15 November 2022, Mumbai:
With a sizable raw materials base and textile manufacturing, India has one of the largest textile industries worldwide. Along with other essential industries, the manufacturing and trading of textiles play a significant role in our economy. The export of textiles and apparel accounts for about 27% of total foreign exchange earnings.
Textile industry overview
The textile and apparel industry (T&C) contributes about 14% of industrial production and 3% of the nation's GDP. The textile sector contributes about 8% of the total excise taxes collected. So much so that the textile industry is responsible for up to 21% of all employment created in the economy. The manufacturing of textiles directly employs about 35 million people. Another 60 million people could be used indirectly, including the workforce involved in trade and handling related to producing agriculturally based raw materials like cotton.
Trade Data points
India exported $41 billion of textiles in the calendar year 2021, with a CAGR of 2.7, a little above the average for the world. The domestic textile industry depends heavily on imported wool of the apparel/clothing grade. Because of this, the domestic economy is dependent on imports. India imports raw fleece from several nations. Turkey, China, New Zealand, and Australia make up the top four import markets.
From April 2016 to March 2021, Japan, Mauritius, Italy, and Belgium will have contributed the most foreign direct investment (FDI) to India's textile industry (including dyed and printed textiles). India's textile and apparel (T&A) exports, which include handicrafts, reached a record high of $44.4 billion in FY 2021–22, a significant rise of 41% and 26% over the corresponding amounts in FY 2020–21 and FY 2019–20, respectively.
Exports basket pie
Additionally, the $75 billion domestic consumption was broken down into $55 billion for apparel/garments, $15 billion for technical textiles, and $5 billion for home goods. At the same time, exports included $12 billion in garment exports, $4.8 billion in home textile exports, $4 billion in fabric exports, $3.8 billion in yarn exports, $1.8 billion in fiber exports, and $2 billion in other exports. The United States accounted for 27% of all exports, followed by the European Union (18%), Bangladesh (12%), and the United Arab Emirates (6%). In September 2022, RMG/apparel exported all textiles valued at $1020.78 million, accounting for 3.13% of the month's total exports.
Decoding Friend shoring/friendly geographies
From measures at the border, trade strategies are increasingly shifting to efforts behind the border. For instance, the Biden administration's trade program has increasingly focused on raising labor standards and addressing climate change.
US President Joe Biden late last year signed a law to ban cotton products, originating from China’s Xinjiang Uyghur Autonomous Region (China views it as a potent legitimate policy framework for countering terrorism and so-called extremism).
Similarly, trade policies are more frequently employed to achieve foreign policy objectives or address issues of national security. Contextualizing this topical issue making global headlines with the reference to Janet Yellen, the United States Secretary of the Treasury alluding very categorically last week while on her official visit to India last week “India’s membership in Indo-Pacific Economic Framework (IPEF), in conscious efforts to make our supply chains more resilient and reliant through what she called assiduously & unambiguously friend-shoring, are tightening those ties/bonds,”
However, there are specific issues with the idea of "friend-shoring." For instance, when the US and the EU emphasize their commercial relations with friends or critical geographic regions, many developing nations, especially the least developed ones (LDCs), may be excluded or further marginalized.
Others are concerned about the effects of friend-shoring and the growing weaponization of commerce on future trade liberalization, globalization, and the multilateral trading system.
