China Plus One sees India's textile sector stitching a revival

Despite container shortage and a shipping crisis capsizing the sector, India’s textile industry has managed to weave a revival story. It is in a sweet spot, largely because of the China Plus One policy of European and US apparel brands, and the ban on Chinese cotton by the US.

Based on the latest available data, the export of ready-made garments (RMG) of all textiles increased 67 per cent during the first five months of the current fiscal year, showing signs of recovery.

From April-August this fiscal year, revenue from RMG exports was seen at $6.02 billion, up from $3.6 billion during the same period in 2020-21. This is still 11 per cent lower than $6.8 billion during the April-August period of 2019-20. This comes on the back of reports of a 36-per cent year-on-year rise in clothing exports during the first half of this year and textile and apparel exports to the US - India’s single-largest market - too seeing a spike of 55 per cent during the first seven months of 2021, compared to the same time the previous fiscal year.

"There is a huge sentiment in favour of India in the past few months globally. We are seeing a major rise in exports to the US as they are trying to shift to India, despite a shipping and container crisis," said A Sakthivel, chairman of Apparel Export Promotion Council. Based on industry estimates, there is a huge shift of garment exports from China and Vietnam to India.

Early this month, Textile Minister Piyush Goyal had indicated that the Cabinet may soon clear a Rs 10,683-crore production-linked incentive scheme for technical textiles and man-made fibre products that will boost domestic manufacturing and exports.

Based on the scheme, around Rs 7,000 crore will be given as incentive to man-made fibres and Rs 4,000 crore to technical textiles. Goyal had set a target of raising textile and clothing exports to $100 billion, from $33 billion, and also asked industry players to raise domestic production to $250 billion.

Industry players also indicate that following the China Plus One strategy, there is at least a 20 per cent shift of exports from that country to India.

“We are seeing a diversion of around 20 per cent of the orders from China. A similar trend we are seeing from Sri Lanka, Vietnam, and Cambodia. Interestingly, in terms of cotton fabrics, China’s prices are more than India's, giving us a competitive edge abroad,” said Senthil Ramaswamy, a member of the Powerloom Development & Export Promotion Council.

Schemes like the Remission of Duties and Taxes on Exported Products (RoDTEP) and the Rebate of State and Central Taxes and Levies (RoSCTL) are also expected to boost exports during the current fiscal year. The government has lined up Rs 19,400 crore for both schemes during the current fiscal year.

Af owes India around Rs 300 cr, not Rs 4K cr

Following reports that textile traders in Surat are struggling due to pending payments from Afghanistan, the Apparel Export Promotion Council (AEPC) said around Rs 200-300 crore is stuck in that country for almost a year.

There were media reports that said that the pending payments were to the tune of Rs 4,000 crore. When asked, A Sakthivel, chairman, AEPC, clarified, “It is hardly Rs 200-300 crore. There is no reason to panic.”

When contacted, Champalal Bothra, general secretary, Federation of Surat Textile Traders Association, said Rs 4,000 crore has been pending since 2016.

According to Narain Agarwal of the Synthetic and Rayon Textiles Export Promotion Council, although unverifiable, the figure was unlikely to be high since most exports happened through letter of credit, in which case the banks of buyers would also be involved.