Wazir Advisors July 2023 report ‘Apparel Trade Scenario in Key Global Markets and India’ reveals the scenario hasn’t changed much since the previous report released in June 25. The June 2023 figures indicate India’s apparel exports was at $1.2 billion, which is 20 per cent lower than June 2022. On YTD basis, exports are 14 per cent lower than in 2022. Between January and May 2023, US has remained the largest importer with 31 per cent of all Indian RMG exports; the UK with 10 per cent and the UAE with 9 per cent. 

In the first five months of 2023, India’s export to the UAE has dipped by 5 per cent since 2021 but there are seven more months to go. Similarly, India registered a 1 per cent increase in its share in the US and UK the first five months of 2023. India’s exports to Germany and France have remained steadfast at 6 per cent and 5 per cent respectively. The Wazir report takes stock of April, May and June 2023 trade stats. Apart from reporting on imports and retail level performances in the US, EU, UK and Japan, the report also provides analysis of India’s RMG sector’s performance.

Given India’s falling export graph, a look at why India is not faring well in some traditional markets. 

Indian RMGs fall from grace in the UAE

After the Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates was signed in May 2022, it was speculated that India’s trade with the Middle-East country will get a boost. Indeed it did as per the government’s statements. Gems, jewellery, sugar confectionery, cereals, and electrical machinery have noted a significant rise in the UAE market after the implementation of CEPA but for inexplicable reasons, the readymade garment sector did not benefit much. In terms of readymade garment export destinations, the UAE has fallen to the third position while the UK now takes up second spot. The UAE’s decline in importing readymade garments from India is hurting local exporters as they are facing low to negative growth elsewhere as well. Once the second largest supplier of readymade garments to the UAE after China, India has been elbowed out by Bangladesh. The economic conditions in the UAE at the moment are better disposed towards larger volumes of basic, cost-efficient clothing that Bangladesh is an expert at. 

India’s negligible presence in Japan’s import basket 

Japan is another case in point as the third largest importer of readymade garments. On an average, the country imports apparels worth of $24 billion. In this collective, India has only managed to capture a tiny 1 per cent share, despite excellent bilateral trade relations with Japan and the fact that India and Japan have had a bilateral trade agreement since 2011 whereby duty on importing Indian apparel is zero. 

Moreover, India excels in manufacturing base for cotton, and cotton based knitwear, and has good chances for market penetration as demand for such items is high in Japan. Then what is the reason for Indian apparel exporters to underperform in such an important market? However, as late as 2022, Indian apparel exporters performed remarkably well in South Korea, seeing an increase of 51 per cent. 

Taking into account the statistics in the report, it could well be said Indian exporters should take a leaf out of Bangladesh’s playbook and focus on the Far East as new markets to leverage growth opportunities.