On one hand, India is showing its presence in cotton textile products, whereas on the other hand, China has high dominance in overall textiles, recounts Avinash Mayekar.
After the end of World War II, the world was dominated by one nation alone – the USA, which is the supreme power ruling the world in all the sectors of life. Even in textiles, when it comes to the brands, it witnesses major dominance from the USA. However, the scenario is changing today with Asian developing countries like China and India rising in different sectors. Predictions say that China will overtake the USA in the coming few years and India is expected to overtake China in the next 20 years. Textile is one of the major industries where this change is significant. Though brands of the US are still present globally, but the end product is being manufactured majorly in the Asian countries. The textile manufacturing hub has long back shifted to Asia. China today is the world No. 1 in textile industry having a global share of 40 per cent, whereas India is at distant No. 2 position having share of 5.8 per cent. These two dominating countries have different strengths and game plays in textile world.
Textile and apparel industry of China
China’s textile industry is a world beater, accounting for over 60 per cent of world chemical and synthetic fibre production and it is second in cotton production just after India as on 2016 accounting for 20 per cent of the total global production. It is also world’s largest textile garment producer and exporter, and its international market share exceeds one third of the world. In 2015, the production value of textile industry accounted for 7 per cent of its GDP. As textile is an important exporting product in China, it plays an important part in China’s foreign trade.
The Chinese textile industry has six major sub industries: cotton, chemical fibre textile and printing and dyeing finishing, wool textile and dyeing finishing, linen textile, silk textile and finishing, finished textile product manufacturing, and knitted and woven products. In 2016, China’s textile and apparel exports were valued at $253 billion and is increasing at a CAGR of 5 per cent in last 10 years, whereas imports were at $28 billion.
Indian textile industry
In India, the textile Industry is considered as the golden industry, contributing 14 per cent to industrial production, 4 per cent to India’s GDP and constitutes 15 per cent of the country’s export earnings. It is the largest cotton and jute producer and second largest fibre producing country in the world for textile industry, estimated to reach production of 10 MT in 2017-18.
It also has the second largest textile manufacturing capacity globally accounting for 18 per cent of world’s spindles and 9 per cent of world’s rotor and has 5.8 per cent share in global textiles and apparel trade. Indian textile and apparels exports were valued at $35.4 billion in 2016 and is increasing at a CAGR of 7 per cent in last 10 years, whereas imports were at $6.1 billion.
When we look at India and China, they are growing with their own pace and strengths. India on one hand is showing their presence in the cotton textile products, whereas China on the other hand has high dominance in overall textiles. India’s strength lies in spinning, whereas China focuses more on finished garments.
Both the countries are well known for their capabilities of producing a range of textile and apparel products for the global market. They have high reputation in the international markets for delivering the finished products having best-in-class quality and meeting the service expectations of the established fashion brands and retailers.
China has strong infrastructure for finishing and apparel manufacturing and has strong presence in retailing. They also have strong base for man-made filaments and staple yarns. India on the other end is highly capable to supply fine count yarn, super fine fabric, denims and home textiles. The home textiles market is dominated by India. India’s textile giants are also today shifting towards other technical textile products like packtech. The Government of India recently has also come up with various policies to boost the apparel industry and give a chance to compete with China.
China and India both are dominating the textile market as they are having intense manpower being at number one and two positions respectively in terms of population. Both the countries are also front-runners among emerging nations when comparing key economic indicators. China at current has surged ahead with a per capita GDP of $ 8,113 as against India’s $ 1,704. China has also managed to gain a competitive edge over India in other crucial parameters including building public, social, and judicial institutions; developing suitable infrastructure as roads, quality electricity supply, etc; investing in health and primary education; and ensuring higher labour market efficiency. India, on the other hand, has managed to outpace China in only a few indicators.
Both China and India have managed to establish themselves as strong contenders in T&A manufacturing. China is the largest T&A producer and exporter worldwide, with its exports valued at $253 billion in 2016 of which 58 per cent was contributed by apparel and 42 per cent by textiles. On the other hand, the Indian exports were $ 35 billion in 2016 of which 48 per cent came from apparel and 52 per cent from textiles. Within T&A manufacturing, there is a greater scope for value addition in downstream activities like fabric processing and garmenting. It is crucial to realise that, for China, 60 per cent of the exports come from apparel, while for India the corresponding number is only 40 per cent.
This provides an opportunity for Indian manufacturers to engage in downstream activities within the country rather than exporting raw material and intermediates to other manufacturing countries that in turn convert them into apparel which is then exported. In addition to the US and Europe, China has also developed a strong market in Japan.
Industry-specific resource comparison
Some of the key elements for comparison of industry-specific resources in China and India are the availability of raw material for the textile industry, the installed capacity of textile machinery, availability of quality manpower, infrastructure and scale of economy.
Labour scenario: The wage cost in India is lower than China. China has the highest labour wages amongst the competing nations, but it has developed sufficient training infrastructure to meet the industry requirements. On the other hand, there is limited availability of skilled labour in India.
India is focusing on development skilled workforce in the textile industry.
Power scenario: The cost of power in India and China is more or less same. There is erratic and limited power supply in some parts of India. China has the highest power cost but it has consistent and reliable supply.
For any industry to run successfully, the surrounding environment plays a crucial role, thus it has become a necessity to develop a supportive infrastructure. In India, the need of development and environmental concerns have just taken pace and the country’s Government is also coming up with policies like textile parks and cluster development, which will provide common infrastructure for a large number of units, thereby reducing the overall infrastructure cost. Further on-time delivery of products can be paced up with supportive transportation facilities. India has faced setback in the international market only due to its delay in delivery. In China, all the industrial cities are connected by six-lane express highways, Most of the units are in industrial zones that are set up with the state-of-the-art facilities. They have 5-6 tier flyovers and underground tunnels to avoid traffic problems. With good infrastructure in place, the industry has better scope to flourish. The transit time taken by the Chinese units to move their goods from factories to destination is just a fortnight, compared with a month’s time that Indian textile units take.
As per the global predictions, China is way ahead of India, but since 2015, if we observe the textile trend for China, it is declining. They are caught between rising cost and change of focus from textile to other more profitable products. This is giving ample opportunities for India to gain the ever-desired No. 1 position. The major advantage India has is its abundance availability of raw materials, developing skilled manpower, domestic market and technical know-how of technical textiles.
These products today have generated awareness and are soon to become one of the major consuming textile products.
The second thing which will surely help India to reach its vision of becoming global leader is if we study our competitors and create our own strategy rather than just copying the trend. We have a established spinning sector in India, but somehow we have restricted ourselves with just yarns and at the most converting it into grey fabric. We must start focusing on the value addition and advance to produce fine quality end products rather than just fabrics. This will ultimately help us deliver finished product giving competitive advantage as then we will be exporting directly to developed countries having their own brands. On the wider path, India must also focus on creating its own brands. If India encashes this opportunity created by downfall of Chinese textile and apparel industry then sky is the limit for India’s textile and apparel industry.
China may end up in having complete retail sector of textile industry under their control and as per need base, India can supply textile and apparel products to China. Both the countries have shown remarkable growth and would sustain their positions in their key domain areas. India may get advantage of leading in cotton-based products, whereas China may lead in other categories.