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India's Apparel Exports: Strategic Responses to Slower Growth


Description: Indian apparel exports have proved disappointing in recent years. The deterioration stems partly from weaker overall demand in the two main markets for Indian apparel exporters, the USA and the EU, and partly from the appreciation of the rupee. In 2003-04 experts predicted that India, along with China, would do well from the global elimination of quotas at the end of 2004. Sales to the US market did indeed soar by 34% in 2005 but this was followed by a disappointing 7.1% increase in 2006 and a 0.5% fall in 2007. By contrast, China achieved growth rates of 70%, 22% and 23% respectively. In the EU, India’s success continued into 2006 with a 16% growth rate. But this came after a 27% rise in 2005 and was followed by a minimal 0.8% increase in 2007. Again China did much better than India through most of this period, having achieved growth rates of 44% in 2005, 11% in 2006 and 14% in 2007. In the first four months of 2008, India’s fortunes revived. While US apparel imports as a whole were down by 3.7%, those from India picked up. Furthermore, India did better than its chief competitor, China, whose sales fell by 6.8%. India’s competitiveness has improved since 2007 thanks to a reversal of the rupee’s appreciation against the dollar. Nonetheless, China has continued to make massive gains—and new competitors such as Vietnam have appeared.

Companies have been adopting various strategies to cope with the new business climate. Celebrity Fashions, Orient Craft, Royal Classic Group, SP Apparels and Texport Syndicate have placed more emphasis on India’s fast growing domestic apparel market—where there is scope for achieving higher margins by saving on transportation costs and customs duties, where quality requirements are lower and where it is easier to do business. Gokaldas Exports, India’s largest apparel exporter, has responded to the US slowdown by placing more emphasis on Europe, as well as increasing its sales in India.

For the future, India may be forced to focus on a narrower range of products where it is more competitive. Data for 2007 suggest that such products include: men’s and boys’ cotton knitted shirts; men’s and boys’ cotton trousers; women’s and girls’ cotton trousers; and cotton underwear. However, such a focus could force the Indian government to downgrade its ambitious expansion plans for the apparel sector.


Contents: SUMMARY

INDIAN APPAREL EXPORTS: FROM BOOM TO STAGNATION
India's performance in the US and EU apparel markets: 2005-08
2005
2006
2007
First four months 2008

FACTORS BEHIND THE SLOWDOWN IN INDIAN APPAREL EXPORTS
Slower demand growth in the leading export markets
Intensified competition as other low cost producers have sought to gain market share
Appreciation of the Rupee
Focus on the domestic apparel market

STRATEGIC RESPONSES OF MAJOR INDIAN APPAREL EXPORTERS
Gokaldas Exports
Products
Markets
Capabilities
Expansion and modernisation
Slowdown
Strategic responses
Celebrity Fashions
Expansion and product diversification
Slowdown
Strategic responses
Orient Craft
Royal Classic Group
SP Apparels
Texport Syndicate

OUTLOOK

STATISTICAL APPENDIX

List of tables
Table 1: USA: top ten suppliers of clothing, 2004-07
Table 2: EU: top ten suppliers of clothing, 2004-07
Table 3: USA: top ten suppliers of clothing, Jan-Apr 2007 and Jan-Apr 2008
Table 4: India: consumer expenditure on clothing, 2002/03-2006/07
Table 5: USA: leading imports from India by category, 2004-07
Table 6: EU27: leading imports from India by category, 2004-07
Table 7: USA: top ten suppliers of men's and boys' cotton knitted shirts, by value, 2004-07
Table 8: USA: top ten suppliers of men's and boys' cotton knitted shirts, by volume, 2004-07
Table 9: USA: top ten suppliers of women's and girls' cotton non-knitted shirts and blouses, by value, 2004-07
Table 10: USA: top ten suppliers of women's and girls' cotton non-knitted shirts and blouses, by volume, 2004-07
Table 11: USA: top ten suppliers of men's and boys' cotton non-knitted shirts, by value, 2004-07
Table 12: USA: top ten suppliers of men's and boys' cotton non-knitted shirts, by volume, 2004-07
Table 13: USA: top ten suppliers of cotton skirts, by value, 2004-07
Table 14: USA: top ten suppliers of cotton skirts, by volume, 2004-07
Table 15: USA: top ten suppliers of women's and girls' cotton knitted shirts and blouses, by value, 2004-07
Table 16: USA: top ten suppliers of women's and girls' cotton knitted shirts and blouses, by volume, 2004-07
Table 17: USA: top ten suppliers of women's and girls' cotton trousers, slacks and shorts, by value, 2004-07
Table 18: USA: top ten suppliers of women's and girls' cotton trousers, slacks and shorts, by volume, 2004-07
Table 19: USA: top ten suppliers of men's and boys' cotton trousers, breeches and shorts, by value, 2004-07
Table 20: USA: top ten suppliers of men's and boys' cotton trousers, breeches and shorts, by volume, 2004-07
Table 21: USA: top ten suppliers of cotton underwear, by value, 2004-07
Table 22: USA: top ten suppliers of cotton underwear, by volume, 2004-07
Table 23: EU27: top ten suppliers of cotton T-shirts, knitted or crocheted, by value, 2004-07
Table 24: EU27: top ten suppliers of cotton T-shirts, knitted or crocheted, by volume, 2004-07
Table 25: EU27: top ten suppliers of women's and girls' cotton blouses, excluding knitted or crocheted items, by value, 2004-07
Table 26: EU27: top ten suppliers of women's and girls' cotton blouses, excluding knitted or crocheted items, by volume, 2004-07
Table 27: EU27: top ten suppliers of cotton skirts and divided skirts, excluding knitted and crocheted items, by value, 2004-07
Table 28: EU27: top ten suppliers of cotton skirts and divided skirts, excluding knitted and crocheted items, by volume, 2004-07
Table 29: EU27: top ten suppliers of men's and boys' cotton shirts, excluding knitted or crocheted items, by value, 2004-07
Table 30: EU27: top ten suppliers of men's and boys' cotton shirts, excluding knitted or crocheted items, by volume, 2004-07
Table 31: EU27: top ten suppliers of cotton pullovers, knitted or crocheted, by value, 2004-07
Table 32: EU27: top ten suppliers of cotton pullovers, knitted or crocheted, by volume, 2004-07
Table 33: EU27: top ten suppliers of cotton nightdresses and pyjamas, knitted or crocheted, by value, 2004-07
Table 34: EU27: top ten suppliers of cotton nightdresses and pyjamas, knitted or crocheted, by volume, 2004-07


Companies Mentioned - Gokaldas - Orient Craft - Royal Classic Group - SP Apparels - Texport Syndicate


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