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After Bangladesh Fire, India’S Textile Exports To Us Up

Date 04-July-2014
Subject After Bangladesh Fire, India’S Textile Exports To Us Up

India’s textile and garment exports to the US are up a sharp 6 per cent in the first four months of 2014, the growth being largely attributed to a dip in shipments from Bangladesh in the wake of heightened safety compliance from global buyers after last year’s tragic collapse of the Rana Plaza garment factory building in Dhaka.

While a slowdown in Chinese supplies is a factor that has continued to help India as well as Vietnam in claiming the top two slots in terms of the rate of growth in shipments to the US, this has been at the cost of a perceptible dip in the export growth of Bangladesh — a very strong player in the garments segment — during the period (-0.21 per cent).

India’s 6 per cent growth during January-April 2014, according to the US Department of Commerce’s Office of Textiles and Apparel (OTEXA) data, in comparison with an average 1-2 per cent growth, is being seen as significant as it is despite the sharp strengthening of the Indian rupee since September 2013.

Alongside Bangladesh, Indonesia too recorded a sharp contraction in the growth in export shipments to the US during this period, primarily on account of the Indonesian rupiah’s appreciation since January 2014.

The overall growth of textile and garment exports into the US market during the four-month period, according to the data, was just over 3 per cent.

“India and Vietnam have gained primarily on account of the Bangladesh factor this year, if the broader trend of the continuing slowdown in Chinese exports were to be discounted,” said D K Nair, secretary general of industry body CITI (Confederation of Indian Textile Industry).

Bangladesh was clocking an average growth of over 5 per cent in shipments to the US in the months preceding the tragic accident, which killed more than 1,100 and left over 2,500 injured. Bangladesh’s biggest market, however, is the European Union, where it benefits from a zero duty access under the LDC (least developed country) head.

Although the Dhaka factory fire happened on April 24 last year, the impact on Bangladeshi export orders became evident only by early this year as the suppliers were flush with orders for up to the winter season of 2013 before the fire occurred.

Big buyers in both the US and the UK, including JCPenney, Gap, Laura Ashley and Next, are learnt to have renegotiated contracts with

Bangladeshi suppliers in the wake of increased safety compliance audits after the fire. A number of orders were re-routed to other countries, especially Vietnam and India.

The improvement in India’s textile sector, primarily linked to the surge in shipments to the US, is visible in the domestic industrial output numbers. The IIP (index of industrial production) estimates for April showed a sharp 7 per cent increase under the textiles head, coming in the wake of strong performances in both March and February.

Readymade garments played a significant role in India’s double-digit export growth in May, clocking a 25 per cent growth. The pick-up in performance, visible in the export of Indian apparel and textiles, is also matched by a revival of sorts visible in domestic sales, said Nair. The turnaround in textile and apparel exports comes after India’s lacklustre performance in much of the last half a decade.

The turnaround is significant as India has been steadily losing ground to Bangladesh, Vietnam and Indonesia in the US market for apparel and textile products.

While China’s hold over the US market has been loosening on account of increasing labour wages and power shortages, India, which was widely seen as being in the best position to capitalise on China’s lost market share, had been increasingly relegated to the position of a supplier of intermediate products to other successful garment exporting countries.

Source : financialexpress.com

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