India is emerging as the biggest gainer in the 'bra war,' triggered by restrictions imposed on 10 10 apparel items exported by China.
In the absence of Chinese products in the US and the EU, made-in-India skirts and blouses are on high demand in these markets. This has resulted in a 20-per cent increase in the export of these items in the last three months, compared with the corresponding period of the last year.
The rise in imports of made-in-China items -- bras, pullovers, men's trousers, blouses, T-shirts, dresses, flax yarns, cotton fabrics, bed linen, and table and kitchen linen -- forced the EU to cut jobs by 13-per cent in the textiles sector. The US also joined the controversy, popularly known as the "bra war", by imposing higher tariff on these items.
India has stepped in to fill the void created by the absence of Chinese items to the EU market. Amit Goyal, whose firm Sarju International is one of India's largest T-shirt exporters, says the rise in demand for blouses and skirts has helped Indian apparel exporters post a 16 per cent growth in September against 11 per cent in August.
Goyal, president of Confederation of Indian Apparel Exporters, feels that if the trend continues, the worth of Indian apparel exports will go up to Rs 35,000 crore (Rs 350 billion) from Rs 30,000 crore (Rs 300 billion) by the end of 2005-06. The combined export of blouses, skirts and T-shirts were about Rs 9,000 crore (Rs 90 billion) last year.
The increased demand has taken a toll on profit margins that have come down by about 5 per cent from 15-20 per cent. "The western markets are familiar with cheap Chinese products. We have two options -- to reduce our profit margins to compete in the markets or supply value-added products. We are doing both," says another apparel exporter.
JB Jain, proprietor of Rupam, a leading exporter of blouses and skirts, says in the absence of Chinese products, the demand has gone up to such an extent that almost all the export firms, especially those into value-added products, have received huge orders.
"We depend a lot on cottage industries for the production of value-added items like skirts with knot-n-tie prints and Rajasthani embroidery. The industry is working overtime to meet export commitments," Jain adds.
Data available from the Office of Textiles Exports of America (OTEXA) show India has emerged as the biggest beneficiary of the bra war. Bangladesh, Pakistan, Cambodia and Vietnam also stand to gain. Latest data reveal that India exported 710.39 million metres of apparel in June, 715.96 million metres in July and 730.50 million metres in August.
Sources say exports would have been even higher had the industry's capacity been more.
"India can derive the maximum advantage of being an integrated player, having a presence in the cotton-to-textiles-to-finished garments segment. However, Indian exporters are producing at full capacity now," they add.
With little or no capacity to produce pullovers and bras, local entrepreneurs have started investing in building up capacity in the home textiles segment.
Investments worth Rs 5,000 crore (Rs 50 billion) have been lined up for home furnishing products. Of these, bed linen and table and kitchen linen are among 10 items that are on the restrictive list on exports from China.