China is expected to edge out all other textile and garment exporting countries in the quota-free era from January next year because of its sharper competitiveness in the form of cheaper labour, grey fabric and economy of scale in production.

Indian textile industry sources said China, with over $60 billion worth of exports and one of the most cost-effective destinations for textile production, is being viewed as a key place for partnership tie-ups and outsourcing.

The emerging view in India is that instead of regarding China as a threat in textile sector, one should tap opportunities for investment in the textile industry of that country.

The Confederation of Indian Industry (CII) is likely to send a delegation of textile manufacturers to take part in an international textile and garments exposition in China in September, according to Piruj Khambatta, chairman of Gujarat state unit of the CII. Gujarat is one of the leading textile manufacturing states of India.

Since China offers cheap labour, competitive interest rates and better infrastructure, many Indian textile firms are keen to join hands with their Chinese counterparts, Khambatta said.

The sources said some Indian firms would not be averse to looking at the possibility of setting up manufacturing units in China or forming marketing collaboration with the Chinese.

A leading textile and garment manufacturer said they may examine the possibility of sourcing its grey fabric requirement from China.

At present, half of its fabric need is met from domestic sources and if China offers better quality and price, the company may not be averse to procure fabric from that country, a top official of the company said.