Comparative Analysis of Growth of the Indian & Chinese Textile Industries.
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Introduction: The growth means growth economical growth, prospect by which a Nation can be benefited. Similarly, the growth in Textile Industries means that there should be growth in GDP, Export, more revenue earnings, more job potentialities, and more expansion which over all benefits the Nation.Indian Textile Industries are now zooming for last decades and facing challenges with world economy and that of in export Market. This Industry means just not cotton or linen, but it includes Jute, Silk and several natural fibers where growth is found every where. It has got equal high quality and competition in the field of Polyester segments also. The growth in this Manmade Fiber industry i.e. Polyester filament and staple yarn is tremendous high. But the high growth with quality is found not at per with China.
As on today, our GDP is 4%, with 14% contribution to industrial production, 17% contribution to export earnings. Textile Industries in India, is the 2nd largest employers after Agriculture. It gives jobs to the weaker sections too. India is having largest loom age including handlooms which is 61% as on today (source- ministry of textiles).
But in spite of such positive environment , Indian Textile Market is lagging behind China especially in two major aspects i.e. cost of Production and that of Export .It is a fact that any growth or downfall depends by & large on the policy matters/ decisions of the concerned Governing bodies.
This subject has elaborated the facts and compared both the populated countries with their pros & cons.
India’s Growth. Growth along with the investment of an industry depends heavily on the economic health of the country. Indian economy grew rapidly during the fiscal year 2006-2007 posting a growth rate of 9.4 % p.a. Not only this, India has been performing significantly in the last three years where its average yearly rate of growth has been estimated to be 8%. One of the most beneficial classes of this economic growth saga has been the middle income section of the society. The total strength of this class in absolute terms has been found out to who are still at their prime age and are outwardly fashion savvy. This has generated huge demand for fashionable dresses which has consequently led to the emergence of some world class Indian designers with their latest fashion apparels.
Propensity of consumption (after excluding all spending on essential items like housing, health, education, etc.) by the average Indian people has increased at the rate of 5% to a total amount of US$ 219 billion in the year 2005. At this time, the organized retail sector has been able to tap a market of around US$ 8.2 billion which is projected to increase to US$ 25 billion by 2010.
The Indian textile industry is one of the major sectors of Indian economy largely contributing towards the growth of the country’s industrial sector. The opening up of the sector through liberalization polices set up by the Indian Government have given the much-needed thrust to the Indian textile industry, which has now successfully become one of the largest in the world. Textile sector in India provides direct employment to over 35 million people and holds the second position after the agriculture sector in providing employment to the masses.
Growing at a rapid pace, the Indian Market is being flocked by foreign investors exploring investment purposes and with an increasing trend in the demand for the textile products in the country, a number of new companies and joint ventures are being set up in the country to capture new opportunities in the market.
Growth Trends
The Indian textile industry can be divided into a number of segments such as cotton, silk, woolen, readymade, jute and handicraft. The total cloth production registered during September 2010 was 10.2 per cent higher than that registered for September 2009. The total production of cloth during April – September 2010 increased by 2.1 per cent as compared to the period April – September 2009. The highest growth was observed in the power loom sector (13.2 per cent), followed by hosiery sector (9.1 per cent).
The total textile exports during April-July 2010 (provisional) were valued at US$ 7.58 billion as against US$ 7.21 billion during the corresponding period of the previous year. The share of textile exports in total exports was 11.04 per cent during April-July 2010. Cotton textiles has registered a growth of 8.2 per cent during April-September 2010 -11, while wool, silk and man-made fibre textiles have registered a growth of 2.2 per cent while textile products including apparel have registered a growth of 3 per cent. Textiles and apparel industry exports, valued at US$ 20.02 billion, contributed about 11.5 per cent to the country’s total exports in 2008–09. The total textiles imports into India in 2008–09 were valued at US$ 3.33 billion.
The total foreign exchange earnings from the textile exports during the current financial year (April-July 2011) was registered at US$ 10.32 billion against US$ 7.75 billion during the corresponding period of financial year 2010-11.
India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5 per cent to 8 per cent and reach US$ 80 billion by the end of the year 2020.
The Textile sector grew at 3-4 per cent during the last 6 decades. As per the 11th Five Year Plan (FYP), it was projected to fast-track to a growth rate of 16 per cent in value and is further expected to reach US$ 115 billion (exports US$ 55 billion and domestic market US$ 60 billion) by 2012. Exports are likely to reach US$ 32 billion in 2011-12 and domestic market US$ 55 billion
Government Initiatives
The Government of India has promoted a number of export promotion policies for the Textile sector in the Union Budget 2011-12 and the Foreign Trade Policy 2009-14. This also includes the various incentives under Focus Market Scheme and Focus Product Scheme; broad basing the coverage of Market Linked Focus Product Scheme for textile products and extension of Market Linked Focus Product Scheme etc. to increase the Indian shares in the global trade of textiles and clothing. The various schemes and promotions by the Government of India are as follows –
Welfare Schemes:
E-Marketing: The Central Cottage Industries Corporation of India (CCIC), and the Handicrafts and Handlooms Export Corporation of India (HHEC) have developed a number of e-marketing platforms to simplify marketing issues. Also, a number of marketing initiatives have been taken up to promote niche handloom and handicraft products with the help of 600 events all over the country.
Skill Development: ISDS started for 5 years at each segments
Credit Linkages: As per the Credit Guarantee program, over 25,000 Artisan Credit Cards have been supplied to artisans, and 16.50 million additional applications for issuing up credit cards have been forwarded to banks for further consideration with regards to the Credit Linkage scheme.
Financial package for waiver of overdues: The Government of India has announced a package of US$ 604.56 million to waive of overdue loans in the handloom sector. This also includes the waiver of overdue loans and interest till 31st March, 2010, for loans disbursed to handloom sector. This is expected to benefit at least 300,000 handloom weavers of the industry and 15,000 cooperative societies.
Textiles Parks: The Indian Government has given approval to 21 new Textiles Parks to be set up and this would be executed over a period of 36 months. The new Textiles Parks would leverage employment to 400,000 textiles workers. The product mix in these parks would include apparels and garments parks, hosiery parks, silk parks, processing parks, technical textiles including medical textiles, carpet and power loom parks.
Recent Developments
- Along with the increasing export figures in the Indian Apparel sector in the country, Bangladesh is planning to set up two Special Economic Zones (SEZ) for attracting Indian companies, in view of the duty free trade between the two countries. The two SEZs are intended to come up on 100-acre plots of land in Kishoreganj and Chattak, in Bangladesh.
- Italian luxury major Canali has entered into a 51:49 joint venture with Genesis Luxury Fashion, which currently has distribution rights of Canali-branded products in India. The company will now sell Canali branded products in India exclusively.
The Road Ahead
With the increase in investments in the Indian textile sector, the subsequent increase in the industrial production, and the positivist observed by the Textile sector has resulted in progress and development of the sector. Integrating the spectral needs and continued investments with technical advancements will completely modernize the industry chains across the country, and further assist in reaping benefits for the Indian Textile sector.
The Textile Industrial Scenario at China.
Major targets review
1. Output
According to the market reflection, the volume of manufactured fiber reached 41.30 million tons in 2010, up 60.70% from 2005. The output of chemical fiber, yarn, cloth and garment reached 31 million tons, 27.3 million tons, 79 billion metres and 28.5 billion pieces respectively, up 86.21%, 88.21%, 63.09% and 92.59% respectively.
2. Investment and a relocation of industrial bases
The accumulated investment for statistics-worthy textile projects 2010 reached CNY400.6 billion, 1.51 times more than 2005. In 2010, the share of the textile investment in the central and western regions was 38.55 percent and 9.27 percent respectively, which were 19.13 and 2.66 percentage points more than 2005.
3. Domestic demand
The domestic sales production value of statistics-worthy Chinese textile enterprises accounted for 81.14% of the total production value, increasing 10.38 percentage points from 2005.
4. Export returning to its pre-crisis export level
According to China Customs, the exports value of China’s textile and garment amounted to $206.5 billion in 2010, increasing 75.72 percentage points from 2005.
5. Profit
By looking further at the market, textile enterprises in China saw their main business income edged up by 1.33 times from 2005 to CNY4690.0 billion in 2010; profit ratio edged up by 1.91 times from 2005 to 5.44% in 2010.
Factors that shape the development of the industry
1. Competitive advantage of China textile
In the first 10 months of 2010, China exported a total of more than 62.6 billion U.S. dollars worth of textile yarns, fabrics and textile products, an increase of more than 29 percent compared with the same period of 2009, and exported a total of 105 billion U.S. dollars’ worth of clothes, an increase of nearly 20 percent.
2. Domestic demand returned to the spotlight
Stimulating the growth of production, sales and exports of the China textile industry, Domestic demand serves the major factor here in the market. We are glad to see that with a long-term continuity in domestic demand for China Textile, the substantial progress has been achieved by China textile industry in all areas of statistics during the 11th Five-Year Plan periods.
3. Industrial upgrading and innovation
During the 11th Five-Year Plan period, the industry has gradually adjusted the structure of export markets, while maintaining the United States, the European Union and other traditional market share based on the positive steps to develop non-traditional export markets, promote market diversity.
4. Favorable policies.
”Revitalization Plans for the Textile Industry” was passed in early 2009. One year after China launched the stimulus package and regained economic growth momentum; the textile industry has overcome serious difficulties and has made new developments.
Outlook
In 2011, domestic demand will continue to serve the major factor stimulating the growth of production, sales and exports of the China textile industry. China’s economy is gearing up to change its growth model from an export driven economy to the one driven by domestic demand by boosting consumption at home.
However, China textile industry is still exposed to various problems: the rising inflation in emerging markets, great difficulty in recruitment and increasingly high labor cost; growth of environmental protection cost caused by low-carbon economy as well as unemployment in developing countries. An unrelenting rise in the cost of raw materials is cutting textile corporate profits, in some cases, pushing up consumer prices. The appreciating yean in China will further slash the marginal profitability of China’s textile makers.
Policies and Measures
1)Textile and garment export tax rebate rate may be further increased.
2)More cotton and raw silk may be purchased to benefit cotton and cocoon peasants.
3)Investment in technical upgrade and technical reform is encouraged.
4)Domestic consumption would be enlarged. Guidelines on speeding up domestic brand building will be drafted.
5)Merger and acquisition is promoted among the industrial enterprises.
6)More financial support would be strengthened for domestic textile enterprises.
7)Social burdens of enterprises may be eased, such as delayed payment of social insurance premium, reduced premium of social insurance, etc.
8)Support to small and medium textile enterprises may be intensified through the establishment of public services platform.
9)More guidance may be provided to intensify industry optimization, e.g. in dyeing and printing sectors.
10)Industrial associations (or chambers of commerce) are suggested to play their roles actively to encourage players to develop themselves in a disciplined manner.
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