Source: The Stitch Times, April 2009

After months of gloom and hope against hope, some silver lining did appear on the horizon of Indian apparel export trade at long last with the January 2009 figures offering some ray of hope. Apparel exports grew by 5 per cent in January 2009 over the same month last year. When compared on a month-to-month basis, the increase was of the order of 11 per cent at $972 as compared to $871million in December, 2008, as per the information available from National Centre for Trade Information.

How did it happen, particularly in view of the fact that apparel exporters have all along been seriously complaining of Indian apparel being priced out of international market because of lack of support from the Government? True, the Government of India did some small mercies, but these were utterly inadequate when seen in the context of out-of-the-way support that other Governments gave to their garment export trade; be these smaller fries like Bangladesh or even big brother China.

To my mind, it is ultimately the ingenuity of Indian apparel exporters alone that has stood by them, as they decisively fought for their survival and offered more discounts and lowered their prices to compete with what are now generally known as "Chinese prices". This price reduction was not only for future contracts, but also for even the jobs executed and products delivered, as anything less than that would not have satisfied the shrinking tribe of international retailers who themselves were under pressure of the ultimate consumer to slash prices. Luckily, even the Chinese prices had, in the meanwhile, moved upwards because of rising wages, better adherence to ecological parameters, higher interest rates and higher costs of raw materials. Besides, the Chinese Government did withdraw some of export incentives and for some time, even the reports suggested that the Chinese apparel industry has shifted its emphasis from quantity to quality, in order to improve their unit value rates. The Chinese apparel exporters did continue to suffer for quite a few months for all these reasons which did trigger southward movement of Chinese apparel exports. This did send the alarm signals to Chinese Government, which, hastily withdrew "disincentives" and not only restored the export subsidies they were providing to apparel exporters, but even further improved over them to win back their share in the world apparel trade.

It must also be admitted that in the meanwhile Chinese Yuan, which had till a couple of years back a frozen value, was allowed limited freedom to float in international market with the result that the Yuan appreciated by some 12% within a short span of a few months. This did make the Chinese products costlier than when the Yuan was frozen.

Fighting for its very survival, the Indian apparel exporters, according to press reports had slashed prices by 11-12 per cent. "In order to survive and retain customers, exporters have to slash prices," said Praveen Nayyar, President, AEMA, according to press reports that there is still requirement for goods made here. Said, Rahul Mehta, President, CMAI "Things are not as grim as feared."

In addition, Indian garment exporters also focused on markets other than the US and the EU, our traditional export destinations. They made a concerted bid to aggressively market their products in West Asia, Africa and Australia where the Tsunami of recession had not impacted their economies as seriously as the US and the EU. The results were encouraging and did contribute to northward movement of Indian garment exports.

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Originally published in The Stitch Times: April 2009