P S Anantharaman | 01 May, 2008
Appreciation of the Chinese yuan and a drop in China's cotton output have helped the Indian textile industry emerge as a major exporter once again, overcoming one of its worst phases, says a top official of an industry lobby.

An increase in exports to the US, the largest market for Indian exports, shows that the industry is recovering from its woes, says D.K. Nair, secretary-general of the Confederation of the Indian Textile Industry (CITI).

"Imports by the US are rising, which is very positive," Nair said.

He said China's strong currency appreciation and drop in cotton production were the two main factors that help the industry to recover from its worst period, when there was also a cutback in production and closure of units.

"But no one is talking on such lines now," he said, adding: "Now, however, there are other issues like high cotton and low yarn prices which need to be sorted out."

India's textile exports for 2007-08 were estimated at $20.5 billion - short of the target of $25 billion. Yet the impact of rupee appreciation notwithstanding, the industry was able to register a growth of 10 percent over 2006-07.

Nair said textile imports by the US grew by 1.85 percent in terms of quantity in 2007, with 2.59 percent growth in imports from India alone. In value, total imports were up 3.35 percent and 1.45 percent, respectively.

"We grew faster than the US market but lost significantly in value realisation. In January 2008, the US' total imports of textile products declined by nearly four percent, but imports from India increased by 0.53 percent."

In fact, Vietnam is the only country doing better than India in the US market for textile products at present, he said.

As in January, the annual appreciation of the rupee was over 11 percent, while the Chinese currency appreciated by 6.96 percent. But when the rupee's average appreciation dropped to 8.36 percent in March, the yuan was up 8.52 percent.

China's textile worries are not restricted to currency appreciation alone. They have increasing problems in labour cost and raw material prices, said industry officials.

According to a recent survey by the China Cotton Textile Association, nearly half of the textile companies across 17 provinces wanted to exit and venture into other businesses and some 45 percent diverted their goods to the domestic market.