Published By : 21 Oct 2015 | Published By : QYRESEARCH
India’s share in the global apparel trade is less likely to increase considerably in the long term unless structural changes are brought about that restrain the industry, as stated by industry body ICRA.
Due to the fragmented nature of the industry that has low levels of modernization, limited presence in man-made textile apparels, and high costs of production are the reasons that are restraining growth of apparel exports in India.
In 2014, India’s share in the global apparel trade was low recorded to be only 4%, which increased only marginally from what 3% in 2004, in spite of the abolishing of quota system from 2005.
India is ranked as the sixth largest apparel exporter in the world after China, Italy, Vietnam, Bangladesh, and Germany, with India’s share in the global apparel exports swinging in the modest 3%-4% despite the country is one of the largest producers of cotton in the world and also has the second largest spinning and weaving capacity in the world.
The global trade for apparel is highly competitive and price sensitive reflected in the modest increase in the standard realization of apparel exporters in the last decade, contrary to the relative increase in fiber costs other than increase in power costs, labor costs, and manufacturing costs.
On an average, the average price of apparel that the U.S. imports has been flat at US$ 3/ sq. meter in the last decade, whereas the average standard realization of apparel imports by EU had augmented at CAGR of 2% in the last ten years to €16/kg.
With respect to the flat to modest increase in the standard apparel realization with increasing costs in the backdrop, countries that have benefits of easy availability of cheap labor, and economies of scale such as Bangladesh, China, and Vietnam have been able to capture a larger share in the global apparel trade.