Small unit sizes set back textile exports

In 2005, after the end of the multifibre agreement on December 31, 2004, China's textile exports to the US and the EU jumped from 20.1 per cent to 27.45 per cent, while India's share inched up from 5.7 per cent to 6.45 per cent.

This even lead Prime Minister Manmohan Singh to remark recently that he was not sure if India had benefited from the dismantling of the quota regime.

The answer could lie in the difference in the scale of operations of textile companies in the two countries "" Indian companies are only a fraction of their Chinese counterparts in size.

India's largest spinning company is the Vardhman Group, which has an installed capacity of 500,000 spindles. In comparison, China's largest, Weiqiao Textile, has 30,00,000 spindles.

In weaving, Arvind Mills is India's largest with a capacity of 110 million meters of denim and 30 million meters of fabric per annum. Weiqiao has an installed capacity of 844 million meters of fabric and 157 million meters of denim.

Even the average size of a Chinese textile unit is almost five times that of its Indian counterpart. An average Chinese unit employs 648 cutting, sewing, special purpose and finishing machines, while an average Indian unit employs just 136 machines.

Consequently, Indian manufacturing units can cater to order sizes between 5,000 and 50,000 pieces, while Chinese units can cater to orders ranging from 10,000 to 1 million pieces.

All this reflects in the turnover of Indian companies. While Arvind Mills, India's largest textile company, reported a turnover of $500 million (Rs 2,000 crore) in the last financial year, China's Weiqiao reported a turnover of $1.7 billion. Even other Chinese companies like Texwinca ($918 million), Fountain Set ($868 million) and Crystal Group ($625 million) are bigger than India's biggest.

"It will take Indian companies another five years to catch up with the Chinese," said Nahar Industries Managing Director Kamal Oswal. "Most Indian businessmen take a conservative line and are content to wait and watch before venturing into risks," said Prashant Agarwal, associate director (Textiles), KSA Technopak.

On the investments side, a meagre $5.72 million came in the form of FDI to the Indian textile industry between April-December 2005, according to the department of industry, policy and promotion statistics.

In comparison, China's textile industry attracted $5.4 billion in foreign investments in 2005.