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The global apparel industry is currently navigating a complex and challenging landscape. A number of factors, including shifting consumer behavior, economic uncertainties, and geopolitical tensions, is impacting trade flows, retail sales, and overall market dynamics. The latest edition of ‘Apparel trade scenario in key global markets’ by Wazir Advisors’ reveal apparel imports by key global markets viz. US, UK, and Japan went down in May.
A contradictory import picture
One of the most striking trends is the divergent performance of apparel imports across key markets. While imports to the US, UK, and Japan contracted in May compared to the previous year, the EU bucked the trend with a robust 17 per cent increase. This disparity highlights the varying degrees of economic recovery and consumer sentiment in different regions.
The decline in imports to the US, the world's largest apparel market, is particularly noteworthy. This downturn is corroborated by retailers' inventory data, which indicates a substantial reduction in stock levels compared to the previous year. This suggests that retailers are exercising caution in replenishing their inventories amid uncertain consumer demand.
Export dynamics, a tale of two worlds
On the export side, the picture is equally complex. While India has registered impressive export growth at $12 billion a year on year change of 13 per cent, China and Bangladesh have witnessed declines. This shift in the export landscape could be attributed to several factors, including changes in production costs, trade policies, and consumer preferences.
Retail sales, a mixed bag
Retail sales data offers further insights into the state of the apparel industry. While the US has reported an increase in apparel and home furnishing store sales in June compared to the previous year. In June 2024, US monthly home furnishing store sales are estimated
to be $5.3 billion, which is 4 per cent higher than in June 2023. On YTD basis, the sales in 2024 are 8 per cent lower than in 2023.
The UK market has experienced a slight decline. In June 2024, UK’s monthly apparel store sales were £4.6 billion which is 2 per cent lower than in June 2023. On YTD basis, the sales in 2024 is 3 per cent lower than in 2023. In Q1 2024, UK’s online sales of clothing registered a growth of 7 per cent over Q1 2023. These contrasting trends underscore the regional differences in consumer spending patterns.
At the same time, for last several quarters, several major retailers like Walmart, Target, Kohl's, VF Corp GAP, PVH, Hanesbrand, Ralph Lauren have reported lower inventory levels compared to same period in the previous year
Economic headwinds
The broader economic environment is also exerting pressure on the apparel industry. The easing of inflation in the US is a positive development, but it has failed to boost consumer confidence. The decline in the Consumer Confidence Index and persistent unemployment challenges suggest that a revival in consumption is still elusive.
The study highlights, the apparel industry is at a crossroads. While the EU market is showing resilience, other major markets are grappling with challenges. Retailers are adopting a cautious approach to inventory management, and exporters are facing a shifting landscape. The industry will need to closely monitor consumer behavior, economic indicators, and geopolitical developments to navigate these turbulent waters. As the global economy continues to evolve, the apparel sector will undoubtedly undergo significant transformations.
Some key questions that still need to be seen are: What are the specific factors driving the divergence in apparel import trends between the EU and other major markets? How will the ongoing geopolitical tensions impact global apparel trade flows? What strategies can apparel retailers and manufacturers adopt to thrive in this uncertain environment?
By addressing these questions, industry stakeholders can develop effective strategies to mitigate risks and capitalize on emerging opportunities.
Leading vertically integrated denim manufacturer Soorty teamed up with key players including The Lycra Company, Lenzing, Tonello and Officina+39 to drive innovation in the fashion industry.
The collaboration was finalised at an event titled, ‘Collectively Better: Shaping Future Possibilities,’ that brought together industry leaders with a shared vision to transform the supply chain into a value chain. The event showcased collaborations aimed at creating a more environmentally, socially, and economically sustainable future for fashion.
At this event, Soorty unveiled a new shaping technology called ‘ShapeSync’, that allows designers to target specific areas using Lycra's patented technology to provide discreet shaping and stretchy comfort. The technology offers lift and support by combining Lycra's FitSense with Soorty's advanced garment treatment processes.
Ebru Ozaydin, Global Strategic Marketing Director –Denim, Wovens, and Ready-to-Wear, describes this technology as a ‘magic fiber’ created by merging Lycra's dual-core yarn structure with thermo-responsive fiber technology. This technology allows for targeted heat activation, creating a ‘locking’ memory of the shaping activation without damaging the Lycra fiber or altering its composition.
Additionally, Soorty and Lenzing presented a capsule collection titled, ‘Wildflower,’ that featured indigo modal for deeper hues and Ecovero Refibra for a circular-minded option. Accoridng to Tuncay Kilickan, Head-Global Business Development-Denim, Lenzing Group, the collection emphasises on circularity and durability.
The event also showcased Soorty’s vertically integrated setup with Officina+39's smart chemicals and Tonello's machinery. The collection included six Soorty fabrics made into garments utilising Officina+39’s Novascraper Indigo, Novastone Nebu enzyme, and Smart Bleach technology for nebulised systems, as well as the Oz-One Powder treatment for eco-friendly bleached or acid-washed looks.
Further, the event featured a trends presentation by design consultant Miles Johnson, who collaborated with Soorty on a circular denim collection earlier this year. A alumni of Patagonia alum, Johnson identified three emerging concepts: organic denim made for movement, timeless Americana pieces, and a reframing of Canadian tuxedos along with a warm embrace of gray denim.
The textile industry has expressed its disappointment at the Budget 2024-25 presented yesterday by Finance Minister Nirmala Sitharaman. The budget fails to reduce the duties on imported raw cotton and polyester fiber as demanded by the textile industry, says Sanjeev Arora, Member of Parliament, Ludhiana.
The budget also does not fix the minimum import rate for all HSN codes for Chinese fabrics, thus failing to provide any reprieve to the ailing Textile Industry facing issues like rising unemployment and growing NPA accounts.
Further, the budget also fails to fulfill the demands of the tax payers, adds Arora.
The textile industry has expressed its disappointment at the Budget 2024-25 presented yesterday by Finance Minister Nirmala Sitharaman. The budget fails to reduce the duties on imported raw cotton and polyester fiber as demanded by the textile industry, says Sanjeev Arora, Member of Parliament, Ludhiana.
The budget also does not fix the minimum import rate for all HSN codes for Chinese fabrics, thus failing to provide any reprieve to the ailing Textile Industry facing issues like rising unemployment and growing NPA accounts.
Further, the budget also fails to fulfill the demands of the tax payers, adds Arora.
The Indian government has increased the Budget allocation for textile sector schemes by 28 per cent to Rs 4,417.03 crore for the fiscal year 2024-25. Union Finance Minister Nirmala Sitharaman announced a significant increase in funding for cotton procurement, the National Technical Textile Mission, the Integrated Scheme for Skill Development, and several other schemes. The proposed Budget includes Rs 4,373 crore for revenue expenditure and Rs 43.65 crore for capital expenditure, totalling Rs 4,417.03 crore.
Focus on export promotion
To give a much-needed push to exports in the leather and textile sectors, the Finance Minister announced a reduction in the basic customs duty (BCD) on real down filling material. This move is expected to lower input costs for manufacturers, making Indian products more price-competitive in the global market.
Additionally, the government has expanded the list of exempted goods for the manufacture of leather and textile garments, footwear, and other leather articles. This is seen as a strategic step to encourage value-added exports and reduce the export burden on these sectors.
A simplification and rationalization of the export duty structure on raw hides, skins, and leather were also announced. Industry experts believe this will promote value-added exports and discourage the raw material outflow from the country. Under the Central scheme, the Budget announced Rs 600 crore for the procurement of cotton by Cotton Corporation of India (CCI) under price support scheme.
Reacting to the budget Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI) says, “This Budget is extremely pragmatic and innovative in some of the bold decisions and directions it has taken to encourage employment directly. The steps include an internship scheme, the decision to reimburse one month's wages for new employees, and subsidies for employees earning over a lakh of rupees. These are excellent steps being taken. However, there are many open-ended areas at this point, and we await the details before making specific suggestions.”
Skill development and employment generation
Recognizing the crucial role of skilled manpower in the growth of the textile and leather sectors, the government has introduced a new centrally sponsored scheme to train 20 lakh youth over the next five years. This initiative, in collaboration with state governments and industry, aims to bridge the skill gap and create ample employment opportunities.
Furthermore, the upgrade of 1,000 Industrial Training Institutes (ITIs) with a focus on industry-relevant courses is expected to enhance the employability of young people. The Budget has proposed to allocate Rs 635 for Amended Technology Upgradation Fund Scheme (ATUFS) for the current fiscal. And doubled budget allocation to Rs 375 crore for National Technical Textiles Mission (NTTM) from Rs 170 crore of last fiscal (revised budget). The FM also proposed to increase funding for PM MITRA to Rs 300 crore from Rs 52.30 crore of last fiscal.
Sudhir Sekhri, Chairman Apparel Export Promotion Council has welcomed the Union Budget and said, “The garment industry hails the acceptance of the demand of AEPC by expanding the list of trims and embellishment under IGCR, which will help the RMG industry thrust exports.”
Support for MSMEs
The Budget has accorded special attention to the MSME sector, particularly labor-intensive manufacturing. The government has introduced a Credit Guarantee Scheme to facilitate term loans for MSMEs without the need for collateral or third-party guarantees. This is expected to improve access to finance for small businesses and boost investment in machinery and equipment.
To streamline the credit assessment process for MSMEs, public sector banks will be building in-house capabilities and developing a new credit assessment model based on digital footprints. This move is aimed at expanding credit access to MSMEs, including those without formal accounting systems.
A new mechanism has also been announced to provide continued bank credit to MSMEs during stress periods. This will help prevent MSMEs from slipping into the non-performing asset (NPA) category due to temporary financial difficulties.
To facilitate exports by MSMEs and traditional artisans, the government will set up E-Commerce Export Hubs in a public-private partnership model. These hubs will provide a platform for MSMEs to showcase their products globally and overcome trade-related challenges.
Rakesh Mehra, Chairman of the Confederation of Indian Textile Industry (CITI) sees the budget as a forward-thinking one that addresses several key issues for the overall growth of the Indian economy. However, the stagnation in the textile and apparel industry needed some bold measures for capacity building, modernisation and cost competitiveness. “MSME accounts for about 80 per cent of the Indian textile industry. The credit assurance schemes announced today will provide the much-needed impetus to the growth of large number of textile and garment MSMEs and enable them to expand
their operations and innovate.” The increased focus of government towards skilling and the announcement of the Employment Linked Incentive scheme coupled with the decision of easing the FDI norms will facilitate new investments in the textile industry. Moreover, the financial support for clean energy transition, energy initiatives, and energy audits underscores the government's commitment to sustainable development.
Infrastructure development
The Budget emphasizes infrastructure development to support industrial growth. The government will facilitate the development of investment-ready "plug and play" industrial parks in 100 cities, in partnership with states and the private sector. This is expected to attract investments and create jobs.
Additionally, the development of rental housing for industrial workers in a public-private partnership mode will address the housing needs of the workforce in industrial areas.
FDI and investment facilitation
The government has committed to simplifying rules and regulations for Foreign Direct Investment (FDI) and overseas investments to attract more foreign capital and promote the use of the Indian rupee for international transactions.
Kumar Rajagopalan, CEO, Retailers Association of India (RAI), says “The government has tried to strike a balance between populist and policy measures. Initiatives such as monetary support for farmers, higher exemption limits in personal income tax, and increased standard deductions will provide higher disposable income, leading to increased spending. We believe this will stimulate consumption growth, thereby boosting the overall economy.” Rai says the emphasis on MSMEs and startups, including enabling more lending and abolishing angel tax, is a positive step towards realizing their potential. Tax simplification and compliance, which are crucial needs of the hour, have also been addressed.
The Southern India Mills’ Association (SIMA) chairman S K Sundararaman has welcomed the announcement of reducing the BCD on Methylene diphenyl diisocyanate (MDI) used for the manufacture of spandex yarn from 7.5 per cent to 5 per cent to address the duty inversion, enhancing the global competitiveness of textile goods manufacturers using such yarn. He has said that use of spandex yarn has been increasing exponentially and hoped that the domestic manufacturers of spandex yarn would pass on the benefit to the downstream sectors. He welcomed the allocations granted by the Finance Ministry for exports i.e., RoDTEP and RoSCTL with an increase of 5.8 per cent and 10 per cent for the year 2024-24 as compared to 2023-24, a much-needed boost when the textile exports are on the downward trend due to various external factors.
India's textile sector, has hit a rough patch in recent months. While there are bright spots, overall exports have declined. And the slump is being felt across sectors.
An analysis of the Ministry of Commerce data reveals a 4.2 per cent year-on-year decline in textile exports for the first 11 months of FY24 (April 2023-February 2024). This translates to $30.96 billion compared to $32.33 billion in the corresponding period of the previous year.
A decline across sectors
Ready-made garments: Exports dipped from $14.73 billion to $13.05 billion.
Jute: Exports declined from $400 million to $310 million.
Yarn (excluding apparel): Exports fell from $4.47 billion to $4.23 billion.
Several factors have contributed to the current situation one major one is the global economic slowdown asweakening economies in major destinations like the EU, US, and West Asia have dampened demand for Indian textiles. Then there were geopolitical tensions. The ongoing war in Ukraine and its ripple effects have disrupted global supply chains and impacted consumer confidence.The increase in cotton and other raw material prices too has squeezed margins for exporters.
Meanwhile, the dynamics between cotton and synthetic textiles are interesting. While cotton exports have witnessed a slight decline, synthetics have fared worse. This could be due to:
Shifting consumer preferences: A growing demand for sustainable and eco-friendly clothing might be pushing consumers towards natural fibers like cotton.
Price fluctuations: Greater volatility in synthetic fiber prices compared to cotton might be making them less attractive to manufacturers.
However, the decline in exports is not uniform across destinations. For example, the slowdown in major markets like the US and Europe significantly impacts overall export figures. And similar economic woes in West Asian region have also contributed to the decline. However, countries in Southeast Asia and Africa might offer some opportunities for export diversification.
Competition heats up
India faces stiff competition from other textile-producing nations like:
Vietnam: Emerging as a strong competitor with lower labor costs and government support.
Bangladesh: Another major player with a focus on cost-effectiveness. China: The global leader, though facing challenges due to rising domestic wages.
To move ahead the Indian textile industry needs to adapt to navigate these challenges. Here are some potential solutions:
Focus on high-value segments: Shifting focus to niche markets and premium products could help improve margins.
Diversification of export markets: Exploring new markets in Southeast Asia and Africa can help reduce dependence on traditional destinations.
Technological advancements: Embracing automation and digitalization can improve efficiency and competitiveness. While the near future might be challenging, India's textile sector has a strong track record of resilience. By addressing these issues and embracing innovation, the industry can bounce back and reclaim its position as a global leader.
The International Cotton Association (ICA) has launched a new podcast, "The Thing About Cotton," spotlighting the cotton value chain and female leaders in the industry. Hosted by ICA’s Women in Cotton Committee members Camille Cluzel (Louis Dreyfus Company), Eimear McDonagh (AgriDirect), and Katie Farren (Cargill Cotton), the podcast aims to educate and inspire.
In Episode 1, ICA President Kim Hanna discusses the history and structure of the cotton industry. She expressed her honor in being the inaugural guest and emphasized the podcast's potential to highlight the positive aspects of cotton and provide a platform for women in the industry.
Episode 2 features Eva Bille, EU Policy Director at Hill & Knowlton Brussels, who delves into EU legislation's impact on the global cotton value chain, particularly concerns over PEF regulations favoring manmade fibers. Bille stressed the importance of these discussions for the cotton supply chain's awareness and preparedness.
India’s garment exports, once thriving, have faced setbacks, falling to $14.5 billion in 2023-24 from $15 billion in 2013-14, due to high duties and barriers on raw material imports, coupled with cumbersome customs procedures, according to the Global Trade Research Initiative (GTRI). While countries like Vietnam and Bangladesh saw substantial growth in garment exports, India lagged behind.
Vietnam's garment exports surged by 82 per cent to $33.4 billion, and Bangladesh's by 70 per cent to $43.8 billion between 2013 and 2023. China, despite a decline, still exported $114 billion worth of garments in 2023. India’s imports of garments and textiles also grew, reaching $9.2 billion in 2023, with further increases anticipated as companies like Reliance Retail introduce Chinese brands.
The GTRI report highlights that India’s complex import procedures and high costs for raw materials like synthetic fabrics are significant hurdles. Quality Control Orders for fabric imports have exacerbated these issues, raising costs and making Indian garments less competitive globally.
Exporters are forced to use expensive domestic supplies, making their products less appealing. The report urges a comprehensive overhaul of the Directorate General of Foreign Trade and Customs procedures to streamline import processes and reduce costs for exporters.
In her Budget 2024-25, Finance Minister NirmalaSitharaman announced several measures to enhance the export competitiveness of the leather and textile sectors.
One of these proposed measures includes reducing the basic customs duty (BCD) on real down filling material from duck or goose and expanding the list of exempted goods for manufacturing leather and textile garments, footwear, and other leather articles for export.
To correct duty inversion, the government has reduced BCD on methylene diphenyldiisocyanate (MDI) for manufacturing spandex yarn from 7.5 per cent to 5 per cent, subject to conditions. Additionally, it has simplified the export duty structure on raw hides, skins, and leather.
Further, the government aims to introduce a centrally sponsored scheme aimed at skilling, in collaboration with state governments and industry. It also plans to upgrade 1,000 Industrial Training Institutes (ITIs) with a focus on outcome-oriented hub and spoke arrangements.
Another of the government’s objectives includes setting up of e-commerce export hubs through public-private-partnership (PPP) to help MSMEs and traditional artisans sell products internationally. These hubs will offer trade and export-related services under a seamless regulatory and logistic framework.
The government will also develop investment-ready ‘plug and play’ industrial parks with complete infrastructure in or near 100 cities, in partnership with states and the private sector, utilising town planning schemes. Twelve of these industrial parks will be sanctioned under the National Industrial Corridor Development Program.
Rental housing with dormitory-type accommodations for industrial workers will be facilitated in PPP mode with viability gap funding (VGF) support and commitments from anchor industries.
Finally, the government will simplify the rules and regulations for Foreign Direct Investment (FDI) and Overseas Investments to facilitate FDIs, prioritise certain sectors, and promote the use of the Indian Rupee for overseas investments.
The 54th edition of Munich Fabric Start, alongside Bluezone and Keyhouse, will be held on September 3-4, 2024, under the theme "Intuition". This premier German platform for the international fashion and textile industry invites attendees to reconnect with their inner voice, showcasing the latest trends for the Autumn/Winter 25/26 season and exploring innovative materials and future technologies.
Spanning over 40,000 square meters, the event transforms Munich into a central hub for designers, product managers, and fashion professionals. Nearly 1,000 collections from premium suppliers, including Akin, Albini, Amanda Kelly, and many others, will be presented. The event will feature eight distinct areas: Additionals for accessories, Fabrics for material trends, ReSource for sustainable textiles, Bluezone for denim and streetwear, Design Studios for global trend offices, Keyhouse for groundbreaking showcases, Sustainable Innovations for new materials, and The Source for apparel manufacturers and sourcing services.
Sebastian Klinder, Managing Director of Munich Fabric Start, emphasizes the strategic decision to shorten the event to two days to align with industry needs and market trends favoring more efficient, cost-effective events. Frank Junker, Creative Director & Partner, highlights the relevance of the "Intuition" theme and the event's focus on balancing simplicity with exploration, providing a platform for creative discoveries and innovative solutions.
A key highlight will be a trend lecture by renowned forecaster Li Edelkoort on September 4, offering insights into future fashion and textile trends. The program also includes numerous lectures, discussions, and workshops. Notable sessions include Monsieur-T's BluezoneDenimined Trends presentation, a discussion on sustainable material developments led by Simon Angel, and a conversation with DrishtiMasand of adidas on the circular economy.
Additional highlights include Peclers Paris’ presentation on women’s fashion trends and a panel on the Denim Deal in Germany. Anna Franziska Michel will discuss AI in fashion, and a session on the Corporate Sustainability Due Diligence Directive will feature insights from industry leaders. The event promises a high-quality working atmosphere and valuable networking opportunities for the fashion community.
