Textile Quotas make a comeback
INDIAN textile exporters are expected to gain the most from the US administration’s decision to impose `safeguard quotas’ on three categories of clothing shipments from China, mainly because Indian suppliers have a strong presence in some of these product categories in the US.
In two of the three items that have come in for US restrictions — cotton knit shirts and cotton trousers — Indian exporters have already made significant gains in the last four months since quotas were phased out. The Indian strength in these categories is reflected in the 116 per cent jump in exports of cotton knit shirts to the US between January and April 2005. The growth in Indian cotton knit shirt supplies was next only to Chinese exports, which, however, recorded a massive 1,005.85 per cent growth during the period, according to US Customs and Border Protection (CBP) data. In the case of cotton trousers too, Indian supplies to the US were up 66.80 per cent between January and April this year.
The move to re-impose quotas on the three categories of clothing imports from China would mean that Chinese shipments in the these categories would be permitted to increase this year by just 7.5 per cent, as compared with shipments made during 2003.
“Since Chinese exports have already surged to such high levels during the first four months of the year, the 7.5 per cent annual cap would allow very insignificant quantities of Chinese exports to the US for the remaining part of the year in these product categories,” a textile sector analyst said.
According to domestic exporters, a large number of US buyers and retailers have already begun making enquiries on the capacity of Indian suppliers to ramp up production. “US retailers have been factoring in the administration’s move and have been working on developing alternatives to China as a big manufacturing base. India is the most obvious alternative,” the analyst said.
The one constricting factor in the otherwise bright scenario is the capacity limitation of Indian exporters. “While the entire provinces in China are involved in the production of one or two specialised products, resulting in a mass assembly line production model, Indian exporters have been constrained by lack of scale. It remains to be seen by what measure our suppliers can increase production to take advantage of the situation,” the analyst pointed out.
The third category on which the US has re-imposed quantitative restrictions, namely undergarments, is an area where Indian suppliers have traditionally not been very strong, unlike their Chinese counterparts. But analysts sense an opportunity in this category too. “With Chinese exports likely to be plugged for the rest of the year, there is ample opportunity for Indian hosiery players to make inroads into this product category in the US market.”
Besides the three items targeted so far, the US administration has also announced its intentions to take up four more petitions filed by the US industry last year seeking re-imposition of quotas in other clothing categories.
Even though quantitative restrictions on the global textile trade were done away with from January 1, under China’s accession agreement with the World Trade Organisation (WTO), member-countries can impose quantitative restrictions in the form of `safeguard quotas’ on Chinese imports till 2008 if they can prove that imports from the country are getting `market-disruptive’ in nature. The restrictive clause, however, applies only to China because of its late entry into the WTO.
In two of the three items that have come in for US restrictions — cotton knit shirts and cotton trousers — Indian exporters have already made significant gains in the last four months since quotas were phased out. The Indian strength in these categories is reflected in the 116 per cent jump in exports of cotton knit shirts to the US between January and April 2005. The growth in Indian cotton knit shirt supplies was next only to Chinese exports, which, however, recorded a massive 1,005.85 per cent growth during the period, according to US Customs and Border Protection (CBP) data. In the case of cotton trousers too, Indian supplies to the US were up 66.80 per cent between January and April this year.
The move to re-impose quotas on the three categories of clothing imports from China would mean that Chinese shipments in the these categories would be permitted to increase this year by just 7.5 per cent, as compared with shipments made during 2003.
“Since Chinese exports have already surged to such high levels during the first four months of the year, the 7.5 per cent annual cap would allow very insignificant quantities of Chinese exports to the US for the remaining part of the year in these product categories,” a textile sector analyst said.
According to domestic exporters, a large number of US buyers and retailers have already begun making enquiries on the capacity of Indian suppliers to ramp up production. “US retailers have been factoring in the administration’s move and have been working on developing alternatives to China as a big manufacturing base. India is the most obvious alternative,” the analyst said.
The one constricting factor in the otherwise bright scenario is the capacity limitation of Indian exporters. “While the entire provinces in China are involved in the production of one or two specialised products, resulting in a mass assembly line production model, Indian exporters have been constrained by lack of scale. It remains to be seen by what measure our suppliers can increase production to take advantage of the situation,” the analyst pointed out.
The third category on which the US has re-imposed quantitative restrictions, namely undergarments, is an area where Indian suppliers have traditionally not been very strong, unlike their Chinese counterparts. But analysts sense an opportunity in this category too. “With Chinese exports likely to be plugged for the rest of the year, there is ample opportunity for Indian hosiery players to make inroads into this product category in the US market.”
Besides the three items targeted so far, the US administration has also announced its intentions to take up four more petitions filed by the US industry last year seeking re-imposition of quotas in other clothing categories.
Even though quantitative restrictions on the global textile trade were done away with from January 1, under China’s accession agreement with the World Trade Organisation (WTO), member-countries can impose quantitative restrictions in the form of `safeguard quotas’ on Chinese imports till 2008 if they can prove that imports from the country are getting `market-disruptive’ in nature. The restrictive clause, however, applies only to China because of its late entry into the WTO.
posted by Ritesh at 1:23 AM
0 Comments:
Post a Comment
<< Home