Despite its size, India''s textile industry has struggled on the global market. India’s share in global textile exports has declined while countries like Bangladesh and Vietnam are expanding their market share. A new study suggests India’s textile exports are constrained by high costs, unhelpful customs policies and competition from abroad.
In an article published on Ideas for India, a policy research portal, Saon Ray of the Indian Council for Research on International Economic Relations (ICRIER) explores the reasons for Indian garment exporters'' struggles by drawing on data from surveys conducted in 2010. The survey covered 127 firms and 25 respondents in five apparel production centers in Bangalore, Delhi, Kolkata, Ludhiana, and Tirupur.
She finds that, partly because of India’s large domestic garment market, garment production in India is organized according to the production logistics of a handful of large firms. This results in low integration of Indian garment exporters into the global value chain
According to the survey, the biggest constraints for Indian firms are production costs, time involved in exports and competition from other countries. Specifically, factors such as high electricity and raw material costs make it difficult for manufacturers to meet strict quality requirements for exports and deliver exports on schedule. In terms of competition, India’s garment export competition comes from countries like China, Vietnam and Cambodia which produce similar garments, rather than neighbouring countries such as Bangladesh and Sri Lanka which produce different types of garments.
The author suggests that to make Indian textiles more competitive the government should improve infrastructure networks to streamline the textile input-procurement process, ease credit constraints for textile exporters and streamline customs policies for textile exports.
Source: Live Mint, India Wednesday, 04 September 2019