China-Plus-One to boost India’s textile exports to $ 65 billion by 2026 (study)

0


Supported by the ‘China Plus One’ sentiment on a global scale, India’s textile exports are forecast to increase 81% to $ 65 billion by 2026 from the level of around $ 36 billion before. Covid in 2019, according to a report by the Confederation of Indian Industry (CII) and global consulting firm Kearney. This jump should generate 7.5 to 10 million new jobs.

Much of that targeted increase, around $ 16 billion, could come from China Plus One sentiment due to India’s relatively large strategic depth compared to Vietnam or Bangladesh, according to the report. “We believe that with the good actions of industry majors and solid execution of government programs, India can reach $ 65 billion in exports (implying a compound annual growth rate of 9-10% ) by 2026. This, along with growing domestic consumption, could propel domestic production to $ 160 billion, ”said Siddharth Jain, partner at Kearney.

Other key areas where growth is expected include fabrics for which the target is a $ 4 billion leap by positioning India as a regional fabrics hub, starting with cotton fabrics and then moving to cotton fabrics. extending to other subcategories. In home textiles, too, the target is a $ 4 billion increase by building on existing advantages to expand global customer base. Regarding synthetic fibers and yarns, a jump of 2.5 to 3 billion dollars is expected with an emphasis on taking shares in MMF (synthetic fibers) products. On the other hand, in technical textiles, a jump of around $ 2 billion is targeted by building capacity in some key sub-segments based on potential growth in domestic demand.

“Covid-19 has triggered the redistribution of global trade shares and a recalibration of supply models (‘China plus one’ supply), offering a golden opportunity for Indian textiles to make a turnaround and regain a leadership position as the leading exporting economy. We believe that the Indian textile industry is expected to aim for a CAGR of 8-9% during the period 2019-2026, driven by growth in domestic demand and significant growth in annual exports (reaching $ 65 billion by 2026), ”said Neelesh Hundekari, Partner and APAC Head of Lifestyle Practices at Kearney. .

The textile industry employs nearly 45 million people in agriculture and manufacturing. However, the country’s recent performance in world trade has fallen short of its capabilities. Exports fell by 3% between 2015 and 2019 and by 18.7% in 2020. And yet, during the same period, other low-cost countries like Bangladesh and Vietnam gained shares.

Various factors have contributed to India’s recent trade performance. India has drawbacks related to factor costs (for example, electricity costs 30-40% more in India than in Bangladesh). The lack of free or preferential trade agreements with major importers, such as the European Union, United Kingdom and Canada for clothing as well as Bangladesh for fabrics, puts price pressure on exporters. The high cost of capital and heavy reliance on imports for almost all textile machinery make it difficult to get the right return on investment, especially given India’s slight disadvantage in terms of costs. Longer lead times than for Chinese manufacturers make India uncompetitive, especially in the fashion segment.

Dear reader,

Business Standard has always strived to provide up-to-date information and commentary on developments that matter to you and have broader political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these difficult times resulting from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative views and cutting-edge commentary on relevant current issues.
However, we have a demand.

As we fight the economic impact of the pandemic, we need your support even more so that we can continue to provide you with more quality content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscriptions to our online content can only help us achieve the goals of providing you with even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital editor


Share.

About Author

Leave A Reply