The Indian RMG (ready-made garment) industry that saw sourcing shifting from China as a lucrative opportunity, seems to be struggling as regional competition for market share heats up.
Indian RMG exports by value have seen a sharp decline in the current fiscal year, which began in April as total trade has slid 17.6% year on year, to $4.8bn, with a YoY fall in July of 17.4%, official data shows.
The latest figures not only present a gloomy outlook for RMG exports, but is also in stark contrast to the 17% spike reported by Bangladesh apparel exporters last month, the first in its fiscal 2023-24.
According to Indian apparel industry sources, the crux of the problem is falling demand across larger economies as consumers there – facing inflationary pressures – tighten spending on discretionary items. Indian exports overall crashed for the sixth straight month in July, down 16%, year on year.
“We have inherent cost disadvantages in the absence of ‘most-favoured nation’ status in several markets, particularly the EU and the US,” an official said. “As a result, our exports are not competitive in about 80% of the worldwide market.”
He also complained that Indian RMG exporters had to deal with demands for heavy discounts from foreign buyers, on top of higher import duties.
However, Indian industry groups have embarked on a stakeholder outreach programme to publicise the bottlenecks to trade development and to identify ways to reinvigorate export flows.
To that end, officials at India’s Apparel Export Promotion Council (AEPC), have voiced concerns over growing ‘non-tariff barriers to trade’, which they said mostly came in the form of newer certifications, inspections, regulations and standards enforced by developed nations.
“Non-tariff barriers have slowly but surely emerged as a potent tool to damage, and even disrupt, legitimate trade,” said AEPC secretary general Mithileshwar Thakur. “Of late, innovative ways were being explored by developed economies like the EU to restrict imports from developing countries.
“Legislations like the CBAM [Carbon Border Adjustment Mechanism] and EUDR [EU Deforestation Legislation] violate WTO agreements and are bound to make Indian exports to the EU less competitive. So ways and means need to be explored to handle the challenges arising out of these legislations.”
The Confederation of Indian Textile Industry, a collaborative platform between government agencies and trade stakeholders, is also seeking efforts to reorient Indian apparel brands in tandem with evolving environmental, social and governance criteria.
A string of free trade agreements (FTAs) already concluded, notably with Australia, and in the works, including with the UK, combined with other labour policy reforms, could help India grab a bigger share of the global garment market in the longer term, industry observers noted.
