India’s Widening Trade Deficit with China – A Cause Concern for the Indian Textile Sector – CITI
New Delhi, Friday, August 3, 2018: Mr. Sanjay Jain, Chairman, Confederation of Indian Textile Industry (CITI) highlighted that the India’s huge trade deficit with China is a matter of great concern. India’s trade deficit with China has increased from US$ 51.1 bn. in 2016-17 to US$ 62.9 bn in 2017-18. India’s bilateral trade with China was US$ 89.6 bn. in 2017-18. India exported US$ 1,362 mn. worth of textile and apparel products to China in 2017-18 while India’s textile and apparel imports from China stood at US$ 2,905 mn., indicating a trade deficit of US$ 1,543 mn. It is pertinent to mention that during 2010-11 to 2013-14, India was a net exporter of textile and apparel products to China. However, after that India’s trade deficit with China is constantly increasing.
Mr. Jain stated that amongst the very few items in which India is more competitive than China is cotton based textiles viz. yarn, fabric and made-ups. However, our competing countries such as Vietnam, Indonesia, Pakistan and Cambodia enjoy duty free access to Chinese market while Indian products carry 3.5%, 10% and 14% duty on yarn, fabric and made-ups, respectively.
Mr. Jain also pointed out that India was a market leader in cotton yarn but lost almost 50% of its market to Vietnam over last 3 years, creating excess capacity in the system. India’s cotton yarn exports to China has decreased by 53% from 2013 to 2017 while Vietnam’s exports of cotton yarn to China has increased by approximately 88% during the same period.
Moreover, the profit margins in the cotton textiles industry are very thin, in single digit only. Therefore, the industry is very sensitive to even small changes. Hence, Mr. Jain said that if level playing field is given to India like its competitors, it can double its exports plus help in reducing trade deficit with China. CITI requests the Government to push negotiations with China to give duty free access to Indian cotton textiles.