RMG exports from India jumped 33pc in FY15 and is likely to continue the uptrend

As per the latest data of Ministry of Textiles, India’s exports of readymade garments jumped 33 per cent from INR72,592 crore in 2013-14 to INR96,523 crore in 2014-15. Experts opine that the stupendous uptrend will continue for the next three years. The expectation is based on three fundamentals. One, export incentives from the government, second, revival in demand from major markets such as US and Europe and, three, increase in manufacturing costs in China.

In the new trade policy, the government has provided export incentives to the tune of 5-6 per cent to garments exporters and this has gone down well with garment exporters. This is one of the chief reasons why textiles companies are finding it relevant and profitable to export garments than raw materials.

A national daily quoted Jayesh Shah, chief financial officer at Arvind saying: “With the government’s focus on Make in India theme, there is an increasing focus on facilitating exports of garments. A case in the point is the government’s decision to provide exports incentives in the range of 5-6 per cent to garment-exporters from India in its new trade policy. I think India’s garments exports’ story is a five-year story.”

Demand revival in the US and European Union emerging from economic activities picking up in these markets has boosted garment export during the year. Krunal Modi, Manager with CARE Ratings, stated that export of readymade garment witnessed a healthy double digit growth can be primarily attributed to healthy demand from the US and the European Union which accounts for bulk of the apparel exports from India.

Lastly, there is shift in demand for garments from China to India due to rise in labour and power costs have made production in China expensive compared to India.

In contrast to growth readymade garments export, cotton yarn export has been tepid. According to YnFx – Fibre and yarn Exports – India report, export of cotton yarn declined 29 per cent to INR20,890 crore in 2014-15 as China reduced its buying from India. IN US$ terms export of cotton yarn declined 17 per cent to US$3,440 million with volumes at 1,081 million kgs.