The year 2019 witnessed around Rs 20,000-crore market share loss for China in the apparel segment alone and post-COVID- 19, the declining trend has been accelerating.
This may create a 10-billion US dollar opportunity in the American markets in the segment alone for other countries, including India.
Due to COVID-19 implications, the overall US apparel imports dropped by 30 percent in the first seven months of 2020,while their import of Chinese apparel dropped by 49 percent.
Moreover, reports about recent US’s action on trade restrictions on Chinese apparel and other products from one of the major textile regions – Xinjiang leads to a notion that it would accelerate the trend further.
On September 14, the US imposed restrictions on the import of certain products originating from the Xinjiang Autonomous Region in China, citing concerns on illegal and inhumane forced labour in the region.
As per ICRA an agency this development will benefit domestic textile exporters.
“Several major apparel exporters from India have either already started receiving increased orders or are in active discussions with large international buyers, looking at increasing their sourcing from India. The shift, which was previously expected to take place gradually over the medium term, could be expedited in the light of this recent development.”
While there were speculations of a more broad-based ban on the products originating from the region, the restrictions have been limited to a few entities, for now, it said.
Besides banning imports of other product categories, including hair products and computer parts, it also includes restrictions on some entities from the region involved in manufacturing apparels and producing and processing cotton.
Xinjiang is a major cotton-producing belt, which accounts for an estimated 80-85 per cent of China’s cotton output.
With China being the leading apparel exporter, accounting for more than 35 per cent of the global trade and more than three-fourths of China’s cotton originating from the Xinjiang region, any extension of the ban to a wider base in China could trigger a material shift in global apparel trade in coming years.
Amid concerns on origination of the coronavirus from China, there have already been reports of several international buyers looking at diversifying their sourcing base across countries, the report opined.
Raja M Shamugham, MD, Warsaw International a Tirupur based export house said, “It seems that buyers are testing if India can deliver higher volumes as the anti-China sentiment is prevailing all across.
This is an opportunity as in the future many buyers would want to pull out business from China and might shift to other sourcing countries India being one of them.”
In this situation India definitely needs to gear up because this is an opportunity and if worked upon well might prove to be highly beneficial for the industry in the long run.
China has always remained a dominant player in apparel export but post Covid 19 many countries have expressed outrage and willingness to move business away from China and distribute it to countries like India, Vietnam, Bangladesh and Indonesia.
Several major apparel exporters from India have either already started receiving increased orders or are in active discussions with large international buyers, looking at increasing their sourcing from India.
The shift, which was previously expected to take place gradually over the medium term, could be expedited in the light of this recent development.
Widening of the scope of the ban could, however, be practically challenging as the existing systems are not adequate to track the origin of the raw material.
Accordingly, cotton originating in the Xinjiang region could end up as yarn or fabric in another region/ country, which could be processed further to manufacture apparels.