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Indian garment exports to US headed for a record surges this year

YarnsandFibers News Bureau 2014-12-31 10:00:00 – New Delhi

India’s textile and garment exports strong performance this year was a reflection of a combination of global factors — a steady improvement in demand as the American economy picks up, a progressive decline in Chinese exports to major markets such as the US, currency appreciation in Indonesia, labour unrest in Asian competitor Cambodia and safety concerns after a major factory fire in Bangladesh last year.

Textile and garment industry was one sector where the Centre’s ‘Make in India’ pitch seems to have found an ready resonance, with India’s exports to its largest single market, the US, headed for a record surge in the year 2014.

A steady revival in the US economy hold out hope for the coming year, with the buoyancy in the aggregate demand for textile and apparel products likely to continue in the coming months. Exports to mainland Europe too have reported a surge this year, with this renewed buoyancy in the textile and apparel exports marking a departure from the sluggish growth trend in the previous three years, which was helped by a perceptible improvement in raw material supplies.

According to the US department of commerce’s Office of Textiles and Apparel (OTEXA) data, Indian textile and apparel exports to the US increased nearly by 6.5 percent between January and October compared with an average 2 percent annual growth in the last five years.

The growth in exports this year is being seen as significant as it happened despite the sharp strengthening of the rupee since September 2013.

While the steady pick-up in US demand is a major factor, larger domestic cotton supplies are also helping India push textile and apparel exports, said a senior executive of Aditya Birla group firm Grasim on the sidelines of a recent conference.

India is projected to be the world’s top cotton grower this year, ahead of China for the first time in over three decades, according to a September 12 US department of agriculture forecast that has been backed up Cotton Association of India.

Added to this is a series of problems encountered by India competitors. Cambodia, in June this year, saw labour unrest as angry workers rampaged through a textile plant that supplied US sportswear company Nike Inc, clashing with police over their demands for a pay hike. The collapse of the Rana Plaza garment factory in Bangladesh last year has had a continuing impact in terms of orders being diverted to India and other markets because of concerns over Bangladeshi workshop safety while textile manufacturers in Vietnam, one of the fastest growing supplier base, have been weighed in by the high cost of credit.

Both Bangladesh and Cambodia have seen a contraction in exports to the US, a factor that has helped India alongside the continuing slowdown in Chinese supplies on account of surging labour costs. Indonesia, another major exporter, too recorded a sharp contraction in the growth in export shipments to the US during this period, primarily on account of the Indonesian rupiah’s appreciation since January 2014.

The pick-up in performance, visible in the export of Indian apparel and textiles, is also matched by a revival of sorts visible in domestic sales.

The improvement in India’s textile sector, primarily linked to the surge in shipments to the US, is visible in the domestic industrial output numbers. The IIP (index of industrial production) estimates for April showed a sharp 7 percent increase under the textiles head, coming in the wake of strong performances in both March and February.

Readymade garments played a significant role in India’s double-digit export growth in May, clocking a 25 per cent increase (year-on-year). The turnaround is significant as India has been steadily losing ground to Bangladesh, Vietnam and Indonesia in the U S market for apparel and textile products.

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