Comparative Analysis of Growth of the Indian & Chinese Textile Industries.
Introduction:
Growth refers to economic progress that benefits a nation. Similarly, growth in the textile industry leads to an increase in GDP, higher export volumes, greater revenue generation, expanded employment opportunities, and overall national development. The Indian textile industry has experienced significant growth over the past decade, despite facing challenges from the global economy and the export market. This industry encompasses more than just cotton or linen—it includes jute, silk, and several other natural fibers, all showing steady progress. India has also made significant strides in the polyester segment, demonstrating strong competition and high-quality production. The manmade fiber industry, especially polyester filament and staple yarn, has seen tremendous growth. However, the quality and scale of this growth still do not match China’s advancements.
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
Industry growth and investment rely heavily on the country’s economic health. During the fiscal year 2006–2007, India’s economy expanded rapidly, achieving a growth rate of 9.4% per annum. Over the past three years, the country has maintained a strong average annual growth rate of 8%. The middle-income segment has emerged as a major beneficiary of this economic progress. A significant portion of this population, still in its prime age, has shown a strong inclination toward fashion and lifestyle products.
This shift in consumer behavior has fueled demand for fashionable apparel, paving the way for several world-class Indian fashion designers to emerge with trendsetting collections.
Meanwhile, the propensity for consumption, after excluding essentials like housing, healthcare, and education, rose by 5%, reaching US$ 219 billion in 2005. During this period, the organized retail sector tapped into a market worth US$ 8.2 billion, with projections estimating an 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 comprises several segments, including cotton, silk, woolen, readymade garments, jute, and handicrafts. In September 2010, cloth production rose by 10.2% compared to September 2009. Between April and September 2010, total cloth production increased by 2.1% over the same period in 2009.
The power loom sector led the growth with a 13.2% increase, followed by the hosiery sector, which grew by 9.1%.
During April–July 2010 (provisional data), textile exports reached US$ 7.58 billion, up from US$ 7.21 billion during the same period in 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.
In 2008–09, India imported textiles worth US$ 3.33 billion.
Between April and July 2011, India earned US$ 10.32 billion in foreign exchange from textile exports, up from US$ 7.75 billion during the same period in 2010–11.
India has the potential to increase its global textile and apparel trade share from 4.5% to 8%, aiming to achieve US$ 80 billion in exports by 2020.
Over the past six decades, the textile sector maintained an annual growth rate of 3–4%. According to the 11th Five Year Plan, the government projected the sector to accelerate to 16% growth in value. This would push the industry’s size to US$ 115 billion by 2012, with US$ 55 billion from exports and US$ 60 billion from the domestic market.
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.
The government has launched several marketing initiatives to promote niche handloom and handicraft products, organizing over 600 events across the country.
Skill Development: The Integrated Skill Development Scheme (ISDS) was launched with a five-year implementation plan across various segments of the textile industry to enhance workforce capabilities.
Credit Linkages: Under the Credit Guarantee Program, the authorities have issued over 25,000 Artisan Credit Cards to artisans. Moreover, banks have received 16.5 million additional applications for consideration under the Credit Linkage scheme.
Financial Package for Loan Waiver: To ease the financial burden on handloom weavers, the Government of India introduced a financial relief package worth US$ 604.56 million. This package waives overdue loans and interest accrued up to March 31, 2010, for loans disbursed to the handloom sector. This initiative aims to benefit at least 300,000 handloom weavers and 15,000 cooperative societies.
Textile Parks: Furthermore, the Indian Government has approved the establishment of 21 new textile parks, scheduled for execution within 36 months. These parks are expected to enhance infrastructure and promote growth in the sector.
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, the Chinese textile industry still faces several significant challenges. Rising inflation in emerging markets, labor shortages, and escalating labor costs continue to pressure the sector. Additionally, the demand for environmental protection in a low-carbon economy has increased operational expenses. High unemployment rates in developing countries also affect global demand. The unrelenting rise in raw material costs continues to shrink corporate profit margins and, in some cases, raises consumer prices. Moreover, the appreciation of the yuan is further reducing the marginal profitability of China’s textile manufacturers.
Policies and Measures
To address these issues, the Chinese government and industry stakeholders have introduced the following measures:
Increase in Export Tax Rebate: Authorities may further raise the textile and garment export tax rebate rate to support exporters.
Support for Raw Material Procurement: The government plans to increase the purchase of cotton and raw silk to benefit cotton and cocoon farmers.
Encouragement of Technical Investment: The industry is being encouraged to invest in technological upgrades and reforms.
Boost in Domestic Consumption: Guidelines are being drafted to accelerate the development of domestic brands and expand internal demand.
Promotion of Mergers and Acquisitions: Policies are being implemented to encourage consolidation among industrial enterprises to improve efficiency.
Strengthened Financial Support: Domestic textile enterprises will receive enhanced financial assistance.
Reduction of Social Burdens: Measures may include delayed or reduced payments for social insurance premiums to ease pressure on enterprises.
SME Support: Small and medium-sized textile enterprises will receive increased support through the development of public service platforms.
Industry Optimization Guidance: The government plans to issue directives to optimize sectors such as dyeing and printing.
Active Role of Industrial Associations: Chambers of commerce and industry associations are encouraged to guide and discipline members in self-development.
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