India's textile and garment industry is facing strong headwinds as its competitors such as Bangladesh and Vietnam enjoy priority access in India's main textile market, the European Union (EU). This may make it increasingly difficult for Indian apparel exporters to remain competitive in the EU.
The EU accounts for more than one-third of India's clothing exports. In the second quarter of fiscal 2019, India's container exports to China also fell by 20%, mainly due to a decline in demand for textiles and garments made in India, which were bulk exports in the same period last year. Jayanta Roy, senior vice president and group leader of ICRA Corporate Ratings, said: "In addition to the challenges facing Indian textiles in the EU market, the retail market in the United States is still not optimistic, which may put additional pressure on the order flow of Indian clothing exporters in the future. The external environment of Indian clothing exporters remains challenging, and the activity of multiple free trade agreements between major trading countries has increased, which has intensified competition among countries with cost-advantages."
expects that the Sino-US trade war will bring opportunities to Indian industry to fill the gap, thereby promoting the development of Indian industry. However, India's main competitors make much more profits than India. Although large Indian exporters are in a good position to benefit from market opportunities, this requires companies to scale their business in a short time, maintain a strict delivery schedule and meet buyers’ strict compliance requirements, ICRA said in a report.
SMEs in the textile and garment industries have limited bargaining power and rely on small U.S. retailers, which are facing performance pressures and are more vulnerable to the slowdown.
Meanwhile, India's container transport trade growth slowed to 1% in the second quarter of fiscal 2019 from 9% in the same period last year due to the combined impact of international factors such as slowing trade growth, rising trade tensions and domestic factors. Steve Felder, Managing Director of South Asia of Maersk Logistics, said: "With the intensification of global turmoil, the local economy slows down and the United States cancels preferential access to certain Indian products, India's import and export trade is expected to be adversely affected in the coming months."
1Steve Felder added: "The integration and enhancement of the logistics value chain, coupled with the adoption of new technologies such as blockchain and artificial intelligence throughout the logistics network, and the joint efforts to improve port and road infrastructure, will ensure that farmers, MSMEs and small businesses jointly promote India's economic growth and maintain trade competitiveness."
(Translated by Hugo.com Lv Xiaolin)
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