India needs to look at new markets, bigger basket

As the green shoots of Indian exports start showing, the new President of International Apparel Federation (IAF) Rahul Mehta, feels, increase exports, India needs to look at new markets and have a broader product basket. He believes, India has missed a huge opportunity since 2005. “It was a combination of government lethargy, lack of foresight and industry over confidence,” he explains, talking about the country’s position in world apparel trade.

Lost opportunity, but prospects intact

As per Rahul Mehta, who is also the President of Clothing Manufacturers Association of India (CMAI), India could not take advantage of the post quota regime. “We allowed countries to overtake us while we relied on value chain advantages. We ignored that the buyer of readymade garments was only looking at readymade garments. If your garment is not good enough or is overpriced, who cares whether you got the cotton from an Indian farmer or from China? To some extent I’d blame the industry,” he asserts.

He feels India faces competitive disadvantages as a garment manufacturer because of various reasons. “Our cost of finance is higher than in many others. Government policies are not supportive. Labour cost is growing and labour isn’t available. The overall prosperity of the country is ironically acting against the apparel industry. The industry is supposed to be low cost but it tends to become more expensive. We are being hit in those product categories; we were focusing on because of the price advantage. Indian exporters those who have moved away from focusing on costs and to quality, reliability and speedy delivery are doing well,” avers Mehta.

In the last 10 months China is getting a little less focused on apparel and Bangladesh is facing problems. There is favorable dollar-rupee parity, factors that have helped Indian exports which is looking up again. So far India has failed to grow beyond its traditional strength in apparel exports because players are not looking seriously at product expansion, category expansion and market expansion. “We are dependent on our traditional strengths but with the newer generation of exporters I see a bright future. In the apparel industry there is a clear division between manufacturers focusing on the domestic market and those focusing on exports. But now some overlapping is happening. Exporters are looking at the domestic market and domestic manufacturers with their brand strengths are looking at international markets,” he opines.

Mehta feels, to grow exports, India needs to look at new markets and have a broader product basket. “We should move away from cotton based and summer based exports,” he says, adding, “Capacity should be used around the year. That will reduce cost of operations, increase profitability and turnover. Exporters should look at winter products too. Australia and New Zealand are promising export markets. The seasons are opposite. So during winter you can make summer products. China imports a fairly large amount of apparel in spite of being the biggest exporter. So we can try to export there, we can also look at Taiwan and Korea.”

On the current dynamics of global apparel industry, he says, “The concept of manufacturing closer to home is catching up. It will impact global dynamics. Manufacturing countries will look at non-traditional markets. I feel they should merge the export with the domestic business. That’s why China is looking inward, India is looking inward. Europe and South America will expand faster. Production will be higher in South America with the US companies looking to source from them.”