China and India were tipped to emerge as big winners when global textile quotas were abolished last January, but even domestic manufacturers are stunned by the speed with which their goods have flooded global markets.

“We have been caught by surprise by our own success in recent months,” B K Patodia, chairman of India’s Cotton Textiles Export Promotion Council, was quoted as saying.
“China and India are emerging as the two biggest textile players and we are working hard at developing a good understanding with China so that we do not undercut each other,” he added.
“Business is booming and there is enough room for both of us to flourish in the new competitive environment.” India’s textile exports to Europe in the five-month period between January and May 2005 rose by 11 per cent to 2.21 billion euros ($2.69 billion) from a year earlier, according to EU import data.
Similarly during the same period, India exported textiles worth $987.81 million to the US, up from $788.48 million in 2004, US import data shows.
Indian textile exports to these two markets grew the fastest next only to China, while countries like Bangladesh and Sri Lanka are concerned early export trends may signal a loss in business to Asian rivals.
The end to quotas and a loosening of regulations is expected to quadruple India’s slice of the $400 billion-a-year textile market to 15 per cent from four per cent, according to World trade Organisation calculations.
That, however, is still far behind China whose market share is seen potentially more than tripling to at least 50 per cent from 17 per cent in 2003, according to the same WTO forecast.
D Rajagopalan, a senior official of India’s trade department, noted China and India enjoyed several advantages in the new quota-free world. “Both countries are big cotton producers and have a strong textile and apparel base. They not only have the raw materials but established textile industries and cheap, abundant labour,” said Rajagopalan.
Last week’s revaluation of the Chinese yuan which will make the country’s products more expensive could help Indian exports. But analysts say the 2.1 per cent upward revaluation is too small to give a major boost.
Indian textile exports are expected to touch $15 billion in the fiscal 2005-2006 from $13.6 billion the previous year.