Indian Garments Gain Ground

December 9th, 2013 - South Asia’s largest country set for growth pattern

With its low costs and skilled workforce, India looks set to fulfil its potential as a garment exporter.

India’s fashion and garment industry has long struggled to compete with other rivals such as China and neighbouring Bangladesh, hampered by weak infrastructure and fragmented manufacturing capabilities.

But now, amid concerns over pay and working conditions in Bangladesh and rising costs in China, India has the chance to become a new power in the world’s fashion industry.

« India is a fast-growing economy with 1.2 billion inhabitants, » says Remi Lefevre, SDV’s regional business development manager for South Asia. « There is a strong political will to develop the garment industry there. »

In particular, the Indian government’s creation of special duty-free zones for clothes manufacturers in areas such as Nodia, Mumbai and Kochi has given the garment industry a boost by simplifying logistics, says Lefevre.

The Indian government hopes to promote exports in other ways, notably by introducing duty drawback schemes for exports to the U.S., organizing fashion-industry workshops with designers from countries such as Mexico and South Africa and initiating trade delegations to potential markets such as the U.S., Canada, China, Tunisia, Brazil and Argentina.

There is some way to go. India ranks fifth among the world’s exporters of clothing, according to the World Trade Organization, behind China, the European Union, Bangladesh and Turkey. India’s $13.8 billion in clothes exports in 2012 are far from China’s $160 billion or the European Union’s $109 billion.

When textiles are included, India ranks third in the world behind China and the European Union with $29 billion in exports. Of the top five clothing and textile exporters, only China, Turkey and Bangladesh enjoyed growth in 2012, still according to the World Trade Organization.

The Indian garment industry has several advantages, however, that should help it attract more overseas buyers, says Thomas Duplan, SDV’s chief executive officer for South Asia based in Gurgaon, India. Firstly, India’s favourable location halfway between China and the European Union helps reduce transport costs and time to two of the world’s biggest markets.

In addition, India has low labor costs compared to other Asian competitors such as China and Thailand, while it boasts an educated workforce with considerable know-how in the textile and garment industries. Indian clothing manufacturers are also able to handle smaller orders, unlike say China that is geared to the mass market.

India enjoys greater political stability than Bangladesh and does not suffer the power shortages that regularly hit its neighbour, Duplan adds. 

So far, the Bangladeshi garment industry has attracted some of the biggest U.S. and European retailers. «These companies do their own quality controls and then we transport the clothes from Bangladesh to distribution hubs in Europe and the U.S., » explains Duplan. Most of the goods are shipped by sea although roughly one third are sent as air cargo as cycles become shorter with between six and eight seasons a year. 

Bangladesh benefits from cheap labor as well as an organized and efficient logistics network. The export volumes are impressive and SDV plans to continue to play a key role in the country, Duplan notes. 

India, meanwhile, is still hampered by its lack of infrastructure. A shortage of roads, suitable ports and shipping facilities in the country slow down transport, Duplan says. 

To help solve the logistical challenges, the Indian government recently approved infrastructure projects worth around $28 billion in areas including roads, railways and ports. This will be a good opportunity to boost export traffic in the long term, says Lefevre. 

« The garment industry is moving from China to Thailand and Bangladesh, » he adds. « There is also an opportunity for a shift to the Indian market. »

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