them in getting more business are technical and chemical experts
who can guide them about optimum usage of chemicals, new printing techniques and the
compliance issues related to use of banned chemicals. These types of BDS are not available in
Ludhiana and to get such services printers generally depend on chemical suppliers only.
2.1.5 Embroidery Units
There are around 1250 embriodery units in the cluster. Embroidery is mainly used in women
and kids wear . It can be done manually as well as with machines. Most of the units have
Barudan and Tajima embroidery machines. Nowadays buyers are also showing interest in the
Chinese and Taiwanese machines.
Embroidery units use the services of software vendors to feed the designs in machines. These services are easily available in Ludhiana at very nominal prices.
2.1.6 . Sub-contracting Units (for Garment making):
Approximately 3000 sub contacting units do stitching and tailoring operations for exporters
and domestic manufacturers . Most of them work for more than one exporter. They normally
have 20-40 machines, operated mainly at home or in small rented premises. Exporters use
their services whenever there is shortage of time to fulfil the orders. All the fabric, trims and
accessories are provided by the contractor to these units to do the job work.
Mostly these sub-contracting units are of micro or small level and affording external BDS at their
level is a challenge. They generally work without proper invoicing and without TIN or VAT
registrations.
Normally these units are not compliance approved. They do not adhere to the quality standards
required either due to lack of knowledge or as cost cutting tactics. Hence sensitization for
quality standards and work efficiency improvement is required with these units.
2.1.7 Direct Exporters
There are approximately 400 direct exporters of sweaters as well as circular knitted garments
in Ludhiana. They get orders directly from buyers and through buying houses or agents. After
getting firm orders and all specifications from buyers, they have to take approval from buyers
at every stage . So a complete control on quality is maintained at their end. Normally,
payment terms in exports are L/.C at sight.
Maximum BDS are used by the direct exporters. They require BDS like marketing,
certifications, technical assistance, buying agencies, testing labs, HR consultants , branding
consultants, financial advisers, transporters, freight forwarders, R&D, software vendors etc.
Marketing BDS which can advise them about new markets and new products are required by
all export houses and more so currently in the time of recession. Technical BDS are required
to reduce their operation costs and to minimize their expenses. HR consultants are required
to hire the best men for best job.
From the above mentioned BDS, HR consultants, transporters, testing labs, Financial services
and freight forwarders are easily available . The challenge is to get good marketing, branding
& technical experts who can assure them the secrecy of their business and help them in
getting new business, reducing their expenses and increasing their profits. Most of the
exporters have customised software for Invoicing, Chillan and Inventory Management
developed by local software vendors. However, there is a reluctance in accepting branded
software packages because of the cost factor involved in it. Sensitization & awareness
regarding SAP & ERP is required in the industry.
YORK EXPORTS LTD- Use of International BDS York Exports Ltd was established in 1983 and is engaged in manufacture of woollen and cotton knitwear’s for sale in domestic and export markets. The company was initially dealing only with men’s garments in flat knits but later diversified into circular knits also and started another firm with the name of York Exports . The units are located at Civil Lines, opposite old session courts and G.T road, Sherpur Bypass respectively. Their range of products in various blends and washes include T-shirts, Jogging suits, Track suits, Sweat shirts, Track pants, Shorts, Singlet, Pullovers and Cardigans, Kids wear and girls wear. A few years back, The Company was approached by a famous brand who wanted to use the premises for their exclusive production. The company was very willing to accept their offer but faced a lot of problems in the initial orders in terms of Quality, delivery, consistency and production planning. The orders were good and there was no dearth of money but the smooth functioning was missing. The company approached a person who was working as Director, Technical Apparel Industry consulting Services, Srilanka to provide technical guidelines on the total machinery setup as well as the guidelines to recruit and boost the morale of persons who matters in production to produce only the quality goods for timely delivery of the same. He also advised about the improvement in total system from the stage of sampling till the delivery of goods with the help of Time and Motion study and Cad Cam Systems. As a result the company’s turnover more than doubled in just 2-3 years Many new buyers placed their orders with the group and the previous ones increased their quantities after seeing the wonderful performance the company was enjoying. Later the company imported a lot of advanced computerized knitting machines for the production of fabrics and manufacture of knit wears / sweaters / garments according to international standards .Today this company enjoys a very strong presence in the cluster and is running on full capacity
2.1.8 . Merchant Exporters
Exporters who do not have their own production facilities but they procure orders from
overseas buyers and get the production executed by outsourcing the work are usually known as
merchant exporters. The payment usually comes in their own name . They usually have very
good relationship with the buyers .
They are highly dependant on sub contractors or manufacturers giving packed shipments. They
use the services of freight forwarders, financial consultants and marketing consultants to run
their operations. Merchant exporters are not available in Ludhiana cluster and operate from
outside Ludhiana.
2.1.9 . Buying Houses and Buying Agents:
Buying houses are agents of buyers abroad and work generally on a 3-5 percent commission
basis on the invoice value. They collect it from the exporters for procurement of the orders
and all this is done through coordination between the buyer and exporters. Some big brands
/buyers like GAP, Triburg, Diesel, etc. whose offices are working as sourcing arms do not charge
any commission from the vendors. There are about six buying houses in Ludhiana.
They need software vendors, testing labs, designers and HR consultants to improve their
business operations. They often employ services of recruitment consultants for their staffing
needs. All these services are amply available in Ludhiana. There are about 6 Buying agents in
Ludhiana.
2.1.10 Yarn Suppliers
Most of the commonly used yarns are 100% cotton and cotton blends. Some fancy yarns are
also in trend which are made up of Acrylic, nylon, Lycra, polyester , linen etc. Most of the yarn
buying is done through agents to safeguard the payments and other disputes. Arti, Nahar,
Malwa, Vardhman , Reliance, RSM, and Winsome are some of major players in this field.
Yarns are also available thru dealer network of various suppliers. No. of yarn suppliers in
Ludhiana cluster are about 150-180.
Yarn suppliers work through a network of yarn agents who work on a commission basis. They
liaise with knitting units to agglomerate orders for the yarn suppliers.
Other BDS that are often required by yarn suppliers are testing labs, transporters, marketing
consultants, textile designers and research consultants.
They require support from textile designers and researchers to develop new look, blends and
yarns with enhanced qualities. Innovative products would help them increase their market
share. In the process need for technical advisors and marketing consultants would also evolve.
At present such services are at a rudimentary stage. Their availability and price do not
encourage innovative development especially for small and medium enterprises. Another area
that requires assistance is quality standardization. Being the raw material for the knitting and
garmenting units, any flaw at this level affects the final output. Training on quality standards,
testing and certification will be helpful towards business efficiency and growth.
MADURA COATS –Embedded BDS story MADURA COATS is an international manufacturer of stitching threads of all types like Poly Poly, Poly Cotton, 100% Cotton etc. They have six manufacturing units in India at different locations, and have offices and dealers all over India. At one of the factories of Oswal Group, they were facing problems in getting orders, The reason was low prices offered by local the manufacturers. Madura coats prices are approx 15% higher because of transportation & other costs involved in its deliveries. Manufacturer was not ready to give orders to Madura because of the price issues. Although there were some quality issues with local suppliers the manufacturer was unable to count its direct loss or it’s impact on production. Madura proposed one plan to one of the factories of the group that in two stitching lines you use Coats threads for stitching and in the rest of the lines you can use your local manufacturers thread. Keeping all other factors same they will note the breakage, plit seams, repairs & final production for two days. After two days Madura thread got an edge over repairs & Split Seams, which results in more production. So, when the manufacturer checked the cost of repairs, man power, threads consumption involved, he found that Coats thread is cheaper than the other supplier, So he switched the orders to Coats. Coats had provided an extra helping hand in calculating thread consumption to the factory , So that there should not be any over or under inventory . It helped the manufacturer a lot and coats get a better business share.
2.1.11 . Chemical Suppliers
All major chemical suppliers have their base in Ludhiana, the total no. of chemical suppliers in
Ludhiana being around 200. Most of the national and international dye stuff are available
through dealers or companies’ own representatives. These chemical players also contribute
knowledge to the cluster regarding usage of chemicals through workshops and seminars.
Some large exporters import chemicals directly from the manufacturers abroad to save on cost
Certification Agencies, testing labs are primarily required BDS by chemical suppliers.
Certification agencies are required to get certification that their products don’t have any
harmful or banned chemicals and are safe for environment and human beings, certificate like
REACH, Oeko tex , Fair trade are few examples.
2.1.12 Accessory Suppliers
Most of the accessories required by the cluster are locally available. There are about 225-250
accessory suppliers in Ludhiana. Foreign buyers generally nominate suppliers for accessories
to maintain quality and consistency in supplies. Accessories are imported mainly from Hong
Kong, China and Europe. Most of the major suppliers like PAXAR, Kailash Ribbion, YKK, Opti,
IDEAL have agents or representatives in Ludhiana or in metros like Delhi , Bangalore, Mumbai
,etc who can be contacted as per requirements.
The accessory suppliers are into absolute trading activity and make minimal use of BDS.
However advertising is an important activity for them having direct bearing on their business.
Services of transporters, clearing and forwarding agents, and testing labs are also commonly
utilized by them.
An area of expansion for them could be the designers and exporters who develop new
collections for the buyers and can provide helpful inputs on the new trends.
2.1.13 Packing Material Suppliers
Packing material is easily available in Ludhiana, and numbers of suppliers vary between 150-
200. Cartons and polybags of every type and size are easily available and can be manufactured
in Ludhiana. Thus, there is little problem in securing the packing materials required for the
cluster. Many of the buyers have nominated suppliers of Tag, wash -care label ,etc.
The packing material manufacturers also face from problems from the pollution control
authorities as their units are generally not compliant. The reason for non compliance is usually
lack of knowledge of the actual rules or of ways to implement them at reasonable costs. Most of
the suppliers have small units and are very cost conscious. They require consultancy which is
practical and reasonably priced. The other pain point for them is marketing. Currently they
secure business by word of mouth and informal references. They would greatly benefit from
listings in the industry directory. And if such a listing could also get a rating based on their
capabilities, capacities and overall reliability factor it would help them secure more business.
Other areas where they would benefit from BDS are consultancy on innovative packing
materials and methods but these BDS are not available in Ludhiana.
2.1.14 Machinery Suppliers
All the machinery manufacturers and suppliers have offices, agents or dealers in Ludhiana.
These numbers stand around 60-70. Local offices are required to provide after - sales services
to the cluster. All the major brands like JUKI, Brother, Pegasus, Siruba, Fakuhara, Mayor, etc.
are available through various dealers like IIGM, ALT, HCA etc.
Machinery Suppliers commonly use the services of transporters, freight forwarders and financial
institutions which are suitably available in Ludhiana.
They could benefit from a regular platform where they can display their new products,
showcase efficient methods of utilization of their machines and carry out promotional activities.
2.1.15 Machine Manufacturers
Ludhiana is also famous for the manufacturing of Domestic Sewing Machines as well as
Industrial Sewing Machines which cater to the apparel sector. A large number of SMEs (about
1,000) are engaged in the production of complete sewing machines as well as its parts &
components. Various models are being manufactured in different sizes. The domestic sewing
machines are manufactured in ‘‘ Singer Type’’ and ‘’‘Usha Type’’ models. The Industrial Sewing
Machines viz., Umbrella Sewing Machines, Rib Cutting and Stitching Machines, Flat Lock
Stitching Machines, Overlocking Machines, Bag Closing Machines, Zig-Zag Embroidery
Machines, Chain Lock Stitching Machines, Cuff-Seamer Machines, Leather Stitching Machines,
Blind Stitch Machines etc. are also being manufactured. Though mainly situated at Ludhiana,
the industry is also engaged in the manufacturing of different parts and components and such
units are located at Bassi Pathana, Kurali, Nabha, Jalandhar, Pathankot, Malerkotla, Patiala,
Khanna, Morinda, Village: Bowani, Distt. Ludhiana, Samrala and Rurka Kalan in the different
districts of Punjab.
Major technological gaps of this industry are observed as under :
• Lack of new Models, Designs & Light-weight High Speed Sewing Machines.
• Precision Special- Purpose Production Machines are not used.
• Hi-Tech/High Production plants are not installed.
• Precision jigs, fixtures andtooling are not used in production.
• Inter-changeability of components and sub-assemblies is very limited.
• Hi-tech foundries having controlled metal temperature are not used.
• Latest painting technologies are not in use.
• Latest technology environment friendly heat treatment plant is not used.
• Quality control methods are not strictly adhered to.
• R& D support to the required level is not available.
• Production technology like aluminium pressure die cast components and cast steel
components are not in practice.
• Lightweight materials for parts and components are not used .
• Hi-tech environment- friendly electroplating plants are not used.
Some other issues noted for these machinery suppliers are
• Common Effluent Treatment Plants (CETP) are not available.
• Skill development training facilities are not available for the work force.
• HRD training for the supervisor to the required level is not available.
• Dumps for disposal of intoxicated/hazardous waste are not available.
• Lack of exposure to the international market and manufacturing technologies.
• Individual approach and cut- throat competition amongst the unit.
• Entrepreneurs are not receptive to new market avenues and technologies due to limited
resources and other constraints.
• Raw material prices are unstable.
• DEPB incentive is on the lower side.
• BIS licence fee system is irrational.
• Bill discounting facility provided by financial institutions is on the higher side.
Capacity building through training, consultancy and information dissemination is urgently
required for these suppliers/manufacturers.
The machinery used in dyeing is mostly indigenous while a lot of imported machinery is being
used in finishing despite the fact that there is 25% import duty on machines. The machinery
being imported is through indenters which are around 25 in number. Direct machinery import is
almost negligible. Of late, there has been a provision of importing second- hand reconditioned
machinery under the TUFS Scheme and many units are availing this facility. This machinery is
much ahead of what is called advanced in the Indian context. This gives a technological
upliftment to the industry, and, in turn, increases the quality of the produce.
2.1.15 . Machinery Spare Part Suppliers.
Most of the machinery dealers and suppliers provide after- sales services also like repairs
and supply of spare parts. There is a big demand for the Chinese & Taiwanese spare parts,
as original parts are very expensive. Spare parts are easily available from Ludhiana and Delhi.
2.1.16 Second hand and Rejected Goods
Exports surplus and rejected shipments are taken by agents who sell them in cheaper
markets in India and abroad.
Transporters, freight forwarders are generally used by these cluster actors as BDS. Both of these
are easily available in Ludhiana. They generally work on cash payment terms.
2.2 Demand for BDS Services
A sample survey of 29 firms manufacturing various kinds of knitwear products in the Ludhiana
cluster was undertaken to map the demand side issues of firms. These firms have been covered
in the sample survey to make them representative for Business Development Services (BDS) in
the cluster. These firms pertain to garment manufacturing, printing, embroidery, garments
washing and dyeing. The raw materials used by them are cotton, lycra, polyester, yarn, fabrics
and blended fabrics to make T- shirts, trousers, inner wear and many more daily wear garments.
2.2.1 Outsourcing and Sub-contracting
It is observed that these firms receive bulk orders in the form of final products ready to sell to
the end- customer like pullovers & cardigans, T-shirts/pyjamas, track suits, sportswear and
sweaters. The survey highlights in the area of subcontracting are
· 31% of the firms make use of sub-contracting for order execution for processes such as
fabrication, printing, knitting and embroidery.
· The financial capacities of the smaller firms are quite low to sustain high-end designers and
other experts for technically advanced processes in manufacturing and finishing.
· One- third of the units are able to cater to the high-end and middle segments through the
sub-contracting mode.
2.2.2 Quality of machines and new technology has remained a challenge. 27.5 % of the
sample firms rent / hire machines, tools and equipments from other businesses.
2.2.3 Demand Pattern for Cluster Products
Among the sample firms
· Most of the business in the cluster is generated by wholesalers and retailers
· About one fifth of surveyed firms are exporters.
· Use of E-commerce for business generation is very limited.
An analysis of the shifts in the demand pattern shows that:
· Clearly ,majority of the firms (58.62%) believe that their clients have increased for their
products, though
· 13.8% of the firms believe that the clients have decreased over the period of two years.
· 27.58% firms believe that there has been no change in the number of clients during the
last two years.
The general reaction of the BDS /firms is positive and feel that if the market conditions remain
good over the next two years there is a possibility of 20- 25% growth of this knitwear & apparel
cluster.
2.2.4 Sources of Business Information
The Ludhiana cluster is very closely networked by family and friends. Most of the business
information still comes from
relations. Gradually trade
associations and the media have
started playing the role of business
information providers. Even for new
business ideas and other support information for business growth family relatives and industry
associations are very important. Customers (buyers) are still very important for product
markets.
Family & friends , other Business People (31%) Business associations / support organizations (23%) Media - Radio, TV and Newspapers (17%)
2.2.5 Information and Communication Technology
The cluster in the use of ICT is still very conventional and is mainly used in the areas such as
Accounts/ Inventory Control / Designing /Office Communication / Reports, etc. A very few firms
were inclined to make use of ERP or any of its variant for supply chain management. The firms
apprehended that these products are not reliable and priced very highly for SME consumption.
The products manufactured by the firms were not standardized and design variations were
quite rampant, particularly in value -added products for export markets. ERP applications, on
the other hand are more suited to standardized products.
However, the firms were quite emphatic that better availability of CAD / CAM facilities in the
Apparel and Knitwear Cluster Ludhiana is important. Currently the cost of setting up this facility
in-house is high and apart from the investment cost, availability of skilled / trained operators is
also an issue. It was also indicated by the respondents that the need for ICT skilled and trained
staff is of great urgency to improve productivity levels and further operational efficiency.
2.2.6 Quality Testing and Training
Quality plays a significant role in branding and competitiveness of the products from the cluster.
During the survey ,more than 55% of the firms have indicated in negative on the quality testing
facility in the cluster. However, in-house testing facilities for colour matching and colour
fastness are available in most units. The PunjabGovernment has also set up a network of Quality
Marking Centres (common service centres for testing and certification), District Industries
Centre (DIC) located in and nearby Ludhiana. The quality services are generally used on the
recommendation of the buyers.
2.2.7 Human Resources and Skill Development
The most common training methodology used by the firms is in - house, on –the- job training
(93% of the sample firms have used such method of training).
Other preferred modes of trainings are through private training company (67%), Government
Training Institute (40%) and
Association -based training
programmes (7%) ,respectively.
No firm / firms have ever tried
partner company or other business
- based trainings. Even private BDS
providers are also playing a major
role in trainings.
This shows that the trend to train
the staff/workers with professional
channels is still not very popular .
24% surveyed firms feel that the existing government skill development infrastructure may be
useful to upgrade the skills. However 48 % feels that multi -skilling of the workforce may help in
protecting the business against risks.
2.2.8 Product Design
and Development
Designing inputs are
critically important in
Ludhiana. The best
perceived source of design
is traditional and own
design ,followed by other
sources such as media and
catalogue books and bulk
buyers.
However local products and other sources such as product development and design experts are
not given much importance by any of the firms. Such a BDS market needs to be developed in the
cluster, this being in an embryonic market mode currently. Such an initiative will impart
professionalism in the product design and development for these units and will meet the
dynamic changes in the export market demand. Currently the firms tend to resort to free
service channels.
About 86 % of the sample export firms indicated that there is no requirement of designing
capabilities as all export buyers and major domestic buyers provide their own designs for
development.
Similarly 44.82% of the sample firms have responded that diverse product- mix helps protect
sales from dipping in recessionary time. Mostly, the product is designed based on the
specification given by buyers. Further probing revealed that insufficient capacities for designing
according to specific buyers’ target market hinder the business due to unmet buyers’
expectations.
2.2.9 Linkages with Financial Institutions
More than 50% of the companies surveyed had agreements / arrangements with financial
Institutions / banks to access loans. They rely on Public Sector banks to avail such a facility.
Further 78.5% of the firms were satisfied with their relations with financial institutions. Some of
the problems faced by the firms related to delays in loan sanction, unnecessary procedures etc.
Higher rate of loan interest was an obstacle for not banking / doing transactions with the private
banks.
The surveyed firms of Ludhiana prefer
term loans from Public Sector banks
/financial institutions as they
generally carry a lower rate of
interest. Working capital limits and
Cash credit limits were the other
forms of credit being availed.
2.2.10 Factors for Business Growth – Last Two Years
In the sample survey, various factors were assessed for their impact on the business of the firms
over the last two years (to see whether the factors resulted in business to increase, decrease or
remain constant). The inferences are mapped below :
a) Market Opportunities – Majority (> than 50%) of sample SMEs indicated that their business
increased due to the increase in market opportunities but this has resulted in high competition
also.
b) Change in prices – Most SME responses indicated that increase in raw material prices has
impacted the profit margins over the last two years, though the volumes of sales has increased.
This indicates towards a competitive business environment in the global markets.
c) New / Latest technology – 90% of the Ludhiana firms were confident that the latest
technologies like Internet have helped in increased efficiency, better communication and easy
process of their overall business.
d) Market linkages - About 66% of the sample indicated that business opportunities were
abundant in the last two years and their market linkages have increased. However, some 17%
firms experienced recessionary pressures and their business prospects dipped. The remaining
17% said that their market linkages and in turn business have remained constant over the last
two years. So, this was indicative of the
recession setting in with fewer new orders for the
cluster exports as the old order book got gradually
vacated. This has implications for introducing new
marketing consultants in exports who can guide the
firms in tapping new orders/markets
e) Marketing Strategies – 59% of the sample firms
were convinced that their markets have grown in the
last two years due to better marketing strategies over
the last two years. So a large proportion of the firms
were applying themselves to new marketing strategies to develop their sales. This points to an
optimistic scenario in the cluster as firms are amenable
to new marketing ideas. Overall, one perceives the
Ludhiana cluster market as a growing one for the
marketing BDS.
Important BDS services
The priority in the usage of various BDS and service
providers, the following picture emerged :
a) The SMEs considered financial services as the most critical BDS service for a firm’s market
competitiveness and revenue growth. However there was no dearth of financial BDS firms in
the cluster.
b) Machinery/ accessory suppliers/importers and training institutes/skill development are
placed at the second spot and need attention.
c) Software vendors and marketing and branding consultants fared at the third spot.
d) None accorded any importance to the packaging BDS.
e) Product designs & development expert, tailoring and technology consultants were among the
least preferred services as most were mostly used in-house.
2.11 Other Issues
The sample firm pointed out various other problems faced in the procurement of BDS ,such as-
· Lack of awareness
· Lack of proper services (competent people)
· Late deliveries (leading to usual problems of delay and harassment)
· Non -fulfillment of commitments, unavailability of desired services and locating issues
· Pricing problems (some BDS providers are reluctant to any change in prices)
So ,in general, the main concern for using BDS is awareness about the services offered by the
BDS provider as well as proper management and quality of services provided by BDS provider.
A lot of variations were observed in the percentage share of money invested on the
procurement of BDS services (including raw materials) out of the gross revenues of the firms.
This ranged from 15% to 70%. The firms were also keen to deploy agencies (BDS providers)
who could take up various matters with the Government on policies in the interest of the
industry (Advocacy) and also advise the firms on the changes in government policies and
regulations that affect their industry directly like registration under MSME Act, delayed payment
act etc.
Other areas of concern mentioned by the sample firms are:
· Process planning and plant layout: Currently there is an expected 10 – 15% productivity
loss due to inefficient processes, work methodologies and even plant layout.
Consultants doing workflow studies and system optimization activities would be helpful
in this regard.
· Dyeing: This is a critical area where improvement is required. The dyeing units need to
have zero discharge and convert to RO systems as per the pollution norms. But the costs
for such systems are high due to which many small units are reluctant to invest.
However, the industry was willing to pay a little higher price for the dyed fabric/yarn if
RO system is installed as this would help them with buyer’s compliances. A common
effluent treatment plant is not possible as the units are not clustered in one area and
even if a few units are together then lack of space is an issue. Consultants for RO system
installations and for government grants / soft loans would be helpful for all dyeing units.
· Manpower training: There is a huge demand for training of workforce. The main areas
for training are ICT, management, machine operations, supervisor training and other
operational areas. HR issues related to worker motivation and work culture also need to
be addressed.
· Health care services: Most of the labour is either migrant labour or from nearby villages.
They belong to the economically weakest section and live in unhygienic conditions.
Seasonal diseases and malnutrition are rampant leading to increased absenteeism.
According to industry sources this leads to nearly 20% productivity loss.
· Sales and Marketing: The industry felt a need for marketing services to increase their
spread in the domestic market by linking up with retailers. Information on international
and national fairs and exhibitions could help them with their marketing efforts.
Clearance of their stocks, which are created due to over-booking for export orders, is a
major area where they loose money. If a viable platform / channel can be created for
them to sell this fabric and garment stocks, it would increase their turnover by minimum
5%. E-commerce could be an interesting possibility for which they would require
services of consultants and ICT vendors.
· Energy: Another major area of expense for the factories is energy. At present very few
facilities for energy audit are available and the services are expensive as well. Thus most
small and even middle size units shy away from such audits. However, one factory
reported 6-10% energy saving due to changed lighting after an energy audit by TERI.
CHAPTER III - STATUS AND SUPPLY OF BDS
3.1 Status of Business Development Service Providers in the Cluster
As the cluster graduated from the mere sweater manufacturing centre for domestic market to
manufacturing of value- added garments to exports, a number of functional BDS providers
emerged along the line of business operations. Most of the first generation entrepreneurs were
depending on the services for accounting, taxation, finance, and documentation of import and
export.
Post 1991 during the liberalization phase, a number of foreign buying houses began to develop
sourcing networks in Ludhiana and became catalytic feedback-giving intermediaries for market
access, transfer of knowledge and monitoring for local producers. The State and Central
Government programmes under which the European and American designers were brought in
to help local firms became the channels of such information flow. Knowledge spill over from
other firms complemented the absorbing firm’s own efforts and carried it to new efficiency
levels.
When the authorities of Employees’ State Insurance (ESI) and Provident Fund organizations
were enforcing the Act during the year 1999, a number of BDS providers emerged to maintain
the records and to liaise with those enforcement authorities. They are one of the most utilized
service providers in the cluster.
The cluster is actively supported by an array of supportive activities in the value chain, located
within the cluster. These activities relate to the forward and backward linkages within the
industry such as tailoring, embroidery, finishing, marketing etc. Some of the services are at a
mature level of acceptance and usage whereas with changing business environment a whole
new lot of BDS like energy audits, IPR have emerged which still need to be established in the
cluster to stay globally competitive.
3.1.1 Buying Agents
Foreign buying houses happen to be an important set of embedded BDS in the cluster on export
marketing information.
The private sector BDS providers particularly for export promotion have a very significant role to
play. They act as middlemen between the buyer and exporter by procuring order from the buyer
and by identifying the right supplier for the order and by coordinating with them till they
execute the order. Such buying agents represent more than one buyer and charge fees either
from the supplier or the buyer or both for the service provided by them. The buying agents look
for new suppliers as per the need of the buyers. They depend on references from friends and
old suppliers.
3.1.2 Testing and Inspection Services
Textiles Committee and SGS are two premier institutes providing testing facilitates and
certifications in Ludhiana. Although these are critical services but they are availed only on
buyer’s behest. So there is actually no pull factor for utilizing them unless there is a requirement
mandated by the buyer. Thus, it is mostly the exporters who use these services.
3.1.3 Lead Auditors and Certifying Agencies for Compliances
Nearly two decades back , Ludhiana did not have a BDS provider for implementing ISO 9000
certification. The auditors had to be called from Delhi or Mumbai. Also there was not much
awareness about the international quality certification. Now there are about five companies
giving this certification in the cluster but the firms still feel that such certifications are mere
formality and they undertake these certifications only when buyers ask for them, and insist on
the adoption. However some companies have started feeling that such adoptions will actually
bring benefit to the firm if implemented properly and with good intentions. Thus, need is slowly
emerging in the cluster for better utilization of these BDS awareness programmes on what
certifications entail and the benefits that can be drawn from then will also create more demand.
3.1.4 Spinning Units
There are more than 50-60 spinning units producing yarn for this industry. The modern worsted
spinning mills have been installed in and around Ludhiana district. Good quality knitting yarns
are available though, still there may be shortage of '’ready to use'’ yarns in various colours and
blends.
3.1.5 Woolmark Company
It is an international body of wool growers from Australia, South Africa and New Zealand to
promote sales of wool by helping woollen industry to grow. This is done by holding an annual
national -level wool meet that provides a show window to local firms, as foreign firms are also
invited. The Secretariat has its own brand name '’Woolmark’' that it licenses for usage by firms
after assessing their methods of production and usage of high quality wool. Initially, when the
licence was issued free of cost, there were some 200 firms licensed, but after imposition of a fee
of US $ 2,000 per annum on the firms, the number of licensees has reduced to about 60 in
Ludhiana. IWS provides guidance on best manufacturing practices and supports industry by
providing them with information on the latest trends at the international level with regard to
fashion, marketing strategy and new technologies.
3.1.6 Skill Up gradation Infrastructure/Training institutes.
At present, there are 9n training institutes in Ludhiana for the textile industry. Some of
these are supported by the industry itself. The present level of skill developing
institutions in the cluster is not up to the desired level as they are not only ill -equipped
but also severely inadequate to meet the requirements. These are open to region’s
workforce in general. This initiative has contributed greatly to skill development and
enhanced productivity in the cluster. With twp lakh of workers, a few thousand
supervisors and an equal number of entrepreneurs, the available number of intake in
various public institutions (Polytechnics, ITIs, Engineering Colleges) in Ludhiana for
example is estimated to be less than 200 seats per annum, primarily for school pass outs,
based on their marks and/or entrance examinations.
Moreover, most such institutions are under the control of the national and state ministries and
conduct only long duration (12 months to 3 years) courses targeted mainly at fresh students
with little linkages with the industry. There is an urgent need to upgrade the available facilities,
revamp available courses and cut them into acceptable short-term modular courses that the
industry can sponsor their candidates on a part time basis. Besides formal institutional based
training, innovative means to train supervisors, private BDS providers, machinery operators
and creation of the cadre of trainers in the clusters is called for. This can only be meaningfully
undertaken after a clear mapping of skill requirements as per their competencies needed at
every segment of the productive value chain of the cluster.
It is of utmost importance to involve private sector in designing the new requirement of training
modules, upgrade available facilities, sponsor candidates for training in order to utilize the
upgraded skills effectively on a sustainable basis.
3.1.7 E- Readiness Centre/ ICT adoption
E- Readiness Centre has been opened at the Local institute named SIFT in Ludhiana to promote
ICT in the cluster. E- Readiness Centre is an organization promoted under “Project Vikas” - a
joint initiative of National Manufacturing Competitiveness Council (NMCC) and Microsoft
At the Knitwear cluster of Ludhiana, the local women polytechnic college – Government Polytechnic for
Women (GPW) got linked up with various support organizations to introduce a training programme for women. Institutionalization of the programme was ensured from the very beginning. The newly-
created association of exporters – Apparel Exporters’ Association of Ludhiana (APPEAL) took all the initiatives in ensuring that industry demands were met, including the types of modules and
sustainability of initiative. Two local NGOs (Nishkam Sewa and Ram Saranam) took up the task of mobilizing women trainees. Because of the natural aptitude of women in stitching, it was decided that
women would be trained on industrial stitching and tailoring. In the absence of standard funding (these being new programmes), resources were raised from innovative sources. Discussion held with the Department of Technical Education, Government of Punjab led to the provision of space for the programme at no cost. Department of Science & Technology (DST) provided financial support. Similarly, capital investment was supported by the industry. A Japanese
machinery manufacturer (Juki) provided 13 machines valued at US$ 22,000. By the same token, the industry also provided 20 local machines. The programmes were constantly monitored and changes
were made in the course content and duration. The training programme for women initially lasting one month, was later enhanced to three months. Witnessing such success, the Bhadur ke Road Textile and Knitwear Association has also launched a
training programme on garmenting. The industry invested more than US$ 22,000 on machinery. The space for the training centre has been provided by a local charitable trust.- Source: UNIDP, CDP
Corporation (India) Pvt. Ltd. .The centre can provide basic training for utilizing available
software to the companies’ best advantage. It can also design simple solutions for common
work flow procedures and reports. This aspect requires a push from BDS providers to make
themselves better embedded in the value chain.
3.1.9 Designers
Although designers are an integral part of any textile value chain but in Ludhiana their role is
minimized as most of the manufacturers depend on designs given by the buyers which slowly
percolate down to domestic market as well. Most of the designers are used as merchandisers in
the industry with the assumption that they would be better able to interpret buyer’s designs.
The market is not yet mature enough for this BDS.
3.1.10 Fashion Designing Institutes
There are seven fashion institutes being run at Ludhiana, besides NIIFT at Mohali and NIFT and
Pearl Academy of Fashion at Delhi. All these institutes are running courses in designing as well as
knitting. These are a great resource to the industry, but there are very few takers for the pass
outs due to one- man show and entrepreneur giving his own design inputs. There have been a
couple of programmes arranged with these institutes such as those on product diversification
with NIFT and on retailing with Pearl Academy. They can be collaborated in various other issues
also like those concerned with forecasts and international trends
3.1.11 Marketing Agents
Marketing agents basically cater to requirements of the domestic markets, both high-end and
low-end /middle- income segments. They provide two kinds of important services to the
entrepreneurs. Firstly, they source orders to manufacturers from distant buyers and secondly
they serve as a guarantor of the buyer. They are responsible for collection of money from buyers
after expiry of credit limit. In case of dispute they reimburse 50 per cent of entrepreneur's dead
payment.
3.1.12 . Financial Services
Finance is not a big problem for the enterprises in Ludhiana. The surpluses they generate find
their way back in the industry. Finance is easily available from banks and other financial service
institutions. Even in the local market there are a number of private financiers who provide
financial resources to the industry. However, efficient working capital management for stocking
requirements is a major critical success factor for the units in the garment sector which requires
efficient delivery schedules to be complied with market order books. So there is a good need for
consultants of BDS services which can plan the supplies at the backend to match with the
delivery schedules required by the market, and suggest working capital (finance)
withdrawals/limits based on such a real- time flow scenario. Good management on this front
can facilitate cut into the interest costs, paving the way for increased margins.
There are a number of banking agents who provide door –to- door banking service to the
entrepreneurs. Most of them are themselves in the banks, rest are their agents who provide
these services on a commission basis.
3.1.13 Inventory Management
Most successful garment units have to place orders for raw materials in the case of wool or for
other garments prior to receiving the customers’ orders. This is done with a view to minimize
purchasing costs, the time required to fulfil customers’ orders and the risk of non-delivery. The
units also have to maintain an inventory of certain products that they anticipate will be in
greater demand. Such inventory levels in excess of customers’ demand result in inventory
write-downs and the sale of excess inventory at discounted prices. Smaller importers have the
impact of delaying the delivery schedules to customers, and also negatively impact retailer and
distributor relationships, thus diminishing brand loyalty. Better management techniques and
adoption of ICT can help in minimising stocks.
3.1.14 . Yarn Agents
The yarn agents are mainly agents of traders who collect requirements of knitters for different
shades on a daily basis by going door to door. They then purchase these shades from traders at
night and deliver the required amount of different shades to knitters by early next morning
before the unit commences its daily operations.
3.2 Who Does Who Pays Matrix: Ludhiana Knitwear Cluster (Annexure - II)
3.3 Supply of Business Development Services in the Cluster
BDS Provider Firms
A sample of 18 BDS firms from Apparel and Knitwear Cluster of Ludhiana were studied. The BDS
survey is intended to look into the supply side issues of BDS market for the cluster firms. All
except one firm, are private entities - the sole other one being a Public – Private Partnership. A
wide range of service providers were contacted for the sample survey - Testing, ICT, Quality,
Fashion Designing, Consultancy, Education and Training etc.
Organisational Structure
The size of surveyed firms varied from single person to 50 persons. These firms had different
information and communications skills nil computer to 15 computers.
Few of them make use of their own software and training materials and make use of e-learning
devices such as projectors and slides. 3.3.1 Business Coverage
Majority of the clients of the BDS surveyed are exporters. Most of the clients come from
seminars , workshops , personal contacts preferences from the existing clients account for 39%
of total source (s) in terms of clients tapped. Other most prevalent modes are Internet,
meetings and personal contacts (36% in all). Seminars/ Workshops and awareness programmes
account for only 19 % whereas advertisement is the least used by Ludhiana firms (accounting
only 6%).
While Internet as a major mode is fast catching up in Ludhiana, more credibility is assigned to
the personal contacts due to cost factor. Lack of use of market tools like Advertisements and
media reflects weak marketing strategies in a competitive scenario and requires an intensive
interface of marketing strategists/consultants with these firms.
3.3.2 Backward / Forward Linkages
The sample studied indicated little backward linkages with national institutions, university/
professional bodies and international organization has been observed. Only three BDS providers
in the sample informed having International certifying organisations and External Consultants as
a source of their backward linkages.
Most of the BDS in the cluster are of local knowledge base. Their relationship with national level
or international BDS was not reported during the survey except in few case of certifying
agencies for the exports.
3.3.3 Demand for BDS in the last Two Years
With the increase in competition and growing demand (domestic and international) it seems
obvious that the demand for BDS has increased. Clearly out of the 18 responses 16 have
informed that their clients have increased over the period of two years despite the
recessionary conditions in the world during the preceding year.
Business Growth of Firms perceived by BDS
Among the major factors pointed out by the BDS catering to the Ludhiana firms, the following
are worth mentioning:
· Competition from other countries
· Lagging in quality, price & delivery
schedules
· Inadequate technological advancement
· Lack of skilled workforce
· Lack of diversification leading to concentration of market risks
It was also highlighted that there was a need to coordinate the functions of other institutions
and firms engaged in similar activities. This would encourage cross learning of adopted best
practices internationally to make effective dents into the global markets.
3.3.4 Understanding Client Needs
While certainly every BDS provider is making an endeavour to understand client needs, the
sample has revealed that a personal meeting with the clients accounts for 63% of the various
sources available. The Internet and cellular services together account for 25% (18+7) and are
gradually increasing as these modes save time, cost and increase efficacy. Due to cost and time
factors, nobody seems to use market/customer surveys as a source of information for assessing
clients’ needs.
3.3.5 Fee Criteria
The main criteria for charging fees by the BDS in the cluster is the organizational standard
service charges. Cost and profit basis mark-ups are also resorted to in quoting the fees to the
SMEs. No one seems to use either prevailing charges for similar activities or clients’ ability to
pay as a measure of judging fee requirements.
The pricing levels of some major BDS types in the cluster have been plotted in the table below
for an understabding of the BDS pricing scenario :
S. No. Name of the BDS Type Average pricing of each type of BDS
1. ISO Certifications - ISO Consultant charges Rs 35000 (For trg. 150-
175 Man power)
- Certification charges Rs 35000-40000
Social Compliance - Consultant charges Rs 50000
- Certification Charges Rs. 50000
Oeko Tex Certification - Rs 260000- Rs. 275000 ( considering none of
the item in value chain is not certified.) if any
of the item is certified cost will be less)
HR Consultancy - 15 days or One month’s salary
Transporters - By Road Approx Rs1/Kg to 2.5/Kg ( Depending
upon weight & distance)
- By Air : Rs 95-Rs 135/Kg (Depending upon
Weight & Distance )
Courier Services - International Courier : Rs 550/kg-1500/kg(
Depending upon country & weight )
- Domestic Courier Rs 25/ kg -35 Kg (Depending
upon Courier to courier)
Advertising Services - TV Advt : Rs 400/ 10Sec & Rs 5000/3 Minutes
/3 times a Day
- Graphic Add Making Rs. 4000-5000
- Advt with Models Rs.60000 onwards
Printing ( Fabric & Garment
)
- Rs 0.50 To Rs 50 ( Depending upon no. of
colors / types / Area of printing )
Embriodery - Rs 0.50 /1000 Stitches
Knitting - Rs15/ kg-Rs 35/ kg ( Depending upon Knit ,
Quantity & Machine availability )
ICT Services - Rs 12000/- onwards Depending upon the
requirement
3.3.6 Income Source- in the last two years
Out of the 18 members only few are believed to have sources of funds from Education and
Training, Testing and Consultancy Services. Most of the BDS income comes through consultancy
services, and as such there appears little initiative on diversifying their activities.
3.3.7 Customer Satisfaction and Business Problems
None of the BDS provider seems to use feedback on a regular basis or just after receiving
services as a source to evaluate satisfaction of their customers. However there were eight BDS
providers who believe in assessing the impact of the services provided through other modes
including oral feedback.
The major problem while implementing services was found to be the delay in fees payment
among sample BDS. Too much bargaining is ranked second in terms of problem faced. However,
problems such as lack of awareness, lack of commitment towards procedures, less priority by
the management are the problems faced by very few BDS providers.
3.3.8 Linkages with Financial Institutions
None of the sample surveyed appears to have any significant relation with the financial
institutions nor have they apparently facilitated clients in accessing the banks or financial
institutions.
CHAPTER - IV CONCLUSIONS AND RECOMMENDATIONS
4.1 Challenges before the Industry
After the diagnostic study and a detailed analysis of the same, we can see that the market today
is not the same as it used to be a few years back and the business environment has also
changed. The buyer today has many more options available in terms of quality, variety and
source of the product. There is much competition from the neighboring countries as well as
from some new production centers. Countries like Austria etc are also developing and growing
in Europe with latest production facilities which gives an advantage to the buyer in terms of
proximity and quicker delivery time
Hence the buyer today has become more quality conscious, and the delivery span has reduced
considerably. Fast changing demand pattern also puts a strain on the designing capabilities of
the manufacturing firms. A major factor of the competitiveness of the Ludhiana knitwear
industry was its cheap and skilled labor availability though most of it was migrant population.
Since last two years, this trend is also reducing due to changed economic conditions and policies
in the neighboring states. Hence the industry is loosing that advantage.
It is felt that there is dearth of trained professionals in the cluster to improve the
competitiveness of the cluster and to prepare the cluster stakeholders for the changing business
requirements. The buyer today, whether international or domestic, has more choices for
sourcing his product and has made considerable changes in his pattern of sourcing. The
markets are not the same as they used to be especially after the removal of quota restrictions.
Buyers today are looking for small lead times and more value addition in the products. Also, the
buyers are looking for new and faster ways to connect the value chain so that the pre-
production costs can be reduced. The buyers have become more quality conscious and would
like to work with exporters who have independent quality control and quality assurance system
and have the ability to respond faster for their needs and can quickly run the production. Also,
the production reporting system is required to be much faster through the electronic medium.
Changes in the climate condition as well as change in the dressing style of today’s new
generation have made the Ludhiana industry change its strategies. Earlier there was an
emphasis on the production as well as demand of sweaters of heavy gauge which has shifted to
finer gauge. While earlier winter was a busy season for the industry, now days the industry is
catering to the summer knitted garments in a big way. Also earlier Ludhiana was mainly a bulk
market and domestic buyers used to move to Mumbai and Delhi for hi fashion garments. This
trending is changing day by day although a bit slowly and the industry needs support for the
changing market.
4.2 Areas of Intervention
4.2.1 FACTOR CONDITIONS
HR Development: The most important need felt in the cluster is of skilled or unskilled labor in all
the major sectors .Also there is need to include the local labor in the industry mainly female
population so that the acute shortage of labor can be dealt with. There are very limited channels
of training as explained in the pervious sections. Even the entrepreneurs come from trading
background with minimum formal education. Any new worker learn the skill on the job . The
immediate result of these kinds of factors is lower productivity and discouraged innovation.
Moreover, the cluster is not attuned to employing women workers. Most of the local knitwear
training institutes provide training largely irrelevant to the needs of the industry and are ,
therefore, of limited use. Lack of skilled work force is important area identified for intervention
under the project. Since the requirement for training is huge, it is essential to identify and
promote BDS, most preferably an institute, who got experience in training workforce. It is also
necessary to do capacity building for these institutes and provide some training to trainers. It is
also proposed to train the labourers in their own working place, in association with their
employers.
4.2.7 Inventory management is a major issue: The current system of order booking and
production synchronisation gives serious problem of piling up of huge inventories in the
industry. There is a need to look for innovative ways for such inventory and order management.
Guidance about Inventory management and a resource centre for stock lots sale is a major
requirement for the industry and the project need to work in this direction.
4.2.8 Energy: In the summer season power supply always becomes a critical issue. Also, these
days , PSEB imposes a compulsory cut on power supply for as much as 33 hours in a week. For
the last 2-3 years ,there is an acute shortage of power supply to the industry. Most of the
small-scale units, dyeing units, garment units and furnace units don’t have generators to run
their units. Power cuts also increase the cost of production and high rejection. The
competitiveness of the industry can also be addressed by tackling firm level issues such as
inefficient energy usage, lack of proper organization, inappropriate washing, etc. Currently,
power & energy audits are not in great demand. Although industry have some awareness
about the benefits of these audits, Availability of BDS providers and lack of motivation ,
effective presentation is a hurdle in streamlining the audits.
4.2.9 Environmental Issues: With the focus on climate change, one of the key pain points is
environmental pollution. ETP plants for zero discharge are the key requirement for dyeing
units imposed by the Pollution Board. A notice to install zero discharge ETP or closing
down the units has already been issued to dyeing units at Focal Point and Bahadur Ke Road.
Most of the units are very small and don’t have land and funds to install zero- discharge ETP.
The dyeing units are a major pain point for the industry for quality, delivery period as well as
pollution issues. There is need for up gradation in this field. The dyeing units are a major pain
point for the industry for quality, delivery period as well as pollution issues.
4.2.2 FIRM STRATEGY STRUCTURE AND RIVALRY
Weak Institutional Linkage: Ludhiana has about 70 odd different industry associations. All are
usually engaged in activities related to petty Local problems or lobbying for fiscal concessions
without any developmental activities. Linkages between the support institutions and industrial
associations are dormant and the atmosphere of dialoguing with confidence in each other is
missing.
Poor branding of Ludhiana: There is common feeling among clusters actors (with so many
associations-70) industry feels that a shared vision is missing in the cluster. This is necessary for
industry to become a leader instead of being a fashion follower. On top this existing
infrastructure available in the cluster is mainly used for non industry purposes to earn revenue
and sustain it. The evolved vision can help cluster to utilise such infrastructure in better way.
This will also help in marketing and branding of Ludhiana. There are some initiatives of joint
marketing in domestic market such as KAMAL (see annexure III). There is need to institutional
such initiative. Therefore, there is a requirement for the same to promote Brand Ludhiana.
There is a feeling in the industry that the sector should be a leader instead of being a fashion
follower and thus a vision and participation in national and international events is required.
Information and communication Technology (ICT) : The industry is not very much aware of IT
usage . Only a few big Players have ERP & SAP. Small and micro have some locally
manufactured software for invoicing, challan and accounting purposes. Mostly used
accounting software is Tally. The industry is not ready to spend much on software because the
major transactions of MSMEs are done in cash without proper invoicing. IT usage is limited to
challan, accounting inventory management only. Majority of the SME understand that it is
important to adopt the IT practices for survival but are unable to afford the cost involved. It is
felt that there is need to introduce some small industry specific software of low cost so that the
industry requirement is fulfilled. Also awareness need to be created about the existing software
so that the same can be adopted by the industry. Also CAD / CAM professionals are required in
the cluster to overcome traditional system of cutting in firms. CAD can reduce their wastage
level and can increase efficiency. Even some firms are still believing that Masters (cutters)
can cut fabrics with greater efficiency as compared to CAD software, Which is technically not
true. So a sensitization is required to change their mind set. BDS who can work on CAD/ CAM
are required. Also , A portal/ Association or BDS is required which can provide them required
information related to their business. The information source must have linked with
professional bodies and connected with good ICT means so that information can be
gathered within minimum time frame. Presently Main Source of Information is through
relatives which are not professionals in their fields.
IPR (Intellectual Property Rights ): Awareness about issues like Copyrights, Patents,
trademarks, designs, patents, geographical indications is very low in the cluster. Even BDS in
this area is not easily available in Ludhiana because of low demand. Awareness regarding
patent of designs, new products is required at the cluster level. Employees are not aware of
their Legal rights , work environment , Safety issues at workplace.
4.2.3 DEMAND CONDITIONS
Weak International Market Intelligence: Selling their products through agents deprives the
manufacturer-cum-exporters of gaining crucial market intelligence of the changing international
demand pattern. Most manufacturer-cum-exporters are also deprived of the process of
planning in advance, creating new products with confidence and ultimately searching for new
markets. Clearly, BDS services have a major role to play in introducing/expanding this market for
the cluster firms. This appears to be even more important in the present recessionary scenario
which has affected adversely the cluster firms’ business due to heavy dependence on export
markets.
Stagnant Growth in Domestic Market: Manufacturers specializing in the domestic market used
to sell through agents, wholesalers, retailers and end-product users. Thus, they also lacked
market intelligence related to yarn diversification, product diversification, product finish, etc.
The industry continued to use basic yarns with standard materials namely, wool, acrylic and
cotton. Yarn diversification existed only in terms of blends of cotton, wool and acrylic. Lack of
proper finishing techniques restricted entry into high- value segments.
4.2.4. RELATED SUPPORTING INDUSTRIES
Lower Penetration of BDS in Strategic Areas with innovations and motivation: There is an
urgent requirement of trained professionals in marketing , process planning and management
sector so that they can introduce new techniques across the value chain and the traditional face
of the industry can change as per the changing environment and the industry competitiveness
can increase .There is need to train the industry about ways of productivity improvement and
innovative marketing methods like e marketing etc. BDS in areas like pollution control, product
development, Supply Chain management technology planning, plant layout are very low in the
cluster. Brand building is an immediate need for the cluster. In this respect an annual or bi-
annual event at the industry level for local, national and international buyers/sellers under the
aegis of the industry associations would be a big step towards brand building of Ludhiana
Knitwear cluster. Motivation of workers and training to them about the soft skills and ethical
issues is also a requirement as per the industry stakeholders
Lack of Original Designs capabilities in the cluster: As regards product design development is
concerned the main source of product design is the design supplied or provided by the buyer.
Very few firms rely and have established facilities to develop their own design. Therefore, it is
important to support fashion institutions like the Designing and Knitwear Fashion Institute to
establish linkages with reputed fashion design institutions abroad, source information relating
to fashion trends and to work with private BDS in fashion design whose designs are acceptable
to the industry.
In view of the above implementation description, a bird’s eye view of the field level
Implementation Strategy can be had from the following table :
S. No.
AREAS OF BDS INTERVENTION
PROPOSED INTERVENTION INVOLVED PERSONNEL FROM MSMEs
BDS/INSTITUTIONS TO BE INVOLVED
1 HR Development
Upgrading human resource and technical skills through training programs, seminars and workshops at worker , supervisor and managerial
worker, supervisor, manager level
ATDC, PAU SIFT, TEXTILE COMMITTEE, NITRA
2 Energy Energy audits and promoting ways of reducing energy consumption of a manufacturing unit
manager and entrepreneur level
Energy audit experts , TERI ,PEDA
3 Inventory Management
Training, introducing software for inventory management,
manger and entrepreneur level
Software provider and management experts
4 Environmental Issues
CETP, awareness about ways to minimize pollution, waste water management
entrepreneurs PCB, PEDA,
5 Weak institutional linkage
Establishing linkages between industry associations on one side and firms & BDS on the other
association members FEKTAA, APPEAL, LDA,
6 Poor Branding Brand promotion and Development of firms
entrepreneurs Brand Consultants, advertising agencies
7 ICT Promotion of Industry specific ICT usage
manager and entrepreneur level
Software experts
8 IPR Sensitization on IPR and legal Issues
manager and entrepreneur level
Legal advisors and IPR specialists
9 3 Weak demand market intelligence
Enhancing linkages with International market , innovative ways of capturing market share, buyer seller meet
manager and entrepreneur level
Buying Agents,Marketing advisors, Software developers, Advertising agencies
10 Stagnant growth in domestic market
Product diversification, e-marketing, and effective distribution strategy
manager and entrepreneur level
Software provider and marketing advisors
11 Lack of original design capabilities
Designing softwares,awareness of recent trends in fashion / design, and involving professional institutes
merchandiser and manufacturer level
designers
12 Lower Penetration of BDS in Strategic Areas
Introducing BDS to ramp up systems of SMEs in Productivity / Quality / Waste minimization
manager and entrepreneur level
process planning expert, management experts
4.3 Major Pressure Points
The critical issues which hamper the competitiveness of the cluster can be summarised as under
:
1. Non Availbility of skilled & unskilled labour : The labor mainly consists of casual /temparory
workers. Because of uneducated , unskilled labor without proper training the quality of products
suffers in global markets which are highly conscious of the product quality. This results in
alterations , reworks & rejections which ultimately results in loss of revenue to the firm.
2 Inventory management : Most of the firms face significant challenges in managing
inventory of items , raw material , WIP, finished material, store, spares consumbles. However ,
the major concern is the inventory of raw material. Because of small order size, a huge
inventory of many types of yarns and fabric is maintained. Managing and tracking a large
number of SKUs (stock keeping unit) is a very difficult task and often results in dead
inventory.
4.4 Cluster Vision
Improving market reachout, particularly in the export markets through better networking with
the market related BDS to facilitate this process. This would be required to be clubbed with
skilling of labour through industry matched linkages with local institutions to induce quality
production and cost efficiences through better inventory control. Other quality related
initiatives like designing would be needed so as to carve out good value addition in the markets.
4.5 Strategy
A major factor of the competitiveness of the Ludhiana knitwear industry was its cheap and
skilled labor availability though most of it was migrant population. In recent years, this trend is
reversing due to changed economic conditions and labour policies in the neighboring states.
Hence the industry is loosing that advantage. In addition to cost efficiency, market based reach
and strategy has grown to be an important tool in the overall current growth perspective of
business entities. This has an reinforcement impact on the target market audience and needs to
be addressed. Historically the time has come to reposition Ludhiana Knitwear and Apparel
cluster from a high low road strategy (cheap labour) to a high road strategy (Niche and unique).
Therefore , the strategy for Ludhiana will focus on efficiency and innovation tools. Major BDS
intervention areas to effectively facilitate this vision would be Marketing (branding, research),
Technology Upgradation including ICT usage, Higher number of Quality related BDS in deficient
areas like designing, and a Skill Development perspective of firms alongside proper linkages with
cluster institutions
s
TRANSPORTERS (450)
FRIEGHT FORWARDERS (450 - 500)
Government Resources (4-5)
Finance (22-25)
Industrial Association (70)
Testing Facilities (2)
Training Institutes (9)
HR Consultants (15)
Certification Agencies Supporting
Environmentntnntnnn
AGENTS
SALESMEN
DISTRIBUTORS (650 – 700)
BUYING AGENCIES (6-7)
RETAILERS
Spinning (50-60) Yarn **Solid **Blended
Software Vendors (15-18)
Management Consultants (9-10)
Quality Consultants (12)
DISTRIBUTION & SALES
Logistics Advertising Agents (80-100)
Marketing and Branding (5-6)
Markets
EXPORTS
LOCAL
DOMESTIC SALES
INSTITUTIONAL SALES
PRODUCTS
Sweaters
Track Suits
T-shirts
Sweat Shirts
Kids Wear
Body Warmers
Blankets
Shawls
Socks n Gloves
Home
Sports n Leisure
Industrial Fabrics
PRODUCTION
Dyeing Units (200 –250) 250)
Finishing Units (225 –
Flat Knit Units
Circular Knit Units
Knit Panels
Fabric Stitching & Finishing
Linking & Finishing
Machinery Suppliers (60-70)
Yarn Wholesalers (150-180)
Chemical Supplier (200)
Plant Layout Experts (12-15)
Fabric Wholesalers (350)
Fibre
Natural & Synthetic
Designer Research & Development
INPUTS
Job Workers (Knitters)
Accessories Supplier (225 – 250)
Printers (100 – 125)
Job Workers (Tailoring)
Embroidery Units (1250)
Packaging & Labeling (150 – 200)
Annexure-I Cluster Map and BDS in Value Chain
Annexure II BDS Analysis – Who does, who pays?
Sl.
No.
TYPE OF
BUSINESS
DEVELOPMENT
SERVICES
WHO DOES WHO PAYS PLACE REMARKS
1 YARN
AGENTS
SPINNING MILLS &
YARN DEALERS
- ALL FIRMS
- TRANSACTION TYPE :
CASH AND CREDIT
- MARKET WELL -
DEVELOPED, AMPLE NO.
OF SUCH EGENTS
AVAILABLE
PUNJAB,
HIMACHAL
PRADESH,
DELHI, SOUTH
INDIA,
AHMEDABAD
CASHMERE
AND SOME
OTHER YARNS
ARE
IMPORTED.
2 PACKAGING
MATERIAL
SUPPLIERS
SMALL, AND MICRO
FIRMS
- ALL FIRMS (LARGE ,
MEDIUM, SMALL AND
MICRO)
- TRANSACTION TYPE :
CASH AND CREDIT
- MARKET WELL
DEVELOPED, AMPLE NO.
OF SUCH SUPPLIERS
LUDHIANA,
HIMACHAL
PRADESH,
DELHI
PART OF THE
BACKWARD
LINKAGE
VALUE CHAIN.
HOWEVER,
SPECIFIC
PACKAGING
DESIGNS
COULD FORM
PART OF THE
EMBEDDED
BDS
COMPONENT.
3 TESTING LABS TEXTILECOMMITTEE,
SGS ,INTERTEK
- ALL FIRMS (LARGE ,
MEDIUM , SMALL AND)
- TRANSACTION TYPE :
CASH
- VERY FEW BDS
OPERATING (2-3); MORE
NEED TO BE INTRODUCED
LUDHIANA,
DELHI
USED 99 % IN
THE CASE OF
EXPORTS
ONLY’.AWARE
NESS NEEDED
TO INDUCE
USE BY FIRMS
IN THE
DOMESTIC
SEGMENT
4 CERTIFICATION
AGENCIES
PRIVATE
CONSULTANTS,
TUV,BVQI.,SGS
- ALL FIRMS (LARGE AND
MEDIUM)
- TRANSACTION TYPE :
CASH
- ONLY 5 SUCH BDS IN THE
CLUSTER; MORE
AWARENESS NEEDED FOR
THE CLUSTER TO HAVE
MEDIUM TERM EDGE ON
QUALITY
COMPETITIVENESS
LUDHIANA,
DELHI,
MUMBAI
MOSLY USED
IN THE CASE
OF EXPORTS
ONLY OR FOR
SOME
FAMOUS
DOMESTIC
BRANDS;
CURRENTLY
CERTIFICATION
DONE ONLY
ON BUYERS’
DEMAND
5 BARCODE
PRINTING
MACHINES &
LABELLING
SUPPLIERS
TRADERS AND
IMPORTERS
- ALL FIRMS (LARGE ,
MEDIUM)
- TRANSACTION TYPE :
CASH AND CREDIT
-
LUDHIANA
DELHI,
MUMBAI
6 H R
CONSULTANCY
PRIVATE
CONSULTANTS,
INHOUSE EXECUTIVES
- INDIVIDUAL CLIENTS
AND FIRMS (ONLY
MEDIUM/SMALL)
- TRANSACTION TYPE :
CASH AND CREDIT
LUDHIANA
DELHI
7 ADVERTISING ADVERTISING AGENCY,
NEWS PAPER
AGENCY,MEDIA
,PRIVATE
CONSULTANTS,
INHOUSE PERSONS
ALL FIRMS (LARGE AND
MEDIUM)
TRANSACTION TYPE–
CASH AND CREDIT
LUDHIANA
DELHI
MUMBAI
8 TRAINING
INSTITUTES
ATDC, GOVT
POLYTECHNIC,SIFT,
NIIFT, NIFD,PIFT,JD
INSTITUTE
- INDIVIDUALS AND FIRM
SPONSERED CANDIDATES
- TRANSACTION TYPE :
MOSTLY CASH (ADVANCE)
- A LARGE NO. OF
INSTITUTES BUT
CURRICULUM NOT
CUSTOMISED TO
LUDHIANA,
MOHALI. DELHI
- MORE
INDUSTRY
INVOLVEMENT
AND
MODULAR
SHORT TERM
COURSES
SUITED TO
INDUSTRY
REQUIREMENTS
INDUSTRY
REQUIRED
- CURRICULUM
UPGRADATION
CAN BE DONE
ON PPP BASIS
9 TRANSPORTERS
AND LOGISTICS
PVT TRANSPORTERS.
FREIGHT FORWARDERS
AND CLEARING AGENTS
- ALL FIRMS (LARGE ,
MEDIUM , SMALL AND
MICRO)
- TRANSACTION TYPE :
CASH AND CREDIT
- MARKET WELL
DEVELOPED
LUDHIANA,
MUMBAI,
CHENNAI,
DELHI
10 MARKETING
AGENTS
MOSTLY, INDIVIDUALS,
APPOINTED BY FIRMS
ON THEIR OWN
- ALL FIRMS (LARGE ,
MEDIUM , SMALL AND
MICRO)
- TRANSACTION TYPE :
CREDIT
- MARKET DEVELOPED
FOR MEDIUM AND SOME
SMALL FIRMS; FOR OTHER
SMALL & MICRO FIRMS
SOME INTERVENTION
NEEDED
ALL MAJOR
STATES &
CITIES
ALSO
FUNCTION AS
INFORMAL
GUARANTORS
IN CASE OF
DEFAULT IN
PAYMENTS
11 BUYING AGENTS AGENTS OF BUYERS AT
A SITUATION ABROAD
- EXPORTER FIRMS
- TRANSACTION TYPE :
3-5% COMM. BASIS ON
INVOICE VALUE
-CURRENTLY NO MORE
THAN 6 BUYING AGENTS
IN THE CLUSTER
LUDHIANA RESPONSIBLE
FOR QUALITY
& TIMELY
DELIVERY
12 DESIGNERS FUNCTION MOSTLY
ASSUMED BY
ENTREPRENEURS BY
COPYING DESIGNS
- EXPORTER FIRMS
- IN-HOUSE, CASH
- MOSTLY DONE INHOUSE
CURRENTLY, NEED TO
DEVELOP PROFESSIONAL
DESIGNERS
LUDHIANA NEED TO
INVOLVE
FASHION
DESIGNING
INSTITUTES IN
DESIGN
TREND
FORECASTING
13 GENERAL
MANAGEMENT
CONSULTANTS
PRIVATE
CONSULTANTS,
- LARGE FIRMS
- TRANSACTION TYPE :
CONTRACT BASIS
- DEVELOPED MARKET
LUDHIANA
,DELHI,
14 SOFTWARE
VENDORS
SOFTWARE COMPANIES
, SMALL AND MEDIUM
- ALL FIRMS (LARGE ,
MEDIUM , SMALL AND
MICRO)
- TRANSACTION TYPE :
PART CASH
PART CREDIT
- CUREENTLY NOT MANY
SERVING THE CLUSTER
DELHI,
LUDHIANA,MU
MBAI
BANGALORE
NEED TO BE
INVOLVED IN
SUPPLY CHAIN
INTEGRATION
15 ACCESSORY
SUPPLIERS
TRADERS, SMALL AND
MEDIUM
MANUFACTURERS,
IMPORTERS
- ALL FIRMS (LARGE ,
MEDIUM , SMALL AND
MICRO)
- TRANSACTION TYPE :
CASH AND CREDIT
- DEVELOPED MARKET
DELHI,
LUDHIANA
OVERSEAS
CHINA AND
HONGKONG
ARE THE MAIN
COUNTRIES
FROM WHERE
ACCESSORIES
ARE
IMPORTED
16 MACHINERY
SUPPLIERS
TRADING AGENCIES
AND DIRECT COMPANY
OUTLETS
- ALL FIRMS (LARGE ,
MEDIUM , SMALL AND
MICRO)
- TRANSACTION TYPE :
CASH AND CREDIT
- LARGE NO. EXIST
(>1,000)
LUDHIANA,
DELHI ,
MUMBAI,
OVERSEAS
MACHINERY
TECHNOLOGY
UPGRADATIO
N, AND
CUSTOMISED
MACHINERY
PROCUREMEN
T (EMBEDDED
SERVICE) TO
FALL UNDER
BDS MARKET
DEVELOPMEN
T ISSUES
Annexure-III Knitwear and Apparel Manufacturers Association of Ludhiana (KAMAL)
KAMAL was started in 2008 with 50 members having domestic knitwear brands . The main
aim was to promote Ludhiana brands. KAMAL is an outcome of collective effort to bring
buyers to Ludhiana instead of every individual approaching his buyer and selling product to a
limited market . Last year it was start and buyer seller meat was organised at Maharaja
regency. The major products include Shawls, jackets, coats, Sweaters, T-shirts, Accessories in
short it includes all winter & summer range for every age group. The idea was to cater the
whole market of every age group & every season. Buyers from All over India were invited to
Buy Ludhiana products. It is the first effort of its type in cluster towards collective marketing
and branding of different products under one brand name KAMAL. It’s a good start towards
joint marketing & branding. Till yet they have organised 2 Buyer Seller meets.
Annexure IV Estimated BDS Usage and size
Estimated BDS Usage and size
Name of the area Number of providers
Usage level
Testing Labs 3 Medium
Certification Agencies 5 Medium
Designers 15 Low
Management consultants 10 Low
Quality Consultants 12 Medium
Software vendors and trainees 15-18 Low
Advertising agencies 80-100 Medium
Marketing and branding consultants
6 Low
Logistics – C and F agents 450-500 Medium
Transporters 450 Low
Machinery maintenance TBC Low
Financial services 22-25 Medium
Training Institutes 11 Low
Associations 70 Low
HR consultants 15 Low
R and D 2 Low
Buying Houses 6 Low