Since the past three years, large garment exporting countries to the US, including China, Bangladesh, and Vietnam, have been recording decline in unit realisation. India, on the other hand, has not only maintained its realisation but also expanded market share.
According to the data from the Office of Textiles and Apparel (OTEXA), USA, the average realisation per square metre equivalent of apparels exported by India to the US has been in the range of $3.4-3.6 since 2014.
In comparison, the average for China fell by 13 per cent to $2.3 whereas for Bangladesh, it dropped by 11 per cent to $2.7. Vietnam reported a drop of 9 per cent in average realisation at $3. Due to rising labour cost in China, Chinese apparel manufacturers have been slashing prices to stay competitive in the global market.
This has affected their realisations. Industry veterans also highlight rising use of manmade fabric in garments exported to the US compared with cotton. Manmade garments such as winter-wear and other specialised garments fetch higher value than cotton-based garments.
Compared with China, which lost market share by 380 basis points to 38.2 per cent between 2014 and 2017, India's share rose by 80 basis points to 4.5 per cent. Industry observers point out that more Indian apparel manufacturers are becoming compliant to the US norms in terms of quality of products, labour conditions, and other legal aspects.
While this has increased India's cost of production, the US buyers are willing to compensate for this by paying higher prices. These reasons have helped Indian garment exporters to increase the market share as well as improve realisations.
Source: economictimes.indiatimes.com