India exports to maintain growth but work needed
India's share in the global trade could suffer unless structural challenges are addressed
India's apparel industry is expected to maintain its growth rate by increasing exports to US$18bn this year, but its share of global trade could suffer unless structural challenges are addressed, a new study suggests.
India's apparel exports have increased at a CAGR of around 10% over the last decade and stood at $16.5bn in 2014. It is the world's sixth largest apparel exporter after China, Bangladesh, Italy, Germany and Vietnam.
According to ICRA Research India, the country's apparel exports are expected to increase to around $18bn for fiscal 2015 and to around $20bn in 2016, supported by an increase in global apparel trade and partly due to benefits of depreciated rupee.
However, despite India being one of the world’s largest cotton producers and man-made fibre manufacturers, with the world’s second largest spinning and weaving capacity, its share in global apparel exports has remained modest over the last decade at 3-4%.
“The fragmented nature of the industry with low level of modernisation, high cost of production and limited presence in man-made fibre (MMF) apparels are the main factors which have constrained the growth in India’s apparel exports,” the report authors note.
“While countries such as China, Bangladesh and Vietnam have been able to increase their share in the global apparel exports after the dismantling of the quota system in 2005, India’s share has remained modest.”
India’s weaving, processing and garment making sectors have not been able to derive benefit from the government’s Technology Upgradation Fund Scheme (TUFS) and remain fragmented with limited modernisation, the report points out.
Additionally, while India's apparel industry is mostly accounted for by MMF apparel, the country's exports are mostly concentrated on cotton apparel. High domestic prices for MMF as compared to international prices (due to trade restrictions), differential excise duty on MMF versus cotton, and unavailability of the TUFS benefits to the MMF sector are further constraints.
The report also points out that the depreciated rupee is unlikely to remain a sustainable advantage in the long-term as India’s market share in world trade has not significantly changed despite depreciation during the last three years.
“The government has taken a number of measures to address the issues of small-scale of operations, low level of modernisation and non-integrated operations by promoting schemes for development of integrated textile parks and promoting the utilisation of TUFS benefits towards sectors such as weaving, processing and garmenting by increasing the fiscal incentives available to these sectors,” the report explains.
“With growth in the economy and rising income levels, [the domestic apparel market] is expected to maintain the growth rate over the medium term.”
Click here to view the full report.
- Why do modern robotics elude sportswear makers?
- Traditional financing is a misfit for fast fashion
- Bagir CEO says suit-maker is back on track
- Trump trade policy – Who knows what he'll do?
- How would end of NAFTA affect US apparel industry?
- Bagir exports first trousers for H&M from Ethiopia
- US Q3 in brief - G-III Apparel, Express
- Fruit of the Loom CEO Medlin dies suddenly
- Crystal expands empowerment project to male staff
- Film documents Cambodia garment workers' stories
- Outdoor performance apparel 2016: A broader perspective
- Global market review of lingerie – forecasts to 2022
- Global apparel markets: product developments and innovations, October 2016
- Footwear Top 5 Emerging Markets Industry Guide_2016
- REPORT BUNDLE: Africa-Med, Southeast Asia and Central America strategic sourcing pack