Apparel industry expects uptick in exports in last two quarters

After tepid growth in last few months, apparel industry is expecting revival in exports on account of festive, spring and summer orders in the West.

As per data from Apparel Exports Promotion Council (AEPC), readymade garments (RMG) exports had fallen by 2.44 per cent to stand at $1.26 billion in dollar terms in August 2019 compared to the said month last year and fell again by 2.17 per cent in September 2019 to $1.07 billion. As a result, cumulative RMG exports in dollar terms during April-September, 2019-20 have stood at $7.8 billion registering a marginal growth of 2.06 per cent.

Further, apparel exports to the largest market US showed a steep decline of 13 per cent in April-August 2019 as compared to that in April-August 2018. The exports to other major markets including Germany, UAE, Spain, France and UK have also declined.

However, according to industry representatives, given India's strength in predominantly cotton fabric based garments, the spring and summer shipment in the remaining two quarters of October-December 2019 and January-March 2020 are likely to see an uptick.

"Europe is going slow and the US growth has not been as buoyant as expected. However, spring and summer is India's strength and this could lead to some growth in the remaining two quarters," said Sivaramakrishnan Ganapathi, managing director of Gokaldas Exports Ltd., one of the largest garment exporters in India.

As such, the remaining two quarters tend to perform better than the first two, said Prashant Agarwal, joint managing director of Wazir Advisors, a leading apparel and retail consulting firm. "It is now that order booking is really good with lot of exporters, especially medium players are totally booked. If you compare with last year, overall buying would be a bit low," said Agarwal.

According to Clothing Manufacturers Association of India (CMAI)'s analysis of financial filings of select apparel manufacturers and fashion brands & retailers for the first quarter of fiscal 2019-20, most companies showed an increase in their operating revenue.

"Growth in operating profit margins (OPM) for majority of companies was very high. The increase in OPM percentage of fashion brands & retailers is mainly because of a change in regulation in Ministry of Corporate Affairs," the industry body stated.

Ganapathi added that when compared to last year, the overall growth in apparel exports is expected to be flat for the industry in general. Meanwhile, Agarwal pegged the growth in Q3 to be around 4-5 per cent, similar to last year.