Subdued Demand May Hit Apparel Industry

Subdued Demand May Hit Apparel Industry

With sluggish demand from importing countries the growth in apparel export may stay muted for a consecutive year in financial year 2017. According to the Apparel Export Promotion Council estimates, it is likely to close at 17.3 billion US dollar in 2016-17, up by roughly two per cent from 16.9 billion US dollar in the previous financial year.

What also works against India is its heavy reliance on cotton amid an increasing share of lower-priced man-made fibre-based apparels by other competing markets such as Vietnam and Bangladesh.

The other competing nations import almost all the raw materials and hence have a better economies of scale than India, which is dependent heavily on the domestic industry, predominantly driven by cotton, an AEPC official said.

The exports in value terms have declined, following an increase in the share of man-made fibre-based apparels, which are lower in value vis-a-vis cotton-based apparels. This in turn has been caused by the improved competitiveness of polyester vis-a-vis cotton during the past few years.

While this growth is modest compared to the healthy growth clocked in prior years, the growth quantum looks satisfactory in the backdrop of a one percent decline in import quantity of the US. Similarly, apparel export quantity to the European Union (EU) is estimated to have grown six per cent in 2016, compared to a five per cent in total apparel import quantity of the EU.

On the other hand, exports to the UK have fallen to 1.2 billion US dollar from 1.6 billion US dollar due to sluggish demand, AEPC sources said.

The previous three quarters have seen fluctuating growth for the Indian apparel industry. Top garment manufacturers have posted net loss in the third quarter of the current financial year, against a profit in the corresponding period in financial year 2016.

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