labels: mckinsey, textiles, dhl worldwide express
India could be next biggest winner after China, says DHL-McKinsey study news
Our Economy Bureau
25 March 2004
Mumbai: Following the lifting of the existing multi-fibre agreement (MFA) quota restrictions on apparel exports from December 2004, India could be the biggest winner after China says a McKinsey study commissioned by DHL, world leader in express and logistics.

According to the DHL-McKinsey Apparel and Textile Trade Report, the value of the global textile and apparel industry is likely to go up to $248 billion by 2008, with China, India and Pakistan expected to be the "clear winners". The report forecasts that India has the potential to increase her share from the current 4 per cent to 6.5 per cent valued at $16 billion by 2008.

The report noted that by 2013, exports from India could grow 15 per cent to 18 per cent annually amounting to over $30 billion provided reforms are implemented.

However, the study sounds a note of caution - the window of opportunity is closing soon and the status quo export growth is likely to be only 8 per cent per year if such reforms are overlooked.

At a special event organised by the Indo-German Chamber of Commerce, John Mullen, chief executive officer - Asia Pacific, DHL International, presented a copy of the report to S BMohapatra, textile secretary, Ministry of Textiles. The German ambassador, Heimo Richter and DHL's regional director, Bryan Jamison were also present.

"Increased sourcing from low cost economies is now a matter of time with quota restrictions on apparel exports being lifted from January 2005. The question is who will be the winners. We know China has an advantage. But we are also very bullish on India and we hope the findings from the DHL-McKinsey Apparel and Textile Trade Report serve as a catalyst for the future growth of exports from India," said Mr. Mullen.

Outlining the key imperatives for India, Charlie Taylor, partner, McKinsey Singapore, said that while some progress had been made such as de-reservation and piece rates for garment exporters, key reforms are still required if India is to capitalise on the emerging opportunities.

Some imperatives identified in the report include:

  • Creating level domestic market playing fields by extending dereservation, uniform application of excise taxes and further reduction in import duties on apparel, textiles and machinery
  • Revising labour laws (flexible exit policy), improving infrastructure (minimise power outages and port delays) and improving availability of high quality textiles in order to increase FDI (foreign direct investment)
  • Establish bilateral agreements with US and EU under the quota free regime, to be competitive against other low cost exporters such as Sri Lanka
  • Setting up institutes for training skilled operators on techniques

For local manufacturers to maximise their opportunities, the report has the following recommendations:

  • Make organisational improvements to minimise absenteeism, rejection levels and delays
  • Make technology investments to speed production and gain scale
  • Develop relationships with the right customers
  • Address supply chain needs: optimisation of time to market and logistics costs, reliability, security and visibility

The report was initiated to understand the structure and expected changes in the textile/apparel industry in the Asia-Pacific. The project was undertaken in 12 countries covering retailers, brand owners, sourcing agents, suppliers, trade associations and government boards.

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India could be next biggest winner after China, says DHL-McKinsey study