Indian textile exporters should take efforts to benefit from the energy crisis in China
China's pandemic recovery faces many problems, from new COVID19 infections to extreme weather conditions and supply chain disruptions have prevented a smooth return to normal economic conditions. China now faces a big problem to normalize its business due to the power shortage. China's electricity shortage has two different reasons: rising coal prices and low hydropower production. China is the world's largest consumer of coal, and the raw material accounts for atleast 60 percent of all energy consumption. The increase in coal prices is due to the severe shortage of coal supply. A diplomatic dispute with Australia has caused a shortage of coal supplies. China produces 90 percent of its coal needs locally, but producers cannot increase production in the short term. Beijing now relies on other suppliers such as Indonesia, Russia and South Africa. The problem is that Chinese factories are used to working with Australian coal and the fuel switch has affected their efficiency. This is because they have to change equipment to work with non-Australian coal.
China, which became the first country to recover from the Covid19 pandemic, has also been flooded by demand for exports. As a result, electricity consumption increased by more than 10 percent, so the systems were unable to meet the growing demand. Electricity producers also face the problem of not being able to increase electricity prices because they are being regulated by the communist regime. Since these producers tend to lose money to rising coal prices, they hesitate to increase production to meet demand.
The impact -
China's textile and clothing prices are expected to rise 30 to 40 percent due to planned closures in the industrial provinces of Jiangsu, Zhejiang and Guangdong. According to new government regulations, factories in China cannot work more than 3 days a week. Some can only open 1 or 2 days a week, as power is cut on the remaining days in all industrial cities.
The Opportunity Size -
China exports textile and apparel products worth $ 145 billion, approximately 8.73 times of India's $ 16.6 billion in the same category. India used to be a leader in the textile sector, but due to poor policies in the past, India lost to countries like China, Bangladesh and Vietnam. Indian textile exporters can take advantage of the crisis in China caused due to the shortage of electricity. As China is facing issues related to supplying the demand for textile products, India can take this opportunity to serve the global market and fill the demand gap.
You can use the Exports potential tab from our website to find out the export potential of different products in different countries, here below we have collated the data to find out the top 10 countries for exports from India in the Textiles & Apparel products,.
|
Sr. No. |
Country |
Export Potential |
Actual Exports |
Untapped Potential |
|
1 |
United States |
$9.9 bn |
$7.5 bn |
$2.9 bn |
|
2 |
United Kingdom |
$2.7 bn |
$1.9 bn |
$825.7 mn |
|
3 |
Germany |
$2.5 bn |
$1.7 bn |
$859.7 mn |
|
4 |
United Arab Emirates |
$2.0 bn |
$1.8 bn |
$564.9 mn |
|
5 |
France |
$1.6 bn |
$1.1 bn |
$472.9 mn |
|
6 |
Spain |
$1.1 bn |
$947.7 mn |
$257.3 mn |
|
7 |
Saudi Arabia |
$940.2 mn |
$526.1 mn |
$505.9 mn |
|
8 |
Italy |
$932.2 mn |
$585.6 mn |
$431.8 mn |
|
9 |
China |
$889.2 mn |
$155.6 mn |
$735.6 mn |
|
10 |
Japan |
$848.7 mn |
$300.6 mn |
$570.1 mn |
Government Efforts to boost Textile sector exports.
The Government recognizes the immense potential of the textile sector to increase its contribution to India's exports. That is why it has launched several programs to overcome the different problems facing the sector. India lost to China due to modern and advanced textile machinery that made its production more efficient. Therefore, India launched the Amended Technology Upgrade Fund Scheme (ATUFS) which aims to improve and modernize the textile industry. India has also increased export incentives through various systems such as MEIS and RoSCTL (Rebate of Central and State Levied Taxes). The government has also introduced production-related incentives to increase textile production capacity and restricted imports of certain textile products to encourage manufacturers to make in India. The government has launched a special sector specific program called the Mega Integrated Textile Region and Apparel and Apparel (MITRA) Parks Scheme to establish seven textile parks with state-of-the-art infrastructure, common utilitiesand R&D lab which will be in close proximity to the ports to attract foreign buyers.
