Indian Apparel Exports To Grow Despite Stiff Competition From Asian Neighbours

Apparel, Footwear, Fashion

Indian Apparel Exports To Grow Despite Stiff Competition From Asian Neighbours

Despite stiff competition from Bangladesh and Vietnam, the Indian apparel sector is headed for a healthy surge in exports mainly aided by Chinese manufacturers choosing to move up the chain and switch to electronic goods and other value-added industries.

Currently, India is in a favourable position in the apparel trade, stated a report that was sourced by CARE ratings. The low side of the report stated that increasing competition from Bangladesh and Vietnam and the passage of the Trans-Pacific Partnership there is a strong probability of moderation of demand for Indian apparels.

Another contributing factor to the moderation was cited as the British pound depreciating against world currencies including the US dollar and the Indian rupee. This is expected to result in a surge in the prices of Indian apparels that are slated to be exported to Britain which in turn will result in slump in Indian exports.

The report then dwelt on the positive side, stating, “The Indian government has set in motion efforts to support the apparel industry. This coupled with declining competitiveness of Chinese apparel will help Indian apparel surge ahead in the international market.”

The reason for China becoming less competitive was also stated in the report which mentioned that the country has witnessed a sustained rise in cost of wages that has resulted in higher apparel prices. Consequently, China has shifted the product base from apparels to higher value-added industries like electronics. It has now cut down on the lower-value added chain goods like textiles and apparels for a good part. The report stated that this was a golden opportunity for South Asian countries including India to boost their export share.

According to a World Bank study, in the event of a 10 percent increase in the prices of apparels exported by China, the US would increase its imports from India by 14.62 percent. The corresponding figure for Bangladesh would be 13.58 percent. However, the biggest beneficiaries would be countries like Vietnam and Cambodia that could witness an increase of exports by 37.71 percent and 51.25 percent respectively.

The problem Indian apparel exports are facing right now is the higher growth rates of apparel exports from competing nations like Bangladesh and Vietnam. These countries are supported by favourable government policies and strong incentives for the apparel and textile sector. They also enjoy a favourable trade agreement with the European Union (EU) and the US which happen to be the largest importers of apparels.