Northern hubs in Punjab, Haryana, and UP worst affected due to high input costs.
According to data released by Directorate General of Commercial Intelligence and Statistics (DGCI&S), Kolkata, India’s garment exports fall by 26% in September due to higher input cost and lack of favorable trade agreements for major global markets.
Exports of readymade garments of India declined sharply in September 2018 worth Rs 7968cr compared to Rs 10705cr in September 2017.
The decline is a shock to apparel exporters of India, particularly from Punjab, Haryana and Uttar Pradesh (UP), who blame it on high input costs. Production costs in the northern hubs are high compared to other competing countries.
According to experts, manufacturers based in the northern states are not even able to compete with Tirupur cluster in Tamil Nadu because of high labor, transportation and processing cost.
Major textile hubs in northern India are in Ludhiana, Jalandhar, Panipat, Gurugram, and Noida. Textile clusters in the three northern states employ over 2 million workers. Around 200 textile exporters are based out of Punjab and Haryana alone.
The Indian garment exporters are facing stiff competition from countries such as Bangladesh, Sri Lanka, Vietnam, Cambodia and Ethiopia and so competition in the international market has become very severe.
Harish Dua, Managing Director of Ludhiana-based KG Exports, said, “The Indian garment exporters are facing stiff competition from countries such as Bangladesh, Sri Lanka, Vietnam, Cambodia and Ethiopia and so competition in the international market has become very severe.”
“Neighboring competitors like Bangladesh, Pakistan, Sri Lanka, and Vietnam have duty advantage of 9.6% in major European markets compared to the Indian manufacturers because India does not have the Free Trade Agreement (FTA) with the European Union (EU), therefore, our products get out priced and we lose the market,” he added.
Overall, India exported readymade garments worth Rs 35860.16cr in April-July 2018, and during April-July 2017, India’s apparel exports were to the tune of Rs 39857cr.