"An analysis of the macro-trends and proprietary data of 100 top apparel exporters in India reveals, export value and shipments from major markets like the UAE have consistently fallen during the year. A report by US-based Drip Capital, a major provider of trade finance for SMEs in the sector, notes demand from key importers has declined over the last few months."

An analysis of the macro-trends and proprietary data of 100 top apparel exporters in India reveals, export value and shipments from major markets like the UAE have consistently fallen during the year. A report by US-based Drip Capital, a major provider of trade finance for SMEs in the sector, notes demand from key importers has declined over the last few months. This decline, starting last year with new manufacturing zones coming up in free market zones, surpasses the increase in exports to India’s largest markets, the US and the EU.

Decline worries apparel exporters

This decline has flagged concerns among Indian apparel exporters, the major foreign exchange earner for the country. As an ICRA report published earlier this month pointed out, negative growth of 4-5 per cent registered in 2018-19 may also continue in the next financial year. Adding to the woes, Drip capital report also emphasises on the complaints made by the United States to the World Trade Organization (WTO) against India's export incentive schemes, which Washington holds responsible for unfair market practices. This further shrouds the future of apparel exporters with uncertainty, translating into stagnation for the overall sector.

India loses market share

With Bangladesh and Vietnam establishing themselves as two of the most developing nations, China continues to lose its share with a majority of its jobs percolating down the value chain. Rising imports from these nations have also eaten away at the competitiveness of smaller domestic players and the government raised import duties on more than 330 textile items in 2018.

Drip Capital’s report also emphasises on the need for immediate policy changes and interventions to give the sector a boost. It recommends expansion of both the Credit Link Capital Subsidy Scheme for Technology Upgradation, as well as the Technology Upgradation Fund Scheme to incentivise apparel exporters to push exporters to adopt higher technology.

The Federation of Indian Export Organisations (FIEO) has also reiterated this demand for urgent and immediate action on falling exports including augmenting the flow of credit and better fiscal support. It has identified four new markets that show high potential for future growth: United Kingdom, Chile, Israel, and Japan. Identifying products with high growth potential besides exploiting technological innovations will enable exports to further enhance their efficiency margins.