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Rediff News  All News  » Business » Fewer bells ring for Indian apparel exports this Christmas

Fewer bells ring for Indian apparel exports this Christmas

December 20, 2012 14:00 IST

With Bangladesh and Vietnam giving a tough competition to India, Christmas may not be as merry for apparel exporters as last year. According to industry players, exports have been dwindling by 8-10 per cent, as against an anticipation of 20 per cent growth.

A decline in manufacturing competitiveness of Indian apparel players coupled with demand erosion from West European and North American markets has led to the scenario.

"We were anticipating a steady growth of 20 per cent, especially during Christmas, in apparel exports. However, the scenario has been worsening since sometime resulting in a further decline of 8-10 per cent in apparel exports instead," said Rahul Mehta, president of Clothing Manufacturers Association of India (CMAI).

While the scenario has been worsening since June, the industry was anticipating a revival during November-December in the wake of Christmas festive demand from abroad. However, exports are declining almost by a billion dollar this month.

In the month of June itself, India's garment exports declined from $ 1.2 billion for June last year to $ 1.1 billion this year. Annually, India's garment exports are estimated at around $ 14 billion.

"There are two factors that have played against strong export growth anticipations during Christmas, namely decrease in manufacturing competitiveness and tough economic times in West Europe and North

America. Unlike our competitors Bangladesh and Vietnam, India's dependence on the western markets is still over 70 per cent despite the garment industry trying to look for newer markets," said DK Nair, general secretary of Confederation of Indian Textile Industry (CITI).

For instance, according to A Sakthivel, chairman of the Apparel Export Promotion Council (AEPC), the industry body took a 25 exporters' delegation to visit Israel and Japan, apart from African and South American countries.

According to Prashant Agarwal, joint managing director of apparel consulting firm Wazir Advisors Pvt. Ltd., the US and Europe together account for about 70 per cent of India's total garment exports.

However, as compared to its competitors like Vietnam and Bangladesh that peg a double digit compounded annual growth rate (CAGR) in apparel exports, India registered only two per cent in last five years.

"India's competitors are growing faster in terms of apparel exports. This explains why India needs to diversify its apparel exports reach and look for new markets. India could look at markets like Japan, Canada, Israel, South Africa, Russia and Australia for spreading its apparel exports beyond the US and Europe," said Agarwal.

The five markets of Japan, South Africa, Israel, Russia and Australia alone have an apparel export potential of $70-80 billion for India, Agarwal added. Meanwhile, as against exports, the domestic market has been growing steadily at 10-15 per cent.

Vinay Umarji in Mumbai and Ahmedabad