As the dollar index rose to its highest level, crossing Rs 70 mark, exporters anticipated a positive impact whereas, the importers are worried as the raw material, like fabrics, accessories and machines coming from other countries, will now be available at higher prices. According to Motilal Oswal report, rupee fell to fresh record low levels primarily on back of surge in global crude oil prices and on expectation that higher crude oil prices will start hurting India’s import bill. Major Asian as well as emerging market currencies remains under pressure and that also is weighing on the rupee.
As far as the apparel trade is concerned it is observed to be coming back on the growth trajectory with an estimated growth of 4-5% in the first half of CY2018 and 2% in CY2017 in US dollar terms. The positive trend in the global apparel market is being led by the strong recovery in apparel imports by the European Union (EU), which accounts for two-fifth of the global apparel trade, it added.
The country’s apparel exports are likely to remain subdued in the near term, growing at a modest pace of 1-2 percent for the rest of FY19, due to factors such as transition to the new taxation regime and liquidity challenges for the apparel industry, a report said. The exports have seen a sharp de-growth of 14% percent year-on-year in the first four months of this financial year, rating agency Icra said in its report. However, the country’s apparel exports saw an unencouraging trend, with a marginal de-growth of 1 percent in FY18 as well as 4 month of FY19, even after adjusting for apparel exports to the UAE, which have declined inexplicably and sharply over the past one year, according to Icra.
As per the latest figures, after a 17% decline in the April–june quarter, India’s textiles and clothing exports revived to witness a jump of 11% in July. Data compiled by the DGCIS under the Union Ministry of Commerce showed total textiles and apparel exports at Rs 196.36 billion ($ 2.86 billion) for July 2018 compared to Rs 176.92 billion ($2.74 billion) for the corresponding month last year. Total textiles exports witnessed a jump of 15% to Rs 108.79 billion ($1.58 billion) for July 2018 versus Rs 94.29 billion ($ 1.46 billion) in the comparable month of previous year. Moving in tandem, India’s apparel exports recorded a jump of 6% to Rs 87.57 billion ($1.27 billion) for July 2018 as against Rs 82.63 billion ($1.28 billion) for the same month last year.
Going forward, steps taken by the government to address these concerns, will remain crucial for apparel exporters to capitalise on the revived global apparel trade as well as the continuing loss of market share by China, which opens up a lucrative opportunity for key players such as India, vietnam and Bangladesh.
This issue of Perfect Sourcing highlights how the trade war between the US and China will impact apparel industry of India and the response received indicates that the tension and rift between these two countries over exports will shift business to India. However, it totally depends on manufacturers how they utilize the opportunity as even a small shift of business to India will bring lot of revenues.
Also, you will see the article on Gokaldas Exports, a company that has gone through a lot of ups and downs and now with a new Managing Director Siva Ganpathi, who brings immense knowledge from his past experience in telecom sector the company is geared for a very positive growth in the coming times. The company is not only bringing up fresh perspectives but is also gearing for huge expansions.
We hope you will enjoy reading the issue Will await your feedback on the same