As 2022 winds down to its last fortnight with festivities in the air, the India’s apparel exports sector can’t participate in the joy. A justifiable concern is spreading across the industry as the EU continues to grapple with the Russo-Ukraine war theatrics and the US displaying caution in its non-essential spending – the scene is set for plunging business in retail. The continually shrinking exports figures is the cause for many a headache as the near future doesn’t hold much promise.
Declining figures cause concern
October 2022 saw India’s goods export contract 16.5 per cent, a first in 19 months. October saw some serious decline - readymade garment exports fell to its 28-month low of $988.7 million. Cotton yarn exports took the biggest hit with a decline of 46 per cent to $ 719 million. Tiruppur, India’s largest knitwear export hub recorded a 39.8 per cent drop, whereas in August and September it fared slightly better with 17.4 and 33.1 per cent contractions respectively. Textile and readymade garment export as a whole saw a contraction of 8.5 per cent to $18.3 billion in the first half of fiscal year 23, way below the 17.8 per cent growth in overall merchandising exports.
Another sector that faces damaging exports decline is gems and jewellery. Actually, the fall of textile and readymade garments and gems and jewellery exports had begun months ago and affected lives of these labour-intensive industries. These statistics are telling about India’s exports in the near future as India has been eroding its competitiveness particularly in the textile and readymade garments in the last few years. At the moment, the ambitious target of increasing shipment to $100 billion in the next five years may just turn out to be a dream.
As a member of the Textile Export Promotion Council declared, the current fiscal year has been the worst experience for the country’s textile value chain and that the record high prices of domestic cotton made it worse. Apparently, India, for the first time in history, has had to import cotton yarn in the months of June and July.
Cotton a bigger challenge
The situation for India’s cotton yarn can best be described as an unpleasant roller-coaster ride. Although domestic price may have fallen in October, the all-time high prices in previous months have had a deep impact in spinning. Moreover, the step down in prices has not been that significant between Rs 68,000 to 70,000 per candy is still high. The secretary of the Gujarat Spinners Association stated that spinning mills in the state are losing Rs 15-20 per kilo of yarn and are running below 60 per cent capacity. This situation has brought a tight situation for the 600-odd spinning mills in Gujarat where over 60 per cent of the total production is for exporting.
Alongside cotton yarn woes, the knitwear sector is suffering hard as well. Tiruppur, one of the largest Asian exporting hubs, is witnessing the impact of slowdown in the US and the EU which accounted for 70 per cent of its exports. From $0.329 billion in August, the fall in October stood at $0.264 billion. New orders have ceased and current pending orders have been withdrawn as the buyers claim unsold stocks. Tirupur prayed that Thanksgiving and the upcoming Christmas will see movement of unsold stocks in the US and the EU, opening up the possibility of fresh orders.
