Lil Mathew
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India’s apparel exports are rising, primarily because the country is eating into the shares of neighbouring China and Bangladesh. Exports from India are being driven by demand from major textile importing regions such as the US and Euro zone.
Currently, China is facing high labour costs, and this is working in India's favor. Also, the yuan has risen against the dollar, and this has reduced its competitive edge. In September, Bangladesh saw a protest by labourers, who demanded higher wages. Also, the collapse of Rana Plaza, a huge garment factory in Bangladesh on April 24 2013, has caused concern on safety and working conditions in that country.
Exports from India, on the other hand, have been aided by the falling rupee. India's garment exports to the European Union increased 5.9 per cent year-on-year in January-May 2013, while those of China and Bangladesh declined 9.7 per cent and 1.8 per cent year-on-year, respectively, according to data from the Apparel Export Promotion Council (AEPC).
In September, apparel exports from India rose 14.95 per cent to $1.11 billion. In the first half of this financial year, India exported apparel worth $7.9 billion, a rise of 13 per cent over the year-ago period, according to data collected by AEPC. For this financial year, Union textile minister K S Rao has pegged apparel exports at $20 billion. Last year, apparel and garment exports stood at $14 billion.
“In the last few months, our garment orders have gone up due to issues in Bangladesh. Importers now prefer to import from India, rather than Bangladesh due to safety-compliance issues there,” said M Shivkumar, chief financial officer, Raymond.
Orders from the Euro zone have risen 15 per cent compared to last year. Orders from the US, too, have increased. Exporters are also seeing good demand from West Asia and Japan. India has also started exporting apparel to Latin America, Russia and Australia.
Owing to the good export demand and the fall in the rupee, stocks of textile companies have risen in the last two months. During this period, shares of textile companies outperformed the S&P BSE Sensex, which rose 10.25 per cent. By comparison, the Raymond stock rose 40 per cent, Arvind 33 per cent and Alok Industries 18 per cent.
India Ratings & Research, a Fitch Group research agency, expects this trend to continue in the short to medium term. “Strong revenue growth and earnings in FY14 are likely to improve the credit metrics of garment exporters. However, exporters may find it challenging to manage liquidity amid increasing volumes, a long working capital cycle and the consequent higher use of working capital limits—a characteristic of the textile export business,” India Ratings & Research said in a report.
Most exporters are running on full capacity and outsourcing manufacturing, as order books are increasing ahead of the peak festive season (December). “This year, growth in the number of orders is very strong and the rupee’s current levels are working in our favor. No, India has become a preferred nation for apparel exports, which is also working well for the Indian apparel industry,” said Premal Udani, ex-chairman of AEPC.
Indian garment exporters eat into share of China and Bangladesh | Business Standard
Currently, China is facing high labour costs, and this is working in India's favor. Also, the yuan has risen against the dollar, and this has reduced its competitive edge. In September, Bangladesh saw a protest by labourers, who demanded higher wages. Also, the collapse of Rana Plaza, a huge garment factory in Bangladesh on April 24 2013, has caused concern on safety and working conditions in that country.
Exports from India, on the other hand, have been aided by the falling rupee. India's garment exports to the European Union increased 5.9 per cent year-on-year in January-May 2013, while those of China and Bangladesh declined 9.7 per cent and 1.8 per cent year-on-year, respectively, according to data from the Apparel Export Promotion Council (AEPC).
In September, apparel exports from India rose 14.95 per cent to $1.11 billion. In the first half of this financial year, India exported apparel worth $7.9 billion, a rise of 13 per cent over the year-ago period, according to data collected by AEPC. For this financial year, Union textile minister K S Rao has pegged apparel exports at $20 billion. Last year, apparel and garment exports stood at $14 billion.
“In the last few months, our garment orders have gone up due to issues in Bangladesh. Importers now prefer to import from India, rather than Bangladesh due to safety-compliance issues there,” said M Shivkumar, chief financial officer, Raymond.
Orders from the Euro zone have risen 15 per cent compared to last year. Orders from the US, too, have increased. Exporters are also seeing good demand from West Asia and Japan. India has also started exporting apparel to Latin America, Russia and Australia.
Owing to the good export demand and the fall in the rupee, stocks of textile companies have risen in the last two months. During this period, shares of textile companies outperformed the S&P BSE Sensex, which rose 10.25 per cent. By comparison, the Raymond stock rose 40 per cent, Arvind 33 per cent and Alok Industries 18 per cent.
India Ratings & Research, a Fitch Group research agency, expects this trend to continue in the short to medium term. “Strong revenue growth and earnings in FY14 are likely to improve the credit metrics of garment exporters. However, exporters may find it challenging to manage liquidity amid increasing volumes, a long working capital cycle and the consequent higher use of working capital limits—a characteristic of the textile export business,” India Ratings & Research said in a report.
Most exporters are running on full capacity and outsourcing manufacturing, as order books are increasing ahead of the peak festive season (December). “This year, growth in the number of orders is very strong and the rupee’s current levels are working in our favor. No, India has become a preferred nation for apparel exports, which is also working well for the Indian apparel industry,” said Premal Udani, ex-chairman of AEPC.
Indian garment exporters eat into share of China and Bangladesh | Business Standard
