Indian apparel sector can ride out a second dip – Expert
Mr Robin Anson, Managing Editor of the UK-based Textiles Intelligence was in Ahmedabad recently for the International Conference on Denims. Mr Anson delivered the keynote address at the conference and presented a paper on “Denim and Jeans: A global perspective”.
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Since, Mr Anson is a respected figure in the global textile and apparel arena, we decided to field him a few questions to get his perspective on the Indian textile and apparel industry.
F2F – Please comment on the reason as to why smaller countries like Bangladesh and Vietnam are squeezing ahead of India in the worldwide apparel export market.
Mr Anson - As far as Bangladesh is concerned, the country is focusing very much on the garment sector, due to which it draws a lot of support from the government and it looks at the sector as a way to bringing economic development in to the country. Secondly, the wages in that country are extremely low, which makes it extremely competitive. Thirdly, Bangladesh is a Least Developed Country (LDC), due to which it qualifies for duty-free exports to the European Union and other regions. These are probably the main reasons for its rise in garment exports.
Again, Bangladesh does not historically have any textile production to speak of, so the country has had to import all its fabric needs, which is a disadvantage as there are extra costs attached to imports, but at the same time, it also has its advantages, as they are free to source the fabric and the quality of their choice from wherever they want, which ensures complete control over the whole production process.
Turning to Vietnam, it is a communist country and has been a closed economy and trying to get in to the US markets has been difficult, again because of historical reasons, mainly because of the conflict in the past, but when Vietnam joined the WTO, the US had to withdraw import quotas. Secondly, labour costs are also low here, along with good working ethics and when the country joined the WTO, a lot of entrepreneurs smelled opportunities and pushed forward and got the first mover advantage in to the markets of Europe.
Vietnam too has been wise in choosing the clothing sector in achieving the goal towards industrialization and is trying to build an efficient supply chain network to complement the industry.
F2F - But considering that Vietnam does not have free trade access to Europe and the US, except with Japan, and is also not a LDC, there has to be something else, which is driving garment exports and your advice to Indian clothing exporters.
Mr Anson - I would say that, this industry is new to Vietnam, due to which they have new technology, while in India it is a traditional industry, which some times gets in the way and since the sector industrialized sooner, it has got older machinery and technology. The second major flaw, I foresee is that foreign investors are reluctant to invest in India due to red tape, while Vietnam on the other hand is encouraging FDI in the sector from China and other countries, the benefits of which are there for all to see.