The industry accounts for 30% of India's exports. China does a much larger dollar volume in textiles, but still the sector accounts for only 18% of China's exports.
India, like China, chafed for decades under quotas that limited how much it could send to the U.S. and Europe. In January those quotas were lifted and exports from both countries shot up. In the first five months of this year China's exports of cloth and apparel to the U.S. jumped 54% to $9.9 billion. India's volume was up 29% to $2.3 billion, according to the International Labour Organization, a UN adjunct.
...Last year the Indian government finally cut duties on imported textile machinery. In a further effort to boost the industry's competitiveness, the government this summer announced plans to spend $150 million creating (with private partners) 25 textile parks by 2008--enough for 500,000 new jobs. Each park will cluster small producers in one industrial unit, with some shared buildings like testing labs, raw materials depots and warehouses.
Investment has been pouring in. Companies have contributed more than $17 billion in recent years to the Indian cloth and clothing industry, according to Texprocil, the export-promotion body of the Indian cotton textile industry...
India and China compete fiercely for orders from the U.S. and Europe, but Indian companies are finding they often get the nod for handwoven, embroidered or otherwise embellished fabrics, clothing and housewares, while China is chosen for larger orders of mass-produced items. As China wins the bulk orders, its market share is likely to increase faster than India's.
Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.