Indian garment exporters have been bagging more orders from the traditional export markets since April. Among the many reasons are a depreciating rupee, recovery in the US, rising cost of Chinese manufacturing and a hardening yuan and, last but not the least, Bangladesh.
The garment industry in Bangladesh has been facing labour compliance problems after the collapse in May this year of Rana Plaza that housed hundreds of garment units has raised human rights issues and social unrest.
As a fallout, several importers in the US and Europe are reportedly ditching Bangladesh and looking at alternate supplies, including from India.
Aggravating the situation in Bangladesh, 250 garment factories near capital Dhaka were forced to shut down on Wednesday, following labour unrest over demands for higher wages.
The earlier developments seem to have already had some positive effect on Indian exports. The latest labour disturbance can further expand India’s opportunities.
“Last year our garment exports declined to below $13 billion from $13.5 billion in the previous year,” said DK Nair, secretary general, Confederation of Indian Textile Industry (CITI). “However, since April exports have been growing by 15 to 17 per cent and we will probably clock an export revenue of $17 billion this year. It seems business orders are getting diverted to Indian manufacturers, as many have reported a spurt in orders,” he said.
According to Amit Ladsaria, director of Turtle, Indian garment firms which contract-manufacture on behalf of US, European brands or retail chains are certainly getting more orders. According to data from the Apparel Export Promotion Council (AEPC), Indian garment exports to the European Union increased by 5.9 per cent year on year in January-May, while those of China and Bangladesh declined by 9.7 per cent and 1.8 per cent, respectively.
In September apparel exports rose by 14.95 per cent to $1.11 billion. In the first half of the financial year, India exported apparel worth $7.9 billion, a rise of 13 per cent over the year, according to AEPC data.
In terms of apparel export growth during April-August, the highest growth was registered by the Southeast Asian region followed by West Asia, North America, EU, Latin America and Southern Africa. South Asia registered a decline.
Bangladesh is not just India’s competitor in garment exports, but it also imports Indian yarn. Fortunately, the yarn industry has not seen any drop in demand from Bangladesh. On the other hand, the Bangladesh events have upped the Chinese demand for Indian yarn.
“China imports yarn from both Bangladesh and India. Around 40 to 50 million kg of Indian yarn goes to China. After the events in Bagladesh, China is looking at India as an alternative source. A Chinese delegation headed by its textile minister is now in India. Indian yarn producers are also increasingly receiving enquiries from Chinese companies,” said K Selvaraj, secretary general of the South Indian Mills Association.
“Indian garments are up to 18 per cent costlier. While Bangladesh has the benefit of zero duty for imports into European Union, Indian garments attract 9.6 per cent duty,” said V D Zope, secretary general of the Textile Association of India. “Indian garment manufacturers are largely small and medium in size, compared with the large units in Bangladesh. We lack the capability to handle bulk orders and our response time is also longer,’ he added.
“In the past three or four years, very few factories have been set up in the country. Labour availability has also become worse due to rural job schemes. People in rural areas are finding it easier to stay in their hometown,” said Rahul Mehta, president of the Clothing Manufacturer Association of India.
“Labour shortage is the biggest problem preventing India from taking advantage of the situation. While our labour is already expensive, the shortage only aggravates the problem,” explains a Tiruppur-based exporter, who declined to go on record. “The power shortage, though eased to an extent now, also aggravates the problem. Hardly 30 per cent of the units in Tiruppur are operating today; several others stopped operations.”
The gains from the rupee depreciation have been offset by higher diesel prices and inflation. “Even the benefits of a depreciated rupee come about six months after orders are booked. We neither have the bulk capacities to cater to big global customers nor the skilled labour to get into value- added products,” he added.
Joseph Thomas of Joes Merchandising Services feels the best way forward is “to opt for the Turkish model – small volumes but really high-end value products.”
“But, the problem is, we are still dishing out cotton-based garments, whereas the bigger pie is in other fabrics like recycled polyesters, organic cotton, silk and other fashion driven blends,” he added.
Source:- mydigitalfc.com
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