Post-quota, textiles sew up a fair show

KOLKATA: The first concrete details of a post-quota scenario are emerging, in which India seems to have done moderately well. Countries like Bangladesh and Sri Lanka which are mainly apparel converters and were expected to fare poorly with the dismantling of quotas, have not done badly, putting many equations in jeopardy.

For India, during the January-September 2005 period, the growth was mainly in finished products - apparels and made-ups.

The country recorded a substantial rise of 33% in clothing exports to the US and 31% to the European Union (EU) during the period. In textiles, it notched up an increase of 14% and 4% to the US and EU, respectively, according to Textiles Export Promotion Council of India (Texprocil) data.

China, in turn, has recorded huge increases in exports to the US and European Union. In apparels and made-ups, it has recorded a whopping rise of 82% in exports to the US and a substantial 55% to the EU. In textiles, its exports have risen 28% to the US and 29% to the EU, notwithstanding safeguard measures on several categories.

Pakistan, on the other hand, suffered in its exports to the EU, experiencing a degrowth of 10% in textiles and 11% in clothing to the EU. For the US, its textile exports rose 14% and apparels by 9%.

Siddhartha Rajagopal, executive director, Texprocil, said, “India does not seem to have done badly, considering segments like garments and knitwear had been reserved under the small scale industry (SSI). If you weigh China’s figures against ours, then we have to consider the fact that the former operated in a freer economy, with lower import duties.”

Rajagopal was also upbeat on yarn front. He said, “Our share in yarn exports have gone up to 3% from zero. Canada, Pakistan and Mexico have always dominated this sector.”

Interestingly, some countries, especially Bangla-desh, Sri Lanka and Cambodia, which were expected to perform poorly in a highly-competitive, quota-free regime, have overturned the predictions. “All preference-receiving countries, Mexico, for instance, following the yarn forward rules, are losing market share as their conversion costs are becoming more due to higher raw material costs,” said industry sources.

It may be recalled, according to the North American Free Trade Agreement (Nafta), the US allowed quota-free imports of textile products from a few preferred countries provided they sourced the raw material from the US. The EU too had several such preferential pacts with smaller countries. This acted as a major roadblock to India and other yarn manufacturing countries.

However, in the post-quota scenario, countries like Sri Lanka, Cambodia and others, not bound by tariff preference agreements with the US and EU, are now sourcing their raw materials from India and China at much more competitive rates. Some of the smaller, exporting countries are hemmed in by the yarn forward rules, sourcing their yarn and fabrics at higher costs from the US and EU.  “The fact remains that the US and EU have remained protectionist,” added a textile source.

In 2004, about 77% of the US yarns and fabrics were consumed by Nafta, Carribbean Basin Initiative and central American countries while 37% of EU textiles were absorbed by Romania, Tunisia, Morocco, Bulgaria and Turkey.