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The textile & clothing industry today is one of the largest contributors to global trade, accounting for over $ 900 billion of trade in 2022. The data from the WTO website - https://data.wto.org/ is analysed.
China was already the largest exporter of textiles and apparel when the MFA was dismantled. In 2001 it aceeded to WTO.
In 2001, Its share of T&C exports in the world was 16% valued over 50 Billion Dollars. This share peaked to 38% valued at nearly 300 Billion Dollars in the year 2014. A whopping jump of nearly 250 Billion Dollars in 13 years at a CAGR growth of 14% during this period.
China’s deteriorating competitiveness because of rising wage costs, accelerated the shift of labour-intensive Clothing exports to low cost countries like Bangladesh and Vietnam. Within a span of 5 years, between 2014 and 2019, China’s share had dropped from 38% to 34% in the global T&C trade.
Some intellectuals, in the articles published in 2015 had predicted the China’s share to fall to as low as 20% by 2025, creating a prized sizeble space of over 200 billion Dollars for the other competing countries.
However, nothing of this scale & magnitude has happened. In 2022, China’s share stands at 36%. It has infact regained 2% of the market share during the past 3 years. China seems to be clawing back its lost Share in the Global Markets by focusing on non-apparel Textile exports.
Following two graphs show the breakup between Textile and Clothing Exports of China.
From the above graphs the important point to note is that, from its peak export performance in 2014, though on one hand China has lost its share of 7% in the clothing sector, however, it has shown a remarkable gain in share of 8% in the Textile sector.
China today plays a lead role as a supplier for yarns and fabrics especially for the neighbouring countries like Bangladesh, Vietnam and Cambodia, where the majority of its clothing business has shifted.
Where Does India Stand?
India's Textile & Clothing exports have stagnated. Its share stands around 4% of the world trade, which is insignificant, given the inherent strengths of the country.
Following three graphs show India's share of T&C trade in the world during the past one decade since 2012. Bars showing the world trade have been removed due to enormous difference in the scale between the values of India and the world.
Only India's trade values have been plotted along with its % share in the world.
During the past decade, India has struggled to maintain its Textile export values. The textile exports are stuck at the level of 19 billion dollars and clothing exports at 18 billion dollars. This makes a total of 37 billion dollars for entire T&C sector exports . Practically there is no increase in the overall numbers. The % share in the world trade fluctuates around 4%.
Whereas China, dispite its all cost challanges has managed to increase its overall T&C export values from 255 billion to 330 billion over the same period, thereby averaging around 35% share in the world trade.
China has successfully moved its positioning to be a ‘high-quality, large scale’ made ups and textile manufacturing destination. Large fabric technology hubs in China, are investing heavily in synthetic technology especially in processing, sweat absorption, lightweight fabrics etc.
Unfortunately, dispite extensive efforts and policy initiatives by the Government of India, the Indian Textile & Clothing Industry has failed to live up to the expectations. This is mainly due to its fragmanted & small factory size. No industrialist wants to set up a big size unit.
The PLI scheme for the Textile sector launched in the year 2021, has not yeilded the desired results. The objective was to promote production of Manmade Textile & Apparel products in the country to enable textile industry to achieve size and scale; to become globally competitive and a creator of employment opportunities for people. The government approved 64 out of 67 applications for investment. However, no plant has been set up even after two years. Many applications were withdrawn by the eligible companies.
It is in news now, that the government is planning to launch a new PLI 2.0 scheme. This will cater to the small size of the investment. Government has acceded to the demands from the textile industry, mainly the apparel sector. With this changed approach the very objective of setting up large scale units in order to become globally competitive, is being defeated.
After the Great Bombay Textile Strike of 1982, the species of Large Textile Mills have practically become extinct. Only a few large mills remain. It is high time, the government addresses the policy flaws which have crept into the system. These flaws discourage setting up of large size factories especially in labour intensive sectors like Textile & Clothing.
India cannot fight the international competition with MSME size operations.
It is needless to point out that India has lost the opportunity made available by China's vacating the space in Clothing Exports to our rivals Bangladesh & Vietnam. Bangladesh's clothing exports ($ 45 Bil.) have become 2.5 times and Vietnam's ($ 35 Bil.) 2 times the size of Indian clothing exports ($ 18 Bil.) in the year 2022.
Similar is the case in Textile (non-apparel) exports sector. The systematic way by which China is growing its volumes, capturing 44% of market share in the global trade in 2022, it looks unlikely if India could ever play a catch-up in this segment in the near future.
India has the expertise and capability to be a market leader in T&C exports. However, it remains to be seen how India achieves this in times to come. Sincere introspection is required both at the industry & government forums to find out the root causes and implement the solutions for the same.
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