The government may be gung-ho and rattle off ambitious targets, but the textile and apparel industry, dominated by medium and small players, is not impressed.
KOLKATA: The government may be gung-ho and rattle off ambitious targets, but the textile and apparel industry, dominated by medium and small players, is not impressed.
According to government projections, the Indian textile and apparel market will touch $85 billion by 2010. Out of this mammoth target, exports alone, which are currently hovering at about $13.5 billion, will climb to a whopping $40 billion. Future domestic consumption, it is envisaged, will increase to $45 billion from the present $26.5 billion.
All very well, but industry players doubt India can reach this target within this time frame, given the current level of exports and growth. The Indian textile trade has registered a compounded annual growth rate (CAGR) of 5.91% in the 1994-2004 period against the global figure of 8.09% and China’s robust 10.19%. “The CAGR will have to be at 19.85% if India has to reach its target of $40 billion in exports within the stipulated period,” said sources in the Textile Export Promotion Council of India (Texprocil).
The global CAGR for 2004-2010 has been pegged at a modest 6.34% and China’s at a healthy 13.21%. In China’s case, projected on a CAGR of 16.33% (2001-05), exports can reach $245 billion by 2010. But, considering the slowdown in capacity expansion, safeguard actions by the US and EU and growing competitiveness of other smaller exporting countries, growing intra-EU trade and proposed RTAs and FTAs, the export level is projected to be a more conservative $200 billion.
The global textile trade is dominated by the US and EU, together commanding 80% of the world market. India’s share is a puny 2.98%.
“Expansion of capacities, modernisation of existing manufacturing facilities and diversifying of product mix/base are some of the must-dos for Indian textile players,” said a textile industry source. “Improving infrastructure capabilities like power and transportation time to ports and flexibility in labour laws are vital to the growth of the industry,” added the source.
Some of the biggies are moving according to this prescription. For instance, Raymond recently announced a joint venture with Belgian textile group UCO in which both entities will hold equal stake.
“We are moving up the value chain on our way to being a global major. The proposed joint venture will merge the denim business of Raymond and UCO. The JV will create a transcontinental entity with manufacturing facilities across three continents,” said P K Bhandari, group president and whole time director, Raymond.
But overall, the industry grouse is, because textile is a mass-produced commodity, huge investments do not come in easily. It is only the bigger players who are in a position to make huge investments.
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