Indian apparel exporters record dramatic gains

November 27, 2006

Now that India is no longer constrained by quotas, its intrinsic competitiveness is being revealed. Even though China has made bigger gains in market share last year, India’s impressive performance means it now looks set to be one of the world’s biggest locations for outsourcing textiles and apparel in the future, according to a new report.

Indian apparel companies have achieved dramatic success in the first year of quota-free trade. The country’s textile and apparel sales to the EU grew by 30% last year while those to the USA soared by 34%.

By contrast, EU imports from all sources rose by only 8% in 2005, and US imports increased by just 6% according to ‘India’s Textile and Apparel Industry: Opportunities for Sourcing and Collaboration’ – a new research report from Textiles Intelligence.

Growth in sales of Indian textiles and apparel in these markets was much faster than shipments from other suppliers – with the exception of China.

Indeed, many of India’s competitors suffered badly as their sales to the EU and the USA either fell or grew only slowly.

This confirms, says Textiles Intelligence, that smaller players achieved much of their success in previous years because giants such as India and China were being held back by quotas.

India has done especially well in cotton skirts. Sales of these products to the EU soared by 304% in 2005 while those to the USA leaped by 239%.

Other fast growing categories in the EU market included cotton T-shirts (up 68%), women’s and girls’ cotton blouses (up 56%), men’s and boys’ knitted cotton shirts (up 54%), women’s and girls’ man-made fibre blouses (up 52%), and men’s and boys’ cotton trousers (up 50%).

In the US market, India achieved outstanding success in women’s and girls’ cotton knitted shirts and blouses (up 103%), women’s and girls’ cotton trousers, slacks and shorts (up 86%), man-made fibre skirts (up 69%), and men’s and boys’ cotton trousers, breeches and shorts (up 50%).

International competitiveness
The strong international competitiveness of India’s textile and apparel industry can be attributed to a number of major factors.

Prominent among these, according to the new report, is the fact that India has a complete supply chain – from fibres to finished products.

At the start of the supply chain, India is one of the world’s biggest suppliers of raw cotton. At the end of the chain, India is capable of supplying large volumes of apparel and home textiles – and the quality of its products is improving all the time.

The industry in India is vertically integrated and new technology is being installed at an ever expanding rate.

Added to that are India’s low labour costs, its experience, entrepreneurship and strong design skills, and its large domestic market which cushions export risks. Exports have been helped by a government which is highly supportive of Indian exporters.

The industry in India is also highly flexible. Large firms are able to export basic apparel products which require large-scale production, while small and medium size firms can offer high fashion garments which need to be manufactured in small quantities and delivered quickly.

Besides apparel and home textiles, ‘India’s Textile and Apparel Industry: Opportunities
for Sourcing and Collaboration’ examines India’s enormous yarn and fabrics industry.

While serving local needs, this industry has also emerged as a huge exporter and India now ranks among the top few suppliers in the world.

Major exporters
As well as being a major exporter, India also provides growing opportunities for foreign investment, collaboration and joint ventures following a liberalisation of its foreign direct investment (FDI) policy.

Other drivers of investment and collaboration include India’s expanding domestic market for foreign brands and the benefits to be gained from partnering with competitive Indian firms for selling in overseas markets.

While FDI in the past has been small, it has been growing rapidly in recent years. Since 2003 it has doubled every year and there is enormous potential for future growth.

A number of well known foreign retailers and leading apparel brands are sourcing large and growing volumes of their apparel and home textiles from India in order to take advantage of the country’s strengths.

Examples include Carrefour, Decathlon, Gap, H&M, JC Penney, Levi_Strauss, Marks & Spencer, Metro Group, Nike, Reebok, Target, Tesco, Tommy_Hilfiger and Wal-Mart.

Now that India is no longer constrained by quotas, its intrinsic competitiveness is being revealed.

The number of companies and brands sourcing from India in the future – and the scale of their sourcing activities – will therefore increase sharply in coming years, the report predicts.

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