Quarterly Business Confidence Survey Report – An
Indian Textile Perspective (Annual Subscription)
Post WTO, India was predicted to be only second
to China in terms of gains from global textile trade. China has retained its
numero uno position in the first year of quota-free trade. India is clearly a
distant second but faces intense competition from countries like Pakistan,
Bangladesh and Sri Lanka. This fourth consecutive survey on Business Confidence
of Indian textile companies reveals mixed experience in the first year. Three
scenarios emerge. Firstly, the ignorance about opening up of trade and its
benefits. Second, complacency with the imposition of limits by the US and Europe
on China. And third, those tuned in reaped the benefits of this development.
A sizeable 37% of the respondents to the survey said that they did not
experience any change in their business during the year, while 10% felt that
they had worse experiences during the year. Together, 47% of the respondents are
of the opinion that they did not benefit from the opening of trade from 1
January 2005. The reasons are diverse. Some felt that China was better prepared
for non-quota regime but this was not the case in India. Competition from China
came unexpectedly. China, in desperation to gain WTO membership had agreed to
let importing countries impose special safeguard measures against Chinese
textile exports till 2008.
Few companies indicated that they were unable to take advantage of the
opportunities while a few had bad experiences as they had no direct relation
with global trade. Among the few who had bad experiences, some blamed inadequate
infrastructure impeding them to take advantage of the opportunities.
Nevertheless, these companies are hopeful to see some better changes in the
coming quarters. Developed economies have started placing initial orders and it
will take a while to fully derive the benefits.
The remaining 53% of the respondents had a good experience in the first year of
quota-free textile trade. These companies saw orders tricking and exports
increasing. The orders were better than quota regime and gains from Europe were
more pronounced in the first year. Capacities were fully utilized but there was
some price cutting. In the first year, Indian textile companies also experienced
changes in demand pattern and they were able to price their products better.
