US, EU markets continue to show fluctuating demand even in festive season difficult for long-term strategy
Exporters of readymade garments are now shifting their focus from the developed markets to the domestic market, as well as other rapidly developing markets in Asia.
In the American market, though demand in the festive season rose 15-20 per cent compared to the previous festive season, post-festive orders weakened. The divergent trends discouraged Indian readymade garment manufacturers from adopting a long-term business strategy for that market. From the European Union (EU), too, orders during the festive season were weak.
“Garment manufacturers will have to look at the domestic markets, if they have to survive. Also, they would have to explore markets other than the US and EU,” said Rahul Mehta, president, The Clothing Manufacturers Association of India.
Data compiled by the ministry of commerce showed India’s textile exports declined 8.19 per cent to $18,678.64 million in April-November 2012, compared with $20,345.76 million in the corresponding period of the previous year. The share of textiles to India’s overall exports fell to 10 per cent during the period, compared with 10.12 per cent in the year-ago period.
The changing sentiment has hit small companies hard. “India’s fabric is going to Bangladesh only to come back as finished products. This could make survival difficult for small Indian players. For big companies, however, orders continue to flow in. The trend is likely to continue in the future,” said Sanjay Lalbhai, chairman and managing director, Arvind.
“My own company, Creative Casuals, has been concentrating on the Indian markets since the global economic meltdown in 2008. From no domestic presence three to four years ago, we have managed to get about 35 per cent of the business from local sales,” said Mehta
A couple of years ago, then textiles minister Dayanidhi Maran had asked domestic garment makers to shift their attention to the domestic market.
To grab the attention of customers, local garment manufacturers have commenced branding, labelling and attractive packaging of garments. Kaytee Corporation, a specialist in children’s wear, recently introduced the ‘U-Sport’ line of casual wear. “The business sentiment has totally changed in the last two years. Until two years ago, we were focusing only on exports. But the dwindling global economic situation has forced us to look at the domestic market for survival. Now, we are strategically focusing on the domestic market, which has yielded 25-30 per cent of our turnover so far this year, compared with nothing two years ago,” said Premal Udani, managing director of Kaytee Corporation and ex-chairman of the Apparel Export Promotion Council.
Meanwhile, garment exporters have urged the government before it signs the free trade agreement with Thailand, it should negotiate for a value addition clause of at least 30 per cent. While Thailand has easy access to China, Taiwan and Bangladesh, free import from that country into India would hit the domestic garments industry.
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