China's competitiveness in cotton textiles is dropping rapidly, while India’s competitiveness is steadily improving. This has offered an opportunity for India to capture market share from China in the developed world, especially the European Union and the United States, which cumulatively comprise around 60 per cent of the global export market.
Even if one per cent of China’s market is captured by Indian exporters, there would be a big boost to India’s overall shipment in the sector. The domestic market is also gradually overcoming dull demand sentiment which had arisen out of demonetisation of high value currency notes in November 2016. Steady business growth was witnessed in January and February, after subdued sales in November and December. With the wedding season on, the industry expects sales to remain up this season.
However, global apparel trade remains under pressure, having contracted for a second year in 2016, owing to subdued demand in key importing countries. While the volume growth was marginally positive, primarily aided by a recovery in demand from Europe, realisations fell. Further, latest trends point to a modest recovery so far in 2017.
The pace of growth for other Asian apparel exporters, Bangladesh, Cambodia, and Vietnam, has also moderated in the last two years, though the countries continue to grow at a relatively better pace than India.