The Hindu Business Line : Textile exporters worried over China threat

Chennai, Jan. 12 Textile and garment exporters, hit by a market slump overseas, have a new cause for worry as China comes out of a quota regime on exports to the US.

According to industry representatives, the agreements on textiles and clothing between China and the US, and China and the EU, which provided for a quota on Chinese exports to their markets ended December 31, 2008.

Industry representatives say Indian exporters, hit by a slump in the market, could find growing exports from China an added concern.

Can hold their own

However, industry representatives pointed out that it is not as if exports from China can soar immediately as exporters there are also hit by the international slowdown. Also, Indian exporters have their areas of strength and can hold their own. But China has the capacity to react fast to a situation, and now it has identified the textile sector as one of the areas that has to be supported to generate jobs as other manufacturing sectors, such as automobiles and electronics are hit. So exporters here need to keep a close watch, they say.

Mr K. Venkatachalam, Chief Advisor, Tamil Nadu Spinning Mills Association, says the impact could be felt in February-March when summer orders come in from the US.

With the volume of orders over the last two years slowing down, exporters here are finding it tough to find new business. Under the circumstance, the possibility of more competition from China is a worry. Also, exporters in Tamil Nadu are handicapped by the power shortage and loss of production time.

Areas of strength

However, India has its strength in quality of products such as fine clothing, shirts, coloured material and home textiles, areas in which China is relatively weak, so exporters here can handle the competition, he said.

Mr Manikam Ramaswami, Chairman, Confederation of Indian Industry – Tamil Nadu State Council, said the situation is of concern as exporting countries faced by a dropping market are aggressively looking to gain a share of the remaining market. Until three months ago, India had the advantage of a depreciating currency to give it an edge in exports but not now.

China is also reacting fast to the changed circumstances in the international markets. As various manufacturing sectors have been hit and jobs lost, it has identified the textile sector as a potential area of growth for employment generation. It is supporting the textile sector through banks, higher drawback on exports and encouraging investments.

Earlier, Chinese entrepreneurs had moved out to Vietnam and other South East Asian countries to set up textile units. Now with the encouragement at home they are moving back, he said.

India too should be fast to react to developing situations but exporters here are handicapped by the slow pace and infrastructure gap, he said.

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