Focus Domestic Share - a stitch in time move: Indian RMG exporters

03 Sep '10

4 min read

Indian textile and garment industry is traversing through happening times these days. On one hand abroad conglomerates have augmented their efforts to mark their presence in this country, on the other; the exporters are revising their business strategies to strengthen their domestic hold and inland market share. As a 'Right Time Move', country's export houses and garment makers are re-aligning their focus to their local clientele and consumer base.

Associated to these traits, our vigilant News team convened some interrogative talks on 'why and what next' to a few of select industry's prominent players.

Justifying these movements amongst garment industry, Mr Subhajit Chakrabarty, Director IT&IS, Apparel Export Promotion Council (AEPC)-the official body of apparel exporters in India, remarks- “Shifting of focus by our garment companies to domestic markets implies that exports are less attractive.”

He expounded the factors by saying that the EU markets have recently become difficult. The US has been erecting NTBs in the form of inclusion of India in negative lists such as the TVPRA and the EO 13126. With major export markets showing higher risks, the steadiness of the domestic markets provides the exporters the option to maintain or expand in scale.

Mr Chakrabarty added –“the increasing prices of raw material (cotton, labor etc) have strained their competitive edge in global markets and domestic demand has come to as the savior of the industry when global demand is weak; the recession is a case to the point when IT majors in India started focusing to domestic demand particularly to large e-Governance projects. Similar is the case with the textile industry except that the IT industry has been more supported by the government than most other sectors. What is concerning is that the textile industry, which is the second largest employer in the country, deserves strong support.”

Drawing a comparative picture, Mr Chakrabarty described that Chinese textile exporters have significant advantage in infrastructure; Bangladesh textile exporters have advantage of lower tariffs but Indian exporters have neither of these advantages. However, he agrees that they do have the entire textile value chain within the country by inheritance and also have highly skilled labour still being supported by the industry.

Besides, Mr Chakrabarty is also concerned about the gradual loss of India's global market-share to competitors from other countries if export keeps on being not attractive.

Mr Sunil Khandelwal, CFO, Alok Industries Ltd – the company that constitutes 13% of India's exports, reasoned that in order to boost investment in Textiles, GOI has allowed 100% FDI in Textiles under Automatic Route. However, in his findings, the investment in this sector by FDI so far has not been encouraging.

However, further admitting, he informed that considering the encouraging prospects of the Industry, the FDI investment is likely to go up significantly. The GOI has also allowed FDI in single brand / cash & carry model.

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