Textile time-bomb

If the stakes are high, the competition is ruthless. China is on a roll, exporting 49 billion of garments and growing at a stupendous rate. India, with exports of 5.48 billion, will face stiff competition from other Asian countries like Japan, Korea, Taiwan, Indonesia, Sri Lanka and Bangladesh. If India has one thing going for it, it8217;s a presence in a small club 8212; with China, Pakistan and Brazil 8212; which deals with the entire value chain, from yarn to garments. But the problems are many.

Show Me The Money

Investments, either in capacity expansion or in R038;D, are not visible. As Pradeep Bhandari, Deputy Group President of Raymond Group, puts it, 8220;Huge investments will be required in the post-quota regime and players need to go in for integration. But there is hardly any big investments, especially in the synthetics sector.8217;8217;

At present 70 per cent of the Indian textile export is cotton-based while 25 per cent is man-made fibre synthetics and the rest consists of woollen. Says Rahul Mehta, managing director of Creative Outerwear Ltd, a Rs 300-crore garment exporter: 8220;To take advantage of the post quota regime, we need to double capacity. But no investments to expand capacity has taken place,8217;8217; Mehta added. No wonder a part of the domestic industry is also resting its hopes on the possibility of US and EU deciding to selectively extend quotas on China till 2008.

As most experts put it, medium players will try and switch over to niche areas and products. While a shakeout in the industry is imminent, big firms are looking out for opportunities to gobble up smaller players who have some worth.

The Same Old Cloth

Quality will be a prime concern for importers in the post-quota regime. The quality of processing fabric in India continues to be poor. As Gautam Nair of Matrix Clothing, a Rs 90-crore garment exporter, puts it, 8220;Sixty-five per cent of the fabric for the garment needs to be imported and as far as quality of fabric is concerned China is miles ahead. So why would an importer from US or EU look to India when he can get the entire chain done and shipped much more easily from China?8217;8217; This problem is all the more acute for synthetics. Says Mehta, 8220;There is no standardisation of polyester and other man-made synthetic fabrics in India8217;8217;.

A key issue will be infrastructure bottlenecks. In a competitive environment, getting products to buyers on time is crucial. And India8217;s roads, ports, and airports are not up to scratch. Exporters lose a good seven to 10 days in shipment. According to A Sakthivel, president of Tirupur Exporters Association and chairman of Apparel Export Promotion Council, 8220;Though Tirupur has geared itself up to meet the post-quota regime by upgrading its machines and technology, poor infrastructure continues to dog us8217;8217;.

Absence of flexible labour laws is felt by one and all, be it the big players like Raymonds, Welspun or small and medium players like Matrix and Creative. As D K Nair, secretary general of The Indian Cotton Mills8217; Federation said, 8220;we will pay a huge price if we do not amend our labour laws8217;8217; In fact, according to Ravi Gupta of Mridul Exports, a Rs 70-crore export house based in UP, 8220;We do not see anything happening on this front even in the near future8217;8217;. And time is running out.