Export Prospect of Indian Textile Industry

India is one of the biggest exporter of Textiles and Apparel in the world and hold six position in export. In total export volume of India, the share of textile, apparel and handicraft has a very significant figure. India is majorly exporting to the United States of America, European Union and United Kingdom and also to other countries which is more than hundred in numbers.

 

Product Categories	Export In US $ (FY22)	This industry contributes in Indian economy a lot and is one of the largest employment sector.
Cotton Textile	$ 17.2 billion
Ready Made Garments	$ 16 billion
Handicrafts	$2.1 billion

 

India is facing a big competition from Bangladesh and Vietnam due to their low cost of production which includes power cost which is very cheaper in these countries. Also there is lack of free or preferential trade agreement with major importers and due to which India is facing stiff price competition from Bangladesh. Apart from this there is dependence on import of machinery required for production.

 

The Government of India is trying to boost this sector and projecting its export target to USD 96 billion. This will require greater efforts as compared to Bangladesh or Vietnam as they are creating hurdles for Indian exporter with their cost advantages. We need to focus on Apparels, Fabrics, Man-made fibre & yarn, home and technical textile.

Further, government has launched multiple schemes like RoDTEP, PLI, MITRA to boost export from India and also trying to get foreign investment in this sector which shows willingness of government to achieve target. It will be critical for government to follow up these launches with efficient implementation and for industry players to leverage these schemes effectively.

To achieve growth target there is need of around USD 25 billion fresh investment in this sector which will ensure attractive rate of return on investments. Scheme launched by the government is quite encouraging but as this sector depends on import of machinery, there should be lowest import duties which can make this industry competitive.

It can be summarized as :-

• Proper implementation of government schemes

• Fresh investment in this sector

• Relaxation in power cost

• Relaxation in import duties on Machinery

• Proper digitization to improve design capabilities

• Transparent value chain

• Free trade agreements with major countries.

How India is facing Supply Chain Bottlenecks

 

Post covid period is witnessing a huge problem in supply chain logistics around the world. During covid most of the cities throughout the world went under complete or partial lockdowns. Once the lockdowns were opened there was a surge in demand throughout the globe which was putting pressure on supply logistics chains. All the countries were not prepared to face such situation due to high demand almost all mode of transports were adversely impacted.

Cargo movement by container are taking a very long voyage duration due to congestion and long waiting period on all the major sea ports. Transit time from Indian and Chinese ports to European ports almost doubled. All shipping lines has increased ocean freights drastically as there is severe crunch of inventories.

 

Cargo movement by container are taking a very long voyage duration due to congestion and long waiting period on all the major sea ports. Transit time from Indian and Chinese ports to European ports almost doubled. All shipping lines has increased ocean freights drastically as there is severe crunch of inventories.

Indian exporters are facing major problems due to high prices of containers, issues with availability of containers and longer transit time which has raised problem with perishable goods. Small exporters are almost out of market due to this problem as they are getting it very difficult to sustain in international trade. All major ports including US, Europe, Brazil, China, India are facing same problems which is likely to be inline in coming months.

 

Whereas Break bulk vessel are another option which has several bottlenecks like domestic transportation of cargo to the seaports. Local transporting prices through trucks are also shooting up due several factors including fuel prices largely. However, cargo movement from break bulk vessel increased but it has almost made the small exporters out of trade. Break bulk vessel is also facing a long transit delays at various ports all over the world. Due to increase in crude oil prices, the ocean freights offered by these break bulk operators are pretty high.

 

After Covid, there is surge in demand of energy in India which will be keep increasing as the manufacturing units which were closed during covid period are coming back on production track. India’s energy is dependent 80% on coal which is again putting pressure on supply logistics chain. Every coal based power plant should have a certain quantity of coal deposits for functioning and running the power plant smoothly. Whereas it is being reported that they have left with a few days coal deposits with them. The government is taking it in priority for movement of coal from different mines to power plants throughout India. All the rain rakes are being engaged in coal movement on urgent basis which is also making a problem for different commodities rake movements.

Due to pile up of cargos at Port warehouses and slow movement is also a matter of concern as it is delaying all possible movement of cargo.

Besides, Industries and trading units which are relying on imported goods or raw material is another matter of concern. Our import is quite bigger than export and there are several small manufacturing units which are dependent of imported raw material and various traders are engaged in trading of several commodities including agri products. As there is sharp increase in ocean freights and delay in supply of goods is putting manufacturing and trading industry in worst condition which is ultimately impacting supply and demand ratio in domestic market and further escalating to rise in prices of goods. It can be well seen in the inflation index showing inflation at alarming level.

Recent hike of interest rates by Reserve Bank of India as a measure to control inflation and showing their concern to bring it within ideal level also depicts the stress which is being faced by the Government on these issues.

As these issues are related to Global problems viz Covid impact after that Russia-Ukraine war, there are apprehensions that the Global economy is getting slowly in recession trend and the Global recovery of economy will take time.

In Indian perspective, a section of economists are suggesting that we should put more emphasis on demand side to bring the growth rate on track which is possible by Government taking initiatives to put more money in the hands of people to create demand whereas the supply chain logistics is going to be a big challenge to overcome this prevailing situation. On a bigger screen, it seems that speedy recovery is possible only when these supply chain issues are addressed by every government with honest efforts.