Why India’s readymade garment export industry may be in for good times ahead


Indian Market
by 5paisa Research Team Last Updated: 2022-11-22T11:59:06+05:30

Indian readymade garments exports are expected to surpass the $30 billion mark by 2027, translating into a 4.6% to 4.9% share in world exports as against the current share of around 3%, said rating agency CareEdge in a report.

This is important as Indian readymade garment exports have been stagnant at around $15-17 billion in the past five years ended 2021.

What the report said

"India has a very good presence across the cotton textile value chain from fibre to fabric, while it has a limited presence in man-made fibre, which is expected to get a boost by expected FTA with the UK and production-linked incentive scheme. Furthermore, having presence across entire-value chain reduces transportation costs and lead time, thereby providing a cost-effective solution to the customers," said Krunal Modi, Associate Director - Corporate Ratings in the report.

With free-trade agreements, it said India's share in UAE and Australian markets are expected to increase and the trade pact with the UK would be a game changer as it will create a level playing field.

"Currently, India has a market share of 4-5% in EU and UK as Bangladesh, Vietnam and Pakistan have a tariff advantage of around 10% vis-a-vis India in some of these markets," the report said.

How China is placed

Due to its declining competitiveness and the 'China Plus One' sourcing strategy adopted by global brands and retailers, China is expected to continue losing its share in the global markets, which could be beneficial for India.

Countries such as China, Bangladesh, Vietnam, Germany, Italy, Turkey, Spain and India dominate the export market, with China accounting for a lion's share of 33 per cent of the total exports backed by high labour productivity along with economies of scale.

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