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India:Textile phase out beckons many textile exporters back home |
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2004-9-9
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Many Indian textile exporters are returning home as the quota regime in global textile and clothing trade will phase out in three months.
Textile exporters from India who had established base in Nepal, Bangladesh, the Middle East and African countries to complete their quota shortages in India are today, busy relocating in the country.
India apart from China is sought a a major textile hub by the USA, Eu and other countries with the expiry of the MultiFibre Trade agreement in January 2005.
Dominant industry player like Arvind Mills, has already announced closure of denim and garment manufacturing operations in Mauritius back to India, by this December.
Similarly, number of small and medium Indian export companies, operating from Nepal, Bangladesh and Sri Lanka, are closing shop and returning to India since the utility of opening these units for bagging quotas available to these countries would be over once the quotas are phased out.
Chennai-based Ambattur Clothing Ltd, another industry leader, having units in Middle East (Bahrain), has adopted a wait-and-watch policy subject to fructification of the pending Middle East Asia-US preferential duty agreement,while others have already started packing their bags.
Higher production cost at 20 to 25 percent compared to India has been the reason for relocation of manufacturing bases to India.
With textile quotas phasing, it would be more competitive in relocating to India according to industry source.
According to O.P. Lohia, Managing Director, Indo Rama Synthetics, "The main advantage for textile exporters in India, as also in the case of China, is that the entire raw material base is present domestically. In contrast, in Sri Lanka, Bangladesh and many of the other countries, manufacturers require to source raw material from other places since the countries are not self-sufficient in the raw material base."
Further, manufacturing cost advantage in India is a bait not just Indian exporters'' units operating from abroad but also foreign players planning to come up with low-cost manufacturing bases.
Indian Cotton Mills Federation (ICMF) official expects the trend towards players moving their overseas operations back to India as ''quite discerning'' and would intensify once the January 1, 2005, deadline comes closer said an unnamed ICMF official.
Meanwhile, Nepal has sought an extension of the quota regime for a few more years before the WTO, largely due to the exodus of textile manufacturing units from the country to India.
Sri Lanka, also is trying for a trade pact with the US to remain in the reckoning as a manufacturing hub once the quotas are phased out.
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