India lacking investments

The domestic industry has not been able to keep up with the growing world trade in textiles and clothing in quantitative terms, which is corroborated by the fact that investments have not picked up to desired levels.

According to a report by the Ahmedabad-based consultants SMPS Consultants on 'India's textiles and clothing industries: the post-quota scenario', which was made public on Wednesday, "For exports to grow from the current level of $11-12 billion to $40 billion, the output will have to grow by $28 billion. This means an investment of around $30 billion, without taking into account investments required for producing more for domestic consumption."

"There are may reasons for India's unlikely success in the global market. The first is the disadvantage of high labour cost, which is quite cheap in China, Bangladesh, Philippines and Ghana. That apart, power cost in India is the highest in the world. Other major reason is the dominance of China in the market."

The report says that China has cut prices by over 50 per cent and has increased its market share significantly.

There are several reasons for China cutting down prices.

China, a complete totalitarian state, has been supported by the government and in a way it has been subsidised by funding its losses.

That the fear that China is not baseless is best illustrated by the fact that China has bought more than one lakh new shuttleless looms and has now shifted emphasis to spinning machines.

In fact, investments in new machines by Chinese textile and clothing firms have been huge by any standards. Whatever investments India 'proposes' to make in the textile industry over the next five years have already been made by China, the report said.

The report doesn't make any suggestions to accelerate the growth.