Indian apparel export growth
Indian textile industry is one of the biggest sectors in the world for apparel export and it is the second-largest source of employment after agriculture in the country accounting for 13% of the country’s industrial production. It provides jobs for approximately 45 million people and has the strength to add value in the entire value chain from fiber to yarn, fabric to apparel, and export to earn foreign currency. So, the sector has set a target to achieve $250 billion in textiles production and $100 billion in exports by 2030.
The textile industry of India has immense potential and as per various reports its contribution to the country’s gross domestic product (GDP) is expected to more than double from 2.3 % to nearly 5 % by 2030. In FY23 India’s exports of textiles and apparel including handicrafts reached at $ 36.45 billion and exports were the highest ever in FY 2021-22, crossing $44 billion. It was a substantial increase of 41% and 26% over the corresponding figures in FY 2020-21 and FY 2019-20, respectively. The share of textiles and apparel in India’s total exports was 8.0% during 2022-23 while India’s share of the global trade in textiles and apparel stood at 5%.
FY 2023 Indian textile products worth a total of $ 1.66 billion were exported in July 2023 as compared to $ 1.69 billion in July 2022. Apparel exports were $ 1.38 billion in July 2022 and $ 1.14 billion in July 2023. In FY23 exports of ready-made garments (RMG) stood at $ 16.19 billion showing a growth of 1.1% over 2021-22.
Based on product category, exports during 2022-23 witnessed a decline of -28.45% in cotton textiles followed by a decline of -11.86% in man-made textiles, 1.10% growth in ready-made garments (RMG), and -19.13% decline in handicrafts. Exports of Cotton Fabrics and Makeup stood at $ 2.75 billion during April-August 2023.
The Indian apparel sector has a massive raw material base:
India has the highest area under cotton cultivation around 39% of the world area and is the largest cotton producer of 23% in the world. So, cotton plays a major role in sustaining the livelihood of an estimated 6.5 Mn cotton farmers. India produced 90 Lakh bales of raw jute in FY 2021-22. During 2022-23 cotton production in India was estimated as 5.84 MMT i.e. 23.83% of world cotton production of 24.51 MMT. It is also the 2nd largest consumer of cotton in the world with estimated consumption of 5.29 MMT i.e. 22.24% of world cotton consumption of 23.79 MMT.
India is the 2nd largest producer of silk in the world and the world’s hand-woven fabric around 95% comes from India. The production of Eri and Muga silks, increased by 6% and 6.7% respectively during 2021-22.
Some of the challenges identified as major barriers to Indian apparel export growth that experts point out are the below –
1) Infrastructure bottlenecks and manual process
According to media reports Indian textile manufacturers are yet to adapt to modern technology and advancements. As a result, the over-dependence on manual labor is reported as causing mistakes, oversights, random negligence, frequent downtimes, and considerable loss of productivity.
Much research has shown that Indian textile mills lag in terms of infrastructure standards and production facilities from many of their counterparts across Asia.
According to an Indian media report – The Technology Upgradation Fund (TUF) was launched way back in 1999 but the government schemes to take the textile industry of India to the next level with technology adoption have somewhat taken a backseat because most of the scheme benefits have been accrued by the spinning sector which is only one segment of the overall textile value chain other segments have lagged.
2) The new Quality Control Order by the Indian government
Indian government has set a new Quality Control Order to get a certification from the Bureau of Indian Standards which requires man-made fibers, including imported ones. So, this has made it difficult for local textile makers to get these materials from abroad at affordable prices and availability.
3) Raw materials- Shortage in supply and increase in the cost
Though India itself could produce some of the basic raw materials but still some more materials are required to purchase from outside of the country. Due to environmental issues and pollution some units in China and Europe have been shut down resulting rise in the prices of basic raw materials. On the other hand, Brands are not ready to pay up that for materials due to overall inflation throughout Europe.
4) Market diversification is another challenge
About one-fourth of the total apparel exports from India go to the USA and this is the biggest destination for the Indian textile and apparel sector. During 2022-23, the USA accounted for 29% share of overall apparel exports from India and has grown from 24% share witnessed in 2019-20. Other textile export destinations for India are the EU (18%), Bangladesh (12%) and UAE (6%).
According to Indian apparel experts, Indian export must diversify to other destinations like Japan where the biggest opportunity lies for Indian apparel export. At present $25 billion worth of overall garments are imported by Japan worldwide but India accounting less than 1% whereas China has the biggest share in Japan for exporting RMG products. Though the Chinese share has a downturn rate from a high of 84% in 2008 to around 55% in 2022 the business is still quite significant. So, it has been asked India should focus more on a diversified market.
In conclusion, India is a country of long heritage for apparel production, and all its local raw materials for apparel making help the country to be a step ahead of all its business competitors. But there might be a long way to go to upgrade the industrial setup and develop work efficiency.
* The source of the article is a different media analysis.
