Textile Inc weaves its chance of a lifetime

There's so much at stake. And so much to lose. Textiles Inc faces opportunity (a $400-billion export market) and competition (China, China, ...

There’s so much at stake. And so much to lose. Textiles Inc faces opportunity (a $400-billion export market) and competition (China, China, China), as it races against time to prepare (investments of Rs 3,814 crore till October 2004) for the end of the quota era.

For all the naysayers, there’s a general air of optimism. Most predictions point to China and India cornering nearly two-thirds of the textiles marketshare by 2010. China takes pole position, say WTO estimates, with 50 per cent of the global trade. India comes second with 15 per cent.

Buoyed by the fact that the country straddles the textiles value-chain — from fabric to fashion — the big boys say they are ready. But, as Arvind Singhal, Chairman of KSA Technopak, puts it, ‘‘What will happen to the 95 per cent of the unorganised sector?’’ Have we missed the bus here?

Story continues below this ad

There are other notes of caution. The industry is up against huge bottlenecks in infrastructure and stiff labour laws. Apart from the congestion in big ports like JNPT, airports and roads are far from equipped to handle huge consignments. Says Gautam Nair of Matrix Clothing, a Rs 90-crore exporter, ‘‘We lose a 7 to 10 days in shipment. And for importers, time is always precious.’’

Take Tirupur, a major hub for knitted garments and hosiery. Warns A Sakthivel, Tirupur Exporters Association president, “Though Tirupur has geared itself to meet the post-quota regime, poor structure continues to dog us.”

Social audits may be another dampner. While some think these audits could turn out to be barriers to trade, others say Textiles Inc has already learnt to live with it. Either way, a big issue in 2005 will be getting all exporters to agree on an uniform code on social standards.

That said, there’s more than just a bit of optimism. Predicts Rahul Mehta, MD of Creative group, “The apparel industry will grow thanks to new entrants like Raymonds and Arvind. There will also be consolidation in textile mills, throwing away the artificial fragmentation that has been a big hurdle.’’ He adds that basic production should move to China, whereas value-added and higher-end production will come India’s way.

	THE ROAD AHEAD

			• A $400-billion textile export market up for grabs; can be bigger that IT exports boom • Larger players busy investing in capacities, but unorganised sector under threat • Expected: a White Paper on the industry, a benign tax regime in Budget 2005 THE SPEED-BREAKERS • Price pressure from China, infrastructural bottlenecks in the form of congestion in ports and bad roads and airports, stiff labour laws and an under- prepared retail market • Social audits and social clauses may be used by developed nations as non-tariff barriers Story continues below this ad

The government is also gearing up for the big bang. A White Paper on the sector is in the works. The finance minister has assured Parliament that, in the coming Budget, the textile sector will get a ‘benign’ tax regime.

To be sure, the sector is not lacking in investment. Capital investments of big players — like Abhishek Industries, Alok Industries, Rajasthan Spinning and Weaving Mills — have risen by 98.07 per cent, 1,284.77 per cent and 606.46 per cent. As Mukund Choudhary, MD, CLC Enterprises, a player in spinning and processing fabric, says, “In 2005, exports will rise, domestic market will leverage, and there will be higher investments and capacities. More finished goods, more consumption. Industry also expects some sort of venture capital in place in 2005 to fuel this investment.”

Much of what happens in the months ahead will depend on how quickly industry will cope with the brave new world. Infrastructural bottlenecks and ability to withstand pricing pressure from China will be key. Says D.K. Nair of the Cotton Mills’ Federation: ‘‘Textile exporters are eagerly waiting for Jan. to ship consignments under the new world order.’’

The rest of the world is waiting and watching.