Textiles cash in on quota free times

India's textile exports have increased progressively after the lifting of textile quotas on January 1, 2005. The country has been the second biggest gainer after China since then, leading to more capital investments.

According to a status paper prepared by the textiles ministry, exports are estimated to touch Rs 81,616 crore in 2006-07, up from Rs 75,621 crore in 2005-06 and Rs 63,024 crore in 2004-05.

The ministry recently made a presentation to Prime Minister Manmohan Singh in this regard. "Textile exports grew by 20 per cent in 2005-06 over the previous year, while they rose 20.5 per cent in the first quarter of this financial year over the same period last year," an official said.

Investments in the sector in the post-quota period are also on the rise. They are estimated to touch Rs 33,000 crore in this financial year, of which Rs 25,000 crore will be made through the Technology Upgradation Fund Scheme. The ministry estimates they could touch Rs 1,40,000 crore by 2010.

In 2005, exports to the US had grown 26 per cent, while those to the EU increased 18 per cent. Together, the US and the EU account for 62 per cent of India's textile exports. The ministry pointed out that China, India and Turkey had gained in the EU market, while Thailand, Pakistan and Indonesia had lost out in the post-quota regime.

Similarly, China, India and Indonesia had gained in the US market, while Canada, Mexico and Turkey suffered in that market.

The ministry said India had maintained its unit value realisation (UVR), the value per unit in the US market. China's UVR declined by 14 per cent. In the EU, India's UVR increased 6 per cent, while China's declined 40 per cent in the post-quota period.

However, there continues to be a sharp difference in value terms between exports from China and India. China clocked $120 billion in export of textiles and clothing in 2005, while India earned a mere $17 billion that year.