Increased Textile Exports From LDCs, With the WTO abolition of quotas for textiles, major Western buyers are reducing their sources and large Asian nations are gaining market share. China alone can produce almost every kind of clothing and textile. In many of the supplier countries, industry consolidation is underway with large companies increasing production capacity on the advice of major customers. Meanwhile, smaller and medium-sized firms are facing a shortage of orders and some have even closed down.
India’s textile exports
The Indian government has taken several steps to support the textile industry. A recent announcement will build seven all-in-one textile parks, which will increase employment and facilitate foreign buyers in monitoring the supply chain. Other measures to help the industry include a new PLI scheme worth Rs10,683 crore. The government will continue to work on the PLI scheme until it reaches the desired level of success. However, for the time being, the government is concentrating on promoting domestic textiles.
The industry’s continued success is vital to combat the high unemployment levels in India. Globally, India’s textile exports are the fifth-largest, after China and the EU. Almost a decade ago, India’s textile exports were on par with those of its closest competitor Bangladesh, but this has changed in recent years. The increase in labour costs has caused the cost of clothing from India to be roughly 20% higher than its rivals. To boost its exports, the government is increasing its production capacity, expanding export markets and establishing integrated value chains.
While India’s exports of clothing and footwear are expected to rise, the industry is also helping to create jobs. The textile industry has created more than two million jobs in the last three years and it is expected to add another 7.5 million jobs by 2012.
Bangladesh’s textile exports
In the garment industry, Bangladesh is one of the leading exporters of textiles and garments. The main exporter of the garment industry is the DBL Group, which started in 1991. The company now goes by the name Dulal Brothers Limited. The company’s four brothers are Abdul Waheed, MA Jabber, MA Rahim, and MA Quader. The company mainly manufactures mid-priced garments and children’s clothing, as well as yarn from old cloth. As of 2014, it had over 36,000 employees.
While Bangladesh has historically been a low-wage country, labour costs have risen significantly since the year 2000, and the trend is likely to continue. There are also various problems in the apparel industry in Bangladesh, including low productivity compared to its peers. In addition to these challenges, the government’s textile industry is facing a resurgence in demand for clothing in China, India, and the United States. This makes it critical for the government to act now, before it is too late.
Because of Bangladesh’s economic development, the country is also faced with competition from local industry. While Thailand and India have grown in size and popularity in the United States, Bangladesh is still a distant second to the giants of the textile industry. As a result, the government is seeking ways to promote its own domestic industry. The government must strike a balance between giving special treatment to newcomers and protecting its existing industries. Mostafa’s concern is that a quota system will push Bangladesh’s share of the U.S. clothing market to as low as 2 percent. However, American negotiators are more optimistic about Bangladesh’s textile exports.
Opportunities for LDCs to increase their textile exports
While the potential for increased textile exports from LDCs may be limited, there are still significant opportunities available to them. For example, the textile industry in LDCs offers a wide range of products that could be used in the manufacturing of high-quality garments. But the process of exporting textile products is far from straightforward. Many of these products are not exported. For this reason, LDCs should focus on improving their skills in sourcing and production.
To boost their textile exports, LDC firms should invest in trade facilitation services. The development of more efficient trade facilitation services can significantly boost export prospects in LDCs. China has established a high standard in this regard, with its modern ports and fast customs procedures. Direct shipping services also help reduce transport costs. Moreover, cooperation with countries within the same region can also increase textile exports.
The United States looks forward to constructive participation in the Doha Round of trade negotiations, and anticipates that LDCs will be granted duty-free quota-free access to the U.S. market. Further, LDCs may also benefit from the elimination of safeguards on Chinese textile exports to the U.S. market. However, these initiatives will require years. The United States also looks forward to constructive participation in the work program.
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