The Hindu Business Line : Textile exporters look forward to a bright '05

FOR the Indian textiles sector, 2004 was a year for gearing up to face the challenge of free global trade in textiles, following the unshackling of the four decade-old quota regime. With Indian suppliers widely predicted to increase their market share four-fold after the dismantling of quotas, manufacturers went on an overdrive to jack up capacities.

The Government, on its part, announced a radical duty structure in its budget announced in July, doing away with the mandatory Cenvat duty for the textiles sector. An optional duty regime was, instead, proposed to enable the sector face global competition following the dismantling of the Multi-Fibre Agreement (MFA) this year-end.

Under the new duty structure, manufacturers in the handloom, powerloom and the composite mills sector were allowed to choose between a complete exemption from payment of excise duty and adopting the Cenvat route, under which they would be eligible for Cenvat credit.

The country's bigger manufacturers have already been working overtime to gear up for the business opportunity. For instance, Maral Overseas has set up a new unit at Noida to supply knitwear exclusively to Marks & Spencer. JCT, which supplies to brands such as Gap, Sears and JC Penney, has added a second dyeing range for fabrics. Denim majors Arvind Mills and Ashima Textiles are also ramping up capacity for supply of fabrics.

The order book for most large exporters have also shot up 25-30 per cent as the year-end approached, with foreign clients pre-booking capacities for orders that have delivery dates beyond January 1, 2005. Gearing up for the opportunity, a number of new foreign buying houses and retailers were in the process of tying-up sourcing deals. While newer retail entrants such as the US-based Macys, G-Star, Sara Lee Corporation and a number of US and European buying houses have opened offices in the country, others that already have a supplier base in the country, such as Wal-Mart, Target, and JC Penney, are sprucing up their presence and inking new sourcing pacts.

"There has been a huge order booking for apparels from the US and the UK-based clients, with several of the retailers pre-booking capacities in anticipation of an overcrowding of the existing supplier base since the restriction on volumes would be over," a leading exporter said. Interestingly, it's not just the high-volume US retailers but also a host of high-fashion European brands that are India-bound now. According to industry players, brands such as Diesel, Burberry's and Nicole Farhi are planning to source from Indian suppliers.

"Indian suppliers have proven their expertise at processing small orders with intricate workmanship. So a number of niche segment players are also looking to source from here," an Indian Cotton Mills Federation official said. According to the Apparel Export Promotion Council Chairman, Mr A. Sakthivel, the Indian exporters are also gearing up for the rush by ramping up capacities. Hence, 2005 may well be the year of Indian textile exporter.