Industry Insight

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Apparel
Exports
An insight into the thriving apparel
export industry in India that chronicles
the changes, influences and outcomes
of the burgeoning apparel trade.

TEXT BY
Vasant R Kothari and
Nithya Venkataaraman

– the inside story

72 APPAREL AUGUST 2010
T
rading across boundaries
has been a major source of
revenue for nations since
a long period of time. The
existence of the silk route and
the spice trade draw insight into
the role of International trade as
had been for the Asian economy.
Sources, including excavations from
Mohenjodaro and ancient Buddhist
texts, reveal that India in particular
had been a leader in textile printing
and carpet making; and references
from Marco Polo highlight that
exports of textiles to China and
South East Asia existed through the
“largest ships ever known”.
Apparel exports
International business has long been
recognized as a medium for mutual
gain between participating countries.
While the modern economy
recognises joint venturing and
direct investment as key strategies
for exploring international markets,
exports have maintained lower risk
and higher profit potential for the
stakeholders in this business.
It presents no wonder then
that exports form a key market
for the Indian economy even till
date. Additionally, the vast size
Like any other industry,
exports thrive on
diligent costing and
timely deliveries. These
factors assume added
importance given the
longer transit time for
merchandise and the
functioning of multiple
exchange rates.
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of the Indian textile industry and its
competitiveness makes the textile and
clothing industry one of the key grosser
for the Indian export market. This is
evidenced by the numbers as per the
Apparel Export Promotion Council
(AEPC), for the fiscal year 2008-09.
India registered overseas sales close to
$10.2 billion, equating a 2.6% share in
the overall global exports.
This makes the Indian garment
export industry the sixth largest in
the world.
What makes the garment
export industry a lucrative
area for the Indian economy?
India has been blessed with multiple
factors, which can be leveraged
by the Indian garment industry to
maintain its competitiveness. These
include vast sources of raw material,
competitive labour costs, a wealth of
entrepreneurship, experience and skills,
an open economy facilitating trade,
and a relatively quick response time by
stakeholders in the supply chain.
The line also benefits from a large
pool of exporters located in most major
cities in the country. The number of
garment exporters in India equals more
than 18,000, out of which 78% are
small scale and 15% midsize. Together,
they generate annual sales ranging
between $20,000 and $10 million.
Marketwise, the USA and the EU
are the major shareholders in terms of
the export segments from India. The
value-wise share read as around 35%
APPAREL AUGUST 2010 73

each (2007-08), underlying the
importance of the two players in the
export business. Other markets for
exports include China, UAE
and Japan.
the sheer width of Category-wise, casual wear
the manufacturing prevails as the most important
process for product line in the market, making
exports entails an up for nearly 2/3 of total exports
understanding from India. This is followed closely
and assimilation by formalwear and kids apparel.
of practices Sportswear, intimate apparel and
through the entire sleepwear are other categories that
process flow. are contributors to exports.
The global economic crisis has
affected the major foreign markets,
India being no exception. The Indian
garment industry continues to feel
the effects of the slowdown, as
GARMENTS
74 APPAREL AUGUST 2010
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evidenced by the weakening demand
for exports and the lower margins
realized by exporters. This is further
compounded by crucial challenges
faced by the Indian manufacturing
industry, including acute power
shortage. Exporters tend to deal with
the above challenges by product
value-addition (specifically washes,
sequins, embroidery etc.) aggressive
negotiations and competitive offerings
for price and quality.
Sourcing hubs
Like any other industry, exports
thrive on diligent costing and timely
deliveries. These factors assume
added importance given the longer
transit time for merchandise and the
functioning of multiple exchange rates.

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Certain markets within India have
emerged as sourcing hubs for specific
product categories. These include the
National Capital Region (NCR) for
mid-range and high-end apparel (also
given the concentration of value-add
services like embroidery), Bangalore
for high-end formalwear, and Tirupur
and Ludhiana for circular and flat
knits respectively.
Small and medium enterprises
(with a monthly output of 45000
pieces or less), bring down production
costs through subcontracting a few
processes. Large enterprises dealing
with a monthly output of at least
50000 pieces usually integrate the
manufacturing process in house. Full Sourcing for fabric and trims are key personnel handling the orders.
time workforce can vary up till 250 aggressively followed by merchants However, the terminologies and
to 500 at any given point of time. devoted to the given brand. Production procedures are perceived to be
Needless to say, the sheer width planning and control are also followed extremely complicated and difficult to
of the manufacturing process for through in conjunction with the understand. Hence, this awareness
exports entails an understanding and production floor. Quality control is is usually restricted only to the
assimilation of practices through the maintained through regular inspection functional team in the organization,
entire process flow. process, while the open market who are in turn are limited because
Large export houses deal with the today entails the concept of quality to of not understanding the mainstream
workflow by departments devoted to move beyond “control” to “assurance” business. The thriving apparel
one area of the supply chain. The and “management”. industry presents a challenging
design centres/departments usually With this competitive business work environment through its sheer
consist of stylists/designers who environment it becomes imperative for dynamic nature.n
develop the range for upcoming all players to innovate to sustain in this (Sources: India_resource.tripod.com
seasons based on the buyers’ scenario. This requires the knowledge and Essential sourcing intelligence for
requirements, sales figures and of basic export import procedures buyers by Global Sources,
new trends. and policy, especially amongst the Nov 2009)

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