China produces about one-third of the world's textiles. By 2008, it could get a whole lot bigger as Chinese textile exports will be completely free from quota restrictions, reports CNBC-TV18.

Europe and US are the biggest garment markets in the world, with consumer spends of about USD 700 billion. China and India compete head-on to sell to these markets and post the quota regime, the war has intensified.

China is investing billions of dollars in this sector, half is spent on importing equipment to improve quality and operational efficiency. India is still struggling with government regulations and lack of R&D investment.

Priyank ,Textile Manufacturer and Trader, said, “Regulations in India do not allow Indian companies to do as much R&D.” 

Kanika Dewani, Fashion Designer and Textile Trader, said, “China has a more Western pallete of design, so they attract more buyers from US and Europe.”

China is also focussing on branding strategies to ensure that the textile battle is not just a price war. There is a definite cost advantage with China being the largest producer of yarn, wool fabric, silk fabric and chemical fiber. Materials from china like silk, crepe, chiffon are not only 30% cheaper than what India offers, but also 25% better in quality. Where India exports textiles worth about USD 300 million to China, its imports from China exceed USD 600 milion. In fact, a lot of Indian companies are now setting up base in China as well.

Shaoxing is the textile capital of China, about 300 km from Shanghai. There are over 1,500 Indian families living there, involved in textile manufacturing and trade.

Last year, the trade volume between India and Shaoxing alone was worth USD 145 million. For China, India is only one of many markets hungry for its cheap textiles. The total textile output from China is over USD 400 billion. India will need to change it policies and invest aggressively in technology and innovation to achieve its target of USD 55 billion by 2010.