Wearing apparel production growth at 9-year high in FY’14

While manufacturing sector has been on the slump for the past three years, wearing apparel segment is growing in opposite direction. It not only clocked the highest growth in fiscal 2013-14 amongst the 22 industry groups that comprises the manufacturing sector, but also at a nine-year high.

According to the Quick Estimates of Index of Industrial Production released by the Central Statistics Office for March 2014, production of ‘Wearing apparel; dressing and dyeing of fur’ was up 22.6 per cent in 2013-1, more than double the growth of 10.4 per cent registered in 2012-13. The previous high was in 2006-07 at 20.3 per cent – a year just before the global economic crisis. Production had slumped in 2011-12 but recovering in the subsequent two years.

The segment, although accounts for just 3 per cent of the total manufacturing sector in India, is a net foreign exchange earner. Garments exports from grew 15.5 per cent to US$ 14.94 billion in 2013-14, as per data collated by the Apparel Export Promotion Council (AEPC). The growth story continued into 2014-15 when the first month of the year registered an impressive growth of over 14.3 per cent. The data, from AEPC, showed that the export sector rebounded double-digit in April, with business deals concluded worth over US$1.3 billion.

However, the recent growth has come due to important external developments rather than India’s competitive edge since given the rapid depreciation of the Rupee this appear counter-intuitive. Factors like sharply rising labour costs in China and non-compliance with labour laws by garment makers in Bangladesh have played a major role in India’s export demand.

As the cost factor in China subsides and manufacturers in Bangladesh take recourse to compliance with the governing laws, this growth enjoyed by Indian exporters will be difficult to maintain in the long run. Exporters will have to become more competitive in terms of pricing, meet stricter deadlines, and deliver better quality products to buyers.