The pace of India’s apparel exports is likely to remain contingent upon the industry’s ability to overcome the internal as well as external headwinds that it is currently facing. While the transition to the new taxation and export incentive regime has posed liquidity challenges for the industry, intense competitive pressures in the global market, particularly in the light of the impending trade agreements and foreign currency movements, pose additional challenges.
Following an upward revision in export incentives, India saw a six to 20 per cent year-on-year growth in apparel exports to key nations such as the US, UK, Germany, France and Spain during the November-December period in 2017. India’s competitiveness in apparel exports will also remain contingent on the movement in foreign exchange rates. This remained a key challenge last year, with the Indian rupee appreciating by three per cent vis-à-vis the dollar in calendar year 2017 compared to a one to three per cent depreciation in the currencies of other key apparel exporting nations, that is, China, Bangladesh and Vietnam.
Supported by duty-free access to the EU market, Bangladesh retains its status as the second-largest apparel exporter after China. Vietnam remains the fastest growing among large apparel exporting nations.