Indian Companies Face Challenges From Influx of Cheaper Chinese VSF Ahead of Quality Control Order

The Indian textile industry is currently facing challenges regarding the impending enforcement of a Quality Control Order (QCO) for different textile input materials. This has led to certain issues, as Chinese exporters are flooding the Indian market with low-cost Viscose Staple Fiber (VSF) and polyester in anticipation of the QCO, which is set to be enforced from October 1st. Brij Mohan Sharma, the Joint Managing Director of Rajasthan Spinning & Weaving Mills, has voiced the industry's worries about this situation.

While large players in the textile sector view the QCO as a positive step to improve quality and competitiveness, micro, small, and medium enterprises (MSMEs) are facing difficulties due to their reliance on imported raw materials and the potential consequences of the impending standards. The Joint Managing Director of Rajasthan emphasized that China is aggressively introducing lower-quality VSF products into the Indian market at Rs. 5-7 per kilogram cheaper than domestically produced VSF. This move is seen as an effort to take advantage of the time gap before the QCO becomes effective.

Given the current situation, experts are urging policymakers to focus on the cotton value chain, a critical component of the Indian textile industry. Despite being a major global cotton producer, India is at risk of transitioning into a net cotton importer. This looming issue results from multiple factors, including significant cotton exports and production drops during the ongoing fiscal year.

The US Department of Agriculture (USDA) has forecasted a 19-year low in India's cotton exports for the crop season spanning October 2022 to September 2023. This projection is based on the anticipation that farmers will shift their focus to more profitable crops such as oilseeds and pulses, leading to further declines in cotton production.

Against this backdrop, Indian cotton yarn exports reached a ten-year low of 664,000 tonnes in 2022-2023. The Joint Managing Director of Rajasthan emphasized the need for a balanced approach, highlighting that the government's emphasis on garments and technical textiles should not overshadow the foundational strength of the Indian textile industry, which lies in cotton. He acknowledged the value of organized export promotion but cautioned against neglecting cotton's crucial role in India's textile landscape.

Despite these concerns, attempts to seek clarification and guidance from the textile ministry have gone unanswered. This lack of response has left industry participants and stakeholders eagerly awaiting further information about the forthcoming quality control order and its potential consequences for the sector.

In summary, the Indian textile industry is contending with the influx of low-quality VSF from China ahead of the impending quality control order. While the order is anticipated to elevate the quality and value of Indian textiles, the challenges faced by MSMEs and the potential impacts on the cotton value chain are pressing matters that require thoughtful attention and prompt intervention from policymakers.