Textile exporters eye Asean market

Asean countries have emerged as the new market for Indian textile and clothing manufacturers, which were so far focused on European Union (EU) nations and the United States for exports.

Out of the total export of $ 11.2 billion in 2002, goods worth only $ 316 million went to countries like Thailand, Malaysia, Indonesia and Singapore. On average, 65 per cent of goods went to EU and US.

Industry sources told Business Standard there existed significant scope to raise exports of textile products and clothing to Asean countries, which imported over $ 7 billion worth of textile and clothing in 2002.

Asean countries were competitive in non-cotton products whereas Indian industry excelled in cotton items. However, Indian exporters faced stiff competition from emerging players in cotton textiles like Pakistan, Bangla desh and Sri Lanka. Bangladesh was already a lower cost exporter than India.

With 26 per cent of world's total cotton growing area, the Indian cotton crop was only 13 per cent of the global production. The textile sector was required to invest in new technology and design so to supply buyers which were demanding and fashion conscious.

However, annual investment in modernisation in the Indian textile sector was very low as compared to the sector in countries like China. As a result, India's export basket was dominated by commodities like yarn and fabric, high on volume but low on margins.

Of the $ 316 million worth of goods exported to Asean, textile contributed $209 mn and clothing just $ 170m.

"Indian industry has to invest in manufacturing of high margin products as the ratio of textile to clothing is reduced," said the source.

The share of clothing vis-a-vis textiles in the Indian export basket had declined between 1990 and 2002 while in the world market the share of clothing rose against textiles during same period.

Indian textile export grew 146.55 per cent in the same period against global growth of 46 per cent. Clothing exports rose 116.7 per cent against world growth 85.7 per cent.

Greater trade with Asean countries could help Indian producers cushion the effects of the industry shake-up that would take place following removal of quota restriction from January 1, 2005. The Indian market could be flooded by cheap imports for some period after the date.

The domestic textile industry contributed 3 per cent of GDP. Manufacturers could buy basic non-cotton raw materials, fabric and yarn from the Asean region. The would help producers as demand for blended yarn was on the rise in India. Spinning mills could shift from cotton to blended items.