MARKET
Introduction
Structurally, clothing industry is one of the most fragmented sectors of the Indian Textile Industry, due to historical government policies which favoured the small scale. The clothing industry comprises manufacturers of ready-made apparel making for either the domestic or export markets or, in certain cases, both. The constituents of this segment are very diverse in terms of their size, production facility, the type of apparel manufactured, the quality of output, fabric requirement, price sensitivity, etc.
The textile sector plays a significant role in Indian economy by contributing to the Gross Domestic Product, generating employment and earning foreign exchange. An estimated 35 million people are directly employed in the Indian Textile Industry, which contributes to 4% of GDP, 14% of Industrial production of the country and 21% of total export earnings. (Source: Ministry of Textiles Annual Report 2004-2005). Globally, India is a significant player in the textile industry and is the third largest producer of cotton and cellulose fibre/yarn second largest producer of cotton yarn largest producer of jute, second largest producer of silk fifth largest producer of synthetic fibre/yarn (Source: Wake up Call for India’s Textile Industry, Report of Expert Committee on Textile Policy, ICAC) Removal of Quotas Under World Trade Organization (“WTO”) agreements, quota restrictions and tariff barriers, including for Indian textile companies, were removed in January 2005 and were reduced and will be fully removed by 2008 for Chinese textile companies, giving these companies increased access to a global market worth approximately $395 billion (Source: Datamonitor). According to a WTO discussion paper on the global textile and clothing industry following the WTO agreements, China and India are expected to account for approximately 65% of global clothing exports in the coming years. Countries such as Bangladesh, Vietnam, Turkey and Cambodia have historically contributed a higher share of global textile exports as compared to India. Since these countries enjoy either or both quota-free and duty-free status to compensate for their manufacturing inefficiencies, the introduction of a global quota-free regime is expected to result in their losing market share in the global textile trade. Enabling WTO agreements, low costs of production, availability of abundant domestic cotton supply and availability of skilled labour have enhanced the prospects for India's textile companies. Global retailers are increasingly outsourcing production to Asia as textile capacities shrink in the European Union and the United States due to a perceived lack of competitiveness. Though China is a major beneficiary of quota removals, a perceived threat of an import flood from China into the United States and Europe has resulted in the commencement of trade negotiations with China aimed at restricting its textile exports. Resulting regulatory uncertainty surrounding China appears to be benefiting India and to be leading global retailers to view India more positively. Since India’s existing share of global textile exports is not believed to be over large, perceptions about an import flood from India should be reduced in the immediate future. Moreover, India offers a competitive alternative to China given its wide product range and presence across the textile value chain. FUTURE OUTLOOK FOR THE TEXTILE INDUSTRY The future prospects for the Indian industry appear favourable, particularly in the post-quota removal regime. The industry is in an expansion mode and is likely to benefit from growing demand both in the domestic as well as international markets. Further, the anti-surge mechanism which the WTO has imposed on Chinese exports is expected to benefit India. Turkey is the first country to set quotas on textile and apparel imports from China. The EU is also in the process of adopting measures to avoid surge in imports from China. China has announced exports tariff on textile and clothing with effect from January 2005 that will last until 2007 as measures to avoid penal duties. Even though these tariffs are nominal, it will increase export prices and curb demand for low priced Chinese goods in world markets. This should enable Indian industry to offer competitive products to global markets and increase its share in US and EU markets. Further, earlier regulations favoured small scale players, which is now undergoing change. Further, with the opening up of the quota regime and other regulatory measures like liberalizing foreign direct investment norms, large investments are being planned to meet the growing domestic and international demand. Other factors are :- 1. Replacement of the MFA and full integration of textile industry resulted in huge opportunities for export 2.Increase in consumption pattern across the country alongwith the rise in demand for high quality premium fabrics. 3.Enhanced competition from other countries similarly constrained previously 4.Pricing pressure following the opening up of quotas Indian economy is bullish and is recording GDP growth not only unprecedented in her own history but even on international scale. It the second highest growth rate (China being the highest). It is more important to note that Indian growth is evenly spread in domestic and export markets, with the results, the companies across the board are reporting improved performance :- Results of 670 Companies for Quarter ended Mar. 06 Mar. 05 OPM (%) 24.5 25.9 GPM (%) 18.619.2 NPM (%) 17.6 11.4 Economic Times, 1-5-06 Another study of 354 companies, at the beginning of present boom, underlines jump in business and profits of the companies:- Study of 354 Companies Quarter Ended (Rs. In Crores) Change % Sept.05 Sept.04 Sales 51449 42740 20 Other income 3585 2268 58 Interest 6385 5099 25 Gross Profit 10784 9300 16 Depreciation 200 1929 14 Tax 1854 1743 6 Net Profit 6947 5268 32 Eco.Times, 24.10.05 With textile quotas scrapped, cotton textiles exports rose by 26.29% to Rs. 21502.27 Crores for year ended on March 31, 2006 compared with Rs 17025.91 Crores in the previous year. The entire product groups namely cotton yarn, fabrics and made ups showed positive growth with made ups registering the highest at 37.04%. International buyers are now more confident of India’s capabilities which could push exports further. India scores over competing countries as it offers all the product groups. Different countries are strong in separate segments, but not in all. For India’s cotton textile exports, the US continues to be the largest single market with a share of 23.14% valued at Es. 4976.31 Crore. In Cotton yarn, South Korea is the biggest marked with exports placed at Rs. 903.4 Crore. The growth rate should be between 20 and 25 %.( Hindu 14.9.06)
Globally, India is a significant player in the textile industry and is the third largest producer of cotton and cellulose fibre/yarn second largest producer of cotton yarn largest producer of jute, second largest producer of silk fifth largest producer of synthetic fibre/yarn (Source: Wake up Call for India’s Textile Industry, Report of Expert Committee on Textile Policy, ICAC) Removal of Quotas Under World Trade Organization (“WTO”) agreements, quota restrictions and tariff barriers, including for Indian textile companies, were removed in January 2005 and were reduced and will be fully removed by 2008 for Chinese textile companies, giving these companies increased access to a global market worth approximately $395 billion (Source: Datamonitor). According to a WTO discussion paper on the global textile and clothing industry following the WTO agreements, China and India are expected to account for approximately 65% of global clothing exports in the coming years. Countries such as Bangladesh, Vietnam, Turkey and Cambodia have historically contributed a higher share of global textile exports as compared to India. Since these countries enjoy either or both quota-free and duty-free status to compensate for their manufacturing inefficiencies, the introduction of a global quota-free regime is expected to result in their losing market share in the global textile trade. Enabling WTO agreements, low costs of production, availability of abundant domestic cotton supply and availability of skilled labour have enhanced the prospects for India's textile companies. Global retailers are increasingly outsourcing production to Asia as textile capacities shrink in the European Union and the United States due to a perceived lack of competitiveness. Though China is a major beneficiary of quota removals, a perceived threat of an import flood from China into the United States and Europe has resulted in the commencement of trade negotiations with China aimed at restricting its textile exports. Resulting regulatory uncertainty surrounding China appears to be benefiting India and to be leading global retailers to view India more positively. Since India’s existing share of global textile exports is not believed to be over large, perceptions about an import flood from India should be reduced in the immediate future. Moreover, India offers a competitive alternative to China given its wide product range and presence across the textile value chain. FUTURE OUTLOOK FOR THE TEXTILE INDUSTRY The future prospects for the Indian industry appear favourable, particularly in the post-quota removal regime. The industry is in an expansion mode and is likely to benefit from growing demand both in the domestic as well as international markets. Further, the anti-surge mechanism which the WTO has imposed on Chinese exports is expected to benefit India. Turkey is the first country to set quotas on textile and apparel imports from China. The EU is also in the process of adopting measures to avoid surge in imports from China. China has announced exports tariff on textile and clothing with effect from January 2005 that will last until 2007 as measures to avoid penal duties. Even though these tariffs are nominal, it will increase export prices and curb demand for low priced Chinese goods in world markets. This should enable Indian industry to offer competitive products to global markets and increase its share in US and EU markets. Further, earlier regulations favoured small scale players, which is now undergoing change. Further, with the opening up of the quota regime and other regulatory measures like liberalizing foreign direct investment norms, large investments are being planned to meet the growing domestic and international demand. Other factors are :- 1. Replacement of the MFA and full integration of textile industry resulted in huge opportunities for export 2.Increase in consumption pattern across the country alongwith the rise in demand for high quality premium fabrics. 3.Enhanced competition from other countries similarly constrained previously 4.Pricing pressure following the opening up of quotas Indian economy is bullish and is recording GDP growth not only unprecedented in her own history but even on international scale. It the second highest growth rate (China being the highest). It is more important to note that Indian growth is evenly spread in domestic and export markets, with the results, the companies across the board are reporting improved performance :- Results of 670 Companies for Quarter ended Mar. 06 Mar. 05 OPM (%) 24.5 25.9 GPM (%) 18.619.2 NPM (%) 17.6 11.4 Economic Times, 1-5-06 Another study of 354 companies, at the beginning of present boom, underlines jump in business and profits of the companies:- Study of 354 Companies Quarter Ended (Rs. In Crores) Change % Sept.05 Sept.04 Sales 51449 42740 20 Other income 3585 2268 58 Interest 6385 5099 25 Gross Profit 10784 9300 16 Depreciation 200 1929 14 Tax 1854 1743 6 Net Profit 6947 5268 32 Eco.Times, 24.10.05 With textile quotas scrapped, cotton textiles exports rose by 26.29% to Rs. 21502.27 Crores for year ended on March 31, 2006 compared with Rs 17025.91 Crores in the previous year. The entire product groups namely cotton yarn, fabrics and made ups showed positive growth with made ups registering the highest at 37.04%. International buyers are now more confident of India’s capabilities which could push exports further. India scores over competing countries as it offers all the product groups. Different countries are strong in separate segments, but not in all. For India’s cotton textile exports, the US continues to be the largest single market with a share of 23.14% valued at Es. 4976.31 Crore. In Cotton yarn, South Korea is the biggest marked with exports placed at Rs. 903.4 Crore. The growth rate should be between 20 and 25 %.( Hindu 14.9.06)
third largest producer of cotton and cellulose fibre/yarn
second largest producer of cotton yarn
largest producer of jute, second largest producer of silk
fifth largest producer of synthetic fibre/yarn
(Source: Wake up Call for India’s Textile Industry, Report of Expert Committee on Textile Policy, ICAC)
Removal of Quotas Under World Trade Organization (“WTO”) agreements, quota restrictions and tariff barriers, including for Indian textile companies, were removed in January 2005 and were reduced and will be fully removed by 2008 for Chinese textile companies, giving these companies increased access to a global market worth approximately $395 billion (Source: Datamonitor). According to a WTO discussion paper on the global textile and clothing industry following the WTO agreements, China and India are expected to account for approximately 65% of global clothing exports in the coming years. Countries such as Bangladesh, Vietnam, Turkey and Cambodia have historically contributed a higher share of global textile exports as compared to India. Since these countries enjoy either or both quota-free and duty-free status to compensate for their manufacturing inefficiencies, the introduction of a global quota-free regime is expected to result in their losing market share in the global textile trade. Enabling WTO agreements, low costs of production, availability of abundant domestic cotton supply and availability of skilled labour have enhanced the prospects for India's textile companies. Global retailers are increasingly outsourcing production to Asia as textile capacities shrink in the European Union and the United States due to a perceived lack of competitiveness. Though China is a major beneficiary of quota removals, a perceived threat of an import flood from China into the United States and Europe has resulted in the commencement of trade negotiations with China aimed at restricting its textile exports. Resulting regulatory uncertainty surrounding China appears to be benefiting India and to be leading global retailers to view India more positively. Since India’s existing share of global textile exports is not believed to be over large, perceptions about an import flood from India should be reduced in the immediate future. Moreover, India offers a competitive alternative to China given its wide product range and presence across the textile value chain. FUTURE OUTLOOK FOR THE TEXTILE INDUSTRY The future prospects for the Indian industry appear favourable, particularly in the post-quota removal regime. The industry is in an expansion mode and is likely to benefit from growing demand both in the domestic as well as international markets. Further, the anti-surge mechanism which the WTO has imposed on Chinese exports is expected to benefit India. Turkey is the first country to set quotas on textile and apparel imports from China. The EU is also in the process of adopting measures to avoid surge in imports from China. China has announced exports tariff on textile and clothing with effect from January 2005 that will last until 2007 as measures to avoid penal duties. Even though these tariffs are nominal, it will increase export prices and curb demand for low priced Chinese goods in world markets. This should enable Indian industry to offer competitive products to global markets and increase its share in US and EU markets. Further, earlier regulations favoured small scale players, which is now undergoing change. Further, with the opening up of the quota regime and other regulatory measures like liberalizing foreign direct investment norms, large investments are being planned to meet the growing domestic and international demand. Other factors are :- 1. Replacement of the MFA and full integration of textile industry resulted in huge opportunities for export 2.Increase in consumption pattern across the country alongwith the rise in demand for high quality premium fabrics. 3.Enhanced competition from other countries similarly constrained previously 4.Pricing pressure following the opening up of quotas Indian economy is bullish and is recording GDP growth not only unprecedented in her own history but even on international scale. It the second highest growth rate (China being the highest). It is more important to note that Indian growth is evenly spread in domestic and export markets, with the results, the companies across the board are reporting improved performance :- Results of 670 Companies for Quarter ended Mar. 06 Mar. 05 OPM (%) 24.5 25.9 GPM (%) 18.619.2 NPM (%) 17.6 11.4 Economic Times, 1-5-06 Another study of 354 companies, at the beginning of present boom, underlines jump in business and profits of the companies:- Study of 354 Companies Quarter Ended (Rs. In Crores) Change % Sept.05 Sept.04 Sales 51449 42740 20 Other income 3585 2268 58 Interest 6385 5099 25 Gross Profit 10784 9300 16 Depreciation 200 1929 14 Tax 1854 1743 6 Net Profit 6947 5268 32 Eco.Times, 24.10.05 With textile quotas scrapped, cotton textiles exports rose by 26.29% to Rs. 21502.27 Crores for year ended on March 31, 2006 compared with Rs 17025.91 Crores in the previous year. The entire product groups namely cotton yarn, fabrics and made ups showed positive growth with made ups registering the highest at 37.04%. International buyers are now more confident of India’s capabilities which could push exports further. India scores over competing countries as it offers all the product groups. Different countries are strong in separate segments, but not in all. For India’s cotton textile exports, the US continues to be the largest single market with a share of 23.14% valued at Es. 4976.31 Crore. In Cotton yarn, South Korea is the biggest marked with exports placed at Rs. 903.4 Crore. The growth rate should be between 20 and 25 %.( Hindu 14.9.06)
Countries such as Bangladesh, Vietnam, Turkey and Cambodia have historically contributed a higher share of global textile exports as compared to India. Since these countries enjoy either or both quota-free and duty-free status to compensate for their manufacturing inefficiencies, the introduction of a global quota-free regime is expected to result in their losing market share in the global textile trade. Enabling WTO agreements, low costs of production, availability of abundant domestic cotton supply and availability of skilled labour have enhanced the prospects for India's textile companies. Global retailers are increasingly outsourcing production to Asia as textile capacities shrink in the European Union and the United States due to a perceived lack of competitiveness. Though China is a major beneficiary of quota removals, a perceived threat of an import flood from China into the United States and Europe has resulted in the commencement of trade negotiations with China aimed at restricting its textile exports. Resulting regulatory uncertainty surrounding China appears to be benefiting India and to be leading global retailers to view India more positively. Since India’s existing share of global textile exports is not believed to be over large, perceptions about an import flood from India should be reduced in the immediate future. Moreover, India offers a competitive alternative to China given its wide product range and presence across the textile value chain. FUTURE OUTLOOK FOR THE TEXTILE INDUSTRY The future prospects for the Indian industry appear favourable, particularly in the post-quota removal regime. The industry is in an expansion mode and is likely to benefit from growing demand both in the domestic as well as international markets. Further, the anti-surge mechanism which the WTO has imposed on Chinese exports is expected to benefit India. Turkey is the first country to set quotas on textile and apparel imports from China. The EU is also in the process of adopting measures to avoid surge in imports from China. China has announced exports tariff on textile and clothing with effect from January 2005 that will last until 2007 as measures to avoid penal duties. Even though these tariffs are nominal, it will increase export prices and curb demand for low priced Chinese goods in world markets. This should enable Indian industry to offer competitive products to global markets and increase its share in US and EU markets. Further, earlier regulations favoured small scale players, which is now undergoing change. Further, with the opening up of the quota regime and other regulatory measures like liberalizing foreign direct investment norms, large investments are being planned to meet the growing domestic and international demand. Other factors are :- 1. Replacement of the MFA and full integration of textile industry resulted in huge opportunities for export 2.Increase in consumption pattern across the country alongwith the rise in demand for high quality premium fabrics. 3.Enhanced competition from other countries similarly constrained previously 4.Pricing pressure following the opening up of quotas Indian economy is bullish and is recording GDP growth not only unprecedented in her own history but even on international scale. It the second highest growth rate (China being the highest). It is more important to note that Indian growth is evenly spread in domestic and export markets, with the results, the companies across the board are reporting improved performance :- Results of 670 Companies for Quarter ended Mar. 06 Mar. 05 OPM (%) 24.5 25.9 GPM (%) 18.619.2 NPM (%) 17.6 11.4 Economic Times, 1-5-06 Another study of 354 companies, at the beginning of present boom, underlines jump in business and profits of the companies:- Study of 354 Companies Quarter Ended (Rs. In Crores) Change % Sept.05 Sept.04 Sales 51449 42740 20 Other income 3585 2268 58 Interest 6385 5099 25 Gross Profit 10784 9300 16 Depreciation 200 1929 14 Tax 1854 1743 6 Net Profit 6947 5268 32 Eco.Times, 24.10.05 With textile quotas scrapped, cotton textiles exports rose by 26.29% to Rs. 21502.27 Crores for year ended on March 31, 2006 compared with Rs 17025.91 Crores in the previous year. The entire product groups namely cotton yarn, fabrics and made ups showed positive growth with made ups registering the highest at 37.04%. International buyers are now more confident of India’s capabilities which could push exports further. India scores over competing countries as it offers all the product groups. Different countries are strong in separate segments, but not in all. For India’s cotton textile exports, the US continues to be the largest single market with a share of 23.14% valued at Es. 4976.31 Crore. In Cotton yarn, South Korea is the biggest marked with exports placed at Rs. 903.4 Crore. The growth rate should be between 20 and 25 %.( Hindu 14.9.06)
Enabling WTO agreements, low costs of production, availability of abundant domestic cotton supply and availability of skilled labour have enhanced the prospects for India's textile companies. Global retailers are increasingly outsourcing production to Asia as textile capacities shrink in the European Union and the United States due to a perceived lack of competitiveness. Though China is a major beneficiary of quota removals, a perceived threat of an import flood from China into the United States and Europe has resulted in the commencement of trade negotiations with China aimed at restricting its textile exports. Resulting regulatory uncertainty surrounding China appears to be benefiting India and to be leading global retailers to view India more positively. Since India’s existing share of global textile exports is not believed to be over large, perceptions about an import flood from India should be reduced in the immediate future. Moreover, India offers a competitive alternative to China given its wide product range and presence across the textile value chain. FUTURE OUTLOOK FOR THE TEXTILE INDUSTRY The future prospects for the Indian industry appear favourable, particularly in the post-quota removal regime. The industry is in an expansion mode and is likely to benefit from growing demand both in the domestic as well as international markets. Further, the anti-surge mechanism which the WTO has imposed on Chinese exports is expected to benefit India. Turkey is the first country to set quotas on textile and apparel imports from China. The EU is also in the process of adopting measures to avoid surge in imports from China. China has announced exports tariff on textile and clothing with effect from January 2005 that will last until 2007 as measures to avoid penal duties. Even though these tariffs are nominal, it will increase export prices and curb demand for low priced Chinese goods in world markets. This should enable Indian industry to offer competitive products to global markets and increase its share in US and EU markets. Further, earlier regulations favoured small scale players, which is now undergoing change. Further, with the opening up of the quota regime and other regulatory measures like liberalizing foreign direct investment norms, large investments are being planned to meet the growing domestic and international demand. Other factors are :- 1. Replacement of the MFA and full integration of textile industry resulted in huge opportunities for export 2.Increase in consumption pattern across the country alongwith the rise in demand for high quality premium fabrics. 3.Enhanced competition from other countries similarly constrained previously 4.Pricing pressure following the opening up of quotas Indian economy is bullish and is recording GDP growth not only unprecedented in her own history but even on international scale. It the second highest growth rate (China being the highest). It is more important to note that Indian growth is evenly spread in domestic and export markets, with the results, the companies across the board are reporting improved performance :- Results of 670 Companies for Quarter ended Mar. 06 Mar. 05 OPM (%) 24.5 25.9 GPM (%) 18.619.2 NPM (%) 17.6 11.4 Economic Times, 1-5-06 Another study of 354 companies, at the beginning of present boom, underlines jump in business and profits of the companies:- Study of 354 Companies Quarter Ended (Rs. In Crores) Change % Sept.05 Sept.04 Sales 51449 42740 20 Other income 3585 2268 58 Interest 6385 5099 25 Gross Profit 10784 9300 16 Depreciation 200 1929 14 Tax 1854 1743 6 Net Profit 6947 5268 32 Eco.Times, 24.10.05 With textile quotas scrapped, cotton textiles exports rose by 26.29% to Rs. 21502.27 Crores for year ended on March 31, 2006 compared with Rs 17025.91 Crores in the previous year. The entire product groups namely cotton yarn, fabrics and made ups showed positive growth with made ups registering the highest at 37.04%. International buyers are now more confident of India’s capabilities which could push exports further. India scores over competing countries as it offers all the product groups. Different countries are strong in separate segments, but not in all. For India’s cotton textile exports, the US continues to be the largest single market with a share of 23.14% valued at Es. 4976.31 Crore. In Cotton yarn, South Korea is the biggest marked with exports placed at Rs. 903.4 Crore. The growth rate should be between 20 and 25 %.( Hindu 14.9.06)
FUTURE OUTLOOK FOR THE TEXTILE INDUSTRY The future prospects for the Indian industry appear favourable, particularly in the post-quota removal regime. The industry is in an expansion mode and is likely to benefit from growing demand both in the domestic as well as international markets. Further, the anti-surge mechanism which the WTO has imposed on Chinese exports is expected to benefit India. Turkey is the first country to set quotas on textile and apparel imports from China. The EU is also in the process of adopting measures to avoid surge in imports from China. China has announced exports tariff on textile and clothing with effect from January 2005 that will last until 2007 as measures to avoid penal duties. Even though these tariffs are nominal, it will increase export prices and curb demand for low priced Chinese goods in world markets. This should enable Indian industry to offer competitive products to global markets and increase its share in US and EU markets. Further, earlier regulations favoured small scale players, which is now undergoing change. Further, with the opening up of the quota regime and other regulatory measures like liberalizing foreign direct investment norms, large investments are being planned to meet the growing domestic and international demand. Other factors are :- 1. Replacement of the MFA and full integration of textile industry resulted in huge opportunities for export 2.Increase in consumption pattern across the country alongwith the rise in demand for high quality premium fabrics. 3.Enhanced competition from other countries similarly constrained previously 4.Pricing pressure following the opening up of quotas Indian economy is bullish and is recording GDP growth not only unprecedented in her own history but even on international scale. It the second highest growth rate (China being the highest). It is more important to note that Indian growth is evenly spread in domestic and export markets, with the results, the companies across the board are reporting improved performance :- Results of 670 Companies for Quarter ended Mar. 06 Mar. 05 OPM (%) 24.5 25.9 GPM (%) 18.619.2 NPM (%) 17.6 11.4 Economic Times, 1-5-06 Another study of 354 companies, at the beginning of present boom, underlines jump in business and profits of the companies:- Study of 354 Companies Quarter Ended (Rs. In Crores) Change % Sept.05 Sept.04 Sales 51449 42740 20 Other income 3585 2268 58 Interest 6385 5099 25 Gross Profit 10784 9300 16 Depreciation 200 1929 14 Tax 1854 1743 6 Net Profit 6947 5268 32 Eco.Times, 24.10.05 With textile quotas scrapped, cotton textiles exports rose by 26.29% to Rs. 21502.27 Crores for year ended on March 31, 2006 compared with Rs 17025.91 Crores in the previous year. The entire product groups namely cotton yarn, fabrics and made ups showed positive growth with made ups registering the highest at 37.04%. International buyers are now more confident of India’s capabilities which could push exports further. India scores over competing countries as it offers all the product groups. Different countries are strong in separate segments, but not in all. For India’s cotton textile exports, the US continues to be the largest single market with a share of 23.14% valued at Es. 4976.31 Crore. In Cotton yarn, South Korea is the biggest marked with exports placed at Rs. 903.4 Crore. The growth rate should be between 20 and 25 %.( Hindu 14.9.06)
The future prospects for the Indian industry appear favourable, particularly in the post-quota removal regime. The industry is in an expansion mode and is likely to benefit from growing demand both in the domestic as well as international markets. Further, the anti-surge mechanism which the WTO has imposed on Chinese exports is expected to benefit India. Turkey is the first country to set quotas on textile and apparel imports from China. The EU is also in the process of adopting measures to avoid surge in imports from China. China has announced exports tariff on textile and clothing with effect from January 2005 that will last until 2007 as measures to avoid penal duties. Even though these tariffs are nominal, it will increase export prices and curb demand for low priced Chinese goods in world markets. This should enable Indian industry to offer competitive products to global markets and increase its share in US and EU markets. Further, earlier regulations favoured small scale players, which is now undergoing change. Further, with the opening up of the quota regime and other regulatory measures like liberalizing foreign direct investment norms, large investments are being planned to meet the growing domestic and international demand. Other factors are :-
1. Replacement of the MFA and full integration of textile industry resulted in huge opportunities for export
2.Increase in consumption pattern across the country alongwith the rise in demand for high quality premium fabrics.
3.Enhanced competition from other countries similarly constrained previously
4.Pricing pressure following the opening up of quotas
Indian economy is bullish and is recording GDP growth not only unprecedented in her own history but even on international scale. It the second highest growth rate (China being the highest). It is more important to note that Indian growth is evenly spread in domestic and export markets, with the results, the companies across the board are reporting improved performance :-
Another study of 354 companies, at the beginning of present boom, underlines jump in business and profits of the companies:-
With textile quotas scrapped, cotton textiles exports rose by 26.29% to Rs. 21502.27 Crores for year ended on March 31, 2006 compared with Rs 17025.91 Crores in the previous year. The entire product groups namely cotton yarn, fabrics and made ups showed positive growth with made ups registering the highest at 37.04%. International buyers are now more confident of India’s capabilities which could push exports further. India scores over competing countries as it offers all the product groups. Different countries are strong in separate segments, but not in all. For India’s cotton textile exports, the US continues to be the largest single market with a share of 23.14% valued at Es. 4976.31 Crore. In Cotton yarn, South Korea is the biggest marked with exports placed at Rs. 903.4 Crore. The growth rate should be between 20 and 25 %.( Hindu 14.9.06)