India eyes $300mn garment-textile industrial park near Ho Chi Minh City

India will take the initiative of the Trans-Pacific Partnership deal, which will offer a boost to the Vietnamese garment and textile industry

A worker is pictured at a textile plant in Ho Chi Minh City in this photo illustration.

India is planning to establish a US$300 million industrial park specializing in garment and textile material production near the southern Vietnamese economic hub of Ho Chi Minh City, local media quoted a senior leader of the Synthetic and Rayon Textiles Export Promotion Council of India (SRTEPC) as saying earlier this month.

"It is the efforts of Indian companies to take the initiative of the Trans-Pacific Partnership [TPP] trade deal which will offer a boost to the local garment and textile industry,” Vinod K. Ladia, chairman of the SRTEPC, said at the Indian Textile Exhibition 2015 (Intexpo) at the Tan Binh Exhibition and Convention Center in Tan Binh District, Ho Chi Minh City.

According to Ladia, the new industrial park will focus on producing products related to textile and fabric materials.

It will also accommodate manufacturers making products for large orders for Indian exports to Vietnam in the fields of healthcare, household appliances, and furniture.

"These high value-added products cannot be manufactured in Vietnam now. As a result, instead of importing from India with high taxes, now we will open our production bases in Vietnam to reduce costs," Ladia told Nhip Cau Dau Tu (Investment Bridge) newspaper on the occasion of the exhibition that lasted from April 9 to 12.

Although Vietnam is one of the leading countries in exporting garments, it is dependent on other nations – mostly China – for its textile input.

The Southeast Asian country imported more than $440 million worth of textile products from India during the financial year ending March 2014, with the main items being polyester viscose and synthetic fabric, polyester wool fabric, and polyester filament yarn.

India’s exports of synthetic fiber to Vietnam went up from $36 million in 2009 to $89.09 million last year, an increase of 146 percent.

Meanwhile, India has a sufficient supply of materials for the Vietnamese textile industry, Ladia said, adding that the cooperation between India and Vietnam will bring mutual benefits: a new export market for India and an ample material supply for Vietnam.

Vietnam also imports cotton from India. In 2014, cotton imports from India were valued at $266.170 million, accounting for 18.5 per cent of $1.443 billion worth of cotton imports into the Southeast Asian nation.

With its large population, India is a potential export market for the Vietnamese garment industry, the SRTEPC chairman added.

India is the world’s second largest manufacturer of cotton, silk, cotton cellulose, and fibers with approximately $100 billion in revenue a year, of which $40 billion was from exports, he said.

However, the shipment of such high quality textile materials to Vietnam has faced a lot of hurdles due to the complicated payment mechanism and time-consuming shipping process, Ladia complained.

But this will change soon with the coming TPP, he added.

Indirect benefit from TPP

"Though India is not participating in the TPP, we have cogent reason to invest more in Vietnam to indirectly benefit from the deal because Vietnam imports fabrics from India," Nhip Cau Dau Tu quoted Srijib Roy, director of the SRTEPC, as saying.

Last year, the Indian government approved a credit program for collaborative projects between India’s textile industry and Vietnam’s worth $300 million.

"The preferential credit package is for Indian businesses to engage in exporting to and investing in Vietnam’s market, or for Vietnamese businesses to cooperate with Indian firms in the garment and textile field or to plan on importing raw materials from India," said Nguyen The Hung, deputy director of the Ho Chi Minh City branch of the Chamber of Commerce and Industry of Vietnam.

According to Ladia, if the industrial park in the south of Vietnam is established and developed effectively, the SRTEPC will consider another one with the same operational model in the north.

"We have sent information to the Vietnam National Textile and Garment Group and the Vietnam Textile and Apparel Association to promote investment in the project," he said.

Manoj Kumar, a representative of the Indian Consulate General in Ho Chi Minh City, said that there is a bright prospect for Vietnam-India cooperation as the southern region is very proactive in international economic integration.

Vietnam is the main market in India’s “Look East” policy with promising opportunities for garment industries of the two countries, he added.

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