Under the epidemic situation, Indian textile orders are transferred to China? Expert:This can last at least two or three years
According to the CCTV news client, recently, when the relevant person in charge of the Foreign Trade Department of the Ministry of Commerce answered a reporter’s question, some media asked:Recently, it was reported that since September, many large-scale Indian textile export enterprises could not guarantee normal trading due to the epidemic. Goods. Many orders originally produced in India have been transferred to production in China. Does the Ministry of Commerce have any data in this regard? What is your comment on this?
Li Xinggan, Director of the Foreign Trade Department of the Ministry of Commerce, said that at present, the new crown pneumonia epidemic has a huge impact on the global economy. We sincerely hope that India can contain the epidemic as soon as possible and resume normal production and life. At the same time, he said that it is normal market behavior for multinational companies to adjust order production on a global scale and international buyers to select suppliers based on production capacity. China also has some industries and local orders transferred to other countries and markets for production.
In this regard, Chen Jing, a researcher at the Institute of Technology and Strategy, said in an interview with a reporter from China Business News that due to the epidemic in India and the inertia of supply chain management, it is difficult for overseas companies to communicate with producers at any time. Switching, this phenomenon is expected to last two to three years, but in the long run, the realization of high-tech innovation in the textile industry is the way of future development.
India textile industry may lay off 10 million employees
The Confederation of Indian Textile Industry (CITI) sent to India in July The central bank governor Shaktikanta Das stated in a letter that due to the impact of the new crown pneumonia epidemic, overall demand for this fiscal year is expected to drop by 25%to 50%. Under the influence of this demand, about 25%of textile and garment factories may be permanently closed, causing thousands of people to lose their jobs.
The Garment Manufacturers Association of India (CMAI) also stated this year that without government support, the textile industry may lay off 10 million employees.
The Federation of Indian Textile Industry stated that India’s textile industry is a capital-intensive industry, but the profits have been fairly constant for a long time Low and low, because India’s economic growth has slowed in the past few years, they have been struggling to support it, and the next two years may be even more sad.
In fiscal year 2019, the overall scale of India’s textile and apparel industry was US$162 billion, of which exports were US$37 billion. The Federation of Indian Textile Industry previously predicted that by 2024 to 2025, the output value of the industry is expected to increase to 350 billion US dollars, including 125 billion US dollars of export output value, and 30 million new jobs.
The textile industry has always occupied an important position in the Indian industry. At the end of the 1940s, the Indian textile industry accounted for 46.2%of the total light industry output value, and the proportion has gradually declined since then.
According to a research report published by the Indian Brand Equity Foundation in August, the industry employed more than 45 million people in the 2018 fiscal year. In fiscal year 2019, the textile industry accounted for 2%of India’s gross domestic product (GDP) and accounted for 15%of India’s exports. It is an important source of India’s foreign exchange income.
But India’s textile and clothing industries are quite fragmented, especially the clothing industry is more than 80%of small and micro enterprises, and India’s raw cotton and man-made fibers are very dependent on imports, and the cost is high due to high tariffs. After the outbreak of the epidemic, the suspension of ports and stagnation of transportation further hit India’s textile and garment industry.
The status quo of the Indian textile and apparel industry is just a microcosm of the Indian economy under the epidemic. According to the report”South Asia Economic Focus” released by the World Bank on October 7, India’s GDP is expected to shrink by 9.6%this fiscal year. This is the first contraction in India’s economic growth in 40 years.
Unable to switch at any time
In the early days of the epidemic, Chinese textile exports also encountered setbacks. However, as the epidemic stabilized, the current Exports have achieved high growth.
According to the data released by the General Administration of Customs of the People’s Republic of China on October 13, 2020, from January to September 2020, the cumulative export of textiles and garments was 1,515.67 billion yuan, an increase of 12.2%. The performance of textiles was particularly prominent, with an increase of 37.5%. .
Chen Jing believes that, first of all, the transfer of orders is closely related to the new crown pneumonia epidemic in India. The production environment in India has been greatly disturbed, and the epidemic is difficult to end in a short time.
Currently, the cumulative number of confirmed cases of new coronary pneumonia in India has exceeded 7 million. Many medical experts in India have previously stated that according to the forecast of the growth rate of cases, India will surpass the United States and become the country with the largest number of confirmed cases of new crown in the world. India’s anti-epidemic work is facing severe challenges.
Chen Jing said that the more important thing is the supply chain management of overseas companies, and they are not allowed to switch between China and India at any time. He said that after establishing a stable production process, there will be no categorical changes without special reasons. Now that India is unable to deliver goods, overseas businesses will be forced to transfer their supply chains to China.
He said that once it is transferred to China, it will last for a period of time. Even if Indian manufacturers say that they can take orders again, the switch will be a slow process. This is because companies need to carefully examine whether they are”reliable”. After a period of time, overseas companies have adapted to China’s production system, including logistics, inspection, and customs declaration processes. If the customer finally accepts China’s cost, the order may remain in China for a long time.
Chen Jing said that the textile industry is a very special industry, such as the production of towels, bed sheets and other products, the threshold is very low, almost all countries have this production capacity. In recent years, as China’s labor costs have increased, there is indeed pressure for industrial transfer. But he analyzed that traditional industries are not necessarily low-tech industries, and the combination of high-tech and traditional industries is what China is good at.
He said that the textile industry will also see signs of technological innovation and achieve a higher level of automation to reduce costs. This is the long-term strategy for keeping orders in China.