It’s China to Chandni Chowk for US cloth buyers

Small mercies they may be but the nearly Rs 50,000-crore Indian garment industry is hoping to tide over the bleak economic scenario by stitching up orders that were meant for China but are being diverted to India by US and European merchandise giants.

Unable to withstand economic pressures and stringent norms, a horde of Chinese garment units, particularly the smaller ones with 60-100 workers, are folding up because US and Europe customers, hit by the recession, are opting for destinations such as India and Bangladesh, that have turned cheaper than China in the recent past
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Vijay Mathu, deputy secretary general, Apparel Export Promotion Council (APEC), said, “US buyers are in a bad shape and they are looking at affordable, quality garment and quick delivery. Japan, which has orders worth $20 billion, is also looking beyond China now.” In a bid to strike while the iron is hot, the apex industry body under the administrative control of the Union commerce ministry, is planning to organise a show in Tokyo to promote the Indian garment industry soon. 

“We cannot quantify the extent of diversion of orders from China but it is definitely happening,” said Rajan Hinduja, managing director, Gokaldas Exports, India’s biggest apparel exporter. He added that the country should cash in on this opportunity. Gokaldas has seen a 20% dip in its sales in 2008. The US currently accounts for 15% of Indian apparel exports. 

New Delhi-based Jyoti Apparels said the firm has received 10 enquiries and has recently closed a big-ticket order from a UK-based apparel company. H K L Magu, the managing director of the firm, did not disclose the name of the UK company but said, “We are in talks with UK, Germany, and France firms to supply woven garments.” The company grew 60% in 2008 but 2009 kicked off on a dull note with a 30% drop in orders. Further, buyers are renegotiating contracts and being harsh on pricing for new ones, Magu added.

Though Indian exporters seem well placed with enquiries increasing, neighbour Bangladesh, with its cheaper manufacturing costs, is seen as a threat. It is the fifth largest supplier to the US and can trigger off a turf war. Bangladeshi garment exports have surpassed those from India.

Apparel worth $9.7 billion was exported from India in 2007-08 but Bangladesh exported more at $10.7 billion during the year. In 2008-09, its exports are expected to touch $11 billion notwithstanding the grim scenario. Indian garment exports, on the other hand, are expected to drop 24% to $8.78 billion next year. It had set itself a target of $11.62 billion for 2008-09. 

Hari Kapoor, managing director, Allied Export Industries, said, “Every disadvantage to China should be a blessing for India. But India is plagued by infrastructure, power, transportation and shipping problems. We will have to gear up to use this opportunity.” He said that the government’s bailout package can revive export orders. If the Chinese exports weren’t affected, India would have lost 30% of business by now, said Kapoor.