1_OVERVIEW: India s Cotton industry emerged as No 1 with 2019 cotton output of 34.5 million bales,yet its losing its share in the global textile & clothing markets consistently to big competitors like B.Desh and Vietnam and,other new emerging competitors esp. like Egypt, Morocco, Ethiopia, Cambodia for apparels.Though,India today is no. 2 in the global T & C market share, but it remains a poor 4.5% share holder in global trade of $1500 Billions.
It is in this perspective, and for India to improve upon and/or maintain its current global T & C share of atleast 5% ,it is important to understand and improve its `competitive` matrix and key drivers that can either mitigate the competition or improve India s severely constrained positioning.These pro and con factors have been reviewed in summary below;
2_Sectoral Analysis – Increased Competitiveness of other key Countries
A] Textiles sector
For the core Textile sector, the countries enjoying the majority of trade include China, India, Bangladesh, Vietnam and Turkey. Their positioning and current status of the top 5 exporting countries is as summarised in table below:
COUNTRY 2018 Export,$ Bln. %Change 2010-18
1.China incl. HkKg 126 +8%
- India 18 +4%
- Turkey 12 +4%
- Vietnam 08 +13%
- Turkey remains a key competitor and has benefit of `near to shore` to EU
- Vietnam is a serious challenger considering its `Duty Free `pacts for price competitive access to the biggest markets of US and EU. In view of no dedicated FTA/trade pacts with USA,EU; India is losing constantly to Vietnam. Also,China is feeding both Vietnam and Cambodia for materials.
2 B] Apparel & Madeups Sector
For the Apparel/clothing and madeups sector, the countries enjoying the majority of global trade pie include China, India, Bangladesh, Vietnam ,Cambodia and Turkey. Their positioning and current status of these top 6 exporting countries is as summarised in table below:
COUNTRY 2018 Export,$ Bln. %Change 2010-18
1.China ,excl. HkKg 158 0
2. India 17 -11%
3. Turkey 16 +4%
4. Vietnam 32 +13
5. Bangladesh 32 +11%
6. Cambodia 8 +14%
- By end of 2019, Vietnam had taken no. 1 position with $38+bln.
- Both Vietnam and Cambodia ,along with B Desh and Turkey are new serious and larger threats to India s already declining share vis a vis their Duty Free pacts for free and price competitive markets access to the biggest markets of US and EU.
- Textile sector overall is in serious decline for both India,and China and global pie is being taken away by above competitors as also new emerging and `Near to shore` countries eg Kenya,Ethiopia ,Jordon,Egypt,Morocco & east Europe eg Romania,Poland etc.
3_Competitive and emerging Trends vis a vis India’s future global positioning to be for Textile & Clothing export sectors.
It is important and critical for T & C industry captains and the Govt. bodies to understand India s threat perceptions and quickly work out the ways and factors to mitigate and to face the strong and growing headwinds of completion from other Textile countries vis a vis some of the key attributes and factors that apply currently to India.
• India T&C sectors – Weakest link is manufacturing of higher quality fabrics due to absence of `modern` weaving and processing,
• Diminishing competitiveness of India’s garment and made ups sub sectors ,due mainly to lower productivity and higher Inputs costs,leading to serious decline in the export value for last 5 years
• Key drivers of such fall in export value of India s overall T&C products are mainly perceived on account of:-
o High transaction cost leading to non competitive pricing of basic volume based textiles
o High power and interest burden faced by MSME units and,also the core textile manufacturing mills
o Overall neglect of global standards of productivity, quality control and new Sustainability paradigms,
o India’s motherly and out of sync treatment of `Cotton` sector is now witnessing a declining global markets share versus synthetic and blends. This has created low profile for India in volume based Polyester textile chain where India has one of the largest polyester,and even viscose fiber outputs.
4: ROAD MAO AND WAY FORWARD TO MITIGATE COMPETION
- Besides acute need of major FTA pacts with USA and EU, the Indian textile and apparel industry needs a major shift into manufacturing of value adding fabrics by way of improving its design and new product development, capabilities, and garments of such designed fabrics, and with focus on Polyester to enable exporters to cater to demand all year around. India has adequate capacities for all Synthetic fibers such as Polyester, viscose and others and can easily compete with synthetics focused countries like China, Indonesia, S Korea and Turkey too.
- Once the new export orders for season Summer-Spring 2021 start flowing in, iled, it is of paramount importance to reduce time to market especially in view of post Covid-19 preference of International brands for their new preference for `Near-shore sourcing. For Apparel exports, India thus needs to compete for right product price parity and quick delivery time vis-a-vis existing competitors like Turkey, Egypt , Morocco, and new fast evolving competition from N.African players like Morocco,Jordon, Ethiopia ,Lesotho Kenya,and soon Egypt and Nigeria in 5 years.
By: Munish Tyagi.Intl Textile Industry Consultant
Email : [email protected]