India Sees Surge in Clothing Manufacturers Fleeing China

0
29

India has been waging a boycott campaign against China and trying to persuade international corporations to do business with India instead.

The watershed moment described by TOI was when German leisurewear maker Marc O’Polo placed a major order with an Indian vendor called Warsaw International instead of the usual Chinese supplier.

“We have a huge order. It’s a litmus test for us and the country. If we crack it, then gates open for more global brands to increase their India sourcing,” said Warsaw International owner Raja Shanmugam. The little detail that those gates might open because of a company named after the explorer Marco Polo deciding to do business with India instead of China would be icing on the cake.

“Our buyers have told us that this year sourcing from India will be much higher than last. We will know about the actual size of increased orders in a couple of weeks. We are just opening up after the lockdown,” said a representative from another garment export company, KRP Mills.

TOI reported that one of the biggest companies shifting to India from China appears to be Carter’s, a major brand in babywear. Carter’s has tasked Indian supplier SP Apparels with developing a new fabric, and if the Indian company can deliver – with some help from Taiwanese and South Korean partners, plus support from the Indian government – it could be a “huge opportunity.”

“Chinese firms are learning a painful lesson. And, that is, the foreign policy of China has hijacked their business. China’s geopolitics with India has led to a nationwide fallout for Chinese firms,” analyst Abishur Prakash of the Canada-based Center for Innovating the Future told CNBC on Friday.

China’s response to India’s attempts to decouple and boycott has included a great deal of arrogant sneering that India is entirely dependent on Chinese goods and investment capital, but CNBC noted that India is aggressively marketing opportunities to other business partners, including the United States, to fill the void left by banned Chinese products. That includes the void created by India’s growing blacklist of dodgy Chinese smartphone apps, including some that were tremendously popular and profitable in India.

“Both India and U.S. are seeing their interests converge. Prime Minister Modi’s biggest rule is self-reliance. From defense to e-commerce, he doesn’t want India reliant on anything foreign. And, while India has built its own domestic software industry, it lags in hardware, like chips. At the same time, U.S. firms are looking for a new base to build hardware and a new consumer base to take their products to. It’s a win-win,” Parkash said, perhaps unintentionally borrowing one of the Chinese Communist Party’s favorite phrases.

India Today cautioned in July that Indian textile manufacturers still have a great deal of scaling-up to do before they can truly compete with China, the world’s largest exporter of garments. India currently ranks second in textiles worldwide and fifth in exports of finished apparel. In 2018, Chinese textile and garment exports were valued at $269 billion, while India’s were only about $40 billion. Chinese firms can typically underbid Indian competitors by 15 to 20 percent, given the current disparities in manufacturing costs.

“The textiles sector in India is beset by under-productivity, outdated machinery and a distorted duty structure that encourages import of high-value apparel instead of raw cloth that can be turned into value-added garments for the international market. Wages, too, have been on the rise in India, adding to costs,” India Today noted.

“Moreover, India continues to focus on cotton fabric when the world is moving toward man-made fiber that is both convenient and cost-effective,” the article added. The deal struck by India’s SP Apparels with Carter’s babywear involves man-made fibers.