China is going through one of its worst phases, with the rapid spread of novel Coronavirus. The lockdown of an entire city, as well as the precautionary stalemate of an entire country, along with the rapid spreading across various countries of the world, has affected businesses and trading on a global scale. World Trade Organization has stated that the scenario is going to have a “substantial” impact on the global economy. Many countries have stopped trades with nations like China, South Korea, Japan, Singapore, Iran, Germany, France, Thailand and other coronavirus-affected countries. Italy has become the epicenter for corona virus infection in Europe sending many countries to enforce lockdown. Many major companies like Nike and Amaon have completely shut down their European operations for the time-being. So how does it stand for the textile industry, especially the Indian Textile Industry?
The Indian Textile Industry took a major hit, as China, its leading importer of cotton and yarn, stopped accepting any shipments, as the market came to a standstill due to the Coronavirus outbreak. India exports 90 million kilograms of yarn (mostly greige/grey cotton yarn) a month and China alone imports approximately 30% from India in a month. Sutlej Textiles, one of the leading producers of value-added dyed yarn in India, has had minimal impact due to its dissimilar product portfolio, and also due to their customer spread across 65+ country-markets. However, for smaller exporters, who solely depend on their exports to China and other Coronavirus-affected countries, the scenario is completely different and they are the ones who are hit the most due to this calamity.
Also, India is a big importer of ancillary textile products like buttons, needles, zips, etc., which is estimated to be worth Rs.1000 crores from China. This import is also shut down, affecting the Indian Textile Industry heavily. China being 40% cheaper for these products, it has now become a rather costlier affair to obtain these products domestically or from other countries.
As far as the business is concerned about textile industries in India, this abrupt halt to one of the largest importers, however, did come with a positive. On the global scale of import-export, the countries which used to import from China are looking outside for newer partners. In this scenario, India has suddenly found a whole new potential of buyers. India has received an increasing number of enquiries, from major clientele like US and the European Union, seeking to replace China as a supplier to fulfil their requirements.
Although a few challenges remain in front of the Indian suppliers, as India tries to fulfill the incoming orders efficiently due to production load. India can still fill a gap if the Government provides some tax benefits or intervenes to help in any way possible. However, it is too soon to say about the full extent of the effects of this deadly epidemic. For the time being, it remains to be a test of resilience and patience for the industry.