Japan's trade is now experiencing the 'Indian boom'. Rapid trade expansion is occurring between the two countries, which is likely to fuel the growth of Indian apparel exports to Japan.


Japan is the third biggest apparel importer in the world. On an average, the country imports apparels worth of USD 24 billion. China is the leading supplier of textiles accounting for a 78.95% share followed by Italy, Vietnam, South Korea, and US. These 5 countries accounts for 88.76% of total apparel imports of Japan. India's contribution among apparel exporting countries to Japan was meager with a 1.01% share. Earlier, business transactions between the two countries were very small. Currently, trade activities between the two countries are experiencing a sweeping change.


Trade relations between India and Japan:


India and Japan share an excellent trade relation. India is one of the three countries with whom Japan has security pact, the other two being US, and Australia. Trade relations between the two countries flourished due to the establishment of diplomatic ties after the II World War. The current robust growth of Indian economy has attracted Japans attention. During 2009, India has exported textiles worth USD 315.83 million.


Major textile and apparel makers of India are exploring prospects for enhancing bilateral trade between the two countries. Indian firms are also focusing in developing partnership with Japanese firms to gain access into their fabric,and apparel market. There is a profitable market for cotton apparels in Japan. India is a good manufacturing base for cotton, and cotton based knitwear, and has good chances for market penetration.




 



CEPA Agreement right key for Indian apparel exporters:


India has signed a Comprehensive Economic Partnership Agreement (CEPA) with Japan on Feb 2011 facilitating Japan to import garments from India at zero duty. Earlier export duty for apparels from India was 11%. Share of India in Japan's clothing import was just 1%. The CEPA agreement is positively expected to increase Indian apparel exports to Japan by 50%. Retailers are approaching Japanese manufacturers to sell their merchandise in Japan, and also in bringing brands from Japan into India.


To capture the Japanese apparel market, Indian exporters need to improve their quality, and keep up with timely delivery. The Hindu reports senior researcher Yoshiaki Kamiyama of Japan Textiles Importers Association (JTIA) saying, "The Japanese importers are even ready to compromise on the costs to a great extent if the products have some distinct quality that could outmatch the garments from other countries".


Profitable options than the Asian counterparts:


China is confronting with some difficulties in its low-cost apparel manufacturing sector. Textile companies of Japan are also shifting their focus from China due to the disruption of relations resulting from political and economic reasons. India has the potential to handle the entire textile value chain in a much better way than its counterparts. This gives a competitive advantage for India over other countries. All these factors motivate global apparel buyers to consider India for their importing, and sourcing requirements. With the 11% duty likely to be waived off, Indian garments will acquire duty free access into Japan.


Indian apparel exports are on the path of recovery, and are gearing up to grow further. If issues such as less productivity, and soaring cotton, and yarn prices, and taxes are taken care of, India has the potential to rise higher in the global textile arena.

 

References:


1)     Data source: AEPC circular dated Feb 21st, 2011.

2)     Aepcindia.com

3)     Fashionunited.in

4)     Hindu.com

5)     Business.mapsofindia.com