Textiles and clothing accounted for 4% of India’s GDP, providing the largest employment in addition to the agricultural sector. Currently, India’s textiles accounted for 6.56% of global trade while clothing 3.43%, and export of cotton products occupies dominant position. India is the second largest cotton producer and yarn exporter, of which the export of yarn accounted for 28% of global yarn export in 2013.
China is the second largest export destination of India’s textiles and clothing, but the export to China is mostly raw material, such as raw cotton and cotton yarn. China is the largest source of India’s textiles and clothing, which are mainly high value-added ones. In 2013, China’s import of textiles and clothing from India accounted for 11% – of which cotton yarn 30% – while India’s import from China 45%.
Textile industry has been always shifted from high-cost area to low-cost one. With the increasing producing cost in China, more and more low-end products will be produced out of China. As European textiles developed from low-end to high-end and was gradually shifted to China, now it is the time for low-end textiles to leave China. India welcomes investment and purchase from Chinese yarn customers. The cost of Chinese textile manufacturers can be greatly reduced when Indian textile factories and Chinese textile supply chain are bound.
Indian government has taken many measures to encourage the development of textile and clothing industry, such as allowing 100% foreign direct investment; investing on infrastructure construction of textile industrial parks, 40 of which have been approved till now; formulating export promotion schemes, including the encouragement of production means export, tax allowance and export rebate, aiming to eliminate the tax influence on different stage of production. Chinese textile enterprises can enhance their competitiveness by making use of the friendly investment environment and low processing cost in India and building alliance with Indian textile companies. It’s time for Chinese textile enterprises to seize the investment opportunities in India!