Textiles could spin next outsourcing saga for India
Friday, 05 March 2004, 20:30 IST
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NEW DELHI: A vast base of deft, inexpensive workers and raw materials could soon see India turning into a textile outsourcing paradise with buyers in the US, Europe and Africa. After carving a niche for itself in the global market as the electronic housekeeper to the world, Asia's third largest economy plans to strike it big in the textiles sector. "India has all the necessary ingredients to emerge as the global textile outsourcing hub in the near future," said A.K.G. Nair, executive director of the New Delhi-based Pearl Academy of Fashion. "Strengths in textile and apparel productions mainly include abundant and skilled work for this labour intensive industry, and sufficient raw material supplies, with the highest area under cotton cultivation in the world," Nair told IANS. Analysts and industry representatives say India is well-poised to emerge as the preferred textile and readymade garment-outsourcing destination after neighbouring China, the world's largest garment exporter, in the next few years. Global retail chain majors like Wal-Mart and JC Penny are already unveiling such plans. "With overseas companies increasingly realising the need to diversify their sourcing basket and not focus on one or two countries like China, the Indian textile industry is all set to reap major dividends," said Nair. India is expected to clock over 10 percent growth in the export of textiles and garments in 2003-04, with revenues crossing $13.5 billion -- from $11 billion in the previous year. "Indian textile manufacturers are bullish about doubling their growth after the lifting of the quota regime (next year) to clock an annual 20-25 percent growth. They are confident of scaling the $50-billion export target by 2010," said textiles commissioner Subodh Kumar. The international textile trade scenario will change after Jan 1, 2005, when the quota regime is dismantled completely as part of World Trade Organisation guidelines. The world trade in textiles is expected surge exponentially after that and chances are India's labour cost advantage will result in a significant market share gain for domestic exports. "Indian textile companies have rounded abilities in all departments. So, once the quota era is phased out completely, they will be very well poised to take advantage of the global competition," said Nair. "Most local companies have already become very competitive with plans to become global brand names. This has also enhanced the confidence of overseas buyers in Indian manufactures." US-based mega department store chain JC Penney Company Inc said last month it was planning to increase apparel outsourcing from Indian companies. One of the world's largest importers of readymade garments with nearly 1,100 stores all over the US, JC Penney proposes to step up its sourcing of Indian apparel from $200 million to $600 million over the next two to three years. A number of US and European retail chains and apparel companies are following suit. The Federated Group, Wal-Mart, Target, Russell Corp, Sears Roebuck and The Limited figure are among American retail majors that are finalising additional orders from India. A Singaporean textile and garment business delegation was also in India last month to scout for opportunities to work with Indian companies. S.K. Babbar, assistant general manager of LNJ Bhilwara Group, a $364 million diversified Indian group with major business interests in textiles, says the company currently exports more than 40 percent of its total produce. "The demand has increased manifold in overseas markets in the last few years and we expect our export revenues to grow further as we explore new markets other than 60 countries where we presently sell," said Babbar. Experts, however, warn that Indian companies need to get rid of its weaknesses like lack of economies of scale, low productivity and weak quality control as well as severe technological obsolescence to stay ahead in the competition.
Source: IANS
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