India’s Apparel Exports Fall for 4 Years as Bangladesh & Vietnam Gain
12 August 2021
Indian
textiles and apparel sector is one of the oldest industries in the Indian
economy. It has a history of fine craftsmanship and global appeal. India’s
cotton, silk and denim are highly popular varieties abroad, and with the
upsurge in Indian design talent, Indian apparel too has found success across
fashion centres around the world. Now from the last few years, India has been
behind in the race of world’s top apparel exporter countries due to competitive
market.
India
has decided to extend a major export-promotion scheme for textiles until March
31, 2024, for arresting continuous decline in India’s apparel & clothing
shipments even before the Covid-19 pandemic and since last 4 years. According
to Export Genius, India exported apparel & clothing (both knitted
& not knitted) worth USD 17.2 billion in 2017, that dollar amount
drastically declined to USD 12.2 billion in 2020. Let’s have a closer look at
India’s apparel exports, why the industry is falling and which countries are
gaining.
The
government decided to extend the Rebate of State and Central Taxes and Levies
(RoSCTL) scheme to ensure policy stability and provide continued export
incentives to apparel manufacturers & exporters in India.
Trade bodies such as the Apparel Export Promotion Council have welcomed
the decision to continue the scheme on apparels & made-ups.
India’s
Exports of Apparel & Clothing in Last 4 Years
India
export data shows that while India exported USD
12.2 billion worth of apparel & clothing in 2020, once close competitors
Bangladesh (USD 35.7 billion) and Vietnam (USD 27 billion) have raced well
ahead. Even tiny Cambodia has exported USD 7.3 billion of apparel &
clothing in the said year.
According
to the Federation of Indian Export Organization (FIEO), many neighboring
countries have emerged as India’s competitors having tariff advantage either on
account of Least Developed Country status or owing to effective free trade
agreements.
Under
Harmonized System Code list, apparel & clothing is actually divided into
two HS Codes, namely HS Code 61 (Knitted or Crocheted Apparel & Clothing)
and HS Code 62 (Not Knitted & Crocheted Apparel & Clothing). Let’s
understand how India saw a decline in exports of apparel & clothing under
both the categories during last 4 years from data visualization through chart.
Year |
2017 |
2018 |
2019 |
2020 |
Knitted or Crocheted Apparel & Clothing (Value USD Billion) |
8.3 |
7.5 |
7.8 |
6.1 |
Not Knitted or Crocheted Apparel & Clothing (Value USD Billion) |
8.9 |
8.0 |
8.3 |
6.1 |
Apparel
& Clothing Exports of India’s Rival Countries – Bangladesh & Vietnam
Bangladesh
and Vietnam are major competitors of India in apparel & clothing industry.
Both the countries performed positively in the past years, except in 2020, when
there were large scale Covid-19 pandemic export restrictions. Bangladesh and
Vietnam left India behind and has become 2nd and 3rd
world-largest exporter country of apparel & clothing respectively. Analyze
the performance of Bangladesh and Vietnam in apparel & clothing industry
from statistics that are visualized in charts.
Year |
2017 |
2018 |
2019 |
2020 |
Knitted or Crocheted Apparel & Clothing (Value USD Billion) |
17.7 |
20.0 |
20.8 |
19.0 |
Not Knitted or Crocheted Apparel & Clothing (Value USD Billion) |
16.6 |
18.6 |
19.6 |
16.7 |
Year |
2017 |
2018 |
2019 |
2020 |
Knitted or Crocheted Apparel & Clothing (Value USD Billion) |
12.0 |
13.8 |
14.8 |
13.7 |
Not Knitted or Crocheted Apparel & Clothing (Value USD Billion) |
12.3 |
14.3 |
15.1 |
13.3 |
India,
Bangladesh & Vietnam Market Share in World’s Apparel & Clothing Exports
2020
Garments
manufacturing is the largest component of textiles, which in turn is the
largest private sector job creator in India. But over the past decade, India
has gone from being the 2nd to 7th largest exporter of
apparel & clothing. India shared just 3% value to global apparel &
clothing exports. According to Bangladesh export data, Bangladesh
accounted for over 8% to overall value of apparel & clothing shipments in
2020, while Vietnam export data shows Vietnam accounted for over 6% to
total apparel & clothing consignments. China is on the top position with
30% share in value recorded in 2020.
Country |
Knitted or Crocheted
Apparel & Clothing (Value USD %) |
Country |
Not Knitted or
Crocheted Apparel & Clothing (Value USD %) |
China |
29.8 |
China |
30.6 |
Bangladesh |
9.1 |
Bangladesh |
8.2 |
Vietnam |
6.6 |
Vietnam |
6.5 |
Germany |
5.3 |
Italy |
5.7 |
Italy |
4.3 |
Germany |
5.7 |
Turkey |
4 |
Turkey |
3.2 |
India |
2.9 |
Spain |
3.2 |
Netherlands |
2.7 |
India |
3.0 |
Cambodia |
2.5 |
France |
2.8 |
Spain |
2.4 |
Netherlands |
2.7 |
Why
India’s Apparel & Clothing Exports are Falling?
Check
some major reasons behind decline in exports of apparel & clothing from
India:
·
Apparel & clothing
industry took more time than others to adjust to the Goods and Services Tax
regime.
·
India’s apparel exports
decline by nearly 4% in FY18, a year of GST.
·
India faces challenges in
global trade and rising competition, especially in the form of more shipments
at lower costs from regional competitors.
·
According to the World
Trade Organization, Bangladesh’s export of apparel more than trebled
between 2008 to 2018.
·
Before the Covid-19 crisis,
demand from key importers, particularly, the United Arab Emirates had fallen
drastically.
·
Due to Coronavirus pandemic
lockdown and travel restrictions, India’s supply of apparel & clothing to
global countries was disrupted.
As
far as apparel & clothing industry’s future in India is concerned, Indian
exporters are not very optimistic despite government has announced export
incentives for this sector. One of the major reasons is Covid-19 pandemic,
which is still around us in 2021. India saw deadly second wave of coronavirus
with new Delta variant in April and May months. And many medical bodies have
cautioned for third wave in India. This will again disrupt supply chain of
goods exported around the globe.