|India is poised
to be the next big winner after China now that the multifiber agreement,
which dictated terms in garment trade for the past 30 years, has
finally expired. Although China will gain the major share in global
garment exports, India is well on its way to becoming the second-largest
supplier to the United States and the European Union in the post
quota regime, much to the detriment of other garment-exporting countries
India is currently the sixth-largest apparel exporting country
in the world, with estimated exports for 2004 amounting to US$5.5
billion, an increase of about 12 percent over 2003. The industry
has been growing at an average rate of 10 percent for the past three
years. But with the quota system now terminated, the export growth
rate is projected to double in 2005. All apparel exports are expected
to reach US$6.6 billion by the end of the year.
Suppliers in India are especially upbeat about exports in the
quota-free era, mainly because more than 95 percent of garments
shipped from the country go to former quota-restricted markets of
the US, EU and Canada. In 2004, the three regions combined absorbed
US$5.2 billion worth of India-made garments
almost 95 percent of total exports in the product line. In 2003
too, these main export destinations dominated India's garment trade,
accounting for US$4.6 billion worth of apparel exports, out of a
total of US$4.8 billion.
According to a WTO study, India's share of the US apparel market
is forecast to increase from the current 4 percent to 15 percent,
and from 6 percent to 9 percent of the EU garment market, in the
next couple of years.
Women's garments comprise a major portion of apparel exports
from the country, accounting for an estimated 45 percent of shipments.
The product category is also expected to register the highest export
growth rate in 2005.
One of India's main advantages as a source for women's garments
lies in its large manufacturing base of yarns and textiles. The
country is the third-largest producer of raw cotton after China
and the US, and among the world's largest producers of cotton and
manmade yarns and fabrics. This, coupled with the availability of
relatively low-cost skilled labor and qualified designers, reinforces
India's position as a strong competitor in the quota-free era.
A number of makers also expect a partial shift of US buyers from
China to India in a bid to reduce the risk of sourcing entirely
out of one country. The demand growth, however, will result in intense
competition to the extent that suppliers in India will have to improve
quality, drop prices, add more value to their garments and shorten
delivery lead times in order to compete with domestic as well as
While China is the most formidable force in the world's garment
industry, India's niche specialty in hand-embroidered women's garments
gives it an edge over China. Nonetheless, China is no doubt India's
biggest competitor in other garment categories that do not have
much scope in terms of embellishments, such as knits, sleepwear
and business suits.
Internal competition might in the long-run result in slight consolidation
in the industry, as suppliers unable to bear price and quality pressures
will close down. Makers who are able to offset price reductions
with considerable increases in export volume and a reduction in
overall production cost, will be winners in the post quota apparel
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No. of exporters
|All garment exports
|Share of women's garments
Based on supplier interviews and