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04
September 2018
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India’s apparel exports (The
Total Investment & Insurance Solutions)
India’s apparel exports are
likely to remain subdued in the near term, even as the worst appears to be
over, according to an Icra note released on Tuesday. With the base effect
setting in, ICRA expects India’s apparel exports to grow at a modest pace of
1%-2% Y-o-Y for the rest of FY2019, vis-a-vis a sharp de-growth of 14% Y-o-Y in
first four months of FY2019. The Total Investment & Insurance Solutions
As this would still mean a 4% Y-o-Y decline in the country’s apparel exports in FY2019, it is expected to be the fourth consecutive weak year for India’s apparel exports, following the 4% de-growth in FY2018 and modest growth rates of 1% and 3% in FY2016 and FY2017 respectively. India’s apparel exports have exhibited an unencouraging trend, with a marginal de-growth of 1% in FY2018 as well as in the period April -July of FY2019, even after adjusting for apparel exports to the UAE, declined inexplicably and sharply over the past one year.
As this would still mean a 4% Y-o-Y decline in the country’s apparel exports in FY2019, it is expected to be the fourth consecutive weak year for India’s apparel exports, following the 4% de-growth in FY2018 and modest growth rates of 1% and 3% in FY2016 and FY2017 respectively. India’s apparel exports have exhibited an unencouraging trend, with a marginal de-growth of 1% in FY2018 as well as in the period April -July of FY2019, even after adjusting for apparel exports to the UAE, declined inexplicably and sharply over the past one year.
Commenting on the subdued
industry trend, Mr. Jayanta Roy, Senior Vice-President and Group Head, ICRA,
says, “With several internal as well as external headwinds, the past year turned
out to be rather challenging for India’s apparel exporters. Transition to the
new taxation regime, besides posing liquidity challenges for the industry,
added to uncertainties because of alternating stances on export incentives
during the year. Further, a stronger rupee heightened the challenges in the international
market by affecting competitiveness of players in an intensely competitive
international apparel market.”
ICRA note says that country’s apparel sector’s performance is worrying as it is contrary to the global trends. The global apparel trade is back on the growth trajectory with an estimated growth of 4%-5% year-on-year (Y-o-Y) in H1 CY2018 and 2% in CY2017 in US dollar terms. The positive trend in the global apparel market is being led by the strong recovery in apparel imports by the European Union (EU), which accounts for two-fifth of the global apparel trade (including the trade within EU). The Total Investment & Insurance Solutions
With faster GST refunds, improved clarity on the rate of export incentives and the sharp rupee depreciation witnessed over the past few months, most of the industry’s concerns stand addressed to a large extent. Having said that, the industry is now facing mounting concerns on the continuance of export subsidy schemes in India, after being challenged by the US at the World Trade Organisation (WTO), which seems to be constraining the growth momentum of India’s apparel export sector.
“Going forward, steps taken by the Government to address these concerns, will remain crucial for apparel exporters to capitalise on the revived global apparel trade as well as the continuing loss of market share by China, which opens up a lucrative opportunity for key players such as India, Vietnam and Bangladesh,”adds Roy. The Total Investment & Insurance Solutions
ICRA notes that Bangladesh and Vietnam have been the key gainers from
China’s loss of share of export market over the past couple of years. Vietnam
is maintaining a healthy growth in its stronghold market of the US, with its
position likely to strengthen further if the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership and the EU-Vietnam Free Trade Agreement
are successfully consummated. Meanwhile, Bangladesh continues to gain share in
Europe, even as concerns on withdrawal of its duty-free access to the EU market
have surfaced, given the improvement in its economic indicators. The Total Investment &
Insurance SolutionsICRA note says that country’s apparel sector’s performance is worrying as it is contrary to the global trends. The global apparel trade is back on the growth trajectory with an estimated growth of 4%-5% year-on-year (Y-o-Y) in H1 CY2018 and 2% in CY2017 in US dollar terms. The positive trend in the global apparel market is being led by the strong recovery in apparel imports by the European Union (EU), which accounts for two-fifth of the global apparel trade (including the trade within EU). The Total Investment & Insurance Solutions
With faster GST refunds, improved clarity on the rate of export incentives and the sharp rupee depreciation witnessed over the past few months, most of the industry’s concerns stand addressed to a large extent. Having said that, the industry is now facing mounting concerns on the continuance of export subsidy schemes in India, after being challenged by the US at the World Trade Organisation (WTO), which seems to be constraining the growth momentum of India’s apparel export sector.
“Going forward, steps taken by the Government to address these concerns, will remain crucial for apparel exporters to capitalise on the revived global apparel trade as well as the continuing loss of market share by China, which opens up a lucrative opportunity for key players such as India, Vietnam and Bangladesh,”adds Roy. The Total Investment & Insurance Solutions
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