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Gearing up for future contingencies
It is high time that the domestic industry formulate a comprehensive
strategy to face the future trade challenges. Producers require to prepare themselves
for trade-related contingencies which if not attended properly, may eat into
their market share. The Indian companies will have to create a niche for themselves
by focussing on issues like costs, logistics, infrastructure, supply chain management,
plant efficiency, reliability and relationships. All these issues are going
to play a very crucial role in years to come. Textile producers need to be competitive
on the basis of product quality and pricing. Moreover, they should concentrate
on those products which they can produce with the optimal competency. This will
not only infuse efficiency in the production chain but also help in satisfying
the end user. The success of the textile industry in future will call for an
efficient handling of new issues and contingencies in terms of regional trade
pacts as also anti dumping and countervailing duty measures. The players will
have to chalk out strategies to face trade barriers that are going to emerge
after the phase-out of the quotas. However, it is not the regional trade agreements
that are driving business or altering the global trade pattern, but it is the
end of quotas. End of quota means companies could take advantage of single country
sourcing in stead of transporting components to unrestricted or less restricted
locations. We have seen as to how China’s share which was 15 per cent in
US imports in 2001, grew considerably to 66 per cent in 2002. In a quota-free
environment, major importers will favour locations with vertical capabilities
i.e the availability of production from the point of yarn to fabrics to finished
goods without extensive lead times and transportation cost. Vertical integration
allows companies to meet increased price competition and increased pressure
to shorten the fashion cycle with shorter production cycles. This will be the
area where Asian suppliers like India will have an edge. Currently, the US importers
are trying to reduce merchandise cost structure and increase flexibility in
the supply chain. Speed, quality, legal compliance, logistics and product costs
are the core considerations in the sourcing decision. In the past 10 years,
textile and apparel imports of the US have gone up to around $ 38 billion in
2002 from around 14 billion in 1992. With 35.27 per cent share, Asia has the
biggest share in the US imports; followed by NAFTA countries with 20.17 per
cent share, south Asia 15.26 per cent and 10 per cent CBI countries. Though
at 23.5 per cent growth rate, India is one of the fastest growing top suppliers
to the US market, there is still a plenty of scope for increasing the market
share. The share of the Indian textile industry in the global textile trade
has remained poor. India’s share in the world textile business has been:
22 per cent for cotton yarn, 3.2 per cent fabrics, l2 per cent apparel and 9
per cent made-ups. Thus, India’s overall share in the world textile business
comes to just around 2.8 per cent.
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