India's textile and apparel industry faced a significant setback in May, with exports experiencing a year-on-year decline of 12.2%. The low demand in key overseas markets, particularly the United States, continued to plague the industry. 

Textile exports contracted by 11.8%, while apparel exports witnessed a decline of 12.7%. Other sectors also suffered, with jute products slumping by 29.3%, and handicrafts and handmade carpets falling by 21.1%. The total value of India's textile and apparel exports for the month amounted to $2,816 million, compared to $3,206 million in May 2022. 

The reason attributed the slump to sluggish demand in major importing countries, such as the United States, Germany, and the United Kingdom, influenced by inflation and inventory accumulation. However, there are positive signs of improvement as exporters gradually secure new orders. 

The reopening of China after COVID-19 also presents opportunities for business growth, particularly in yarn and fabrics. Additionally, the moderation of domestic cotton prices offers hope for increased sales from July/August. Despite signs of recovery in the U.S. market, exports to the European Union have not met expectations. 

Competing countries' duty-free access grants them an 11% cost advantage. Therefore, industry feels there is a pressing need to expedite the free trade agreement with the U.K.

US retailers are preparing for a significant drop in apparel and footwear sales over the next few quarters, suggesting a potential downturn despite recent positive retail sales data. Commerce Department figures reveal a 0.3% increase in retail purchases, following a 0.4% gain in April. 

However, the outlook for the remainder of this year and beyond appears gloomy. Factory owners report substantial declines in holiday orders, as companies grow cautious about consumer budgets. There are indications of plummeting demand for merchandise planned for the spring and summer of 2024. 

The decline in apparel orders further supports the growing belief in an impending US economic recession, accentuated by the Federal Reserve's readiness to raise interest rates. Apparel imports have already dropped by 31% compared to the previous year. 

Retailers are becoming increasingly concerned about waning consumer spending, leading to decreased imports and orders. This apprehension is evident across the apparel market, echoing anxiety, according to industry experts. 

Retailers are also adjusting their revenue forecasts, cutting back on inventory purchases, and showing worry about existing stock levels in relation to customer demand.

The Cotton Growers Association stated that the cotton trade between China and Brazil may soon be conducted in yuan, as reported by the Global Times.

The association predicted that Brazilian cotton exports to China will surpass those of the US in the coming years. According to customs authorities, China imported 382,000 tonnes of cotton in the first four months, with US cotton accounting for 52.22 percent and Brazilian imports at 31.53 percent.

In a separate development, Russian President Vladimir Putin revealed at the St. Petersburg International Economic Forum that over 80 percent of trade settlement between Russia and China is carried out in Rubles and Yuan . The bilateral trade volume between the two countries exceeded $190 billion in 2022.

The US’s Department of Commerce released data analysis from its Office of Textiles and Apparel (OTEXA) that indicate the world’s largest economy is slowing down its import volumes of textiles and apparel. The analysis, which was released in the second week of June 2023, revealed since the last quarter of 2022, there has been a high level of unease in the market and amongst consumers as it became apparent that all was not well with the world’s number one economy. 

In following months, the fear was compounded with the financial institution crises and that the country’s national debt factor and signs show that this may continue as the economic and political battles have entwined and not making much headway to the election run up next year. The sharpest drop was in March when it fell by more than 40 per cent YOY, and by value a fall of 32.7 per cent YOY. Since then faltering improvement has been recorded. 

Retailers want to diversify sources

As the Biden administration continues to curtail Chinese influence not only in the Indo-Pacific region but globally as well, American retailers are weary of further embargoes that could destroy supply sources and want to divest from their reliance on China as much and as fast as possible. In the first four months of 2023, the Herfindahl–Hirschman index (HHI) fell below 0.1. 

Similarly, market shares of five largest suppliers (China, India, Bangladesh, Vietnam and Indonesia) fell below 60 per cent for the first time since 2018. This drop suggests US textile and garment exporters are indeed looking towards diversification of supply sources and this strategy may become prevalent in the US fashion industry for years to come in order to deal with market uncertainties and mitigate supply chain risk exposures. 

Near-shoring the new strategy for the US

In a new development, about 17.3 per cent of US apparel imports came from countries in Western Hemisphere in the first four months of 2023, up from 15.6 per cent in 2022. This indicates that in a world of supply chain disruptions continuing to cause issues, near-shoring is being actively pursued by US retailers. 

US fashion committed to lessen Chinese imports

Despite the Xinjiang cotton controversy over the ban of cotton sourced from this region, China remains the largest supplier of clothing to the US. However, the top supplier saw a drop of 17.9 per cent in value and 30.6 per cent in volume in US imports for the first four months of 2023. For the first time in decades, less than 10 per cent of US cotton apparel imports came from China in March-April 2023, revealing a significant impact of the Uyghur Forced Labor Prevention Act (UFLPA) on US fashion companies’ China sourcing strategies. 

Vietnam has been affected in this scenario as it is perceived to be heavily reliant on Chinese cotton as its source for raw material and is therefore, exposed to the risk of buying banned cotton from the Xianjiang province. In value, Vietnam accounted for 17.3 per cent of US apparel imports in the first four months of 2023, down from 18.6 per cent a year ago. 

India, a preferred alternative 

India, alongside Bangladesh, Indonesia and Cambodia are gaining from US apparel importers turning away from China and seeking cost-effective alternate supply sources from Asia. While near-shoring is proving to be a safer option for US retailers, the cost factor of buying from European suppliers is only applicable for high-end clothing and cannot be exercised for mass retail. Leaving China aside, the top five Asian apparel exporting countries that includes India accounted for 44.7 per cent of US apparel imports in the first four months of 2023. 

A unique mix of Indian culture with a twist of modernity designed with skilled craftmanship is the USP of most Indian fashion designers who are making a mark in the premium apparel segment with wearable everyday pieces to luxury bridal couture. While some are globally-renowned large fashion houses of talented and creative fashion and accessory designers, others are those quietly working behind the scene for the intricate embroidery, embellishments and fabrics from prestigious fashion houses like Versace, Hermès, Christian Louboutin, Gucci, Prada, Dior et al.

Although analysts opine Manish Malhotra is probably India's richest fashion designer at the number one position, other big names such as: Tarun Tahiliani, Ritu Kumar, Rohit Bal, Sabyasachi Mukherjee, Neeta Lulla, Rohit Bal, Masaba Gupta, Anamika Khanna, Anita Dongre and more promote their fashion houses with their own USP and customer loyalty across the globe.

Corporate tie-ups a win-win 

There is a trend of designers are tying up with large corporate houses and companies with technical expertise for go-to-markets globally and for smaller towns within India. Indeed, these tie-ups are a win-win for both corporates and the designers as it helps them scale up faster rather than on their own.

In fact, Tahiliani was one of the first to get funding from a corporate house like Aditya Birla Fashion and Retail Group (ABFRL) with his long-standing relationship with the chairman Kumar Mangalam Birla, who had been a customer of Tahiliani’s Ensemble for decades. Similarly, ABFRL bought a 51 per cent stake in House of Masaba Lifestyle, which showcases apparel, personal care, and accessories under the Masaba brand, owned by designer Masaba Gupta. Meanwhile, Reliance Brands bought 52 per cent stake in Ritu Kumar, around 51 per cent in Abu Jani Sandeep Khosla and 40 per cent in Manish Malhotra and this is slowly changing the game for the luxury market. Back in 2008, the then-successful Kishore Biyani’s Future Group had a 23 per cent stake in Anita Dongre, which was later sold to private equity player General Atlantic for around Rs 150 crore.

As per a Statistica market survey, global luxury fashion market is worth around $1.53 billion in  2023 and it is expected to grow annually at 1.32 per cent CAGR from 2023-2028. The Indian luxury segment fashion houses have now expanded from just producing for the global markets and instead becoming one of the largest domestic consumer markets for apparel and accessories. 

Many international brands are now investing in business relationships with Indian corporate houses and well-known designers are more focussed on the domestic rather than the global and NRI market. 

Good for business 

As per real estate consultancy Knight Frank’s Wealth Report 2023, India is set to see around 58.4 per cent increase in ultra-high-net-worth individuals along with those having a net worth over $30 million, from 12,069 in 2022 to 19,119 in five years by 2027.

Perhaps what works for designers through these tie ups is they can leverage the deep understanding of the affluent Indian customers and their heft across digital, retail operations, marketing, and supply chain platforms to grow their business. The corporate houses on their part are creating a platform for designers and domestic artistic subsidiaries and talent to merge with home owned and well established strength in fashion and luxury retail business worldwide. 

However, for effective collaborations especially for global markets, Indian designers need to tick various boxes to be considered worthy at a global level. From greenwashing to sourcing right, fashion designers also need to be forward thinkers in today’s scenario. You have to check it all. Whoever wears the crown in the end, the ball seems to get rolling towards more mergers and innovative strategies to bring more business.

Pakistan's textile exports for the first eleven months of fiscal year 2022-23 reached $15,029.845 million, marking a 14.72% decline compared to the same period last year, according to the Pakistan Bureau of Statistics (PBS). 

However, certain sectors experienced contrasting trends. Raw cotton exports saw a remarkable growth of 104.13%, rising from $6.577 million to $13.425 million. Similarly, the export of tents, canvas, and tarpaulin increased by 26.52% from $99.463 million to $125.840 million. Conversely, cotton yarn exports witnessed a significant decline of 33.75% from $1,112.712 million to $737.186 million. Cotton cloth exports decreased by 16.87%, while cotton (carded or combed) saw a drop of 38.97%.

Other categories that experienced a decline include yarn (other than cotton yarn), knitwear, bedwear, towels, ready-made garments, art/silk/synthetic textiles, made-up articles (excluding towels and bedwear), and other textile materials.

 In May 2023, textile exports showed a YoY decline of 19.57%, amounting to $1,320.558 million. However, on a MoM basis, exports increased by 7.12% in May compared to April 2023, as per PBS data.

Spanish businessman Amancio Ortega's fashion empire, Inditex, continues to make waves as it revealed a net profit of 1.16 billion euros for the first quarter of its 2023-2024 fiscal year, marking a 54% increase. The group, which owns renowned brands like Zara, Massimo Dutti, and Bershka, attributed this growth to a strong operating performance.

In an effort to combat shoplifting, Inditex announced plans to introduce a new technology in July that eliminates physical alarms on its clothing. The multinational aims to test the system with garments from the upcoming autumn-winter collection and eventually implement it across all brands. 

Additionally, Inditex plans to launch the Zara Pre-Owned platform before 2024. Initially introduced in the UK, this platform enables customers to prolong the lifespan of their garments through donation, repair, or peer-to-peer sales. 

Users will have the option to request alterations to any of the brand's used garments from various seasons. These developments showcase Inditex's commitment to innovation and sustainability within the fashion industry.

The United States has called on Mexico to examine allegations of workers' rights violations at an Industrial Interior denim garment facility in Aguascalientes. The U.S. decision includes the suspension of final customs account settlements related to goods from this particular facility. 

This action represents the tenth time the U.S. has formally invoked the Rapid Response Labor Mechanism under the U.S.-Mexico-Canada Agreement, but it marks the first instance in the garment sector. Prior invocations solely pertained to the automotive industry. According to the Office of the U.S. Trade Representative (USTR), a petition was filed with the Interagency Labor Committee for Monitoring and Enforcement, which consists of the USTR and the Department of Labor. 

The petition alleged that the Mexican company coerced workers into accepting revised collective bargaining agreements, interfered with the union's internal affairs, and failed to engage in genuine negotiations.

 The committee subsequently determined the existence of credible evidence supporting the claims of rights denial, thus warranting the use of enforcement measures in good faith. Mexico has been given ten days to agree to conduct a review, and if accepted, they will have 45 days to complete the investigation, as stated by the USTR.

During a gathering with approximately 20,000 workers and employees from six factories and enterprises at the Lecrown Shoes Industry Factory in Cheung Prey district, Kampong Cham province, The government appreciated for the notable progress achieved in the garment and textile factories. 

The improvements in the work environment, wages, transportation, and food facilities, resulted in a significant reduction in the incidents of workers fainting on the job. 

Presently, Cambodia boasts a total of 17,000 factories and enterprises, employing 1.5 million workers and employees. Of these, 1,326 are garment and textile factories, providing employment to over 840,000 individuals. 

Reflecting on the past, in 1997, Cambodia had a mere 64 factories with around 80,000 workers, generating exports worth $270 million. During that time, workers received a meagre wage of only $40, while today the minimum wage stands at no less than $200.

A dynamic growth indicator, predicted at CAGR 7.6 per cent until the projected period of 2032 will put India in the global top five consumers of western wear by then. US-based retail trade research specialist Allied Market Research recently released a report titled ‘India’s Western Wear Market’ that highlighted in 2021, the value of this category was approximately $2.6 billion and by 2032 it is forecasted to be worth $6.1 billion by 2032. 

Changing fashion habits a catalyst

Indian consumers’ fashion choice, particularly among women, has traditionally been influenced by cultural habits. Since the 1980s, India has seen a gradual transition and from the 2000s it has begun to align itself in line with the latest global trends. Sanjay Kapoor, CEO, Genesis Luxury points out brands that are successful in India have understood how Indians consume, what colors they prefer, their choice of designs work, what touch-points and personalization work may be different from what works for a consumer living in New York or Hong Kong. Kapoor says, Indian women have kept a lot of their traditional sensibilities alive, and one can see a beautiful mix of both Indian and Western sensibilities across the spectrum. The rush of western luxury brands to India was the biggest marker that showcased Indian consumers who lead trends locally are more inclined towards western wear. 

Brands reaping harvest

Major players operating in Indian western wear market are: Aditya Birla Fashion and Retail (ABFRL), Chemistry, H&M Hennes & Mauritz, Forever21, Inditex, Mango, Shoppers Stop, Benetton Group, Vero Moda and Westside. Revenue from the ABFRL’s key Madura Fashion and Lifestyle unit, that sells western wear and athleisure casual sports clothing, grew about 30 per cent to Rs 21.56 billion contributing 75 per cent of the quarterly topline Q4 2022-23. 

Such is the attraction of India’s growing western wear market that China’s Shein App, banned by the Indian government has found another way to retail in India riding on Reliance Retail. Recently, the retail arm of Mukesh Ambani and Shein signed a partnership. Media reports say, Shein has partnered Reliance Retail and will operate through RIL's subsidiary to tap one of the fastest growing fashion markets globally.

Key insights from the report

The western wear market in India has witnessed significant growth in recent years, driven by a combination of factors like: changes in fashion trends, increase in urbanization, surge in disposable income, and rise in influence of Western culture on Indian society.

Western wear was initially a stronghold in men’s wear as it traditionally held the major share of the market. In this, western men’s apparel was mainly the traditional jeans, T-shirts and formal shirts and trousers. It has now diversified into jackets, various styles of jeans including ripped, skinny and recently on the lines of Gen Z fashion choice, baggy and flared jeans. 

However, women’s western wear is on an unprecedented rise as preference among female consumers not only in metros but also other urban areas is growing at an incremental rate. More women are working and have the money to spend on their personal fashion choices as well as follow trends created through ever-growing ‘fashion influencers’. The women's western wear market is highly competitive with several local and international brands vying wardrobe space.

For long in the men’s category it’s the formal segment that held lion’s share in western wear. However, this is changing as informal western wear’s growth far outpaces formal wear in the forecast period. Post-pandemic trends indicate casual wear is the preferred style of dressing as it stresses on comfort and has the flexibility of mixing styles, something the more rigidly structured formal wear can’t compete in.