Chinese inflation brings cheer to Indian apparel industry

With inflation and rise in labour costs troubling its neighbouring country China, India is hopeful to grabbing the former's share in global garment and apparel exports to some extent. China, which roughly enjoys a share of 27-28 per cent of total apparel exports, is facing issues like growing inflation and rise in wage costs, resulting in export orders trickling down to India.

With this, the Indian garment and apparel industry are already witnessing a rise in export enquiries from the US and European countries by around 10-15 per cent.

"International pressure led China to implement labour laws which have made workers now assert their prices, thereby leading to rise in labour wages. The neighbouring country has also been witnessing a rise in inflation as well for sometime coupled with power shortage. This has resulted in export enquiries meant for China shifting to India, which forms only four per cent of global apparel exports market," said DK Nair, general secretary, Confederation of Indian Textile Industry (CITI).

Add to that, pressure on food requirements in the country has also led China to reduce cotton acreage. However, it is not just China but also Egypt that has helped India attract the much needed attention. "Due to the recent turmoil in Egypt, major apparel importers in the US and European have begun looking at other markets. Recently, we began receiving more number of export enquiries over and above the regular ones and we are in the process of finalising them," said S N Rangaiah, general manager - finance at Bangalore-based Gokaldas Exports, one of the largest apparel exporters in India.

According to Nair, India could also benefit from the recent FTA signed with Japan. "Currently, China forms 75 per cent of Japan's total apparel imports. However, with the recent FTA signed with Japan, India could garner some more orders," added Nair.

However, in spite of the number of enquiries increasing in the country for apparel exports, India may not be able to make a considerable dent in China's apparel exports.

"There are not many big companies like Gokaldas Exports that can take huge number of volumes in which China plays. Mostly, companies in India can only play with lower volumes of apparel exports," says Nair.

Moreover, the rising raw material prices in India could also act as a dampener for the industry. "As of now, the downtrend in Indian apparel exports has been arrested. Enquiries have been increasing by 10-15 per cent but it would be tough for India to cater to them due to rising cotton and yarn prices," says Rahul Mehta, president of Clothing Manufacturers Association of India.

source:Business Standard