Global textile firms come calling

Eyes JV with Indian units for sourcing raw materials, finished goods

With a month and a half before the quotas are dismantled, global textile firms are eyeing joint ventures with Indian units for sourcing raw materials and finished goods. Gujarat seems to be one of the hottest destinations because of its prominent place in the Indian textile exports.

Last month, a Canadian textile delegation visited the country and has signed four memorandum of understandings (MoUs) with Gujarat textile units to supply bed sheets and pillow covers, amongst others.

A Chinese textile delegation is, at present, visiting the textile units in Ahmedabad to source cotton yarn and cotton fabrics, and textile delegations from Australia and New Zealand are expected to visit the state early next month.

"We are faciliating the textile delegation coming from various countries to tie up with Indian firms to source their requirements post January, 2005. So far, a Canadian delegation has visited and have signed four MoUs. Many more such delegations are expected to come," S P Verma, deputy director, regional office of the textile commissioner told Business Standard on Thursday.

After 50 years of protection, the market will suddenly become open and quotas will not imply assured business. Market shares will have to be gained by competing internationally.

An international survey of international buyers reveals that India will be considered as second best destination in the textile sector, next to China at the international level.

"We want to understand the Indian textile industry in order to identify a joint venture partner for us. We have a good distribution network in exports but we are poor in cotton products for which we plan to work jointly with some of the Indian companies," said, Shoi Li Ke, general manager, Changsshu HTC Import and Export Company Ltd.

He is a member of the Chinese delegation on his two-day visit to Ahmedabad.

With the dismantling of the quota regime, the international textile industry, which is pegged at $360 billion, is expected to grow to $560 billion in the next five years. The Indian textile industry is expected to grow from the current $13 billion to over $50 billion in the next five years.

An expert from a global consultancy firm said: "The world is eyeing India, in the last few years international collaboration with the few of the Indian textile companies reveals the potential of India.

All the small and unorganised textile manufacturers should work in clusters like Truchi and Ludhania to compete with China and face the international challange.

At an average, the effeciency level of Indian textile companies is around 40 per cent as compared to 65 per cent of the Chinese companies and we need to increase our effeciency level to beat China."

With Gujarat accounting for around 25 per cent of the Indian textile exports, the Government of Gujarat (GoG) is plannning to come up with a policy to boost the textile and apparel indusry in the state, to be competitive in the post quota regime of the WTO.