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Rediff.com  » Business » Textiles? India has an edge over China

Textiles? India has an edge over China

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January 18, 2005 07:35 IST

China is the undisputed leader in the world textile trade, making a quarter of the apparel sold worldwide, but India enjoys a few key benefits over China, which will come into play in a quota-free world.

India's current share in the world textile trade is only 4 per cent, according to a study by the World Trade Organisation.

But the Indian government says it can be doubled to 8 per cent by 2010, now that the multi-fibre arrangement is history.

To begin with, India is self-sufficient in cotton -- the 2.7 million tonnes of cotton consumed by its textile industry is all grown at home. China, on the other hand, imports a fifth of its cotton requirement. This is because of the disproportionate build-up in the country's weaving and processing capacities over the last few years.

While China caters to the mass segment, India has the ability to service high-value niche orders and has better designer resources.

This is reflected in the average export realisations of the two countries. While the realisation for India is $4 per piece, that for China is $3-3.5 per piece, according to KSA Technopak.

More important, the WTO agreement provides that countries can place filters if exports from China threaten to grow by more than 7.5 per cent for the next three years. There is no such provision against exports from India. This provides a window of opportunity for Indian exporters.

There is evidence to suggest the US textile industry is lobbying hard to block dumping of products from China. In December, the US government had imposed a quota on the import of nine items from China following complaints from the local textile industry.

Now, the American Textile Manufacturers' Institute has petitioned the US government to impose anti-dumping safeguards in four specific categories: knit fabrics, nightwear, gloves and underwear.

However, such action is being hotly contested by large US retailers. In December last year, they filed a suit, seeking to bar the Bush Administration from setting ing new quotas. A decision is awaited.

Till then, the advantage is with India. "The anti-China lobbying in the US is far more intense than commonly thought. These lobby groups are putting pressure on the government to impose these safeguards," said an industry analyst.

BK Goenka, Welspun India's vice-chairman and managing director, says, "India is a favoured destination in view of abundant availability of cotton, cheap access to funds, traditional textile expertise, skilled labour and designer skills."

The business opportunities for players like Welspun are enormous, especially in view of the financial difficulties faced by two of the world's largest home textile manufacturers, Pillotex and West Point Stevens in the US, while another major bed linen supplier is on the verge of closure.

"These developments are creating 70,000-80,000 tonnes of towel capacity in the market," said Goenka.

Pallavi Majumdar in New Delhi
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