Smaller countries like Vietnam, Bangladesh and Pakistan are outdoing India in textile and clothing exports to the US and EU in the post-quota (2005-2007) period, confirmed a FICCI study.
Vietnam’s share in EU25’s imports of textile and clothing has increased from 0.8% in 1995 to 1.6% in 2007. India has only been able to keep its rank intact in EU market at number three, while Bangladesh has impoved from sixth position in 2002 to fourth 2007. Similarly, in the US, Vietnam seems to be fast catching up with India’s exports.
It may be noted that the appreciation of rupee till a few weeks ago had been hitting India’s textile exports. Of late, there are signs of a turnaround. Back home, textile companies are investing heavily thanks to the technology upgradation fund scheme.
Some firms are also trying to expand their manufacturing bases to other countries through either acquisitions of greenfield plants or by taking over firms in low cost economies.
According to the Ficci study, India’s prices of textiles and clothing which witnessed a declining trend in the quota period, hardended in the post-quota period in the EU market. As a result, India’s share in the EU textile imports from the world declined from 7.9% to 7.5% between 1995 and 2007.
In the US market, even though India’s average price for textile exports declined in the post-quota period they were still higher than China’s and Pakistan’s prices, according to the study. But here also, India’s share did not increase significantly.
India’s share in the US global imports of textiles and clothing increased by merely 1.6% between 1995 and 2007, whereas that of Vietnam increased from 0.04% to 4.7% and that of China went up from 11% to 33.5% in the same period. Even Bangladesh seems to be catching up fast in both EU and the US market via a vis Indian prices.
India was the third largest exporter of textiles and clothing in the US market. However, in value terms, the country’s exports were just 1/6th of China which was the largest supplier in US market.
Also, FICCI study noted that in terms of volume, Pakistan was the second largest exporter of textiles abd clothing to the US in 2007 and India was the fourth largest supplier. Vietnam, which exported only $17 million worth of clothing to the US in 1995, exported $4.35 billion of clothing in 2007 as compared to $3.2 billion exported by India to US.
In EU, India was the third biggest supplier in the EU25 market and its share was 7.5% in 2007. India’s average growth rate higher in post-quota period than the pre-quota period, i.e. 15.4% in 2005-07 and 4.4% in 1996-2004.
However, FICCI observed that there has been a declining trend in growth of our exports to the EU since 2005. India’s growth rate of exports to the EU was 18.6% in 2005 which declined to 14.9% in 2006 and 12.6% in 2007.
India’s share has remained almost constant in EU25 for the last 13 years and its average growth rate (1996-2007) has been lower than EU imports from the world, for the same period.
Whereas, average growth rates of China, Bangladesh and Vietnam were not onlygreater than India, but also greater than the EU25’s average growth rate of global imports for the period 1996-2007.
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