India losing ground in apparel exports

High prices, long delivery time, late adaptation to new trends taking a toll

India is losing ground to new competitors like Indonesia, Bangladesh, Vietnam, Turkey and Mexico in apparel exports to high-margin western destinations, primarily owing to three factors: the high cost of manufacturing, longer delivery time and delay in adapting to trends.

While countries like Indonesia, Bangladesh and Vietnam receive preferential treatment due to the low cost of manufacturing, Turkey and Mexico are quickly adapting to new trends. “By the time countries like India and China understand this trend, their competitors like Turkey and Mexico deliver goods…Not only has the delay in understanding the trend led to this, the rapid execution of orders due to a geographical advantage have helped Turkey and Mexico score over India and China,” said Rahul Mehta, president of the Clothing Manufacturers Association of India and vice-president of the Asian Apparel Federation.

Exporters from Turkey and Mexico can deliver apparel to the European Union in a week. India takes two to four weeks to deliver these. Generally, Indian apparel exporters receive orders three months ahead of the Christmas season for the delivery of goods in one and a half months. According to D K Nair, secretary general of the Confederation of Indian Textile Industry, this year, export orders have been lower, with the scenario likely to remain dismal even after Christmas.

While apparel exports fell 7.2 per cent to $989 million in August, for the April-August period, these plunged 12.16 per cent to $5.26 billion. The decline was, however, in line with the fall in overall exports, which fell 6.79 per cent to $143.6 billion in the April-September period. Apparel exports account for about 50 per cent of textile exports.

“The global financial crisis emanating, inter alia, from sub-prime mortgages and unregulated credit default swaps is behind us. However, the sovereign debt crisis in the Euro zone followed immediately thereafter. The weak recover in that region and the US has reduced the purchasing power of the people in these markets, leading to a shortfall in the overall demand. I request the government to ink the India-EU FTA (free trade agreement) soon, because EU is our biggest market and the textile sector would benefit from this,” said Apparel Export Promotion Council Chairman A Sakthivel.

“Apparel produced in competing countries like Bangladesh, Mexico and Vietnam is cheaper compared to India. Therefore, customers in the US and the Euro zone are sourcing from these countries,” said Mitesh Shah, vice-president (finance) at textile exporter Mandhana Industries. Prices of Indian apparel are 15-20 per cent higher compared to other countries.

Sakthivel said ahead of the Christmas and New Year season, exporters were hardly getting orders. Total apparel exports might not exceed last year's figure of $14 billion, Nair said.

Now, Indian exporters are also targeting new destinations like China, Latin America, Norway, South Korea and Russia. However, the US and European markets would be difficult to substitute, as they are high-margin export destinations. Earlier, Indian exporters focused on knitwear and woollen wear. However, in the last couple of months, they have started offering other products such as trousers, kids wear, pullovers and jackets in their portfolios.