Sunday, November 29, 2009

[ Technical Textiles - INDIA RISING: OPPORTUNITIES IN NONWOVENS AND TECHNICAL TEXTILES.]

Seshadri Ramkumar and Appachi Arunachalam.


Nonwoven and Advanced Materials Laboratory.


Texas Tech University, Lubbock, Texas.


Email: s.ramkumar@ttu.edu

•India will defy the existing nonwoven growth theory and will grow exponentially from 2035 with the rising income levels.
•India’s growth in the technical textile industry in the next two decades will be faster than the one witnessed by the US and Europe in the last three decades – Our
Prediction.
Introduction.
Economy, in particular the losses of manufacturing jobs occupy the centre stage in the Presidential election campaigns in the US these days. This has been a dramatic shift from other issues that were considered priority six months back. Some economic pundits are predicting recession in 2008 in the United States. However, this situation is quite a contrast 10,000 miles away— India. India is rising and moving ahead with opportunities in every sector. For the past four years, India’s GDP has grown over 8%. The growth in 2007 reached as high as 9.4% and is predicted to be in between 8-9% in 2008. The Indian middle class population is over 300 million which is set to spearhead the growth of the nonwoven and technical textile industry. According to Goldman Sachs, India’s economy will exceed the economy of Europe and Japan by 2030 and that of the US by 2045. Such a growth is possible because of the increase in household incomes and the predicted growth in agriculture, manufacturing and service sectors. The consumer spending level is
growing over 5% per annum which has resulted in the ongoing growth of organized retail sectors. India’s population of 1.1 billion of which one-third being middle income group, plays an important role with the growth of India’s economy. India has roughly one hundred million people who are less than 25 years in age, out of which approximately 25 million are highly educated and this number is still growing. The economy gets a boost due to the growing middle class, young and educated population. These are vital factors for the growth of nonwoven and technical textile industry in India. The 11th five year plan of the Government of India (April 2007- March 2012) calls for an all inclusive growth which is expected to reach double digits by the end of the fiscal year 2012. This clearly emphasizes the growth needed in agriculture and manufacturing sectors, as the IT and service sectors have done extremely well in recent years. Taking this mandate of the National Planning Council into consideration, the Ministry of Textiles of India has taken nonwoven and technical textile sector as an important thrust area for support and growth. Several positive schemes at the central government level have been implemented to support the growth of the nonwoven and technical textile industry in India. A major support scheme has been the launching of the National Technology Mission for Technical Textiles by the Honorable Prime Minister of India, which will be implemented during the 11th five year plan to promote the development of the technical textile industry base in India with a budget of US$ 170 million. This technology mission is in addition to the inclusion of technical textiles sector in the Technology Upgradation Fund scheme. These supportive schemes from the Government of India as well as the growth in the middle class population are expected to change the nature of the technical textile industry in the next five to ten years. This fits with the goal of India Inc. and the vision of the Ex-President of India, Dr. Abdul Kalam to enable India to be an industrialized and developed nation by 2020. This article will highlight some of the recent developments that have taken place in India to boost the technical textile industry. In addition, we predict that India’s per capita consumption of nonwovens will exceed than that of the United States at a per capita GDP of US$50,000. An important prediction is that in the next two decades, the rate of growth of nonwoven and technical textile industry will be far ahead than what it was in the US and Europe
during the last three decades, during which the industry in the western hemisphere grew and matured. Therefore, growth is certain in India and hence it is the place for international players to be active.
India’s Consumption of Nonwovens (2007-2050)
The liberalization of the Indian economy in 1991 coincided with the booming of information technology sector. This fortuitous development has led to the growth of middle class population with disposable incomes. In addition, since 2000 India is gearing up with one-stop superstores which are commonly referred to as “big bazaars” and most recently with organized retail stores and malls. The economy and the growth in the sales outlets will lead to a higher consumption of disposable items such as nonwovens. Furthermore, the Government is planning to spend a large sum of money for infrastructure projects such as highways and bridges which consume semi-durable and durable nonwovens and technical textiles. According to estimates by INDA and EDANA, the current per capita consumption of nonwovens in India is less than the meager amount of 100 grams, whereas the per capita consumption of nonwovens in developed markets such as US and Western Europe is around 3-3.5 kilograms. As is evident from the growth of the nonwoven industry in developed markets, it has taken nearly four decades to cross the threshold level of 3 kilograms per capita consumption. More interestingly, the per capita consumption of nonwovens is directly correlated with the per capita income levels of the population. Nonwoven and technical textile pundits are in agreement with this theory. However, no one has predicted the growth of the nonwoven industry based on per capita consumption in India in relation to India’s per capita income level for the next four decades. Our analysis using per capita income levels from World Bank has led to some interesting conclusions that will be of enormous interest to the global nonwoven and technical textile industry. For this analysis, we have used certain baseline figures which were drawn from the data published by the World Bank. We present our original estimates of India’s per capita nonwoven consumption based on World Bank’s income estimates. As per the World Bank data for 2007, per capita GDP of the United States and India are US$ 45,817 and US$ 946.1 respectively.
At this per capita income level, we assume India’s per capita consumption of nonwovens is 80 grams. We are using the annual growth rate for the US and India’s economy to be 4.6% and 13.27% respectively. These figures are the average growth rates of the two countries US and India respectively from 2003-2007. We have used these growth rates to calculate the per capita nonwoven consumption for India and USA for the years 2005-2050. Tables I and II provide the per capita income levels and the corresponding nonwoven consumption for the years 2005-2050. Since the data will be exhaustive, we are providing the data for every five years from 2005-2050.
Table I:
CONSUMPTION OF NONWOVENS IN INDIA vs. GDP PER CAPITA (ASSUMING AN INCREASE OF 13.27% IN PER CAPITA EVERY YEAR)
YEAR GDP PER CAPITA(US$)  Consumtion of Non Wovens(Kg) 
     2005       733                     0.08
     2010      1334                     0.15 
     2015      2563                     0.27 
     2020      4780                     0.51 
     2025      8912                     0.95
     2030     16618                     1.77 
     2035     30985                     3.31 
     2044     57733                     6.16 
     2045    197770                    11.49   
     2050    200850                    21.43
Table II:
CONSUMPTION OF NONWOVENS IN USA vs. GDP PER CAPITA.
(ASSUMING AN INCREASE OF 4.6% IN PER CAPITA EVERY YEAR)

YEAR GDP PER CAPITA(US$) CONSUMPTI0N OF NONWOVENS (Kg)
2005     42499                 3.5
2010     52435                 4.32
2015     65656                 5.41
2020     82213                 6.77
2025    102943                 8.48
2030    128901                10.62
2035    161404                13.29
2040    202103                16.64
2045    264705                20.84
2050    331452                26.10
As you may note from the Tables, the growth rate in per capita GDP used for the nonwoven consumption is same as that of the growth rate assumed for the economy. This is fairly an accepted theory in the industry with regard to the relationship between per capita GDP and nonwoven consumption growth. Assuming that the industry is fairly developed when the per capita consumption of nonwovens reaches 3-3.5 kilograms, i.e., the current state of the US and Western Europe industry, India will reach this level in 2035. India’s nonwoven and technical textile industry is highly currently fragmented and is in the embryonic stage. The industry is poised to have a double digit growth of around 13-15% per annum in the next two decades, leading up to a developed stage in 2035. During this period, developed markets such as US and Western Europe are set to grow at a much slower rate ofaround 5%. Therefore, it is of much value for the global industry to take India seriously and take part in the growth enabling its own development.
GDP per Capita Source: World Bank.

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