Indian textiles, garments face tougher competition ahead

Thursday, 30 January 2003, 08:00 Hrs
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NEW DELHI: Indian textile and apparel units are in for tougher times ahead.

Not only are quota systems set to be phased out by 2005 under the World Trade Organisation, but countries like Bangladesh, Indonesia and China are likely to prove more cost-effective, say experts.

"We have not yet lost the market, though our growth has been at the cost of lower price realisation," an official of the Apparel Exporters and Manufacturers Association told IANS.

The slow global economic recovery has seen sluggish growth in the Indian textile and garments industry. The growth was a low 7 to 8 percent in 2002 against around 12 percent during 1992-98, said industry veterans.

As India approaches the terminal year of lifting of the quota system, under which every country is allowed to export only a fixed amount of goods, major changes are being witnessed in the country with moves towards consolidation.

Several major mills like Arvind, Century and Mafatlal have expanded operations to venture into value addition services and emerge as key players in the branded clothes segment.

Modernisation and larger scale operations are other changes being witnessed in the textile sector, said Siddharta Rajagopal, executive director of The Cotton Textiles Export Promotion Council (Texprocil).

To better understand critical factors affecting the competitiveness of the Indian industry, Texprocil had commissioned a study by Zurich-based consultancy firm Gherzi Textil Organisation on benchmarking of costs of production of textile products in India compared with China, Pakistan, Indonesia, Bangladesh and Sri Lanka.

The study, to be released Thursday, encompasses the comparative cost of inputs like raw material, energy, dyes and chemicals and wages which constitute 85 percent of the manufacturing cost in the cotton textile industry.

"The study revealed that India is at a disadvantage compared with the five countries as they have an edge either in one or more of the inputs, with Indonesia and Bangladesh way ahead with the least energy cost," said Rajagopal.

From around three percent share of the global market, which slipped from $199 billion to $195 billion in 2001, India is targeting $50 billion global exports in the textile sector by the year 2010, with garments accounting for half the share.

To achieve this objective a number of programmes to increase as well as improve cotton production are under implementation.

"Due to the trade diversion to countries like Bangladesh, Pakistan and 38 Sub-Saharan African nations enjoying duty free and other concessions, India has fallen short of reaching its target of $6 billion in apparel exports. Still we have done better than in the previous year," said a spokesperson for state-owned Apparel Export Promotion Council (AEPC).

India's apparel exports during 2002 are estimated to be around $5.5 billion, up from $5 billion in the previous year that saw marginal dip in the aftermath of 9/11 incidents. Textiles excluding handloom exports have risen to $3.8 billion, up from $3.5 billion in the previous year.

"Despite the preferential tariff agreement the European Union has with countries in Africa and Latin America and duty concessions to others like Pakistan, which gives them around 10 percent price advantage, India has not done too badly," said Rajagopal.

The industry bodies are happy that despite the non-tariff barriers being faced in some markets, India's overall textile sector exports including yarn, textiles, made-ups like towels and linen as well as garments have grown 7 to 8 percent during 2002.

The target for 2002 was $15 billion, up from $12 billion in the previous year.

This year exporters see India holding its own with styles and smaller orders working in its favour.

"Current fashions for embroidery, sequins, handwork and smaller orders which India is able to handle are all expected to work to our advantage," said the AEPC official.
Source: IANS
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