Honduras outsmarts India’s garment exports to the US

After Bangladesh and Vietnam, Honduras is the third

country in the race to beat India’s garment exports to the US, which accounts for nearly a third of India's apparel exports. Latest data shows that India has been pushed to the seventh slot in the US garment import sweepstakes by the Central American country after it registered a 16.5 per cent fall in shipments in July. While local players blame the slowdown, Honduras’s proximity and probably preferential access to the world’s largest economy may have worked in its favour.

Though the slow economy has badly affected consumer sentiment in the US with people tightening their purse strings on discretionary spends such as garments and jewellery, the impact is seen more in the case of Indian exports. For instance, among the top seven garment exporters to the US, only India and Mexico witnessed a fall in the value of consignments in July, while shipments from China remained flat. During April-July 2012, Indian apparel exports to all countries shrunk by over 13 per cent to $4.2 billion (Rs 22,436 crores) compared to $4.9 billion (Rs 26,175 crores) a year ago. The fall has been attributed to a slowdown as exports to major markets such as Europe that accounts for almost half the shipments declined 24 per cent while those to the US were down almost 11 per cent.

According to experts, inflexible labour laws, rising wages and poor infrastructure conditions in India are leading to India’s fall from the second slot in global export of garments. The decline has been sharper since the quota regime was disbanded in 2005, a move which was actually expected to benefit Indian manufacturers.