India is one of the few countries in the world with a relatively complete textile manufacturing industry chain. It is the world's second-largest cotton producer and second-largest chemical fiber producer, accounting for 23% and 9% of global cotton and chemical fiber production, respectively. Its spinning capacity accounts for approximately 22% of the global total. India ranks second and third globally in textile and garment exports, respectively. According to UN statistics, India exported US$35.49 billion worth of textiles and garments in 2019. The textile industry is an important consumer goods and export-oriented industry in India, contributing about 7% of the country's industrial output and 15% of its export value annually, directly employing over 45 million people.
Following the outbreak of the COVID-19 pandemic, India implemented lockdown measures to control the epidemic, halting production and port operations, which severely impacted the textile industry chain. Textile companies experienced reduced operating rates, increased closures, and rising unemployment. While a phased reopening began in June, leading to a period of gradual economic recovery, the recent resurgence of the pandemic, coupled with labor and supply chain issues, has hindered many export businesses from operating normally and delivering goods on time, resulting in the loss of export orders.
According to data from the Indian Ministry of Commerce and Industry, in April 2020, India's textile and garment exports plummeted by 87.5% year-on-year. The rate of decline narrowed monthly thereafter, with a 10% year-on-year increase in textile and garment exports in September, marking the first month-on-month positive growth in the fiscal year (India's 2020-2021 fiscal year starts on April 1). However, cumulative exports remained negative. From April to September 2020, India exported US$10.97 billion worth of textiles and garments, a decrease of 31.7% year-on-year. By product category, the decline was largest in garment exports, which account for 43.6% of India's total textile exports. From April to September, India exported US$4.78 billion worth of garments, a decrease of 39.3% year-on-year. Exports of chemical fiber textiles (accounting for 13.2% of India's total textile and garment exports) also declined significantly, falling by 38.7% year-on-year from April to September. Cotton textiles (36.6% of exports) and carpets (5.4% of exports) saw relatively smaller declines of 19.5% and 14.4% year-on-year, respectively. Production in India's textile industry also slowed significantly due to work stoppages and reduced production. According to data from the Ministry of Statistics and Programme Implementation, in April 2020, the decline in India's textile and garment production reached 90.8% and 94.1%, respectively. Given the ongoing severity of the pandemic, production has yet to recover and shows signs of further slowing.
The outlook for India's textile industry remains uncertain due to the pandemic. While the initial growth in cases was slow, the situation worsened in the second half of the year, with daily new infections exceeding 70,000 in mid-September. Media reports indicate that textile factories have experienced significant reductions in production capacity, hindering their ability to consistently fulfill international orders. Statistics show that the US and the EU are the primary export markets for India's textile industry, accounting for 23.8% and 19.3% of its total textile and garment exports in 2019, respectively.
Since May, the US and EU economies have gradually restarted, and consumption of textile and garment products has begun to recover. Retail sales in the latter half of the year have recovered to approximately 85% of the same period in 2019. Due to significantly reduced inventory levels among brands in the early stages, the upcoming Christmas and Black Friday shopping seasons have prompted brands to place orders. However, the worsening pandemic has prevented India from fully capitalizing on this wave of orders, and the textile industry continues to face significant challenges. In mid-October, the rating agency ICRA indicated that Indian garment exporters may see a 20%–25% decline in sales revenue in the 2020–2021 fiscal year, while manufacturers focused on the domestic market are expected to see a 30%–40% decline.
Due to the significant success of China's domestic epidemic prevention and control efforts, the country's textile industry chain and supply chain have gradually returned to normal operation since mid-to-late April. Following the reopening of the US and EU markets, Chinese export companies have seen an increase in orders, and the total value of textile exports has turned positive in the second half of the year and is showing signs of accelerating growth. According to research conducted by professional associations affiliated with the China National Textile and Apparel Council, some Chinese textile companies have indeed received orders transferred from India, Bangladesh, and Sri Lanka, due to the inability of South Asian factories to guarantee timely delivery. These transferred orders include a relatively high proportion of home textile products, such as towels and bedding.
China's significant achievements in epidemic prevention and control have provided fundamental support for the development of its textile industry. Compared with South Asian and Southeast Asian countries, China's textile industry boasts advantages in its complete industrial system and stable supply capacity, which have become particularly prominent during the pandemic. However, in the long term, factors influencing the adjustment of the international textile industry layout, such as manufacturing costs and the international trade environment, remain fundamentally unchanged. The COVID-19 pandemic will also significantly impact the layout of the international textile supply chain, and a trend toward greater verticalization and decentralization of industry and supply chains is expected. China's textile industry will inevitably need to further adjust its approach to participating in international industrial division of labor and resource allocation under the "dual circulation" framework. Overall, in response to orders transferred from South Asia, China must ensure product quality, provide excellent customer service, and maintain a good reputation. However, it is also important to recognize that short-term order inflows do not represent a long-term trend. China's textile industry must resolutely advance transformation and upgrading, continuously improve labor productivity, resource allocation efficiency, and independent innovation capabilities, and steadily optimize its position in international industry and supply chains.
