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India filling china, bangladesh void in garment sector

India filling china, bangladesh void in garment sector Source:
Date: 15-02-2014
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India is outpacing Pakistan when it comes to filling the void created in the global textile market due to an increase in the cost of Chinese products.
India has 26 operational integrated textile parks out of 50 planned parks, while Pakistan has only planned two garment cities which are still under construction.
“After losing the edge in basic textiles, China is also opting out of low value added garments and knitwear as increased labour costs has made these products commercially unviable,” said Pakistan Hosiery Manufacturers Association chairman Shahzad Ahmad Khan.
Bangladesh and Vietnam have grabbed a part of the market that China left but recent controversies regarding the garment industry in Bangladesh have forced many buyers to look elsewhere.
“Indian planners spotted the great opportunity coming their way and planned 50 integrated textile parks,” Khan said, adding that the Indian government began allocating funds for these parks in 2009-10 and has up till now provided a grant of Rs12.76 billion. With the grants covering 40 percent of the costs, the scheme has been able to leverage industry investment significantly which is four times the grant support so far, he added.
Former chairman PHMA Adil Butt said that the Indian scheme has been able to incentivise small and big textile entrepreneurs to set up 592 operational units in the 26 parks that have been completed. He said the parks are spread in nine states and all of them fulfill the primary objective of world class infrastructure, environmental compliances, social wellbeing and long term economic development.
These include a 100 acre power loom cluster and 20 acre handloom cluster, he added. “The Indian government issued promised grants for each park promptly that facilitated the start of development activities without waiting for a bank loan,” said Butt, adding that it also encouraged stakeholders to start contributing their equity share.
Butt said the government’s grant also helped banks recognise the seriousness of the government to execute the project. “The plan for garment cities was initiated in Pakistan during the Musharaf regime in Karachi and Lahore but none have been launched yet,” he said, adding that Pakistan enjoys competitive advantage in many knitwear projects and should take advantage of the opportunities offered after GSP Plus and Chinese withdrawal from certain categories.
“If the gap created by the Chinese is filled by Indians then it would be an uphill task to dislodge them from the market.” The competitive advantage that Pakistan enjoys over India is not high and they may close the gap through economies of scale, Butt added.
All Pakistan Textile Mills association (Punjab) Chairman S M Tanveer said that Pakistan needs at least six dedicated weaving industry parks on an urgent basis in order to consume the 25 percent yarn (of the total yarn it produces) that it annually exports.
“India has already made its huge Palladam Hi-Tech weaving park in Tamil Nado and eight more weaving parks are at different stages of completion. They are creating capacities to avail the opportunity with the gradual exit of China,” said Tanveer. APTMA estimates that an investment of $4 billion would be required only to weave the yarn that is being exported, he added.
The APTMA chairman said that an integrated approach with total state commitment is needed to exploit the true potential of textiles. “We need to increase the cotton production that has been stagnant,” he said, adding that India has doubled it cotton production during this period while Chinese cotton production has increased by 50 percent.
“The industry needs manmade fiber at global rates,” Tanveer said, explaining that at present the industry pays a lot due to the regulatory duty imposed on import of manmade fibers.
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