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India Emerges as Alternative to China in Garment Industry Post-Quota Era

Strategic Insights

— 2 min read

As China's massive market grab has been widely reported since the start of the year, India is quietly positioning itself as a viable alternative. The removal of the four-decades-old World Trade Organisation (WTO) textile quotas on January 1 has opened up new opportunities for the South Asian giant. According to Global Sources, a Nasdaq-listed trade facilitator, India can expect to double its growth rate to 20 per cent this year, from 10 per cent annually since 2002. With its competitive advantages in the post-quota era, including relatively low-cost skilled labour and qualified designers, India is poised to make significant inroads in the global garment industry.

Key Takeaways:

  • India's garment exports are expected to top US$6.5 billion this year, with growth in international demand for men's and women's trousers more than tripling from last year's quota-restricted level.
  • Women's clothes, accounting for 45 per cent of India's garment exports, will grow at a robust 20 per cent, according to local manufacturers.
  • Over 90 per cent of Indian suppliers surveyed by Global Sources plan to expand capacity this year, with more than a third expecting to lower export prices in the next 12 months.
  • India is expected to grow to be the second-largest supplier to the US and European Union in the post-quota era, with its share of the EU garment market rising from 6 per cent to 9 per cent and its share of the US garment market jumping from 4 per cent to 15 per cent.
  • Textiles (including garments) account for 5 per cent of India's gross export earnings and 6 per cent of the country's GDP, according to BNP Paribas Peregrine.
  • India's garment industry specialises in embroidered and sequined garments that are popular in Europe, while China is more focused on mass-produced items such as polo shirts.

Statistics:

  • India's garment exports growth rate: 20 per cent (this year), 10 per cent (annually since 2002) [Global Sources]
  • Growth in international demand for men's and women's trousers: more than tripled from last year's quota-restricted level
  • Percentage of Indian suppliers planning to expand capacity: 90 per cent (over 84 surveyed by Global Sources)
  • Percentage of Indian suppliers planning to lower export prices: 40 per cent (over 84 surveyed by Global Sources)
  • India's share of the EU garment market: 9 per cent (now), 6 per cent (last year)
  • India's share of the US garment market: 15 per cent (now), 4 per cent (last year)
  • Textiles (including garments) as a percentage of India's gross export earnings: 5 per cent
  • Textiles (including garments) as a percentage of India's GDP: 6 per cent (BNP Paribas Peregrine)

Sources:

  • Global Sources, a Nasdaq-listed trade facilitator
  • WTO (World Trade Organisation)
  • BNP Paribas Peregrine

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