US restrictions on textile imports from China may augur well for India: ICRA
Sep 17, 2020
New Delhi [India], September 17 : The US move to impose restrictions on import of certain products originating from Xinjiang autonomous region in China could benefit Indian textile exporters, according to investment information firm ICRA.
The United States cited concerns on illegal and inhumane forced labour in the region while imposing the ban earlier this week.
While there were reports of a more broad-based ban on the products originating from the region, the restrictions have been limited to a few entities for now.
Besides banning imports of other product categories, including hair products and computer parts, the ban includes restrictions on some entities from the region involved in manufacturing apparel and producing and processing cotton.
Xinjiang is a major cotton-producing belt which accounts for an estimated 80 to 85 per cent of China's cotton output.
Jayanta Roy, Senior Vice President and Group Head for ICRA Ratings, said that while the immediate impact in terms of the market catered to by identified entities is not quantifiable, the development could have major repercussions for global textile trade.
With China being the leading apparel exporter, accounting for more than 35 per cent of the global trade and more than three-fourths of China's cotton originating from the Xinjiang region, any extension of the ban to a wider base in China could trigger a material shift in global apparel trade in coming years," he said.
Amid concerns on the origination of the coronavirus from China, there have already been reports of several
international buyers looking at diversifying their sourcing base across countries.
As per ICRA's channel checks, several major apparel exporters from India have either already started receiving increased orders or are in active discussions with large international buyers, looking at increasing their sourcing from India.
The shift, which was previously expected to take place gradually over the medium term, could be expedited in the light of this recent development.
"While Vietnam and Bangladesh have been the key beneficiaries over the past few years for a shift away from China, India also stands to gain from any such market opportunity which may arise due to its strong presence in cotton-based apparel," said Roy.
