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 international counterparts.

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 battle.

And more... To see the full Industry Overview order now.