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Introduction:

The Indian textile industry has been one of the country’s most significant sectors, contributing to GDP growth, employment, and exports. However, the industry faces significant challenges due to the increasing textile imports from China. This report aims to analyze the impact of these imports on the Indian textile industry with a data-driven approach, focusing on competition, market share, job losses, and competitiveness.

Competition:

One of the key challenges faced by the Indian textile industry is fierce competition from Chinese imports. Chinese textiles, particularly in the man-made fiber (MMF) fabrics segment, hold a significant market share in India, directly competing with Indian manufacturers in apparel and home textiles. Chinese textiles enjoy the benefits of economies of scale and lower production costs, which lead to intense price competition. As a result, Indian manufacturers are forced to reduce prices, impacting profitability and potentially leading to closures. Moreover, Chinese government subsidies and favorable trade policies further enhance their competitive advantage, raising concerns about fair trade practices.

According to Texprocil, China’s share of India’s textile imports is projected to reach 27% by 2023. The growth of MMF fabric imports from China between 2018 and 2023 is estimated to be 42%, according to the Directorate General of Commercial Intelligence and Statistics. Additionally, industry estimates suggest that there is an average price difference of 10-15% between Indian and Chinese textiles.

Market Share:

The Indian textile industry’s market share is gradually declining due to the rising influx of Chinese imports. This decline is particularly evident in the yarn, fabric, and garment segments. However, the handloom and handicraft segments are less affected due to their unique product offerings and cultural significance. Even within these segments, there is some competition from Chinese imports in certain categories.

According to the World Bank, the market share of Indian textiles in India was 70% in 2018. Unfortunately, this share is projected to decline to 65% by 2023, based on industry estimates. Chinese textile market share in India is estimated to grow by 5% between 2018 and 2023.

Job Losses:

The Indian textile industry has experienced significant job losses in recent years, with estimates ranging from 10% to 20%. While various factors contribute to these job losses, imports from China are seen as a significant cause. Job losses are concentrated in the spinning, weaving, and garment segments, which directly compete with Chinese imports. In contrast, the handloom and handicraft segments witness job creation due to their niche appeal.

Industry estimates indicate that there could be 1-2 million job losses in the Indian textile industry between 2018 and 2023, with 30-40% of these job losses attributed to Chinese imports.

Competitiveness:

The Indian textile industry faces challenges in terms of price competitiveness, quality perception, and technological gap when compared to Chinese manufacturers. Chinese imports make it difficult for Indian manufacturers to compete on price, reducing profitability and hindering expansion plans. Additionally, Chinese products are often perceived to have higher quality standards than Indian textiles, impacting consumer preferences. Moreover, Indian manufacturers are often lagging behind their Chinese counterparts in technology adoption and modernization, resulting in a productivity gap.:

The Textile Machinery Association predicts that India will invest $2 billion in textile machinery by 2023, while China will invest $10 billion. This significant difference indicates a technological gap between the two countries. Additionally, industry estimates suggest that there is a productivity gap of 20-30% between Indian and Chinese textile mills.

To overcome the challenges posed by textile imports from China, the Indian textile industry should consider the following recommendations:

1. Focus on niche segments: Indian manufacturers can capitalize on their strengths in handlooms, handicrafts, and technical textiles, where they have a competitive edge. By differentiating their products and targeting specific market segments, Indian manufacturers can reduce direct competition with Chinese imports.
2. Technological upgradation: Investing in modern machinery and automation can improve efficiency, product quality, and cost competitiveness. By bridging the technological gap, Indian manufacturers can enhance their competitive position and meet the demands of the global market.
3. Skill development: Upskilling the workforce in design, technology, and quality control is crucial for enhancing overall capabilities. By investing in training programs and skill development initiatives, the Indian textile industry can ensure a skilled and adaptable workforce.
4. Government support: The Indian government should provide targeted policies and support to the textile industry. This includes infrastructure development, access to finance, and skill development initiatives. By creating an enabling environment for the industry, the government can help Indian manufacturers compete effectively and overcome the challenges posed by imports.
5. Strategic trade agreements: Negotiating fair trade agreements that prioritize the protection of domestic interests and fair competition can help mitigate the negative impact of imports. Balancing trade relationships with China and other countries is crucial for safeguarding the interests of the Indian textile industry.
6. Brand building: Building strong brand identities and promoting the unique value proposition of Indian textiles can enhance consumer preference and market share. By highlighting the cultural significance, craftsmanship, and sustainability of Indian textiles, the industry can create a differentiated image in the global market.

Conclusion:

The impact of textile imports from China on the Indian textile industry is significant and poses various challenges. However, there are also opportunities for the Indian industry to adapt and thrive. By focusing on niche segments, investing in technology and skills, and seeking government support, Indian manufacturers can overcome these challenges. Additionally, strategic trade agreements and a focus on innovation are crucial for ensuring the long-term competitiveness of the Indian textile industry in the global market.

The Indian textile industry has a rich heritage and immense potential. With the right strategies and support, it can maintain its position as a global powerhouse in the textile sector. By leveraging its strengths and addressing the challenges, the Indian textile industry can navigate the impact of textile imports from China and emerge stronger and more competitive in the global market.

References:

(1) Competitiveness of Indian Textile Industry – ORDNUR. https://ordnur.com/textile/competitiveness-of-indian-textile-industry/.
(2) India’s Competitiveness in Textiles and Clothing, Then and Now. https://icrier.org/publications/indias-competitiveness-in-textiles-and-clothing-then-and-now/.
(3) Indian textile Industry: Brand strategy and export competitiveness …. https://www.fibre2fashion.com/industry-article/2288/indian-textile-industry-brand-strategy.
(4) TS005-Competitiveness of Indian Textile Industry – Textile Sphere. https://www.textilesphere.com/2020/01/competitiveness-of-indian-textile-industry.html.
(5) China’s Surplus Textile Influx Affects India’s $60 Billion Industry. https://www.thehindu.com/business/Industry/indias-60-billion-man-made-textile-sector-reels-from-chinese-imports-glut/article67668346.ece.
(6) India’s higher textile import from China adding to trade deficit. https://www.fibre2fashion.com/news/textile-news/india-s-higher-textile-import-from-china-adding-to-trade-deficit-282038-newsdetails.htm.
(7) Growing India-China textile trade – The Textile Magazine. https://www.indiantextilemagazine.in/growing-india-china-textile-trade/.
(8) India and China Textile Trade Relation Impact on Global Textile Industry. https://www.fibre2fashion.com/industry-article/7005/india-and-china-racing-in-the-world-of-textiles.