Source: The Economic Times

Apr 2, 2013 - KOLKATA

China has turned to India for huge purchases of yarn to make towels, T-shirts, jeans and stockings, while production in Pakistan, a key supplier for Beijing, is down 30%, bringing good news for Indian businessmen from unexpected quarters. Beijing is now focussing on high-value products instead of spinning yarn, opening up a huge window for Indian suppliers of the raw material, and raising hopes of even the apparel industry in India, industry officials say.

"Yarn imports by China in January this year increased substantially. The year 2013-14 will be good for spinning mills as China is going to depend more on India for yarn supply. Nearly 75-80% of yarn produced in India is now going to China," said K Thirunavukkarasu, managing partner, Sri Choleeswarar Spinning Mills. Cotton spinners in Tamil Nadu, Andhra Pradesh, Punjab and Gujarat are flooded with orders for yarn from China.

Yarn imports in China, unlike raw cotton, are free from quota limits and cost about $160 per tonne less in the country. Thirunavukkarasu, who is also the president of The South India Spinners Association, said Tamil Nadu and Andhra Pradesh are the two major hubs of India's spinning activity. Around 5-6 lakh people are engaged in the spinning activity in these two states. He said China might start importing fabric from India as well. "However, spinners in south India are facing acute power shortage.

We are using generator sets for power supply which is eating into our margins," he said. In the current financial year, the industry expects to export about 1,000 million kg of yarn as against at 827.68 million kg in the previous fiscal. Cotton yarn production stood at 2,317 million kg in April-November of FY13 which is 14% higher compared to the previous year. China accounts for 30% of India's cotton yarn exports.

"China is importing a substantial amount of cotton yarn from India as the cost of production in that country is higher due to high cotton prices. China is now looking at high-value products which will give them better margins," said DK Nair, secretary general, Confederation of Indian Textile Industry (CITI).

Production of yarn in Pakistan has declined by 30%, thereby giving an advantage to India. Rahul Mehta, president of the Clothing Manufacturers Association of India, said: "China is moving out of labour-intensive and low-value products.

This augurs well for the Indian apparel industry. While we export apparels worth $16 billion per annum, China exports $16 billion worth of garments in a month. If we get at least 10% of China's orders, Indian apparel exporters will be in a much better position."

(Source: The Economic Times)