The first year of the non-quota regime for textiles has seen Indian exports to the US grow by 27 per cent y-o-y to $4.6 billion (Rs 20,425 crore), according to the data released by the Office of Textiles and Apparels, USA.
China's exports to the US in the same period increased by 54 per cent to $22.4 billion.
The pace of domestic exports has picked up significantly in the last quarter since they rose just 20 per cent between January and September 2005 and 24.18 per cent between January and June 2005.
The dismantling of quotas have given exports a boost, as the growth in 2005 was much higher than that in 2004 by 13 per cent y-o-y in dollar terms.
Indian textile firms have also sold much higher volumes in 2005 at 2,335 million square metres, a rise of 22 per cent y-o-y, compared with an increase of just 15 per cent y-o-y in 2004.
While China was expected to be the biggest gainer after phasing out of the Multifibre Agreement, given its far higher capacities whether for spinning or weaving, and it's ability to price products more competitively. India too was expected to benefit, especially in the apparels category.
Quota premiums in the apparel category accounted for as much as 25-35 per cent of the selling prices in a quota regime and consequently ate into profit margins.
That problem appears to have been resolved: Indian firms sold apparels worth $2.97 billion in 2005 an increase of over 34 per cent, compared with a growth of just 10.7 per cent y-o-y in 2004.
The story has been somewhat different for non-apparels, which grew at a lower rate of 15.8 per cent y-o-y in 2005, compared with 17 per cent y-o-y in 2004 in value terms.
This is despite the fact that in volume terms the growth at 18.34 per cent y-o-y has been higher in 2005 than in 2004 when it was 15 per cent.
With India's advantages of cheap skilled labour and access to low cost cotton, industry watchers say that total exports of textiles could grow as much as 35 per cent over the next few years with it's share doubling from the current four per cent in five years.
While China's growth could be much higher, India firms may benefit from US imposing restrictions on Chinese textile exports in certain categories.
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