Foreign companies to accelerate Indian apparel export

Export of Indian textile is all set to grow in the coming years. A large number of foreign multinational companies have been eyeing Indian apparel market after the “dismantling” of the Multifibre Arrangement (MFA) beginning this year.

Senior economists at the prestigious Economic Research Service of the US Department of Agriculture – who are keeping a close tab on India’s textile market conclude that the foreign companies would play a key role in accelerating the export of Indian apparel and other related products.

A case in the point is the decision of the Wal-Mart to purchase goods mainly apparel and related products worth $7-$10 billion (Rs 3,150 crore to Rs 4,500 crore) from the Indian market in the next two years.

Same is the case with JC Penny, another large chain of retailers in the US, which plans to make India an important source of its apparel products. Recently, JC Penny is said to have expressed its willingness to purchase $2 billion (Rs 900 crore) from India every year.

“India is an emerging market. Interest in India has intensified due to removal of the MFA quota constraints,” senior economist Thomas Vollrath told HindustanTimes.com.

Several other global giants including The Gap, Ikea (Sweden), Cades (France) and OTTO (Germany) are targeting India. Popular brands like Calvin, Klein, Lacoste and Saree Lee too are looking towards India for purchasing their raw material or finished products under the new regime.

Vollrath said India was fast integrating with the global market because of the advantages it had in this sector. “It has a tremendous potential. But it faces a few constraint also,” he observed.

Prominent among these include India’s internal policies, foreign direct investment and various regulations that come in the growth of its textile sector.

The new challenges and opportunities provided in the post-MFA regime, was not only very crucial but also sensitive time for India, he felt. “If it sets right policies and create proper environment” it can benefit the most from the new opportunities.

Even though China had no such constraints and so far was proving to be very attractive for the global giants, companies were looking towards India because of various reasons.

Spelling out the reasons for this, a latest report by the USDA on India said this was first India’s potential to provide one-stop shopping and secondly international firms “do not” want to rely only on one source for their products. The report carries significance as according to the report the US considers India as an emerging market.

A recent study carried out by the World Trade Organization estimated in the post-MFA era, India could quadruple its share of the US import clothing market to 15 per cent and China could triple it to 50 per cent.

Vollrath said the multinational companies could help in accelerating India’s export of cotton, textiles and related products only if the local companies assure quality products, timely delivery of products and offer competitive prices. They are already offering the third one, while the first is yet to be taken care of, he concluded.