India’s Apparel Exports Fall for 4 Years as Bangladesh & Vietnam Gain

12 August 2021
India Export Data

Indian textiles and apparel sector is one of the oldest industries in the Indian economy. It has a history of fine craftsmanship and global appeal. India’s cotton, silk and denim are highly popular varieties abroad, and with the upsurge in Indian design talent, Indian apparel too has found success across fashion centres around the world. Now from the last few years, India has been behind in the race of world’s top apparel exporter countries due to competitive market.


India has decided to extend a major export-promotion scheme for textiles until March 31, 2024, for arresting continuous decline in India’s apparel & clothing shipments even before the Covid-19 pandemic and since last 4 years. According to Export Genius, India exported apparel & clothing (both knitted & not knitted) worth USD 17.2 billion in 2017, that dollar amount drastically declined to USD 12.2 billion in 2020. Let’s have a closer look at India’s apparel exports, why the industry is falling and which countries are gaining.


The government decided to extend the Rebate of State and Central Taxes and Levies (RoSCTL) scheme to ensure policy stability and provide continued export incentives to apparel manufacturers & exporters in India. Trade bodies such as the Apparel Export Promotion Council have welcomed the decision to continue the scheme on apparels & made-ups.


India’s Exports of Apparel & Clothing in Last 4 Years


India export data shows that while India exported USD 12.2 billion worth of apparel & clothing in 2020, once close competitors Bangladesh (USD 35.7 billion) and Vietnam (USD 27 billion) have raced well ahead. Even tiny Cambodia has exported USD 7.3 billion of apparel & clothing in the said year.


According to the Federation of Indian Export Organization (FIEO), many neighboring countries have emerged as India’s competitors having tariff advantage either on account of Least Developed Country status or owing to effective free trade agreements.   


Under Harmonized System Code list, apparel & clothing is actually divided into two HS Codes, namely HS Code 61 (Knitted or Crocheted Apparel & Clothing) and HS Code 62 (Not Knitted & Crocheted Apparel & Clothing). Let’s understand how India saw a decline in exports of apparel & clothing under both the categories during last 4 years from data visualization through chart.



Year

2017

2018

2019

2020

Knitted or Crocheted Apparel & Clothing (Value USD Billion)

8.3

7.5

7.8

6.1

Not Knitted or Crocheted Apparel & Clothing (Value USD Billion)

8.9

8.0

8.3

6.1

 


Apparel & Clothing Exports of India’s Rival Countries – Bangladesh & Vietnam


Bangladesh and Vietnam are major competitors of India in apparel & clothing industry. Both the countries performed positively in the past years, except in 2020, when there were large scale Covid-19 pandemic export restrictions. Bangladesh and Vietnam left India behind and has become 2nd and 3rd world-largest exporter country of apparel & clothing respectively. Analyze the performance of Bangladesh and Vietnam in apparel & clothing industry from statistics that are visualized in charts.



Year

2017

2018

2019

2020

Knitted or Crocheted Apparel & Clothing (Value USD Billion)

17.7

20.0

20.8

19.0

Not Knitted or Crocheted Apparel & Clothing (Value USD Billion)

16.6

18.6

19.6

16.7

 



Year

2017

2018

2019

2020

Knitted or Crocheted Apparel & Clothing (Value USD Billion)

12.0

13.8

14.8

13.7

Not Knitted or Crocheted Apparel & Clothing (Value USD Billion)

12.3

14.3

15.1

13.3

 


India, Bangladesh & Vietnam Market Share in World’s Apparel & Clothing Exports 2020


Garments manufacturing is the largest component of textiles, which in turn is the largest private sector job creator in India. But over the past decade, India has gone from being the 2nd to 7th largest exporter of apparel & clothing. India shared just 3% value to global apparel & clothing exports. According to Bangladesh export data, Bangladesh accounted for over 8% to overall value of apparel & clothing shipments in 2020, while Vietnam export data shows Vietnam accounted for over 6% to total apparel & clothing consignments. China is on the top position with 30% share in value recorded in 2020.



Country

Knitted or Crocheted Apparel & Clothing (Value USD %)

Country

Not Knitted or Crocheted Apparel & Clothing (Value USD %)

China

29.8

China

30.6

Bangladesh

9.1

Bangladesh

8.2

Vietnam

6.6

Vietnam

6.5

Germany

5.3

Italy

5.7

Italy

4.3

Germany

5.7

Turkey

4

Turkey

3.2

India

2.9

Spain

3.2

Netherlands

2.7

India

3.0

Cambodia

2.5

France

2.8

Spain

2.4

Netherlands

2.7

 


Why India’s Apparel & Clothing Exports are Falling?


Check some major reasons behind decline in exports of apparel & clothing from India:


     ·         Apparel & clothing industry took more time than others to adjust to the Goods and Services Tax regime.

     ·         India’s apparel exports decline by nearly 4% in FY18, a year of GST.

     ·         India faces challenges in global trade and rising competition, especially in the form of more shipments at lower costs from regional competitors.

     ·         According to the World Trade Organization, Bangladesh’s export of apparel more than trebled between 2008 to 2018.

     ·         Before the Covid-19 crisis, demand from key importers, particularly, the United Arab Emirates had fallen drastically.

     ·         Due to Coronavirus pandemic lockdown and travel restrictions, India’s supply of apparel & clothing to global countries was disrupted.


As far as apparel & clothing industry’s future in India is concerned, Indian exporters are not very optimistic despite government has announced export incentives for this sector. One of the major reasons is Covid-19 pandemic, which is still around us in 2021. India saw deadly second wave of coronavirus with new Delta variant in April and May months. And many medical bodies have cautioned for third wave in India. This will again disrupt supply chain of goods exported around the globe.

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