After months of gloom and hope against hope, somesilver lining did appear on the horizon of Indian apparel export trade at longlast with the January 2009 figures offering some ray of hope. Apparel exportsgrew by 5 per cent in January 2009 over the same month last year. When comparedon a month-to-month basis, the increase was of the order of 11 per cent at $972as compared to $871million in December, 2008, as per the information availablefrom National Centre for Trade Information.
How did it happen, particularly in view of the fact thatapparel exporters have all along been seriously complaining of Indian apparelbeing priced out of international market because of lack of support from theGovernment? True, the Government of India did some small mercies, but thesewere utterly inadequate when seen in the context of out-of-the-way support thatother Governments gave to their garment export trade; be these smaller frieslike Bangladesh or even big brother China.
To my mind, it is ultimately the ingenuity of Indian apparelexporters alone that has stood by them, as they decisively fought for theirsurvival and offered more discounts and lowered their prices to compete withwhat are now generally known as "Chinese prices". This pricereduction was not only for future contracts, but also for even the jobsexecuted and products delivered, as anything less than that would not havesatisfied the shrinking tribe of international retailers who themselves wereunder pressure of the ultimate consumer to slash prices. Luckily, even theChinese prices had, in the meanwhile, moved upwards because of rising wages,better adherence to ecological parameters, higher interest rates and highercosts of raw materials. Besides, the Chinese Government did withdraw some ofexport incentives and for some time, even the reports suggested that theChinese apparel industry has shifted its emphasis from quantity to quality, inorder to improve their unit value rates. The Chinese apparel exporters didcontinue to suffer for quite a few months for all these reasons which didtrigger southward movement of Chinese apparel exports. This did send the alarmsignals to Chinese Government, which, hastily withdrew "disincentives"and not only restored the export subsidies they were providing to apparelexporters, but even further improved over them to win back their share in theworld apparel trade.
It must also be admitted that in the meanwhile Chinese Yuan,which had till a couple of years back a frozen value, was allowed limitedfreedom to float in international market with the result that the Yuanappreciated by some 12% within a short span of a few months. This did make theChinese products costlier than when the Yuan was frozen.
Fighting for its very survival, the Indian apparelexporters, according to press reports had slashed prices by 11-12 per cent. "Inorder to survive and retain customers, exporters have to slash prices,"said Praveen Nayyar, President, AEMA, according to press reports that there is stillrequirement for goods made here. Said, Rahul Mehta, President, CMAI "Thingsare not as grim as feared."
In addition, Indian garment exporters also focused onmarkets other than the US and the EU, our traditional export destinations. Theymade a concerted bid to aggressively market their products in West Asia, Africaand Australia where the Tsunami of recession had not impacted their economiesas seriously as the US and the EU. The results were encouraging and didcontribute to northward movement of Indian garment exports.
Originallypublished in The Stitch Times: April 2009
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