China and India were tipped to emerge as big winners when global textile quotas were abolished January 1 but even domestic manufacturers are stunned by the speed with which their goods have flooded global markets.
"We have been caught by surprise by our own success in recent months," said B.K Patodia, chairman of India's Cotton Textiles Export Promotion Council.
"China and India are emerging as the two biggest textile players and we are working hard at developing a good understanding with China so that we do not undercut each other," he added.
PHOTO: AFP
"Business is booming and there is enough room for both of us to flourish in the new competitive environment."
India's textile exports to Europe in the five-month period between January and May this year rose 11 percent to US$2.69 billion from a year earlier, according to EU import data.
Similarly during the same period, India exported textiles worth US$987.81 million to the US, up from US$788.48 million last year, US import data shows.
Indian textile exports to these two markets grew the fastest next only to China, while countries like Bangladesh and Sri Lanka are concerned early export trends may signal a loss in business to Asian rivals
The end to quotas and a loosening of regulations is expected to quadruple India's slice of the US$400 billion-a-year textile market to 15 percent from four percent, according to World Trade Organization calculations.
That, however, is still far behind China whose market share is seen potentially more than tripling to at least 50 percent from 17 percent in 2003, according to the same WTO forecast.
D. Rajagopalan, a senior official of India's trade department, noted China and India enjoyed several advantages in the new quota-free world.
"Both countries are big cotton producers and have a strong textile and apparel base. They not only have the raw materials but established textile industries and cheap, abundant labour," said Rajagopalan.
Last week's revaluation of the Chinese yuan which will make the country's products more expensive could help Indian exports. But analysts say the 2.1 percent upward revaluation is too small to give a major boost.
At risk with the end of the quotas are countries such as Mauritius and Madagascar, which have been importing European, Chinese and Indian fabrics and turning them into garments in low-wage workshops, then selling them to rich countries.
These nations have enjoyed preferential access to wealthy countries because of the quotas. But with the quotas gone, they could see their competitive advantage wiped out by competition from China and India.
Indian textile exports are expected to touch US$15 billion in the fiscal 2005-2006 from US$13.6 billion the previous year.
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