Domestic apparel exports could see a slowdown during the rest of the year

By

Isabelle Crossley

Published
Sep 25, 2019

Although India’s apparel exports are expected to remain higher than the previous financial year, growth is expected to slowdown in the remainder of the 2020 financial year, according to ratings agency ICRA.

India’s clothing exports have seen a revival during the first four months of the current financial year, ICRA told ET Bureau. In the 2020 financial year, apparel exports have grown by around 4% year-on-year after decreasing in the 2018 and 2017 financial years. However, the global trade situation at large could cause the growth rate to slowdown. 

“External environment for India’s apparel exporters remains challenging amid a pick-up in activity on several free trade agreements among the key trading nations, which has intensified competition from nations having a cost advantage over India,” ICRA’s vice president and group head for corporate sector ratings, Jayanta Roy, told ET Bureau.

“Apart from challenges in the EU market, retail trends in the US also remain un-encouraging, which could exert additional pressure on the order flow for India’s apparel exporters going forward,” said Roy.

Indian clothing exports to the US increased by 7% year-on-year during the first four months of the 2020 financial year but exports to Europe and the UK decreased by between 2% and 3%, ICRA found. The depreciating Euro and European free trade agreements with Bangladesh and Vietnam increasing competition have contributed to a decline in exports to Europe.