Global Trade Research Initiative:
India’s garment export industry, a significant contributor to employment, has been facing a persistent decline.
- A recent report by the Global Trade Research Initiative (GTRI) , a research Group focused on Climate Change, technology and trade, sheds light on the reasons behind this downturn, pointing to self-inflicted barriers rather than external competition.
Key Highlights of the GTRI Report:
- India’s garment exports in 2023-24 were USD 14.5 billion, compared to USD 15 billion in 2013-14.
- Vietnam and Bangladesh’s garment exports grew significantly during the same period, reaching USD 33.4 billion and USD 43.8 billion, respectively.
- Despite a decline, China still exported about USD 114 billion in garments.
- Globalisation has increased competition and shifted production to lower-cost labour countries, affecting India’s market share.
- The sector faces substantial duties on importing essential raw materials, making production more expensive.
- Archaic customs and trade procedures add to the challenges, consuming time and resources that could be better utilised.
- The dominance of local suppliers for raw materials like Polyester Staple Fibre and Viscose Staple Fibre forces exporters to rely on more expensive domestic options.
- Recent Quality Control Orders (QCOs) for fabric imports have complicated the import process, pushing up costs for exporters.
- Exporters are forced to use pricier domestic supplies, making Indian garments less competitive globally. Exporters must meticulously account for every imported component, adding to the complexity and cost.
- The PLI scheme launched in 2021 has not attracted sufficient investment and requires major modifications to be effective.
- India’s garment and textiles imports reached nearly USD 9.2 billion in 2023, with concerns that this could increase if export challenges remain unresolved.
- Developed countries prefer clothing made from mixed synthetics, while only less than 40% of Indian exports consist of synthetic fabrics.
- Diversifying into synthetics can enable Indian manufacturers to operate year-round, meeting demands during autumn and winter as well.
- Indian exporters need to keep up with the fast-paced demands of the Fast Fashion Industry (FFI), which includes major players like Walmart, Zara, H&M, Gap, and online retailers like Amazon.
- Simplifying customs and trade procedures can reduce the time and cost burdens on exporters.
