Estimated de-growth of India's apparel exports to be 4-5 per cent

According to the ICRA report, In the fiscal year 2019, India's apparel exports are said to de-grow by 4-5 per cent, which follows a similar de-growth of 4 per cent in the last financial year. The growth rates for the same in FY2016 and FY2017 were one and 3 per cent respectively.   

In recent months, a reversal in trend has been witnessed with a 14 per cent Y-o-Y growth in India's apparel exports in Q3 FY2019. Amid downward revision in export incentives under the GST regime, this growth is overstated considering a sharp decline reported during Q3 FY2018. Hence, during the past five years, India's apparel exports in Q3 FY2019 remained lower than the average quarterly exports. Though, in spite of the pace of recovery likely to remain muted considering the challenging environment, ICRA expects this trend to have bottomed out and recovery to set in with internal challenges and abrupt pressures subsiding.

Mr Jayanta Roy, Senior Vice-President and Group Head, ICRA, while making a comment on the subdued industry stated that so far, the dip in the country's apparel exports this financial year, is mainly driven by a sharp inexplicable decline seen in shipments to the UAE from July 2017 onwards. Even then, the trend has not be too encouraging; India's apparel exports was flat (vis-à-vis a 7 per cent dip in India's overall apparel exports) in 10M in this financial year. It remains worrisome as this weakness coincides with a time when the world's apparel trade has portrayed a positive momentum, he added.      

India continues to experience headwinds in the form of intense competitive pressures from countries that have a cost advantage over India, according to ICRA note. This apparently constrains the overall momentum of the apparel export sector of the country.

Mr Roy further stated that India has not been able to capitalise on the opportunity though the world's largest apparel manufacturer and exporter, China, continues to shed market share in the global trade. In fact, a huge chunk is taken by the second and third largest apparel exporting countries globally— Bangladesh and Vietnam. In the EU, Bangladesh has been the key beneficiary and in the US, Vietnam has maintained growth in its stronghold.


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