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SME Cluster Series 2015: Nagpur

Published in India by Dun & Bradstreet Information Services India Pvt Ltd. (D&B)
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Director

Pawan Bindal

Research and Analysis Naina Acharya, Yogesh Jambhale, Rohit Singh, Prem Kumar, Dipshikha Biswas,

Rohit Pawar, Prashant Mirgule
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Jayesh Bahadur

Sales Team

Nittin Maheshwari, Pankaj Sharma, Anandita Pongurlekar, Vini Batheja, Kalyan Basu,
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Raj Choudhury, Amanpreet Bindra, Rakesh Goyal, Yashaswini Chandrashekar,
Sindhu Ravi, Aisha Rashyani, Rashmi Shetty

Operations Team

Nadeem Kazi, Ankur Singh, Sumit Sakhrani, Rajesh Gupta, Parmeshwar More

Design Team

Tushar Awate

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SME Cluster Series 2015: Nagpur

ISBN 978-93-82060-62-8

Contents
Executive Summary .................................................................................. I
Research Methodology ............................................................................III
Nagpur Cluster Overview ................................................................... 1 - 7
Industry Overview
Engineering .............................................................................. 11 - 16
Textile & Garments...................................................................... 17 - 20

Nagpur Cluster Insights................................................................... 21 - 26

Executive Summary
Dun & Bradstreet India (D&B India) launches SME Cluster Series 2015:
Nagpur, dedicated exclusively for the small and medium enterprises of
the country. This report focuses on SMEs from the Nagpur region and offers
insights in terms of their business perspective, financing requirements &
preferences and outlook on growth prospects among others.
Some of the key findings from the study include:
A staggering 60% of the SMEs believed that given the current economic
environment an entrepreneur in Nagpur can expect a ROI (return on
Investment) of between 10-20% per annum over the next couple of
years.
About 35% of the respondents consider the business environment for starting and running a
successful business for the micro, small and medium business in Nagpur to be difficult.
While public sector banks was considered as the most preferred option to fund a new business
with 58% of the respondents indicating the same, none of the respondents preferred raising private
equity or opted for venture capital as means of sourcing funds to start a new business.
Nearly 43% of the companies rated Ease in procuring finance as Moderate and at the same time
a significant 40% of the respondents rated Documentation process to obtain finance as Difficult.
Majority (75%) of the SMEs rated roadways & highways connectivity in Nagpur as Easy.
High level of competition was cited as a major challenge by about 18% of respondents. High
electricity charges and lack of skilled labour were some of the other challenges cited by SMEs in
Nagpur.
The SME segment is expected to emerge as one of the key growth engines for the Indian economy. In
its endeavor to aid the growth, D&B India will continue to keep track of the developments in the SME
segment. We hope that this study will be a reliable and useful source of reference to the SMEs. We look
forward to your comments and suggestions.

Arun Singh
Senior Economist
Dun & Bradstreet India

Research Methodology
Objective of the Report
The objective of D&B - Cluster Series 2014: Nagpur is to develop a one point reference
document, which will highlight the operational aspects, trends, challenges and benefits of operating in
the Nagpur cluster. The report aims to provide insights that will facilitate enterprises to take informed
decisions.
Methodology
1. Desk Research
A detailed review of relevant literature for the Nagpur cluster was conducted at this stage.
2. Questionnaire Development
An in-depth desk research was conducted to develop a comprehensive questionnaire for the purpose
of primary survey with the objective to capture and analyse the trends and challenges of companies
operating in the manufacturing and other sectors in the Nagpur cluster.
3. Survey
For the purpose of the survey, the companies were selected from internal D&B database and other
authentic sources such as cluster and/or sectoral associations.
4. Eligibility criteria
Companies with a total income of less than ` 50 mn to companies with total revenue of more than
` 1billion as on FY14 in various sectors were selected for the purpose of the survey.
5. Collation of Information
The data and information was collated from both, primary and secondary sources such as through
survey and authentic information as available in the public domain.
6. Analysis of data
The information collected was scrutinised and analysed to explore the cluster dynamics. In case of
multiple choice questions, given that each respondent was asked to cite multiple priorities, the sum of
percentage of responses will be greater than 100%.
7. Report Writing
The outcome of the project including the key analysis and results were written in the form of the
current report.

III

NAGPUR
CLUSTER OVERVIEW

Nagpur Cluster Overview

Introduction
Nagpur, the winter capital of the state of Maharashtra, is one of the fast growing metropolis and
the fourth largest district in Maharashtra in terms of output (GDDP, FY13). Nagpur is also a major
commercial and political center of the Vidarbha region of Maharashtra, and is also famous throughout
the country as the Orange City for being a major trade center of oranges.
The Nagpur district operates through 10 municipal councils, 13 panchayat samitis and 778 gram
panchayats.
Nagpur District- Basic Statistics
Major Indicators
Area
Population
Population density

Value

Nagpur District: Economic Statistics FY13+

Parameters

Value

9,892 sq. km.

GDDP at constant prices (In ` bn)

398.80

4,654,000

NDDP at constant prices (In ` bn)

357.11

470 per sq. km.

Sex ratio*

Per capita NDDP at current prices (In `)

1,11,860

951

Literacy rate

88.4%

+ First revised estimates

* Number of females per 1000 males
Source: Economic Survey of maharashtra 2013-14

The gross district domestic product (GDDP) at constant prices of Nagpur division stood at ` 754.16
bn in FY13. Out of this, Nagpur district constituted up to 51% of GDDP at ` 398.80 bn, registering a
growth of 7.3% as against the preceding year.

Industrial scenario
The Nagpur industrial cluster operates through a wide range of sectors and consists of industrial units
ranging from numerous small scale enterprises to large scale units. Today, the city functions as a base
for various SMEs operating in sectors such as agriculture, textile, spinning, food processing, steel,
automobiles and metal casting.

Special Economic Zones (SEZ)

The Maharashtra State adopted the SEZ policy w.e.f Feb, 2006. As of Dec 31, 2013 Nagpur district
had eight approved SEZs with an area of 3,206 hectares. The approved proposed investment stood at
` 92.35 bn, with proposed employment generation of ` 551,000.
Proposed investment and employment in approved and notified SEZ (upto Dec 31, 2013)
Number of SEZ
Region

SEZ Area
(In hectares)

Proposed investment Proposed employment

(In ` bn)
(In Lacs)

Nagpur Maharashtra Nagpur Maharashtra Nagpur Maharashtra Nagpur Maharashtra

Approved

124

3,206

29,689

92.4

1,437.9

5.51

55.72

Notified

65

2,096

10,188

45.9

779.3

3.97

21.59

Executed

18

1,699

2,528

37.9

165.2

3.61

8.60

Source: Directorate of Industries, Economic Survey of Maharashtra 2013-14

Nagpur Cluster Overview

Maharashtra Industrial Development (MIDC)

MIDC was formed by the Govt. of Maharashtra for the development of industrial areas with essential
infrastructure including internal roads, water, electricity and other services to entrepreneurs in the
industrial areas. As on Mar 31, 2013 about 85.5% developed plots are allotted to entrepreneurs in the
Nagpur division. The number of industrial units in MIDC Nagpur division increased from 3,024 in FY12
to 3,171 in FY13. During the same period, investment and employment in MIDC units stood at ` 88.5
bn and 69,000 respectively.
Industrial units in MIDC - Nagpur (upto March 31, 2013)
Division

Mumbai

Units (no.)

Investment
(` bn)

Employment
(lakh)

No. of Plots (no.)

2012

2013

2012

2013

2012

2013

305

305

39.2

39.1

0.65

0.5

368

365

Percentage of
allotted plots to
developed plots

Developed Allocated
99

Pune

9,554

9,198

387.7

390.3

3.63

3.74

19,476

17,228

89

Nagpur

3,024

3,171

86.1

88.5

0.67

0.69

7,537

6,429

85

Nashik

6,747

7,000

106.8

162.8

0.67

0.71

10,913

9,997

92

Aurangabad

5,955

6,174

50.9

59.4

0.58

0.64

11,120

10,065

91

974.29

9.21

9.38

73,855

65,059

88

Total

38,328 39,300 896.9

Note: Upto March 2013

Source: MIDC, GoM, Economic Survey of Maharashtra 2013-14

Further, MIDC is now concentrating on developing environment friendly Software Technology Parks (STP)
to cater to the needs of the IT industry. Maharashtra Industrial Development Corporation (MIDC), CIDCO
and Software Technology Park of India have developed 37 public IT parks in the state of Maharashtra.
Nagpur has two public IT parks, Software Technology park, Sadar, Nagpur and Parsodi Information
Technology Park besides 5 private IT parks. The main usage of this park is for the data communication
facility of computer and single window clearance for Government licences.

Co-operative Industrial Estates

The Maharashtra State Government has undertaken programme of developing industrial estates in areas
other than MIDC on a co-operative basis. To meet the cost of establishing co-operative industrial estates,
the funding pattern is 20% of project cost from the State, 60% guarantee by the State for availing loan
from financial institutions and remaining 20% is the contribution of the members of the society as share
capital.
Status of Co-operative industrial estates (upto Dec 31, 2013)
Region

Sanctioned

Functioning

Industrial units in operations

Employment

Mumbai

1,248

17,230

Konkan

14

12

510

11,155

Nashik

33

28

1,455

42,295

Pune

45

38

3,150

57,150

Aurangabad

26

13

462

5,260

Nagpur

10

305

3,315

Amravati

10

92

677

142

101

7,222

1,37,082

Total

Source: Directorate of Industries, Economic Survey of Maharashtra 2013-14

MSME and Large enterprises

The manufacturing and services categories of enterprises are categorized into micro, small, medium
(MSME) and large enterprises based on their investments in Plant & Machinery for manufacturing
enterprises and on equipments in case of enterprises providing or rendering services. Nagpur has 9.5%
of overall MSMEs in Maharashtra.
Division

MSMEs

% share

Employment (in lakh)

% share

Mumbai

18,381

10.1

2.85

12.2

Konkan (Excl. Mumbai)

29,603

16.3

4.63

19.8

Nashik

21,467

11.9

2.70

11.6

Pune

75,080

41.5

8.68

37.2

Nagpur

17,208

9.5

2.11

9.0

Aurangabad

11,954

6.6

1.49

6.4

7,426

4.1

0.90

3.8

1,81,119

100.0

23.36

100.0

Amravati
Maharashtra

Note: upto Dec 2013

Source: Directorate of Industries, GoM, Economic Survey of Maharashtra 2013-14

Infrastructure Focus
Infrastructure plays a pivotal role in overall productivity resulting in the development of the economy as
well as improving the quality of life. Nagpur city is well connected through the following:
Rail: A transit for around 160 trains, Nagpur city connects to various destinations due to its central
location. The Nagpur Metro Rail project which has been recently announced by the government
would further enhance the transportation facilities within the city.
Roads: Nagpur is a major junction for roadways as Indias two major national highways,
Kanyakumari-Varanasi (NH-7) and Hajira-Kolkata (NH-6), passes through the city. The
implementation of Nagpur-Aurangabad-Mumbai express highway is an attempt by the Government
to strengthen the infrastructure in Nagpur.
On-going projects of MSRDC
Name of project

Estimated project
cost (` crore)

Expenditure
(` crore)

Expected year of
completion

722

767.74

2014-15

Road Works in Nagpur

422

436.6

2014-15

Widening
Road

31

3.23

2013-14

N.A.

2.39

N.A.

Improvement of
Sinnar-Ghoti Road
of

Nagpur-Aurangabad-

Nagpur-Katol-Jalalkheda

Mass Rapid Transport System Nagpur

Source: MSRDC, Economic Survey of Maharashtra 2013-14

Achievement in Road Length by Breadth (Maintained By Pwd And Zp)

District

Achievement in Length 2012

Achievement in Length 2013

Breadth (mt.)

7.0

5.5

3.75

Other

Total

7.0

5.5

3.75

Other

Total

Nagpur

569

519

6,543

355

7,986

617

471

6,313

635

8,036

Source - Public Works Department, GoM, Mumbai, Economic Survey of Maharashtra 2013-14

Nagpur Cluster Overview

Airways: Nagpur is well-connected with all major cities in India such as Mumbai, Delhi,
Hyderabad and Kolkata through airways. Indian Air Force has its base at Sonegaon near Nagpur
International Airport which houses Mi8 Helicopters and the IAF carriers IL-76. The passenger and
cargo traffic in Nagpur city is as below:
Passenger and cargo traffic of Nagpur Airport
Particulars

Passengers (in Lakhs)

FY12

FY13

Per cent
change

FY12

Cargo (In tonnes)

FY13

Per cent
change

13.77

12.19

-11.47

4,588

4,800

4.62

0.39

0.44

12.82

388

406

4.64

Domestic

262.61

253.83

-3.34

2,20,608

2,08,236

-5.61

International

95.99

98.38

2.49

4,67,570

4,53,147

-3.08

Nagpur
Domestic
International
Maharashtra

Note: Upto March 2013

Source : Airport Authority of India, Economic Survey of Maharashtra 2013-14

Prominent sectors/clusters based in Nagpur District

Some of the prominent sectors operating in Nagpur city comprises of steel, textile, food products,
chemicals, metals, and furniture among others. Some of the existing MSEs are as below:
Featured Micro and Small Enterprise and Artisan units in Nagpur District
Industry Group Description
(as per NIC 1998)

No of
Enterprises
(2007-08)

No of
Enterprises
(2008-09)

No of
Enterprises
(2009-10)

No of
Enterprises
(2010-11)

No of
Enterprises
(2011-12)

Manufacture of Food products and

Beverages

10

1,160

833

963

1,043

Manufacture of Tobacco products

81

81

82

82

Manufacture of Textile

700

610

616

621

Mfg. of Wearing Apparel,

Dressing & Dyeing Fur

25

48

75

116

Tanning & Dressing of Leather;

Manufacture of L

110

87

92

100

Manufacture of Wood, Products of

Wood, cork,art

594

429

447

471

Manufacture of Paper and Paper

Products

249

180

195

218

Publishing, Printing &

Reproduction of Recorded

74

76

108

124

Manufacture of Coke, Refind

Petroleum Products

13

14

15

Manufacture of Chemicals &

Chemical Products

20

771

616

684

733

875

732

772

828

Manufacture of Other NonMetallic Mineral

91

1,271

1,158

1,350

1,427

Manufacture of Basic Metals

26

42

56

85

Manufacture of Rubber & Plastic

Products

Industry Group Description

(as per NIC 1998)

No of
Enterprises
(2007-08)

No of
Enterprises
(2008-09)

No of
Enterprises
(2009-10)

No of
Enterprises
(2010-11)

No of
Enterprises
(2011-12)

Manufacture of Fabricated Metal

Products

30

1,701

1,428

1,529

1,614

Manufacture of Machinery &

Equipment

40

75

135

207

Manufacture of Office, Accounting

& Computing

10

10

10

10

Manufacture of Electrical,
Machinery & Apparatus

614

511

523

543

Mfg. of Radio, Television &

Communication

Equipment of Medical, Precision &

Optical

16

23

24

24

Manufacture of Motor Vehicles,

Trailers

Manufacture of Other Transport

Equipment

Manufacture of Furniture;
Manufacturing

19

20

39

70

Recycling

Electricity, Gas, Steam & Hot

Water Supply

11

11

11

11

Collection, Purification &

Distribution of Wate

12

Maintenance & Repair of Motor

Vehicle

332

345

353

359

Maintenance & Repair of personal

& household

11

20

29

34

Land Transport (NIC Codes 1998

: 60211

Supporting & Auxiliary Transport

Activities

Post & Telecommunications

Renting OF Transport Equipment

Computer & related activities

86

44

79

101

16

824

824

824

824

Health & Social work

Recreation, Cultural & Sporting

activities

14

293

254

367

535

Other business activities

Other Service activities

Source: MSME Development Institute, Mumbai, Ministry of MSME, Government of India

Nagpur Cluster Overview

Details of selected prominent clusters

Cluster Name

Major Products

Functional Units

Turnover (In mn)

Employment (In nos)

Orange City Garment

Cluster Pvt. Ltd

Readymade garment

1500

7,000

8000

Nagpur Dal Mills

Pulses (Tur Dal,

Moong Dal, Chana
Dal, Urad Dal, etc)

125

8,630

598

Source: MSME Development Institute, Mumbai, Ministry of MSME, Government of India

GoI Initiatives undertaken for MSME

The Government of India in order to promote growth in the MSME sector has initiated various schemes
for the development of the Nagpur District. Some of these schemes include
MSE-CDP (Cluster Development Programme)
ISO 9000/14000/HACCP Reimbursement
MSE-MDA (Market Development Assistance)
Capacity Building & strengthening of data base
VDP (Vendor Development Programme)
National Awards
NMCP Schemes (National Manufacturing Competitiveness Programme) such as Market assistance
& technology upgradation, QMS/QTT, Tech. and quality upgradation, ICT, Bar Code, IPR and
Incubator Scheme among others.

INDUSTRY OVERVIEW
ENGINEERING
TEXTILE & GARMENTS

ENGINEERING

ENGINEERING
India aims to increase the share of its manufacturing sector to 25% of GDP. Thus, the government is
planning to develop a global manufacturing and investment destination and create a globally competitive
environment and state-of-the-art infrastructure to support the growth of the industrial sector. The Make
in India programme of the government under which five industrial and economic corridors are being
built to connect the four major corners of India is a major stepping stone in that direction. Since the
engineering sector forms a core segment of the domestic manufacturing sector, initiatives are been
taken to promote the growth and development of the sector. This sector not only forms the basis for the
enhancement of the countrys domestic manufacturing capabilities and thus constitutes a vital ingredient
in driving the nations economy.
Broad Classification of Engineering Sector

Engineering sector in India comprises of diverse set of products

The heavy engineering sector includes machineries such as power generating sets, earthmoving and
mining equipment, power plant equipment, textile machinery, process plant machinery, packaging
machinery equipment, and automotive equipment. The light engineering sector consists of a diverse
set of sub-sectors including items such as medical instruments, sophisticated process control equipment,
castings, forgings, fasteners, bearings, steel pipes, and tubes.
Capacity creation in core sectors such as power, infrastructure, mining, oil, general manufacturing
sector, automotive, process, and consumer goods industries all drive demand for this sector. Some of the
demand drivers for the engineering sector for the coming years will be:
India is the seventh-largest automobiles producer in the world with an average annual production
of around 17 million vehicles and by 2015 is expected to be the fourth largest automotive market
by volume in the world.
12

Industry Overview: Engineering

Incentives for capacity addition in power generation under the target of Power for All will increase
the demand for electrical machinery. The government plans to add 88.5 GW of capacity by
2017 and 93 GW by 2022.
Under the Defence Production Policy, 2011 to encourage indigenous manufacture of defence
equipment, defence procurement procedure (DPP) has been amended to provide for Preference to
Buy (Indian) and Buy and Make (Indian) over Buy (Global), Simplification of the procedure for
Buy and Make (Indian) and Clear and unambiguous definition of indigenous content.
Government schemes like the National Knowledge Network (NKN), National Optical Fibre
Network (NOFN), tablets for the Education sector, a digitisation policy and various other
broadband schemes will generate demand for electronic systems in India.
A majority of MSMEs operate in the light engineering sector, which comprise of low technology machines
such as castings, forgings, fasteners, bearings, steel pipes, and tubes. A few of the MSMEs are restricted
to the assembly of imported components. Although MSMEs are known to dominate the low technology
and light engineering segment, a few of them have also forayed into the manufacturing of niche and
high value-added products.
A number of products that constitute the light engineering segment serve as an input for high engineering
and capital goods sector. Demand for high engineering and capital goods therefore influence the overall
health of the light engineering sector. Some of the products manufactured under the light engineering
sectors such as different types of fasteners (except high tensile and special purpose fasteners), conventional
hand operated sewing machines, bicycle parts, and other components are reserved for the SSI sector.

Engineering goods sector is undergoing unhealthy growth phase

The sectors growth is dependent on the growth of its user industries. For the engineering goods sector,
key user industries include power sector, textile, automotive, oil and gas, and iron and steel. The
engineering goods sector derives its demand from capacity creation in sectors such as iron and steel,
consumer durables, power, mining, automotive, and oil and gas. Growth of the engineering goods
sector is attributed to a healthy demand for these user industries.
Most of the segments under the engineering sector continued to witness a decline during FY15 after
recording a decline during FY13 & FY14. Sectors like radio, TV and communication equipments (-52%),
office, accounting & computing machinery (-37%) and medical, precision & optical instruments etc
(-5.2%) witnessed a higher rate of decline during FY15.

13

Trend in growth of some of the sub-segments of the engineering sector under Index of
Industrial Production

Note: *Apr-Dec FY15

Source: CSO and MOSPI

Production Snapshot of some of the key segments in the Light Engineering sector
Unit

Production
2012-13

2013-14

Roller Bearings

Nos in Lacs

80,265.6

78,996.4

Bicycles

Nos in Lacs

1,304.6

1,383.6

Tin Metal Containers

` bn

3.9

4.1

Medical and surgical equipment

` bn

2.44*

N.A.

Steel castings & C.I. castings

Tonnes

476,754.8

455,076.7

Nut & bolts in organized sector

Tonnes

96,120.0

62,540.0

Stampings & forgings in organized sector

Tonnes

419,807.7

411,408.3

Note: * Apr - Nov FY13

Source: Department of Industrial Policy & Promotion, D&B research

Engineering goods continued exhibiting weak growth in exports

during FY14
Indias engineering goods exports have been growing steadily over the last decade recording a double
digit growth rate. Exports growth declined during FY10 as the global financial crisis impacted global
trade severely. While engineering exports recovered during FY11 and FY12, it again contracted during
FY13 in tandem with the decline in overall exports. Engineering exports growth turned positive during
FY14 growing by 6.4% as Indias overall exports grew by 4.1% during FY14. However, for the period
Apr-Jan FY15, engineering goods export recorded a positive growth compared to the same period last
fiscal year.

14

Industry Overview: Engineering

Indias Engineering Exports from FY09 to FY15

Source: Reserve Bank of India (RBI), D&B Research

Decline in exports of engineering goods also impacted its share in the overall exports for India. The
sectors share of the total of Indias exports has declined steadily from 25.5% in FY09 to 21.8% in FY13.
However, for FY15 the share of exports for the sector increased to 22.5%, reflecting marginal recovery.
Engineering goods exports sub segments for FY14

Source: RBI

Major contributors to engineering goods exports in FY14 include transport equipment (31%), machinery
and instruments (23%) and manufacture of metals (14%).

15

Outlook
Key policy initiatives, infrastructure development, and capacity additions in major sectors are bound
to increase industrial and manufacturing growth and the outlook for the engineering goods sector in
India looks promising. Recent government policy initiatives such as 100% FDI in most sectors will help
in funds inflow and will be the catalyst for growth in this sector. Initiatives in infrastructure development
and capacity additions in infrastructure sectors such as power, mining, and oil & gas will benefit the
sector in the long run.
Going forward, MSMEs are likely to experience a shift in landscape, as the government integrates this
sector, as part of its industrial policy. Many of the policy measures and initiatives will provide necessary
momentum to the growth of the MSME sector. The governments focus on improving manufacturing
infrastructure and engineering sector will lead to a more conducive growth for MSMEs in India.

16

TEXTILE & GARMENTS

TEXTILE & GARMENTS

The Indian textile industry has been a significant contributor to the Indian economy and continues to play
a pivotal role in Indias growth story through its contribution to industrial output, employment generation,
and export earnings. The industry contributes 14% to total industrial production and its share in Indian
exports stands at a significant 13%. India is one of the few countries with a complete and integrated
textile value chain, with production at each level of textile.
India has the second largest manufacturing capacity globally. The Indian textile industry accounts for
about 24% of the worlds spindle capacity and 8% of global rotor capacity. India has the highest loom
capacity (including hand looms) with 63% of the worlds market share.
Indias textile Industry mostly comprises small-scale companies, non-integrated spinning firms, weaving
firms, finishing firms, and apparel making enterprises. With only a few large players and numerous
small and medium-size companies, the Indian textile industry is fragmented. It is classified as the handspun and hand-woven sector and the capital intensive, organized mill sector, which comprises spinning
and composite mills.
Readymade garment, cotton textiles, man-made textiles, wool and woolen textiles, silk, handloom
products, carpets, jute, coir, and coir manufacturers are the main sectors within textile industry.
India enjoys a comparative advantage in terms of skilled manpower and cost of production over major
textile producers. As per the plan for 2012-17, the Integrated Skill Development Scheme aims to train
over 2,675,000 people up to 2017, covering all sub-sectors of the textile sector textiles and apparel,
handicrafts, handlooms, jute and sericulture.

Trends in the local market

As per Ministry of Textiles, Indias cloth production grew at CAGR of 0.3% during FY11-FY14, driven
by the mill sector and hosiery.
Indias cloth production (Mn Sq Mtrs)
Particulars

FY11

FY12

FY13

FY14

CAGR

Mill Sector

2,208

2,313

2,313

2,531

4.7

Handloom

6,903

6,901

6,953

7,104

1.0

Power loom

37,517

37,445

38,054

35,693

-1.6

Hosiery

14,372

12,946

14,541

16,199

4.1

Total

60,999

59,605

61,966

61,526

0.3

* Apr-Nov
Source: Ministry of Textiles

Powerloom continues to dominate the production of cloth in India with 58% of share in FY14 in total
production, with the share marginally reducing from around 63% in FY12.

18

Industry Overview: Textile & Garments

Export Scenario
Textile exports play an important role in the overall exports of the country. The Indian textiles and
clothing industry is one of the largest contributors to the countrys exports with a share of 11%.
Textile Exports (US$mn)
FY12

FY13

FY14

FY15*

CAGR

Readymade garment

13,095

12,398

14,412

11,619

-42

Cotton textiles

11,139

11,272

9,752

5,451

-21

5,658

5,046

5,713

4,379

-8

501

415

445

390

-8

Silk

475.7

403.6

396.6

345.2

-10

Handloom products

551.9

515.3

373.7

263.9

-22

Man-made textiles
Wool and woolen textiles

Carpets

847.5

988.1

1139.6

1099.8

Jute

464.95

390.24

376.1

253.8

-18

Coir and coir manufacturers

211.92

196.39

229.5

173.7

-6

Total

32,945

31,625

32,837

23,975

-10

Note: *Apr-Dec
Source: Ministry of Textiles and CMIE

Readymade garments have the largest share of 44% in total exports of textiles in FY14, followed
by cotton textiles with a share of 30% and man-made textiles (17%). The remaining sub-sectors had
minimal contribution in total textile exports.

Sector policy and financial support from the government

Technology Upgradation Fund Scheme has infused investment of more than ` 2,500 billion in the
industry. Support has been provided for modernisation and upgradation by providing credit at
reduced rates and capital subsidies.
Scheme for Integrated Textile Parks provides world class infrastructure to new textile units. To date,
57 Textile Parks have been sanctioned with an investment of ` 60 bllion. By 2017, 25 more Textile
Parks are to be sanctioned.
Integrated Processing Development Scheme for sanctioning processing parks has been initiated.
` 5 billion have been earmarked for this scheme.
Integrated Skill Development Scheme has provided training to 1.5 million people to cover all
sub-sectors of textiles such as Textile and Apparel, Handicrafts, Handlooms, Jute and Sericulture.

Some of the key provisions of Union Budget 2O14-15:

Setting up of Textile Mega Clusters at Varanasi, Bareily, Lucknow, Surat, Kutch, Bhagalpur, Mysore
and Tamil Nadu with a sum of ` 2 billion.
Allocation of ` 500 million towards the setting up of a trade facilitation centre and a crafts
museum to develop and promote handloom products and carry forward the rich tradition of the
handlooms of Varanasi.
Allocation of ` 500 million towards the setting up of Pashmina Promotion Programme (P-3) and a
programme for the development of other crafts of Jammu & Kashmir.
19

 The duty-free entitlement for import of trimmings and embellishments used by the readymade
textile garment sector for manufacture of garments for exports is being increased from 3% to 5%.
Exemption from service tax on loading, unloading, storage, warehousing and transportation of
cotton, whether ginned or baled.

Investment: FDI in textile Industry

Government has allowed 100% Foreign Direct Investment (FDI) in the textile sector through the automatic
route. The industry attracted FDI worth US$ 164.16 mn during Nov 2013-Nov 2014. and accounts for
only 0.6% of total FDI inflows in India. Mauritius is one of the major FDI sources for the textile industry
in India.

Industry Outlook
Under the Make in India initiative Textile and Garments has been considered as one of the 25
thrust sectors. The government envisages the domestic textile and apparel industry in India to reach
US$ 100 billion by 2016-17 from US$ 67 billion in 2013-14, while exports in textiles and apparel
from India are expected to increase to US$ 65 billion by 2016-17 from US$ 40 billion in 2013-14.
The government, in addition to traditional markets such as EU and the US, is exploring new markets by
holding exhibitions/ shows in the Russian Federation, Israel, Eastern Europe, Latin American countries,
and other non-traditional markets. Further, the government is providing grants under the Market Access
Initiative and Market Development Assistance Scheme for this purpose.

20

NAGPUR
CLUSTER INSIGHTS

NAGPUR CLUSTER INSIGHTS

Dun & Bradstreet India (D&B India) conducted a primary study to capture and analyze trends in the
small and medium enterprises (SMEs) operating in Nagpur. The primary survey aims to highlight
business trends of the SMEs operating in Nagpur in terms of their business operations, financing,
policy requirement and major challenges faced. Companies with total income below ` 50 mn during
FY14 and above ` 1 billion were considered for the survey. The respondent mix included companies
operating in the manufacturing and services industries and some of the manufacturing companies also
undertake trading activities.
Nagpur, the winter capital of the state of Maharashtra, is one of the fast growing metropolis and
the fourth largest district in Maharashtra in terms of output (GDDP, FY13). Nagpur is also a major
commercial and political center of the Vidarbha region of Maharashtra, and is also famous throughout
the country as the Orange City for being a major trade center of oranges.
The gross district domestic product (GDDP) at constant prices of Nagpur division stood at ` 754.16
bn in FY13. Out of this, Nagpur district constituted up to 51% of GDDP at ` 398.80 bn, registering a
growth of 7.3% as against the preceding year. The Nagpur industrial cluster operates through a wide
range of sectors and consists of industrial units ranging from numerous small scale enterprises to large
scale units. Today, the city functions as a base for various SMEs operating in sectors such as agriculture,
textile, spinning, food processing, steel, automobiles and metal casting etc.
Following section highlights some of the key findings from our primary study:
Income levels in FY14 (% of respondents)

Source: D&B Research

Majority of the companies fall under the income bracket of ` 50 mn

The survey was done on a selected sample of companies wherein 80% of the companies surveyed had
income below ` 50 mn, while around 15% respondents fell in the ` 50 - 500 mn income bracket.

22

Nagpur Cluster Insights

Business environment
Business environment in Nagpur (% of respondents)

Source: D&B Research

35% of the respondents consider the business environment to be difficult

About 35% of the respondents consider the business environment for starting and running a successful
business for the micro, small and medium business in Nagpur to be difficult. The study also revealed that
around 30% of the respondents do consider business environment to be moderate while around 23%
also consider it to be easy. Only 13% of the respondents consider the business environment for starting
and running a successful business for MSMEs to be extremely difficult in Nagpur.

Financing
Most ideal financing option for an entrepreneur

Source: D&B Research

Majority of the respondents preferred public sector banks as the most ideal
financing option for entrepreneurs
The survey tried to understand what SMEs considered as the most ideal option for sourcing funds for
entrepreneurs looking to venture into businesses. Banks was considered as the most preferred option to
fund a new business. Among banks, public sector banks were the most preferred choice with 58% of
23

the respondents indicating the same while 20% of the respondents, belonging primarily to the services
sector, stated private banks as the other most preferred option for sourcing funds to venture into a new
business. 15% respondents believed that own savings was the ideal financing option for entrepreneurs
while Co-operative banks were mentioned as the ideal option by only 5% respondents. None of the
respondents preferred raising private equity or opted for venture capital or Government agencies as
means of sourcing funds to start a new business.
Ease in procuring finance

Documentation process to obtain finance (%)

Source: D&B Research

Access to alternative source of financing was rated as Extremely Difficult by

48% of the respondents
In terms of the degree of ease in procuring funds in Nagpur, nearly 43% of the companies rated Ease in
procuring finance as Moderate, while another 28% rated it as Difficult. At the same time, a significant
40% of the respondents rated Documentation process to obtain finance as Difficult while 33% of the
surveyed companies rated it as Moderately Easy.
Access to alternative source of finance (%)

Source: D&B Research

Similarly, access to alternative source of financing was also rated as Extremely Difficult by 48% of
the respondents. While 23% of the respondents rated it as Difficult, just 5% find it Easy to access
alternative source of finance.
24

Nagpur Cluster Insights

Awareness level of schemes amongst the SMEs (%)

Source: D&B Research

Credit Linked Capital Subsidy Scheme emerged as the topmost scheme, which
most of the SMEs are aware of
The government has introduced various schemes at regular intervals to assist growth of the SME sector in
India. The survey tried to find the awareness level of the five government-run schemes among the SMEs
in Nagpur. The survey revealed that most of the SMEs i.e. 95% are aware of the Credit Linked Capital
Subsidy Scheme. The awareness level regarding the other schemes run by the government to help the
sector in various ways was not very high among the SMEs operating in the Nagpur. About 33% of the
respondents were aware of the Credit Guarantee Fund Scheme. For the Micro and Small Enterprises,
the awareness regarding the existence of the National Manufacturing Competitiveness Programme was
prevalent only among 18% of the surveyed SMEs. Despite the prevalence of high level of awareness
of Credit Linked Capital Subsidy Scheme, none of the respondents revealed that they avail the scheme.

Infrastructure facilities
Access to ports and airports

Roadways & highways connectivity

Source: D&B Research

25

A huge majority of SMEs rated roadways & highways connectivity in Nagpur

as Easy
Majority (75%) of the SMEs rated roadways & highways connectivity in Nagpur as Easy. Similarly,
access to ports and airports was rated as Easy by 53% of the SMEs surveyed. Nonetheless, indicating
some discomfort towards access to ports and airports from Nagpur, a considerable proportion (13%) of
the respondents also rated Access to ports and airports as Difficult.
Expectation on Return on Investment in the next couple of years (per annum) (%)

Source: D&B Research

Majority of respondents expect to earn RoI of 10-20% per annum over the
next two years
Return on Investment (RoI) is a performance measure used to evaluate the efficiency of an investment.
In the survey, D&B tried to understand the respondents expectations with respect to RoI over the next
couple of years, given the current economic climate and business environment. A staggering 60% of the
SMEs believed that given the current economic environment an entrepreneur in Nagpur can expect ROI
of between 10-20% per annum over the next couple of years. While 15% expect RoI of less than 10%
per annum another 10% believed that an entrepreneur can expect RoI of more than 30% per annum.

Challenges
High level of competition is a major challenge faced by SMEs in Nagpur
The survey tried to understand the major challenges that hinder growth of companies operating in
Nagpur. High level of competition was cited as a major challenge by about 18% of respondents.
High electricity charges and lack of skilled labour were some of the other challenges cited by SMEs in
Nagpur.

26