India Grabs Share From China As Textile Exports To U.S. Jump During Pandemic

India’s textile exports to the U.S. have surged this year on a rebound in demand, helping the nation grab share from China.

Total exports of yarn to household textiles to the U.S. jumped 46.4% over a year earlier in the first five months of the year to $4.5 billion (about Rs 33,000 crore), according to data by Otexa, U.S. Department of Commerce.

That came as demand recovered in the U.S. after vaccination against Covid-19 picked up pace. While exports from India jumped on a low base, a shift away from China is also underway. India’s neighbour to the east saw exports fall as American importers added suppliers outside to counter higher tariffs and diversify the supply chain.

China’s share declined from 35% of total U.S. imports in the first five months of 2020 to 28% in 2021. India’s market share rose to 9.1% from 7% a year earlier. The nation's contribution to the U.S. exports remained before the pandemic hovered around 7%.

"India has benefitted from China losing orders from the U.S. in the apparel segment, but countries like Vietnam and Bangladesh have benefited even more than us,” Rahul Mehta, chief mentor at the Cotton Manufacturers Association of India, said. This year’s data for Bangladesh and Vietnam isn’t available yet.

Overall, India is the second largest exporter of yarn after China and has a 14% market share. It also ranks No. 2 in home textiles with 11%. The nation has a 4% share in the global textile and apparel trade.

Kailash Lalpuria, executive director and chief executive officer at Indo Count Industries Ltd., a supplier to global chains including Bed Bath & Beyond and Walmart, said, “China has been losing ground due to higher tariffs, plus importing nations are looking to reduce their dependency on just one nation.”

“India has an advantage over Bangladesh and Vietnam as we have the entire supply chain—from growing cotton to manufacturing the product,” he said. “Other countries must depend on India for raw materials like cotton and cotton yarn, and enjoy a labour arbitrage opportunity.”

Demand started improving as the pandemic waned in the U.S. “The vaccination drive is almost done there, and infections have gone down, and the American economy is doing better,” according to Manish Mandhana, joint managing director at Mandhana Industries Ltd., supplier to Zara and Mango. “Hence, India’s textile exports to the U.S. have gained steam.”

People are still working from home and buying household textiles, Lalpuria said. That has contributed to higher exports.

Improving health of the textile exporters has also driven demand for credit. Data from the Reserve Bank of India shows that outstanding gross bank credit to the sector rose from Rs 1.9 lakh crore in December last year to Rs 2.05 lakh crore as of May.

Expenses also rose and payments from vendors are taking time, Mehta said. Credit time from a vendor has gone up to 60 days in some cases, he said.

Raw material prices are up, and so are logistics, container and freight costs. A shortage of workforce during the second wave of the pandemic also pushed labour costs higher. That has prompted Indian exporters to increase prices.