After a long spell of gloom, things have started looking up for exporters of ready-made garments. Chasing away months of consistent decline, Indian apparel exports grew 5 per cent in January 2009 over the same month last year.
On a month-to-month basis, it is an increase of 11 per cent at $972 million, compared with $871 million in December 2008, according to the Apparel Export Promotion Council (AEPC).
Competitive pricing, reduction in bank rates and a depreciating rupee have helped garment exporters survive the recession and compete with countries like Bangladesh, which was able to pip India in garment exports to the US due to its lower production costs. For India, the US, which imports $70 billion worth of textile products every year, is the largest market, accounting for nearly a fourth of ready-made garments exported.
ON THE UPSWING (in million dollars)
India’s exports of ready-made garments
Jan 2008 Jan 2009 % change
923 972 5
April-Jan '08 April-Jan '09 % change
7771 8245 6.1
Jan-Dec '07 Jan-Dec'08 % change
India’s exports of ready-made garments to the US
3186.89 3169.93 (-0.53)
India’s exports of ready-made garments to the EU
4535.33 5089.79 12.23
The recent announcement of providing a 2 per cent duty credit scrip benefit to garment exporters to the US and Europe, which would become effective from April 1, 2009, has also lifted the spirits of exporters. The scrip, which is a cash substitute, can be used by exporters to pay for duties on imported inputs.
“Things are not as grim as we were fearing,” said Rahul Mehta, president of the Clothing Manufacturing Association of India. Exporters have started offering competitive prices and discounts to buyers matching those offered by Bangladesh, Vietnam and Combodia.
According to industry officials, Indian exporters have slashed prices by 11-12 per cent. “In order to survive and retain customers, exporters have to slash prices,” said Praveen Nayyar, managing director of Delhi-based Dimple Creations. “The main point is that there is still requirement for goods made here,” added Nayyar.
“It is a good news for the entire textile industry if the garment sector does well. This will ultimately help the upstream industry that includes yarn and fabric,” said DK Nair, secretary general of the Confederation of Indian Textile Industry (CITI).
However, despite showing an increase in growth, India is yet to regain its position among the top five suppliers in the US market, after slipping to the sixth position, behind Bangladesh, in August 2008. Bangladesh exported garments worth $3,441.64 million to the US in the January-December 2008 period, while India exported garments worth $3,169.93 million in the same period.
Seeing the contraction in demand, while exporters have started exploring other markets like West Asia, Africa, Australia and Japan, others have started looking homewards. “There is a huge market in India also, which can be tapped by exporters,” said Mehta, whose company Creative Group produces private labels for big retailers along with its own brands for the Indian market.
However, according to Nayyar, the domestic market is not yet ready and it would take some time before exporters can tap it.
According to AEPC estimates, exports of ready-made garments from India are likely to fall 24 per cent short of the $11.62-billion target for the current fiscal.
Source : Business Standard