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Textile sector: India needs to grab the opportunity amid tariff turmoil

With the election of Trump as the US President, a Pandora’s box of surprises has opened up. Things which were unheard and even inconceivable have happened. The world is in a state of shock – perhaps what President Trump wanted – tariffs and turmoil!

 However much may be the turmoil, for the optimist there is always a silver lining. For India, it is time to quickly wake up, put the house in order and make the most of the opportunity to reclaim the grounds which we have been losing over the last 15-20 years as one of the market leaders in textiles. Global textile industry contributed to US$ 592.8 billion in textile exports in 2024, with China leading the way with US$ 286 billion, followed by Bangladesh at US$ 46.2 billion, Vietnam US$ 43.7 billion, India US$ 41.4 billion and Germany US$ 40.4 billion. This is followed by Turkey, Italy, US, Spain and Pakistan. This list is of the top 10 textile manufacturing countries.

 Quick look back to 2010, China was still the leader, followed by India, then Vietnam and Bangladesh and Indonesia. In the last 20 years or so, we have lost a lot of ground and are continuing to slide back. Textiles are produced with three major raw materials. Cotton, which we all understand in India, man-made fiber, -a derivative of petroleum and viscose which is made of wood pulp, specifically derived from trees like beech, pine eucalyptus and bamboo.

There are also other fibers like silk, banana, etc., but they are insignificant as compared to these three. India is the second-largest producer of cotton in the world after China. Seventy-five per cent of the world’s cotton is grown between China, US, India and Pakistan. Huge amounts of cotton grown locally explains the presence of large scale cotton textile industry in the country.
In terms of the global textile manufacturing, man-made fiber (MMF) as a raw material dominates the scene with a 72 per cent share, while other natural fibers like cotton and others make up for the remaining 28 per cent of the market. India’s share of MMF textile is diametrically opposite to the world ratio ie., approximately 70 per cent cotton and 30 per cent MMF. In the global textile market, since our presence in the MMF textile market is very thin, we are being driven out of the market. Our over-dependence on cotton, for which the global market is shrinking and under-presence in the MMF market is the real nemesis of the textile industry of India.
India’s thin share in MMF textile market
Increasingly, the human preference has moved to MMF textiles because of its easy to wear and easy to maintain features. So, why is it that we have not been able to catch up with the world in the MMF segment, the segment which is the fastest growing segment in the textile market? The hard truth of the stunted growth of Indian textile manufacturing is that the availability of raw materials – PTA (Purified Terepthalic Acid) and MEG (Monoethylene Gylcol) needed for the industry at internationally competitive prices. Similar is the case of viscose.
There has been a stranglehold on the supply of raw materials for the domestic industry. A couple of manufacturers control the supply of PTA, MEG and viscose in the country. Anti-dumping duties were brought about and were in play for the last 25 years or so preventing the entry of reasonably priced materials from other countries. Because of the monopolistic nature of domestic suppliers, the raw materials were available to the industry at higher than the international prices. Once the raw material costs were higher, the textile industry found it uncompetitive to produce the products made out of these as they could not compete with Vietnam, Bangladesh, Pakistan etc. These countries availed the benefits of cheaper raw materials at international prices.
News Curtesy: Business Standard

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