The Hindu Business Line : International tag eludes Indian textiles

INDIA can boast of accounting for a 25 per cent share of the global yarn market. But its share of total textile and apparel exports in international trade is an abysmal 4 per cent or even less.

What prevents Indian textiles from claiming a bigger share of the pie in the global market, as done by China? It is obviously the missing link — of value addition or product development, the lack of which has made the country fritter away export competitiveness.

Some simple arithmetic on the value gains one realises between the stages of raw cotton and finished cotton textile product will demonstrate that there is at least 10 times value addition existing to a kg of raw cotton that ends up as the cotton `T-shirt'.

Value addition: According to Mr Shekhar Agarwal, managing director of Maral Overseas Ltd of Bhilwara group, and a known player in knitted garment exports, a kg of cotton at Rs 45 (it will be higher at Rs 60 in case of clean cotton) could yield a value rise of Rs 110 per kg on its conversion into hosiery yarn.

When it is turned into unprocessed knitted fabric, it may be valued at Rs 120/130 per kg. The moment it undergoes the processing and comes out as processed knitted fabric, its value jump would be Rs 210 per kg.

But once this fabric is converted into a `T-shirt' of 1 kg weight, it gets a price tag of anywhere between Rs 400 and Rs 600. The route for spinners to achieve this `value addition move-forward' is, Mr Agarwal says, the combination of having the knitting and processing, or weaving and processing stages under their roof.

Capacity addition along these lines will bridge the gap between demand and supply, usher in lower lead-time and increase their profit margin. Spinners would have found ways to increase their margin from the present 3 per cent to as high as 10 per cent.

To achieve this, spinners should work out joint ventures with R&D that will smoothen the path of accessing technology, marketing, and product innovation.

Product development, and its commercial application using new yarns and different fabrics, and their blends evolved through a combination of finishes will be certain winners in the game of value addition.

Challenges: But the path of marketing in the quota-free global trade in textiles bristles with new challenges in the form of global retailers seeking to transcend `geographical' barriers to get into new markets like India.

Large garment sourcing centres and retail chains, according to Mr Agarwal, have begun to replace the buying houses operating hitherto.

Mr Agarwal, who was speaking on the input model for forward integration, for spinners, at a textile conference held here recently, said the top 10 retailers together accounted for 25-30 per cent of the $120-billion worth of textile/apparel global trade.

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