My Space

Scope for co-operation between India and China in textile business

M D Dewani

After the recent abolition of quota-restrictions on international business in cotton textiles and apparels, possibilities of severe competition among various manufacturers cannot be ruled out. But there are also areas where China and India, leading global manufacturers of these products, can cooperate for mutual benefit. Former Texprocil chairman Mr M M Sheth who was recently invited by the China National Textile and Apparel Council (CNTAC) to address the Second Textile Economic Forum in Beijing, was emphatic that such a cooperation in certain areas between China and India, can benefit both the sides.

According to Mr Sheth, China initiated effective and decisive steps almost a decade ago by investing massive sums in modernisation and upgradation of its industry. As a result, China has become a leader in international trade in textiles and clothing. India, though a late starter, is now accelerating modernisation of its industry and the Union government's Vision Statement on textile industry envisages exports worth US $ 50 billion by 2010.

However, according to Mr Sheth there are certain areas where through mutual cooperation both the sides can achieve betterment of common interests in international sourcing of textiles and garments and thereby promote healthy development.

China, he says, has been a net importer of cotton. While India has emerged as a surplus producer of this natural fibre. Moreover, the quality of Indian cotton has also improved and may improve further in view of increasing attention being paid to this. China can benefit immensely by importing large quantities of cotton from India.

Because of its highly vibrant and modernised spinning industry, India has emerged as the largest supplier of cotton yarn to the world. some Indian spinning mills have become dedicated suppliers of high quality cotton yarn of fine counts suitable for production of high quality shirting and dress materials. China can explore the possibility of procuring such high quality cotton yarn from India.

India has also developed expertise in the manufacture of made-up articles like bed sheets, bed linen terry towels, etc. Perhaps a meaningful dialogue between the two sides can help both of them to optimise mutual advantages in this regard in international markets. Mr Sheth was of the view that a joint technical committee, consisting of representatives from both the sides can help in sketching a road map for further action in this direction.

It is well recognised by all concerned that with the changing life style of consumers, designing of textiles and garment products will be a crucial factor apart from production costs. India has some world-renowned designers. China can consider utilising their services for maximising the advantage from this in the international markets.

While quota restrictions have been abolished, it is feared that some of the importing countries may impose anti-dumping and safeguard restrictions. Both China and India are experiencing problems with regard to rules of origin which are unilaterally imposed by some countries. Both can join hands to ensure that such measures are implemented in an equitable and just manner.

Moreover, the tariff rates in some of those countries are unduly high. China and India can work together to bring down these tariff rates to reasonable levels.

Another area on which the two sides can cooperate pertains to abolition of export subsidies. WTO's recent decision with regard to abolition of subsidies from cotton is a case in point. Both the sides can join hands to create an atmosphere for the removal of all barriers impeding the growth of international trade in textiles and clothing.

After the World War II, a large number of Indian trading houses were marketing textiles of different countries like China, Japan, etc to countries in Africa and elsewhere. India and China can evolve a suitable marketing strategy for developing exports to various countries.

Already CNTAC and Texprocil have signed an MoU for mutual cooperation and Texprocil has been trying to activate this MoU. In this context, Mr Sheth feels that timely dissemination of market intelligence by both the countries would go a long way in building up relationship to mutual advantage.

The theory of international division of labour assumes that every country has got some core areas of strength. The free-trade system should enable each country an opportunity to build on its unique strength. China and India should exploit advantages flowing from areas of cooperation. Strategic partnership between the two will ensure that efforts of each other are complemented rather than supplanted, he says, and adds that China and India can also cooperate with each other to ensure that prices of textiles and clothing are not unduly depressed.