On Monday, import restrictions were imposed by the US on certain products from the Xinjiang Autonomous Region in China, on the grounds of inhumane forced labour and illegal activities in the area, said ICRA agency report.
The rating agency stated that this could be in favor of Indian textile exporters.
Products Banned from China
The restriction is moreover region-based, but many products originate from Xinjiang, China. There is a possibility that a broad-based ban will also take place later.
Banning imports has resulted in cotton, hair products, computer parts and manufacturing, processing as well as producing apparel.
China is the leading apparel exporter in the world
Valuing more than 35 percent of the global trade and 80 – 85% of China’s cotton that is originating from the Xinjiang region. The ban could lead to a material shift for the world apparel trading in years to come.
ICRA vision for India
ICRA says the repercussions of this immediate restriction will not be quantifiable at the moment but will definitely have a massive impact on the textile market and global textile trade.
Icra Ratings Senior VP and Group Head Jayanta Roy stated that over the past few years, Bangladesh, Vietnam and India in some ways have been able to build and make their presence in the industry. India has a good chance of benefiting now as it has the next strong cotton-based presence.
This ban will be challenging as the existing systems are not aware of the origin of the raw material in the world apart from China.
Since the outbreak of coronavirus, China has been suffering to sustain international buyers as businesses have started looking for alternatives and are in the process of moving their base out of China.
There is news in the market that many apparel exporters from India have started getting orders and are also in discussion with large international buyers who are considering sourcing raw material from India. The change, which occurred now, was expected to happen progressively over the intermediate-term. Now it could be facilitated in the standing of this current development.