It seems that the rise of China in the 21st century is not like a mountainous peak but a stable plateau, which the Dragon seems to have achieved already. In pre-Covid times, forecasts of the growth of Chinese economy were way beyond the American economy. However, as the post-Covid world is progressing, forget the question of Chinese competing with Americans, as China will be left far behind in the textiles market.
Due to successive lockdowns with the constant outbreak of various variants of the virus, China has not been able to open its economy. In this scenario, like other industries, its textile industry is shrinking in global markets. Considering the situation, Indian textile industry has a huge opportunity to capture the void left by Chinese textiles in the world markets.
The collapse of China’s textile sector
Reports suggest that Chinese Textiles markets are suffering from profit erosion and low demands. Since 2020, the input cost has increased manifold and due to the pandemic, the textile companies are not able to raise the prices of products. Further, the less cash in hand situation has brought down the orders by 40% in comparison to last year.
According to a report by the China Chamber of Commerce for Import and Export of Textiles, in the first half of 2020, the industry had textiles and apparel orders of about $6 billion. Out of which, cotton textiles were valued at about $1 billion.
Contrary to this, now about 90% of Chinese enterprises are complaining that the current order value is shrinking and almost 59% of the companies’ orders have been extended for about 13 months.
The slowdown trend has been attributed to industrial transformation and upgrading, changes in the layout of the industry specific supply chains, and the impact of tariffs imposed by America on Chinese market. Already in the transitional phase of business, the Chinese textile industry almost died in Covid lockdown. The report stated, before the Covid pandemic, China had been overflowing with orders, but now the orders would be completed by November.
The US Department of Commerce data states that China’s share in American cotton textiles and apparel imports was about 23.5% in 2019, which decreased to 17.1% in 2021. From the top exporter in 2019, China slipped to the second position in 2021.
A Great Opportunity for the Indian Textile Sector
Since 2013, China has been the top supplier of textiles and apparel to the US. Now, with a 15.3% share in America’s market, China has been left behind by India, Vietnam and Bangladesh.
The downfall of the Chinese textile products in the world provides a great opportunity for India. India is the world’s largest producer of cotton. The textile industry provides approx. 4.5 crore jobs to Indians and is expected to grow at a 10% CAGR. In the financial year 2022, India exported about $44.4 billion worth of textiles and apparel, which is expected to rise to $65 billion by 2026.
Also Read: PLI Scheme for Apparels is going to eliminate the Bangladeshi clothes from the market
India should now stimulate its textile policy along with the Indigenous textile industry. The National Technical Textiles Mission, Textile Cluster Development Scheme, Mega Integrated Textile Region and Apparel Parks should enhance their production capacity according to global demand to attract foreign orders. To enhance India’s manufacturing and export capabilities, the Production Linked Incentive Scheme 2.0 must be brought in as early as possible.
As China is still struggling to open its economy due to the uncontrolled outbreak of the virus, India has the golden opportunity to increase its export base. The inclusion of huge MSMEs and utilization of incentives under the PLI scheme will reduce the input cost of products and will make them competitive in the market. The time has come to replace China as the powerhouse of the manufacturing base.
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