FROM THE EDITOR-IN-CHIEF’s DESK…
The last five years have been volatile for the industry. In the wake of global uncertainties, prices have dwindled and volumes shrunk…but still we are managing to culture some resistance, going downhill. A close look at the export data for our main markets, the US and the EU over the period 2012 to 2016 (both inclusive) clearly shows that after a major slowdown in 2012 over 2011 in the US and EU, exports to both markets registered decent growth in value and volume in 2013 and 2014.
Whereas the year 2015 was good for exporters working in the US with a proportionately higher increase in value to volumes, as both registered positive growth. For the EU, values registered noteworthy increase, though there was devaluation of the rupee against the Euro, during that period, putting the volumes under pressure.
Last year, both markets were slow throughout the year. While values dipped in the US, reflecting lower prices offered on almost the same order sizes, the volumes also decreased marginally in the EU against a decent increase in value (5.84%).
Business in the first six months of this year (January-June) have been challenging with both markets seeing negative trends in value and volumes. Even the UVRs for both destinations have decreased in the six-month period from last year.
It’s good to read the Government figures of 26% growth in exports for September. But I am very much sceptical on the contribution of the apparel sector in this growth.
No doubt the prices are getting sharper, and what is more worrying is that core products like skirts, blouses and undergarments for which India is famous are registering negative growth from India in both markets. On the other side, men’s shirts to the US and sweaters and nightwear to the EU have continued to register growth despite the overall slowdown.
The US has seen many store closures this year and the EU is struggling with a weak economy, besides many internal issues, from refugee acceptance to Brexit. The buying sentiments in general are low and retail experts are cautious in their predictions for the holiday season.
Global conditions are impacting business across all manufacturing destinations, with Bangladesh registering its lowest growth in more than 15 years during the last financial year, closing in June 2017, and China registering only 3.4% growth in 2016 in garment exports to the world, much lower than expectation.
For Indian exporters, it has been a double whammy…while they face the same challenges to be competitive, as other destinations on a global basis, many internal issues are further pulling them down.
The interesting part is that our competitors feel that the Government is doing a lot for the industry, citing the special package given by the Textile Ministry, the various skill development programmes and the incentives being given by the State Governments…but on ground level, the actual scenario is different.
These moves are not translating into improving business sentiments… the main hurdle is rupee volatility and protections being given to certain countries at the international level. The steps now being taken by the Government in all reality are to ward off difficulties which are in some measure their own creation, in the first place.
The industry now needs to push the Government to support infrastructure and other facilities that will enable better efficiencies and not drawbacks and incentives!
I have said this many times and I want to reiterate it again… It is time for the industry to start working towards improving efficiencies and productivity, if they want to stay competitive.