DOMESTICATION PRINCIPLES OF INDIA AND CHINA

INTRODUCTION:
This paper compares the domestication principles of two country India and china. As we well known that domestication is most important factor for the development of any countries. Before we get into the topic lets see what is domestication. Domestic Economy means the internal local economy of that country. When we discuss about domestication we comes into a concept called DOMESTIC MARKET. It is a part of nation market that represents the system of trading securities located within the nation. Now let us see about the domestication situation of India and China.

DOMESTIC MARKET IN INDIA: Overview of Indian Textile Industry

To see in detail about domestic market in India lets take textile industries. India is the second largest manufacturer in world today next only to China. India is among the very few countries which have a presence of complete supply chain, from natural and synthetic fibers right up to finished goods manufacturing. The industry holds vital importance in Indian economy too. With an estimated domestic consumption of ~ US$ 57 billion and an export value of ~ US$ 34 billion; it contributes to about 6% of the US$ 1.7 trillion Indian economy. The share in total exports also stands at a significant 11% of the total Indian exports and 5% of the global trade in textiles and clothing. The industry holds importance from the employment point of view as well. It is estimated that ~35 million people are directly employed in this sector, whereas an additional ~55 million are employed indirectly. Apart from the employment potential, the large number of skilled and unskilled activities in the industry makes the sector extremely important from the perspective of inclusive growth.

Domestic Consumption
The total Indian consumption of textiles and apparel is estimated at ~US$ 57 billion, out of which apparel retail contributes to ~ US$ 40 billion, technical textiles contributes ~ US$ 13 billion and home textiles contributes ~ US$ 4 billion. The market has grown at a yearly growth rate of 13% over last 5 years. The domestic consumption has been fueled by several factors like growing consumer prosperity and awareness, increasing availability of product variations, catching up with international trends, growth of organized retail, etc. On the basis of these factors, it is estimated that the Indian domestic consumption will become ~US $ 100 billion by 2016 growing at an overall annual rate of 12%.

External Trade
Indian textile and clothing exports have come a long way in last decade or so, tripling the exports value in this duration. Indian textile & apparel as an export category has outperformed several large textile producers of past including Germany, Italy, USA, Turkey, etc. The reasons for high growth of textile and apparel exports from India is countrys strong raw material base, design and skill heritage, manufacturing capacities that are flexible for small orders, manpower cost competitiveness and governments incentive schemes for export promotion. India also imports textile and apparel goods to the tune of US$ 4 billion, which comprises mainly of products like high end woolen / worsted fabrics, coated and performance fabrics, other technical textile and specialty products, fine cotton yarn dyed fabrics, premium and super premium garment categories, etc. The main reason of imports is unavailability of these products. In recent years even some inexpensive commodity articles like raw silk, other fibers, basic fabrics and garments have also made in-roads from suppliers like China.

Key Challenges
Indian textile and apparel industry suffers several challenges in aspects of production marketing, and support infrastructure. Due to its inherent nature several challenges are shortterm but cyclical, which have a global nature and may not be avoided like raw material price changes, currency fluctuation, etc.

DOMESTIC MARKET IN CHINA

. China will still need to more accurately align its domestic policies to the market situation if it expects to insulate itself from global fluctuations. (Photo/Xinhua) The poor economic data in recent times has shown that the Chinese government's plan to shift the economy's dependence from exports to domestic demand failed to mitigate the impact of the global economic downturn. China recorded a nearly three-year low of 7.8% in annual economic growth during the first six months of this year, with a purchasing manager index of below 50 in recent months, pointing towards a contraction in industrial activity. Exports were also affected by the European debt crisis and barely showed year-on-year growth in the past few months. Meanwhile, the retail sales of consumer goods grew at a less-than-impressive annualized rate of a little over 10% in recent months. China's target of 13% or more for the average annual rise in its minimum wage during the 12th Five-Year Plan period between 2011 and 2015 makes it vulnerable to global economic problems. At nearly double its goal of 7.5% for annual economic growth during the same period, such a target puts pressure on China's domestic and foreign employers. Further, Chinese people show a low marginal propensity to consume goods and services. This is why domestic consumption has not grown significantly despite China's rising wages, since people prefer saving their increased incomes. In addition, the ongoing

appreciation in the Chinese yuan against the US dollar around 30% during the five years after foreign exchange reforms were introduced in July 2005 have also forced exporters to downsize or shut down production. China should review its policy on minimum wage hikes, so that pay rises can be more closely linked to the country's economic growth. The government should also improve the social benefits available to the lower social classes, supporting small and micro businesses with tax reduction, as these measures can boost consumption more than wage hikes can. China should further allow its foreign exchange rates to reflect the country's trade situation, depreciating its currency to ease the pressure on its exporters, since the relatively flat currency rates in recent days have not been able to stabilize the economy. In conclusion, China needs to introduce revolutionary policies to stimulate domestic consumption, so that its economy can be more insulated from global events such as the European debt crisis. PRESENT INDIAS SITUATION REGARDING DOMESTIC INDUSTRIES: Domestic market in India is getting down day by day. There are lot of reasons behind that. The government has not given proper attention to them. There is no proper maintenance of domestic market. Foreign goods has ruined this industries. No proper funds are provided to maintain those industries. To overcome the above mentioned problems or struggles Indian government can do the following reforming activities Government can develop the domestic market instead of concentrating on foreign goods. Can make people aware of the domestic market. Encourage domestic market people by giving them certain previlages. Financial aids can be provided. More domestic industries can be developed which may reduces unemployment problem. These are the present domestication level of India and china.