The Confederation of India Textile Industry (CITI) latest analysis of the Indian textile and apparel (T&A) sector’s performance in October 2023 has highlighted what experts have been saying about the sector’s export capabilities, mirrored by financial stocks of reputable manufacturers.
October 2023 enabled textile exports to gain 24 per cent over the same month in 2022 while the cumulative exports of T&A grew 10. 44 per cent in October 2023 compared to October 2022. However, the cumulative T&A exports have actually underperformed in the six-month period of April and October 2023 by 6.67 per cent compared to the same period in 2022 and by 15.55 per cent in the same period of 2021. While textile sector’s exports look buoyant, the opposite is true for apparel sector. The analysis shows a depressed industry that is unable to cross the threshold to growth. In October 2023, apparel exports decreased 8.08 per cent.
Mixed overall performance
The last six months have not been kind. This year, between April and October textile exporters saw a cumulative negative growth of 0.41 while apparel sector saw a larger negative growth of 14.58 per cent. Compared to the same six months in 2021, this year export of textiles was negative by 19.55 per cent apparel expots was negative by 8.8 per cent. The silver lining is the T&A sector’s contribution to the nation’s entire export in 2021 was 9.7 per cent which fell 2022 to 7.31 per cent but rose slightly this year to 7.6 per cent. On the other hand, popular Indian raw cotton and waste had the worst export performance with a whopping decline of 78.69 per cent compared to same period in 2022.
The overall state of depressed exports was mirrored in the manufacturing sector. Despite export orders declining, the domestic apparel market was projecting a windfall due to the festive season. However, this windfall didn’t turn out to be as expected. A reputable Coimbatore-based manufacturer attributed several reasons for this decline in manufacturing and exports. First, the Quality Control Order recently introduced by the government, which mandates a Bureau of Indian Standards certification for man-made fibre, including those that are imported, has led to steep decline in exports as textile manufacturers are unable to source these raw materials as per government specifications in the international markets.
Implication for the workforce
The president of Tiruppur Exporters Association, KM Subramaniam is confident the drop in exports is a temporary phase. He feels while most garment exporters have reduced workers’ shifts or done away with overtime as production has gone into a loss, so far workers have not lost jobs and the recent announcement of drawback in duty hikes is expected to revive exports and hopefully have factories running in profitably again.
While this may sound optimistic, there are others who don’t necessarily reciprocate Subramaniam’s optimism. Clothing Manufacturers Association of India (CMAI) Chief Mentor Rahul Mehta says, the domestic market has been slow since mid-March and compared to last year growth is flat. If low production trend continues for another couple of months, he feels job losses are inevitable after the end of the festive season.
The CITI monthly report indicates a mixed performance, whilst some recent reports have presented doom and gloom. Indeed there is not much clarity on how the sector will pan out by the end of this fiscal. If demand revives in Western markets India’s apparel exports can surely look up.