Eurozone crisis affects Indian apparel exports

Slowdown woes continue to affect the Eurozone and the crisis has negatively hit apparel exports the most. While the US is showing marginal recovery, orders from Europe have gone down significantly. Orders from Italy and Spain

have almost become nil and could reduce India’s total apparel exports by 15 per cent. Indian textile exports are considered to be around $25 billion. Of this, apparel alone contributes $11 billion (Rs 58,597 crores) and the rest $14 billion (Rs 74,578 crores) comprises yarn, fabric and made-ups. Fabric export is expected to be down by 5 per cent in the current fiscal.

Since the US and European countries are major importers of Indian apparels, the slump in these markets are causing a lot of trouble for some time now. And with Italy and Spain booking low or no import orders, Indian apparel exports are taking a major hit. Conditions in the US are a bit better than Europe for the moment and there has been some recovery in demand. But AEPC expects a 15 per cent decrease in apparel exports. Orders for men’s category of garments, which generally comprise the bulk of orders, have come down significantly and even the orders for women’s category are not too exciting.

Interestingly, the apparel export sector, reeling under the pressures due to economic slowdown in the US and Europe and depreciating rupee against the US dollar, witnessed a growth of about 23 per cent year-on-year to $913 million (Rs 4,965 crores) in October. The growth is attributed to the growing demand from markets like Japan and Latin America. These exports stood at $744 million (Rs 4,046 crores) in the same period last year, according to the data provided by the Apparel Export Promotion Council (AEPC). Besides rising demand from Japan, Latin America and other newly explored markets, the council attributed the growth to the low-level of demand (lowbase effect) in October last year.

Meanwhile, to reduce dependence on traditional markets like the US and Europe, exporters are looking at new markets like Africa, Japan and Latin America to stabilise their businesses. The US and Europe together account for over 70 per cent of India’s total apparel exports. The council expects garments exports to cross $14 billion (Rs 74,578 crores) in 2011-12. During the 2010-11 fiscal, exports grew 4.4 per cent to $11.1 billion compared to the previous financial year. The apparel industry employs about 70 lakh people in the country, out of which almost half are engaged in the export sector.

To stabilise the businesses, exporters are now either catering to the domestic market or exploring new territories for exports. After China, with Bangladesh and Vietnam gaining an edge over India due to value-added products, Indian exporters are further getting affected.