Retailers like Steve & Barry and Mervyns filed for bankruptcy, while a number of stores scaled down their operation, including GapInc, Macy and JC Penney. As a result some Indian exports closed their manufacturing facilities. This also adversely affected suppliers in upper stream as generally about 80% of inputs required for the Indian apparel industry were sourced domestically compared to 50% in China. India readymade garment export reached US$9.69 billion, in 2007-08 according to the Indian authorities. The recent US trade data confirmed to the weak market sentiment. While textile exports to the US declined 0.95% in terms for the 12 months ending August 2008, apparel exports were down 4.47% to US$3.05 billion, Data from the office of Textiles and Apparel (OTEXA) and US Department of Commerce Showed. In the first eight months of 2008, apparel exports to the US declined 4.8% to US$ 2.2 billion. Against this background, Rakesh Vaid AEPC Chairman, expected that India will miss the export target for the current fiscal year ended March 2009. President of Tirupur Export Association, Mr. Sakthivel, estimated a 5% decline in export. Tirupur city account for 56% of Indias total knitwear exports.

Others remained positive with their competitive advantages. Even though the end market is in recession, the rapid inflation in China and other market has brought business to India, said Arvind Chief Financial Officer, Jayesh Shah. Arvind ships fabric to garment making centers like Bangladesh, Sri Lanka and Egypt, as well as exporting finished garments to the US. Top buyers like WalMart and Tesco who purchased apparel at around US$1 billion in 2007 recently demanded up to 2% rebate on their existing orders, exporters said. Some players in Bangladesh were also worried, Anisur Rahman Sinha, the owner of Bangladesh biggest garment manufacturer group, and Opex believed that cheap prices would help Bangladesh ride out the turmoil.

Nonetheless, some Bangladeshi players, with the US and Europe being major clients, found difficulties apparent. They were asked to cut orders process and orders were also delayed for spring/ summer season in 2009. Things are very bad. Some of the buyers have made us give rebates on the existing orders said Salim Rahman Managing Director of KDS garments; a large apparel manufactures of Bangladesh. Some were asking rebates for future orders on the ground that they were hit hard by the global financial crisis, according to Mr. Rahman whose company annually exported apparel worth US$150 million. The Bangladesh Knitwear Manufactures Association (BKMEA) in October 2008 reported a 10% drop in knitted items such as T-shirts and pullovers, and some manufacturers said things have been worsening since then. Moreover a number of orders for the spring and summer season were delayed as the retailers were unsure how the economic crisis would play out in the near future.

Former Chairman of the Pakistan Readymade Garment Manufacturer and exporters Association (PRGMEA), Ijal Khokhar commented that in the present economic scenario, it was challenging for Pakistan to meet its exports target and up to 40% shortfall was expected, given that the US and European consumers market become quit Exports from Pakistan in 2008 could decrease by half from the previous years. On the other hand Sri Lanka tried to survive by concentrating on the south- south co- operation. Being members- state of SAARC (South Asian Association for Regional Cooperation) Sri Lanka derived the duty- free route accessible under the SAFTA (South Asian Free Trade Area) agreement to ship garments to India duty -free. Under this agreement Sri Lanka, Sri Lanka exported to India eight million Pieces of garments in 2008.

Although challenges are ahead, industry experts in Asia commented that those who are able to survive or even expand smartly in this adverse environment will find their future brighter when the international market revives.

About the Authors

The views expressed are of authors; Mallikarjuna NL is a Research Student in Department of Studies in Commerce, University of Mysore and Dr. T.S. Devaraja is Reader in Department of Studies in Commerce, University of Mysore.