🇮🇳 The Textile Wars: Can India Beat China and Pakistan?
India has a major opportunity to defeat China and Pakistan. Not in the battlefield but in the textile space. But Asia still holds a lot of competitors for us. Here's who we should watch out for.
At ReadOn, we have been really interested in India Inc's growth story.Â
We have realised that India has the potential to overtake a lot of developing nations, but a few factors, a few drawbacks, keep pulling it back.Â
So, we are trying to look at different sectors where India could possibly beat other Asian countries and what exactly is stopping it.Â
Today our focus is on the $1,400 bn textile sector.
🤑 India's Textile Opportunity
Why textile, you ask?
Because India right now has a great opportunity to overtake two of its neighbours in terms of textile and apparel exports: China and Pakistan.
Since Covid happened the world has been trying to reduce dependence on China. And the fact that China uses slave labour to pick cotton has given many companies the perfect excuse to ban imports.
Meanwhile, Pakistan has tragically lost a major chunk of its cotton crops due to the floods that hit the country.
So, if India strikes while the iron is hot, we could replace these countries as exporters of 248 items including yarn, readymade garments, man made fabrics, Terry cloth towels, and lots more.
And the best part is India already has a 5% share in the global export of these items. So, now it is all about finding the buyers. Doing this can:Â
Increase our exports to $65 billion up from $36 billion in 2019.
Create 7.5 million- 10 million jobs in the textile industry.Â
But this is a long shot.
Not only do we face various challenges on our home ground in this space, but we have two other major competitors as well: Bangladesh and Vietnam.
🥊Our New Challengers
Bangladesh and Vietnam have emerged as the world's clothing factories. A lot of the designer stuff that you wear, probably comes from our next door neighbour Bangladesh.
Yes, these tiny countries have already surpassed India in terms of garment and textile exports.
While India's garment exports were worth $44.4 bn in 2022, Vietnam's exports were worth $45bn and Bangladesh's were worth $52.082 bn.
Now, the difference between these numbers isn't huge, but the fact that these tiny countries with limited resources have managed to beat us is alarming.Â
And if they continue at the same pace, they could pick up the market share left behind by China and Pakistan, leaving India in a lurch.Â
So, what are they doing right that we aren't?Â
🤔 Where We're Going Wrong
For starters, Bangladesh and Vietnam are cheaper.
The shirt that we can make for 50 cents, Bangladesh makes for 22 cents.Â
This low cost is achieved thanks to:
Cheap labour (yes, labour is even cheaper in these countries)
Cheap power (power is 30-40% cheaper in Bangladesh)
Trade agreements (Bangladesh and Vietnam both have signed several agreements which make their products duty-free in markets like Europe and Canada, which are also huge markets for us).
Plus, their currencies are also much lower than the rupee, making it even cheaper for importers to buy goods from them.
On top of all of this, Bangladesh is fast.
It takes us 63 days to complete an order for delivery, while it takes Bangladesh 50 days.
It takes us 10 days to get the shipment to port, while it takes Bangladesh one day.Â
And when we do finally reach the port, the high prices of shipping containers (this price increase has happened ever since Covid) increases the price of our exports even more.
So, what can be done?
🇮🇳 How Can India Win?
Thankfully, a lot of steps are already being taken to solve these issues.
The government has launched product linked incentive schemes to boost production of man-made and technical textiles, to fill in the gap created by Pakistan and China.
And to deal with Bangladesh and Vietnam, there are the National Logistics Policy and renewable energy schemes, which will give us cheaper travel and faster transport.
What's more, India is also planning on manufacturing containers in-home, making them much cheaper for us.
So, we're on our way to take over the textile sector as well.
And these are the companies that could possibly benefit if we do manage to do so:Â
Arvind Ltd.
Vardhman Textiles Ltd.
Winsome Textile
RIL
Grasim Industries
Bombay Dyeing
Fun fact: Bangladesh imports a majority of its cotton from India. So, if worse comes to worse, we could stop these exports and use this extra cotton to spur our own textile industry.
âš¡In a line: India has a chance of stealing China and Pakistan's textile market but Bangladesh and Vietnam are standing in the way.
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Nice and short. Really good work to Readon team
Loved the fun-fact, left a smile on my face!