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India-Vietnam textile cooperation: A win-win situation
28
Jan '15
The textile and clothing industries of India and Vietnam are more complementary than competing in nature. Both can end up in a win-win situation by cooperating with each other, says Rajesh Kumar Shah

With annual exports of around US$ 40 billion, India is currently the second-largest textile and clothing exporter in the world, next only to China. However, nearly $25 billion of this amount is earned by exporting textiles like yarn and fabric, with China being a leading destination, especially for yarn. On the other hand, Vietnam’s annual textile and garment exports currently stand at around $23 billion, with apparel accounting for a major share. However, being raw material-dependent, the country imported $12.5 billion worth of textiles for its garment industry in 2014.

While India is raw material-sufficient, Vietnam is dependent on other countries, mostly China, for its textile inputs. Given this, an India-Vietnam textile cooperation could be a win-win situation for both countries—helping Indian textiles industry get a new market, and Vietnam an extra source of supply. Further, India also provides a huge market for Vietnamese garments.

India as raw material supplier to Vietnamese garment industry

Vietnam has a high demand for textile raw material imports while India offers these materials at highly competitive prices globally, said Manikam Ramaswami, chairman of the Cotton Textiles Export Promotion Council of India (Texprocil), while leading a trade delegation to Vietnam last August.

In 2014, Vietnam’s cotton imports from India were valued at $266.170 million, accounting for 18.5 per cent of $1.443 billion worth of cotton imported by the Southeast Asian nation, according to data from the customs IT & statistics department, general department of customs, Vietnam’s ministry of finance. Similarly, Vietnam imported $76.783 million and $56.491 million worth of yarn and fabric from India last year, representing 4.9 per cent and 0.6 per cent of Vietnam’s total imports of $1.558 billion and $9.427 billion, respectively. This shows that there is huge opportunity for substantial growth in Indian yarn and fabric export to Vietnam.

On the other hand, China was the main fabric supplier, accounting for $4.663 billion or nearly half of all fabric imported by Vietnam in 2014. For Vietnam, finding material suppliers from countries is necessary to reduce its dependence on China and also to prepare itself for the 12-nation Trans-Pacific Partnership (TPP) agreement, which is currently in the final phase of negotiations. The TPP agreement is likely to apply the yarn-forward principle, wherein fabric and garments made from yarn imported from China, which is not a part of TPP, would not enjoy duty-free benefit for exporting to other TPP-member countries.

‘Make in India’ presents opportunity for Vietnamese garment industry

The Indian government recently launched the ‘Make in India’ initiative to attract foreign investors in its manufacturing industry, including the textile and apparel sector. This is being backed up with emphasis on skill development. The Apparel Training and Design Centre (ATDC) has already taken a lead in offering certificate, diploma and advanced diploma courses in seven textile/apparel clusters across the country.

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