Textile exports in WTO regime still lacklustre

Mumbai, Jan 1 | Updated: Jan 2 2006, 05:49am hrs
The much-hyped Indian textile exports failed to take off in the post quota regime, despite several attempts made by the ministry of textiles (MoT) government of India to boost exports. Figures posted on the MoT website not only reveals that India failed to achieve even 50% of the target set by the ministry, but also states that Indian textile exports actually went down in several categories. The Directorate General of Commercial Intelligence and Statistics (DGCIS) suggests that India's overall textile exports actually dipped by 24% this year against last year.

Admitting Indian textile exports were not up to the mark as expected by the textile ministry, officials told FE, "Our exports has actually gone up by over 24% to US and EU countries. However, DGCIS maintains data based on the value of exports. It shows a loss since there has been a decline in global prices of textile products post WTO."

Union textile minister Shankarsinh Vaghela has set an ambitious target to push textile exports to $50 billion by 2010 from the $13 billion, targeting a cumulative annual growth rate (CAGR) of over 20%. He could not be reached despite several attempts made by FE.

Analysts believe that textile sector did not fare well despite opening of the quotas as the manufacturers failed to augment their capacities in time, which China did five years ago. Most of the Indian firms are now in process of augmenting their capacities and were not in a position to service orders and had to turn away international buyers.

A recent study by Assocham on the Indian textile sector suggests that the phasing out of the quota regime has led to a 700% hike in China's market share in global textile exports. On the other hand, India lost 46% share in the global textile trade.

Says Premal Udani, president, Clothing Manufacturers Association of India, "Infrastructure and power sector reforms should be undertaken at a high speed to facilitate the smooth functioning of the industry. India has high energy and capital costs, multiple taxation, and low productivity, all of which add to production costs and make the sector uncompetitive internationally."