People And Their Problems

New Delhi, 5 May 2007

India’s Export Potential

BOOM AHEAD OF TEXTILE SECTOR

By Radhakrishna Rao

The booming south Indian textile town of Tirupur, described as the knitwear capital of India, touched a whopping Rs.11,000-crore mark through the export of textile products and knitwear during 2006-07.Of course, the elimination of the multi-fibre quota provided a strong opportunity for the  Indian textile industry in general and Tirupur’s knitwear industry in particular to boost their presence in the multi-billion dollar global textile market currently dominated by China.

Studies carried out by the World Trade Organisation (WTO) goes to show that since the abolition of the quota regime, export of textile from India has grown by 14% and garments by 33%. Because India happens to be the world’s third largest producer of cotton and the second largest producer of cotton yarn and textile, it is all set to play a significant role in the global   textile market in the years ahead.

All said and done, there is a growing realization in the Indian textile sector  that to sustain  country’s surging  textile export ,  textile companies and production units make  vigorous exports  to upgrade the technology and improve  quality standards in addition to  reducing lead time for the supply while maintaining cost competitiveness. Knitwear industry sources in Tirupur  make it clear that as is widely perceived, India does not need to be scared of China which is a clear leader in the global textile market. “They (China) have their strength but we are also ramping up our operations and can hold on our own”, says Chandra of Eastman Exports of Tirupur. He drives home the point that over the last two years, Indian exporters have crunched their turn around time quite dramatically.

As it is, not long ago, the time lag between bagging an order and executing it used to be a few months. But now it is less than six weeks. Moreover, Indian textile industry is willing to accept order for a few thousand pieces and also equipped to take small orders for custom made items. On the other hand, the minimum order size for the Chinese textile industry is 50,000. “The consolidation of knitwear firms and the process of corporatization are being varied out seriously as retailers in the European Union (EU) and USA prefer to source directly from the producers. We are consolidating our individual entities of production and operation into a single unit to achieve the much needed size essential to meet the market challenges” says a spokesman of Tirupur knitwear industry.

The setting up of Netaji Apparel Park on a stretch of 220 acres on the outskirts of Tirupur has given a much needed boost to the textile export from Tirupur. The park which houses more than 60 units is a joint venture between AEPC (Apparel Export Promotion Council) and TEA (Tirupur Exporters Association). Textile companies and knit wear units based in Tirupur, in keeping with the trend in the Indian textile industry, are moving up the value chain by either building or buying brands.

Of late, Indian exporters have started making it big in the markets such as Spain and Italy where exporters have been able to corner a large share of niche, high quality orders, coming in mainly from the fashion industry. This success is due to the fact that in the area of ethnic garments and high quality fashion textile products, India has a clear cut edge over China. Yet another plus point of the fast growing Indian textile venture is the modest success of the trendy garments, designed by the Indian fashion creators for the high end West European market. In an interesting development, the Indian handloom products known for their gorgeous colours and shades, as well as rich design and excellent finish, are slowly finding favour with a section of the high end buyers in West Europe and North America .But India’s share in the global textile market is just one-fourth of that enjoyed by China.

However, the resurgent Indian textile industry which happens to be the biggest job provider after agriculture is hopeful of notching up an export revenue of US $450-billion by 2010.India’s Commerce and Textile Ministries are also quite bullish on the long term growth prospects f textile exports. The Indian textile industry sources say that a number of small export oriented textile mills are augmenting their production facilities with a view to corner a larger share of the global textile market.

According to the Union Textiles Secretary, despite infrastructural hitches, the Indian textile sector has been witnessing growth and has the resources to outsmart China in the global market .The Government is concerned and wants improvements in infrastructure., says the Secretary.

As things stand, the Indian textile industry occupies a significant position in the Indian economy and accounts for 14% of the total industrial production in the country. India is the largest exporter producer of cotton yarn. Further, India’s spinning facility is the world’s largest with quality and cost effective production infrastructure. However, the trump card of the Indian textile industry is a strong raw materials supply base, supported by skilled labour force. The industry which is multi fibre based using cotton, jute, wool, silk and synthetic fibres, accounts for 4% of the GDP and 22% of the foreign exchange earned by India.

But the weak point of the Indian textile industry is the fragmented nature  of operations with the result that the small textile companies fail to make it big in the price sensitive market .Besides the size related pricing disadvantage, the Indian textile industry operates through  a large number of facilities, resulting in the loss of operational efficiency and cost advantage.

On another front, the skyrocketing oil prices could eat into the profitability for Indian textile mills. For major fibre intermediaries are derived from petroleum products such as Naptha.

The Indian apparel sector boasts of more than 27,000 manufacturers, 48,000 fabricators and around 1.000 manufacturers cum exporters .With a view to boost their export order, many big textile companies in India are making heavy investment in technology up-gradation and augmentation o f production facilities. ”Everybody is investing in capacity. We cannot expect to gain all of a sudden but it will be positive”, says an Indian textile industry analyst.---INFA

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