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'India offers relocation chances for HK garment cos'
09
Apr '16
As production costs in mainland China mount and worker recruitment becomes difficult, Hong Kong-based garment companies are critically examining the suitability of India as an alternative production destination, based on HKTDC Research's recent field trip to India.

A third article of the India series, analyses India's garment sector, assessing factors behind the suitability of the country for Hong Kong garment manufacturers to consider factory relocation, says Hong kong Trade Development Council (HKTDC) Research.

The strength of India as a textile and garment producer on a global scale naturally pales in comparison with China. India's status as a major garment exporter is often under-reported, and its potential as a producer is also under-rated, despite its population size, demographic advantage and verticalised supply chain, says the article.

According to HKTDC Research, the government's Make in India campaign could be a vital factor to attract Hong Kong garment companies.

Based on WTO figures, India ranked fourth among Asia's top garment exporters in 2014, trailing China, Bangladesh and Vietnam. India's major garment export markets include the US, EU and UAE. If textile products were added to garment products, India would rank second in Asia after China. India is second only to China in Asia with a strong niche in vertical production integration due to its strengths in cotton and man-made fabrics.

India's labour cost for garment manufacturing is much lower than that of China, and is comparable to that of Vietnam, which has been a popular location for Hong Kong manufacturers setting up factories in recent years. Regarding industrial relations with Indian workers, assistance available from management committees in textile parks, industrial parks and SEZs would make it easier to adjust to the Indian production environment, which is being upgraded by both the Central and State governments.

In the recent search by many Hong Kong companies for alternative production bases, Southeast Asian countries like Vietnam have apparently stolen all the limelight. In contrast, the awareness of India and its relevance as an alternative production base for garment production is not considered especially high among Hong Kong companies. Nonetheless, India may justify serious re-consideration due to the force of changes emerging over the past two years, particularly after the 'Make in India Initiative' was launched by the Modi government in September 2014, which is a serious attempt to give a makeover to India as a global manufacturing hub.

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