Stronger Rupee Plays Killjoy As India’s Garment Exports to US Reach Top Notch

Economy

Stronger Rupee Plays Killjoy As India’s Garment Exports to US Reach Top Notch

In the first half of 2017, Indian garment exporters have created history of sorts by notching up the top spot for market share in the category “men/boys knitwear shirts cotton”. This is the first time that Indian exporters have reached the top of the ladder in this category.

The reason for this historic feat was however, attributed to an external stimulus in the form of a slowdown in the Chinese markets. Despite having achieved this historic feat, garment exporters in India sounded a cautionary note stating, “The appreciation of the rupee against the dollar in recent times will pose a major hurdle to our staying on top in this segment of garment exports. We have been able to achieve this feat mainly because the US market unlike other countries gives us a level playing field. This enabled us to give a run for the money to other countries exporting garments in this category.”

Supportive data that indicated this trend was released by the US department of Commerce’s Office of Textile and Apparel. According to the figures made available, India has exported 8.5 million dozens of men/boys shirts cotton to the United States. In percentage terms, India had contributed to 8.7 percent of the total U.S. imports of garments falling under this category in the month of June.

From a trending perspective, India had experienced a decline in garment exports under this category in 2014. Ever since the initial decline, India has managed to steadily increase its market share in the segment. Figures that put this trend in perspective indicate that way back in the year 2013, India had a market share of 6.4 percent which fell to 6.2 percent in 2014. Subsequently, there was a steady uphill climb India witnessed in this sector and the figure for the year 2016 stood at 7.8 percent.

Significantly to be noted is that over the corresponding period of time, China’s market share in this segment moved from a dizzy 11 percent in 2012 to 9.6 percent in 2016. The current figures for China stand at 8.5 percent. Heartening trend that indicates India gained when China lost is augmented by the fact India increased its export share in other categories of garment exports to US too which include women/girl’s knit shirts, blouses, cotton men/boys trousers, breeches, shorts and cotton nightwear/pajamas.

However, having being able to capture the market share which China has lost in this segment has failed to make the Indian exporters happy. “There is stiff competition coming from Vietnam and Bangladesh on this front. Figures made available indicate that Vietnam’s export in this garment segment stood at 8.47 million dozens.

A spokesperson for the south-based garment exporters was of the view that heavy investments in this sector had managed to boost the market share for Indian goods in US for the same. Reiterating the exporters’ sentiment that US is the sole country that offers a level playing field to India’s garment sector, he added, “At present we seem to be losing the edge we have over other countries as the cost of production is mounting on the domestic front.”

Other exporters too echoed the same sentiment in unison stating, “Going forward it will be difficult for India to compete with countries like Vietnam and Bangladesh mainly because of increase in the cost of production of our goods.”

“The main factor contributing to the increase in cost of production is the appreciating rupee against the dollar. While we quote a mere 3 to 5 percent higher figure in terms of price owing to the rupee appreciation, to be adequately compensated for the losses we incur, we would need to implement a 7 percent hike,” opined an exporter. He also pointed out that competitors had depreciated their currency at the same time and were quoting lower prices.