Indian textile exporters may be beaming about the rupee?s slide in the past few days, but business has been looking up for them even before the turn in the rupee?s value. More importantly, India?s textiles exports, both in terms of volumes and value, seem to have been growing at the cost of China .

As per the latest official trade data from the US , the value of Chinese textile shipments to the US from the beginning of 2008 till March has declined by 5.39%, while India?s exports to the US have registered a 4.59% increase. In terms of volume too, India fared better with a 0.54% increase, while China suffered a decline of 1.68%.

The US accounts for a quarter of the world?s total textile and apparel imports. US? textile imports, a third of which come from China , were worth $96.4 billion during 2007. India?s exports to the US in 2007 were $5.1 billion. In 2008, US imports till March were $21.79 billion, with India?s ?s share at $1.47 billion.

With the rupee appreciating by nearly 12% against the dollar since last year (till the recent turnaround), the Indian textile industry had been crying itself hoarse over potential employment losses of around 6 lakh and revenue losses of $5 billion. Textile exports for 2007-08 stood at $20 billion, as against the export target of $25 billion.

But with increasing demand from the US and the slowdown of exports from China , the government now estimates that India?s textile shipments to the US would grow significantly. The growth in exports till March is expected to take off sharply now with the rupee?s sharp dip in recent days against the dollar.

Speaking to FE, Union textiles minister Shanker Singh Vahela said he expects the sliding rupee to help turn exporters? fortunes. ?Textile exporters have had a difficult time in 2007 when the rupee was rising. Though we offered them several sops to stay competitive in the global market, they were still hurting. Now we can expect them to do much better,? the minister said.

The rupee fell to a 13-month low on Wednesday afternoon at 42.55/56 against the dollar. China, on the other hand, has allowed the value of yuan to rise by around 18% against the greenback since 2005, which has severely hurt the margins of its exporters. In the first four months of 2008, the Chinese currency appreciated by 4.45% against the US dollar and this was double the rate of increase seen last year.

According to forecasts for the yuan, the currency is likely to appreciate by 8.5-10% for all of 2008. Apart from the appreciating yuan, Chinese exports have also been hit by wage increases, power shortages and interest rate hikes as well as efforts to clean up its image for the upcoming Olympic Games in August.

Consider?in its bid to acquire an image of an environment-friendly country ?pollution control norms have become stricter in China . Due to this, small coal-based power plants attached to textile mills have been stopped from functioning, which in turn, has increased costs and reduced production.

In another new measure, Chinese textile companies have also been asked to pay social security costs. Besides, in order to curb low value exports, China has also introduced export duty. All these reasons combined have started impacting business from China, helping India , its nearest competitor, to forge ahead.

?Until now, China enjoyed a competitive edge in the labour intensive textile and apparel industry due to availability of cheap labour. But with wages increasing by almost 25% and the possibility of a review of labour laws due to growing influence of trade unions, China seems to be a big loser. Also, the Yuan has been de-pegged and over the last two years, it has appreciated by nearly 10%,? said Rakesh Vaid, chairman, Apparel Export Promotion Council.

DK Nair, secretary general, Confederation of Indian Textile Industry (CITI) points, ?According to a recent survey conducted by China Cotton Textile Association across 17 provinces, nearly half of the textile companies surveyed want to quit and venture into other businesses and nearly 45% have started diverting export goods to the domestic market. Another recent survey by China National Textile and Apparel Council shows that the average profit margins of the industry is 3.9% and two-thirds of the companies surveyed have an average profit margin of only 0.62%.?

Indian textile and apparel sector is expected to grow to $110 billion by 2012, of which the domestic market is estimated to be worth $ 60 billion and exports valued at $ 50 billion. In 2006-07, the sector was worth $54 billion, with a $35 billion worth domestic market and $19 billion worth exports. The principal drivers of growth would be a 5.7% annual increase in global trade in textiles and clothing from $479 billion to around $700 billion by 2012.

Under Technological Upgradation Fund (TUF) scheme, the country saw an investment of Rs 48,000 crore in 2006-07, which was over three times the investment in the previous year. The measures would help double the production output and is expected to increase India?s share in global export market from the current 48% to 60% by 2012.

Manikam Ramaswami, CMD of Loyal Textile Mills and a textile exporter, said though there are several textile exporters who have suffered losses due to their exposure on exotic forex derivatives, they would be compensated by increasing demand for their exports and better realisation for their products.

Since Chinese exports are showing a declining trend, India has the opportunity to occupy their space by increasing production. The prospect of a better monsoon is expected to boost India?s cotton production by 13% in 2008-09?up to 35 million bales from 31 million bales in 2007-08. At the other end of the value chain, the government has already given its nod to set up 40 integrated textile parks and 20 more are expected to be cleared soon.

India?s other competitors in the US textile and apparel market include Vietnam, which recorded a 29.44% increase from January to March 2008. However, their total exports during the same period only $1.2 billion, which was lesser than that of India .

Also, though Bangladesh?s exports increased by 5.1%, exports from Pakistan and Sri Lanka fell by 3.43% and 10.16%, respectively.

?Most Indian textile and apparel exporters would start making handsome profits by June, and when the new crop comes in by December, the returns will be even better. India is also increasing its Bt cotton production. Our competitors like Vietnam and Cambodia depend on us for good quality yarn. Sri Lanka?s exports are shrinking due to high costs. All these factors point toward an increase in India?s exports,? Ramaswami added.