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Indian apparal exporters eating in to china, bangladesh's markets

Indian apparal exporters eating in to china, bangladesh's markets Source: www.chinatexnet.com
Date: 13-11-2013
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India’s garment exports to EU increased 5.9% year-on-year in January-May 2013, whereas those of China and Bangladesh declined
 
Now India’s Apparel exports are rising by snatching orders that would otherwise have gone to the China and Bangladesh. Exports are already up driven by demand coming in from major textile importing countries like US and Euro Zone. For overseas buyers, India has now become a favoured destination over China and Bangladesh.
 
China is currently facing high labour costs which also had an impact on it’s pricing which is working in favour of India. Also, Bangladesh had lost it’s competitive edge to India as labourers staged a protest in September demanding reasonably high wages and the collapse of a huge garment factory in Bangladesh had also caused concerns regarding safety and working conditions among overseas buyers resulting in their demand shifting to India. Benefits of falling rupee this year is already having a positive impact on textile companies in this fiscal.
 
India’s garment exports to EU increased 5.9% year-on-year in January-May 2013, whereas those of China and Bangladesh declined 9.7% and 1.8% year-on-year, respectively, in the same period (data source: Apparel Export Promotion Council).
 
Apparel Exports for the month of September 2013 grew by 14.95% registering to the $1.11 billion for September 2013. This is the sixth consecutive months where garment exports grew at an average of 13%, according to data compiled by AEPC. In first half od current fiscal, India exported apparel worth $7.9 billion, a growth of 13% over last year, according to data collected by AEPC. This fiscal, K.S Rao, union textile minister has pegged apparel export target at $20 billion, last year India exported apparel and garments worth $14 billion. Christmas related demand will provide further impetus to the exports.
 
The fall in the rupee has increased Indian apparel exporters competitiveness. China is facing the issue of higher labour costs which is also impacting it’s pricing which is working in favor of India. The Chinese yuan has also increased against the dollar which has also caused China to lose its competitive edge.
 
“Our garment orders in the last few months have gone up due to issues in Bangladesh. Importers now prefer to import from India than Bangladesh due to safety compliance issue,” said M Shivkumar, CFO, Raymonds.
 
Orders from the Euro Zone have gone up by 15 per cent compared to last year as there is a good revival in demand. Even the US has increased their orders compared to last year this festive season (Christmas). Exporters are also seeing good demand coming in from the Middle East as well as Japan. India has also started exporting to Latin America, Russia, Australia to increase exports.
 
Stocks of textile companies have also shot up in the last two months on the back of good export demand flowing in coupled with the fall in the rupee.
 
Textile stocks in the last two months have outperformed the S&P BSE Sensex. The Sensex has moved up by 10.25 per cent in the last two months, while Raymond stock has moved up by 40 per cent, Arvind has moved up by 33 per cent, Alok Industries has moved up by 18 per cent.
 
India Ratings & Research, a Fitch Group research agency expects this trend to stay in the short to medium term.
 
Export sales have also improved as garment manufacturers have tapped newer geographies such as Middle East, Latin America, Japan, Russia and Australia. Most exporters are running on full capacity and also outsourcing manufacturing on a job work basis as order books are growing ahead of the peak festive season (December).
 
“This year the growth in the number of orders is very strong and also the current rupee levels is working in our favor. India has now become a preferred nation for apparel exports which is also working well for the Indian apparel industry,” said Premal Udani, ex-chairman of Apparel Export Promotion Council (AEPC).
 
“Strong revenue growth and earnings in FY14 are likely to improve the credit metrics of garment exporters. However, exporters may find it challenging to manage liquidity amid increasing volumes coupled with a long working capital cycle and the consequent higher use of working capital limits – a characteristic of the textile export business,” India Ratings & Research said in a report.
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