Tough global competition awaits Indian apparel exports: ICRA

The growth rate of India’s apparel exports will depend on the industry’s ability to stride across the new taxation and export incentive regime and severe global competition, says a recent report by rating agency ICRA. Uncertainty looms on the apparel exports to the United Arab Emirates (UAE) due to unfathomable trends in the past few months, says the report.

India’s apparel industry faces liquidity challenges from the transition to the new regime and additional challenges from intense competitive pressures in the global market, mainly because of impending trade agreements and foreign currency movements, a news agency reported citing the ICRA document.

Following upward revision in export incentives, India reported a 6-20 per cent growth in apparel exports to key nations like the United States, the United Kingdom, Germany, France and Spain during November-December 2017, it said.

However, overall apparel exports were down by 1 per cent in the first month of fiscal 2017-18, it added, saying the decline has been primarily driven by the sharp dip in exports to the UAE market.

UAE had emerged as one of the prominent apparel export destinations for India, with its share increasing to 23 per cent in fiscal 2016-17 from 12 per cent in fiscal 2013-14, according to the report.

For the 10-month period ending June 2017, the country’s apparel exports to the UAE grew at a sharp pace of 56 per cent, but declined fast by 45 per cent since then.

Globally, apparel trade has stayed subdued for the third consecutive year, expanding by just 1 per cent in calendar year 2017 on a low base, following a 2 per cent and 5 per cent decline witnessed in 2016 and 2015, respectively.