Domestic textile cos on the prowl to grab American pie

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Domestic textile cos on the prowl to grab American pie

India's textile exports to the US grew by 19.3% in April 2006, helping it capture a marketshare of almost 7%. From acquiring brands abroad to tie-ups to expanding capacities, domestic textile companies are leaving no stone unturned to grab a neat pie in the US.

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India's textile exports to the US grew by 19.3% in April 2006, allowing it to capture a marketshare of almost 7%. From acquiring brands abroad to tie-ups to expanding capacities, domestic textile companies are leaving no stone unturned to grab a neat pie in the US textiles market.

In absolute terms, India's textiles exports  to the US grew from USD 1.6 billion in 2005 to USD 1.9 billion in April 2006. This helped India gain its marketshare to 6.9% and made it the third largest supplier to the US. During the same period China's textile exports rose by .8% to USD 6.4 billion. India has an export target of $40 billion by 2010.

Although China still remains the largest textile exporter to the US, its market share has been steadly declining in recent times. The principal reason behind this is the levy of quotas on Chinese textiles in the US, which was to an advantage to Indian exporters. In March 2006, India's market share in the US textiles import market had touched an all-time high of 7%.

A Morgan Stanley report states that India is likely to be one of the biggest beneficiaries of restrictions imposed on China. "India gained 41 bps market share in total textile exports to the US and China lost 28 bps (y-o-y) during March due to the levy of quotas," said the report. But India will need to do much more to make spectacular dent in China's share of the US market. For the 12-month period ended March '06, India's textile exports to the US stood at $4.8bn against China's $22bn-plus.

Surprisingly, the competition with China in the textile business has an interesting side. While China is bigger than India in volumes, value-addition wise, India appeals more. Gokaldas Exports , Celebrity Fashion , and Orient Craft, are some of the companies which are big on exports. 

In a bid to capture US marketshare, some of the textile companies are even concentrating on acquiring  foreign brands. Welspun India and GHCL are cases in point. Welspun acquired 85% stake in CHT Holdings, the holding company of UK's largest and number one terry towel brand Christy for Rs 132 crore.

GHCL is a domestic soda ash company and does not have any presence in textiles. But it went ahead with two acquisitions in the last six months for about Rs 450 crore (Rs 4.5 billion). These are Dan River (bought in December 2005) and Rosebys. rosebys is UK's largest home textile retailer. Alok Industries has also chalked out plans to expand its range from bed linens to terry towels and is looking for a marketing tie-up in foreign markets.

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