Exporters set eye on China for labour-intensive goods.

In a reversal of trend, Indian exporters have set eyes on China mainly for export of labour intensive products to make up for decline in demand from traditional markets like Europe and US. Besides, rising labour cost in China and shift in country’s policy towards more machine-made products has created a vacuum for hand-made items.

“Indian exporters have to be very aggressive in China as the shift in domestic policy there has opened up huge opportunities for us, especially those associated with labour-intensive sectors like carpets and handicrafts. The cost of manufacturing has gone up in China with nearly 20 per cent increase in labour wages in last one year. This has given a big boost to purchasing power of Chinese and as the wages go up by another 15 per cent each year for the next five years, there will be huge demand for Indian products in China,” Raseeque Ahmed, president of federation of Indian exports organisation (Fieo) said.

On Monday, Fieo top brass interacted with members of forum for financial writers (FFW), an umbrella body of media professionals covering economy sectors.

The move to go aggressive with China is intended at bridging the burgeoning trade deficit between the two countries. The balance of trade stood at $ 23.8 billion last financial year in favour of China with imports pegged at $ 43.4 billion and exports touching $ 19.6 billion only. India at present exports raw material like cotton, copper, ores and organic chemicals to China while imports various electrical machinery and equipments to iron and steel.

Take for instance Xining, the capital of Qinghai province in China that is also the largest city on Tibetan plateau. Being one of the coldest cities, it is home for Chinese carpets. However, almost whole of carpet manufacturing in China has moved to machines and hence there has been a rising demand for woollen carpets from India.

“There is not a bigger market than China for carpets mainly because lot of construction is happening there and the in-house production of woollen carpets is bare minimum. With the kind of potential that is emerging from there, we expect the China alone will contribute nearly 20 per cent to total carpet exports from India in five years,” OP Garg, chairman of the carpet export promotion council said. At present, $12-15 million of India’s carpet exports, which is worth $800 million, is happening to China and the council expects that this would go up to $200 million in five years when total carpet exports would be nearly $1 billion.

Rakesh Kumar, executive director of the export promotion council for handicrafts also feel that the shift in China from hand-made to machine-made products will spell a bonanza for Indian handicraft exporters who continue to stick to the traditional way of making handicrafts.

“China is competitively considered as a new market as we have an edge in handcrafted items, metal ware and wooden handicraft. We hope that in years to come India can leverage on this to penetrate deeper into the handicraft market in China,” he added.

Source : mydigitalfc.com