Southern California-based Indian-American entrepreneur Gaurav Bhargava, who hosted Piyush Goyal, Minister of Commerce & Industries, Consumer Affairs, Food & Public Distribution and Textiles in Los Angeles recently, says his heart beats for India and wants its economy to grow, but also urged the Indian government to work on its policies.
Bhargava, a textile importer, pointed to India’s neighboring countries said even when our neighbor does not produce cotton, it still exports more textile products than India. “Their Apparel Exports are high volume,” he said.
In an interview with indica he says the right policy changes in the Indian textile industry will help India achieve greater heights and more export value.
According to the government of India data, the domestic apparel and textile industry in India contribute 2% to the country’s GDP, and 7% of industry output in value terms. The share of textile, apparel and handicrafts in India’s total exports was 11.4% in 2020-21.
India holds a 4% share of the global trade in textiles and apparel. India is the sixth largest exporter of textiles and apparel in the world.
Besides, India is one of the largest producers of cotton and jute in the world.
Born in Delhi, Bhargava is the founder and president at LPH Apparel Inc, located in Santa Ana, California and primarily operates in the ready-to-wear sector and enhances job opportunities in the U.S. while promoting collaboration with India. He recently imported pillow filling machines from India. He has been in this business since 1990, and opened his first boutique in India in Delhi in 1991.
Excerpts from an exclusive interview:
Q: What led you to host the minister of commerce and textiles?
A: He has the most diversified portfolio with him. My friends and I had a lot of questions and concerns regarding how to improve and boost textile imports and other sector exports from India. I am also well connected in India where there are concerns that voices have to be heard in terms of what is restricting me and what is restricting other retailers to go there and invest in India. Lot of retailers want to move production out of China and we have to make it a point to how can government help.
The first thing is that cotton pricing is outrageous in India, compared to the neighboring countries. When we asked him, the minister countered that when the cotton prices were low we didn’t complain. But,when the prices are low it helps India too as we are able to meet the prices with the rest of the world. When prices are high then it
becomes difficult for importers like us in the US because the cost is too high, and the retailers are not increasing the prices. The US economy is also in a challenging situation in terms of the stock market and retailers not doing well.
If we cannot provide better services, deals and regulate pricing to them, vendors from another country come in and offer to do a better job. The transit time from some Asian countries is between – 11-15 days on a boat, as compared to India where the transit time is 30 days to the East Coast and anywhere between 45-75 days to West Coast.
We don’t know where the problem is – the larger spinners are able to import the cotton crop but the small guys are facing shutdowns or are closing down because they cannot afford and people cannot afford to pay. More than 30% of spinning mills in India are small and medium-sized, *maximum mills of this size are already closed and if cotton rates remain high then small and medium-sized mills in India will disappear completely.
The second point is that the Indian exporters can procure equipment without duty, but they are putting a cap on the exports. I don’t understand how the exporter will meet their cap if the cotton prices are high. The retailer is not loyal to anybody. Loyalty is with consistent pricing and quality. Right now, quality is the foremost thing but pricing is definitely a crucial factor. To top it all there are so many logistical issues. The importer has to face many challenges with delays that could possibly cause the risk of cancellation.
It is not a smooth ride for the importer of textile products, garments, handicrafts, or home goods. Right now, there are millions of units sitting on the floor because the retailer canceled or extended the orders to next year even if the delivery was a week or 10 days late.
Q: What do you import from India?
A: We import apparel, home goods, and other textile products. India has always been known for producing cotton garments. But, India has to work on fabrics that blend with spandex. The demand in world is increasing for stretch fabrics in women’s dresses, and athletic wear. India is lacking, and is nowhere in this sector.
Q: What does India need to get this specialization?
A: To develop the capability of making finished fabric in spandex blends. India is unable to fulfill the demand for this particular product. Lack of machines, technology, and there’s a complete vacuum in that whole space. Nobody has thought of even setting up a zipper plant in India. India imports something as basic as zippers from overseas. Good quality zippers come from Japan.
We want the government to take away the export caps so that the cotton producers and textile manufacturers in India are not in tension or worried that they will not be able to meet the export cap or deliver the requisite volumes. Then, even if there is technology and machines and the raw material is expensive the problem remains.
If India is one of the world’s largest producers of cotton then why are the prices so high? We fail to understand that. The minister was not very clear on the reasons behind the high price of cotton in
India. Nobody regulates the cotton prices in India, it’s an open market, and that’s the problem.
Q: What are the other challenges? Why do you believe in Indian cotton?
A: Being Indians we want to support the Indian economy and provide as much employment there as possible. We also like India because it is able to produce small and big quantities. India is more reliable in doing business in comparison to other countries. A lot of other countries do not have the raw material but still are producing large
quantities of product.
Bangladesh is an example, it does not produce cotton and still, it exports more textile products than India. Their production capacity is so high!
What is their winning strategy and what is our losing strategy? India is not as focused on developing textile sector as it should be. Pakistan, where floods destroyed cotton crops, still supplies us with products at a lower price. There the factories are compliant, some of them are modern factories, and are supplying the products at good prices which somehow India is unable to do. India’s competitors in cotton manufacture and export are China, Pakistan, and Bangladesh. If we are going to invest in India and do business with India then the structure should be seamless. During the last 5-7 years the government has done a lot in this direction but still it needs improvement.
While hosting the minister, our intention was to put these queries and concerns to him so that some steps can be taken.
Q: Your main concerns are pricing, delivery of the material to the port, and there should not be any cap on the exporters?
A: Yes, that’s right. Post covid the market is in recession. It will be a tough battle for retailers. The sales are down, people are not spending as much. Next year we might see a lot of stores closing because of low demand.
Q: How did Bangladesh get an upper hand in the textile business even though it does not produce cotton?
A: Bangladesh has many more modern technological factories compared to India. Bangladesh invested in equipment and the textile manufacturers there became more cost-effective. Even a small factory is doing very large volumes. India lacks good factories and equipment owing to the export caps. Hopefully, someone listens and starts putting the right equipment in place so India can produce. India also lacks printing facilities, even for T-shirts and wash houses for Denim. There is a limited number of people who can actually print. Only a few exporters in southern India can do it, but they are very few and they are running to capacity. They are also selling more to Europe.