Despite concerns from non-governmental organisations and trade unions in the West about India's credentials when it comes to sweatshop labour and basic workers' rights, the country is eyeing ambitious growth plans for its textile and clothing industry over the next five years. But are the official targets realistic? asks Jozef De Coster.

At the inauguration of the Tex-Styles India trade show in New Delhi earlier this month, Indian Commerce and Industry Minister Kamal Nath threatened to retaliate against what he sees as measures by EU countries to create non-tariff barriers for Indian exports by bringing social and environmental issues into sourcing decisions.  

It was not the first time that Minister Nath has raged against non-governmental organisations and trade unions in the West for claiming Indian suppliers employ sweatshop labour and violate basic workers' rights.

Among the Indian garment manufacturers who were accused of labour abuse in 2007 were Gokaldas Exports and Texport Overseas (accused by Brussels-based labour union federations) and Fibres and Fabrics International (under attack from the Clean Clothes Campaign).

Growing clout

However, Kamal Nath's public denouncement of actions undertaken by Western organisations illustrates India's growing clout.

For the past few years, GDP growth in the world's largest democracy has nearly equalled that of China, rising 9.6% in 2005-06 and 8.7% in 2006-07.

For the financial year 2008-09, Finance Minister Chidambaram predicts that the economy will again grow close to 9% in real terms.

India aims to uplift its textile and apparel production, from nearly US$50bn in 2007 to $115bn in 2012 - a leap of 130% in just 5 years.

It also wants to increase its annual textile and clothing exports from less than $20bn in 2007 to $50bn in 2012 - a growth of 150%.

Nikhil Meswani, executive director of Reliance Industries, the world's biggest polyester producer, says he also believes that Indian textile and clothing exports will attain $90bn by 2020.

Realistic targets?

Are the 2012 official targets realistic? At the recent simultaneous textile fairs Tex-Styles India and Intex, in New Delhi, two different sets of answers could be noted.

Some exhibitors believe that the export target of $50bn in 2012 is beyond reach.

They point out that the rise of the rupee against the dollar (up 12% in 2007), a range of infrastructure deficiencies (roads, ports and airports, electric supply) and outdated labour laws are serious obstacles to further high-speed growth.

Some claim they cannot catch up with highly flexible Chinese competitors as long as they are hampered by restrictive labour laws.

And they generally seem to support the idea, popular among textile and clothing associations, that the legal maximum of working hours should be extended from 48 to 60 hours per week.

The view that the appreciation of the rupee will inevitably have negative consequences for the international competitiveness of Indian exporters is supported by recent trends in Indian garment exports to the EU, which rose by a very modest 0.6 % in 2007 to EUR3,833m.

Statistics for April to June 2007 show that exports of woven apparel to the US dropped by 9.8% while exports of knit apparel grew by 7.7% compared to the same quarter in 2006.

During the same period, Indian exports of woven apparel to the EU rose by 1.1% to $610m, while exports of knit apparel decreased by 4.9% to $452m.

Bullish mood

In spite of these rather gloomy export results, many exhibitors at the March 2008 Indian textile fairs were in a bullish mood.

In particular, they pointed to India's strengths - which include the variety of its offer, design capabilities, favourable government policies and huge investments from fibre production through to apparel manufacturing.

Probably more than in any other Indian textile centre, investment fever runs high in the Surat textile cluster in the state of Gujarat, where over 600,000 textile looms are installed.

A major effort towards vertical integration in garment manufacturing is underway here, and it's expected that in the next three years more than 30,000 embroidery machines will be installed, most of them of Chinese origin.

Surat is situated mid-way between Mumbai, once India's textile capital, and the denim city of Ahmedabad.

Surat's Chamber of Commerce is lobbying hard to get an international airport near the city in order to reduce dependence on the facilities in Mumbai and Ahmedabad.

Even in the Indian denim sector, where a wave of investments has reportedly lifted annual production capacity to 550m metres, capacity building goes on.

At the Intex fair, LNJ Bhilwara showed the first collection from its new 12m metres denim plant with which it will compete with Arvind, Raymond, Century Textiles and the like.

Almost 70% of India's textile and garment exports are transacted in US dollars, which makes the appreciation of the rupee a real headache.

According to Finance Minister Chidambaram, exporters must learn to adjust with it. He said there should be no more relief measures for the sector besides what has recently be granted (mainly a 3% hike in duty drawback).

However, at the inauguration of Tex-Styles India, Commerce Minister Kamal Nath, who knows well the sector having been Textile Minister 12 years ago, argued that the social and economic importance of the sector justifies other special relief measures.

Organic cotton explosion

It is difficult to say whether the rapid growth of India's organic cotton apparel offer is a result of increasing ecological awareness or simply of Indian marketing savvy.

According to non-profit organisation Organic Exchange, in 2006-07 India was the world's second largest producer of organic cotton after Turkey.

Indian production in 2007 was estimated at 14,000 tons. It's believed there are about 30,000 organic cotton growers in the country.

At the March 2008 Indian textile fairs, numerous exhibitors flaunted their eco-credentials.

Monika Aggarwal, director of the organic clothing exporter SRC Creations, showed a pile of purchase orders. SRC Creations has more than 12,000 hectares of organic cotton under contract.

The company 'Made in India' said it is selling organic cotton children's wear to C&A in seven countries.

Sanjeev Hota, export president of Alps Industries, a large integrated producer of fashion accessories and home textiles with more than 2,500 employees and a turnover of $110m in 2006-07, says Alps has more than 200,000 hectares of organic cotton under contract.

Around 60% of turnover already comes from organic cotton products, and the company is growing at full speed.

Investments of $85m in new spinning capacities and $16m in new weaving facilities are expected to help triple turnover in 2007-2010.

Alps enjoys process patents for the application of natural dyestuffs which are valid until July 2014.

It also claims to be the first Indian company to experiment with recycled cotton, and also works with exotic fibres like milk fibre, corn and soya fibre.