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Near stagnation in cotton textile and garment exports

Exports of both readymade garments and cotton textiles from the country seem to be stagnating, even before the start of the real competition in the international market, following the elimination of the present restriction on global textile business from January 2005.

While the threat of possible fierce competition in this export business is recognised both by the industry and the authorities concerned, very little has been done by the government to enable the industry to face such as a situation with determination and strength, unlike China which has been modernising and strengthening its textile and garment sectors at breakneck pace in order to step up further its share in global textile and garment business which is already quite high.

In stead of taking such positive steps, the authorities in the country continue to advance worn out arguments for the lacklustre export performance of our cotton textile and garment industries. If one looks at the figures of these exports given out by the Economic Survey 2003-04, the picture looks quite disquieting.

So far as exports of garments from the country are concerned, they have been able to achieve only a fractional improvement of 1.21 per cent in the first 11 months of 2003-04 over the same period of the earlier year. On the other hand, exports of cotton textiles during the same period have actually fallen by 0.54 per cent. Though the fall may not be sharp, the worrisome situation is that there is no improvement.

The authorities concerned continue to advance the same old arguments for the unsatisfactory performance of these items on the export front, while countries like China, Turkey, Pakistan and even Bangladesh are able to push up their exports.

Authors of Economic Survey continue to argue that "Indian textile exports face stiff competition from low cost suppliers like China, Bangladesh, and Pakistan. Indian textile exports have also faced anti dumping and other non tariff barriers from importing countries. Presently, the exports of cotton and bedlinen and polyester staple fibre to the European Union; polyester texturised yarn to Turkey and acrylic blankets to South Africa are subject to anti dumping duties imposed by the importing countries. Similarly, changes introduced by the US in the rural origin criteria affect the exports of third countries like Sri Lanka and members of the European Union".

While these arguments do have some weight, what they try to overlook is the fact that despite similar constraints, other countries have been able to do better. For instance, in the first five months of 2004, China’s exports of textiles rose 24.74 per cent and those of garments by 20.61 per cent in value terms, over the same period of the earlier year. It has accepted the challenges of free competition and prepared its industry to face it. Compared with the steps taken up by it to strengthen its textiles and garment sectors, we have done very little to match its drive. It was earlier argued that the reservation of the garment industry for the small scale sector was coming in the way of its expansion and export growth. That reservation has already been withdrawn some time back, but without any spurt in the garment export so far.

Our efforts to prepare our textile industry to face the possible stiffer competition in the coming days are unduly tardy. Many textile units located in the high-cost metropolitan areas have expressed their desire from time to time to shift to low-cost areas in the interior. But the state authorities have been nearly indifferent to such proposals, perhaps fearing that this might create unemployment in urban areas, while ignoring the fact that this may create employment opportunities in rural areas. As a result many such mills are now lying closed.

When it comes to the question of modernisation of our textile and garment industries, the government remains wedded to the old concept that we can upgrade our industry by installing machinery discarded by other countries to upgrade their industry by installing state-of-the-art equipment. Of course, the recent reduction in the customs duty on imports of textile machinery is a step in the right direction. Such a measure should have taken long ago. Moreover, if the door for imports of old machinery is also kept open, many entrepreneurs might still be dissuaded from going in for the latest new equipment. Thus the results of this fresh initiative may be slow.

Meanwhile, the government has cleared 11 projects under the apparel park scheme. Of them, two will be in Uttar Pradesh; two in Tamil Nadu and one each in Kerla, Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh and Rajasthan. It is difficult to say as to how soon they will be functional.

– M D Dewani