The Hindu Business Line : Slump in Chinese textile market brightens prospects for India

Chennai, Aug. 16 After a tough phase, there seems to be signs of hope for the rupee-scarred Indian textile industry. This time, it is the slump in Chinese textiles that has brought some reason to cheer. Besides, neighbouring competing countries are also facing problems, brightening the prospects for Indian textiles.

Mr P. Sundar Rajan, Managing Director, SP Apparels, says: “In India’s case, this is true for the next two decades at least. Western buyers are now seriously looking at India. We have been getting enquiries from hitherto unexplored markets such as Hong Kong, Singapore and African nations.”

SP Apparels is the No. 2 exporting house in the country and owns brands such as Crocodile, Natalia and Crocokids.

Tirupur’s Royal Classic Group, which owns the brand Classic Polo, has already set up its marketing offices in Singapore and Malaysia sensing this opportunity.

Dragon in distress

Appreciation of the Chinese yuan, shrinking raw material (cotton) base and rising labour wages (30 per cent higher than that of India) are posing a serious threat to the Chinese textile industry.

These, in turn, have come as a blessing in disguise for the Indian textile industry that is now hopeful of emerging as a major exporter once again, overcoming one of its worst phases.

In January, the annual appreciation of the rupee was over 11 per cent, while the Chinese currency appreciated by 6.96 per cent. But when the rupee’s average appreciation dropped to 8.36 per cent in March, the yuan was up 8.52 per cent.

According to data available with the General Administration of Customs of China, textile and garment exports in the first half of this year fell 11 per cent year-on-year. Textile and clothing exports totalled $81.68 billion, the data showed. The customs report revealed that apparel export growth slowed to 3.4 per cent.

The country has registered a negative 2.57 per cent growth in exports to the US in January-February 2008. China is witnessing negative growth in the US for the first time in over a decade, industry sources said.

According to a recent survey by the China Cotton Textile Association across 17 provinces, nearly half of the textile companies surveyed wanted to quit and venture into other businesses and nearly 45 per cent have shifted their focus on the home turf.

Signs of sunrise

According to figures available with the US-based Office of Textiles & Apparel, during the first half of the calendar year, China posted a negative 2.43 per cent growth ($13,834 million) in textile and apparel exports to the US, while India registered a 1.89 per cent growth ($2,742.291 million).

“The unit value realisation per metre of fabric is also on the rise,” an industry insider told Business Line.

Apart from China, the recessionary trend is also being faced in neighbouring competitors Sri Lanka and Bangladesh.

Hit by an economic downturn, Sri Lankan textile units are on a staff downsizing mood, while labour unrests owing to low wages and rising food prices plague Bangladesh’s textile sector.

‘cautious approach’

“China’s pain is India’s gain. It’s true that we have ample opportunity but we have to consider the spiralling raw material costs, rising cost of production and insufficient power problems here.

Most of the companies are not able to pass it on to the overseas buyers and we should have a cautious approach,” said Mr D.K. Nair, Chairman, Confederation of Indian Textile Industry (CITI).

On the raw material front, prices of cotton are on the decline for the past 3-4 days and industry sources expect it to slide further in the coming days, much to the relief of the textile sector.

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