India's political stability helping apparel export, says US trade report

Even though China still remains the largest exporter to USA with a 21% share in America's annual imports, countries like Bangladesh, India, Indonesia, Cambodia and Pakistan all ranked in the top ten group of apparel exporting nations to America.

India's share of apparel export to US has risen from 4 percent to 5.8 percent between 2013-23, along with other Asian exporters, all of whom have benefitted from a dramatically fall in China's share in this period, a recent report by US International Trade Commission (USITC) has said.

Even though China still remains the largest exporter to USA with a 21% share in its annual garment imports, countries like Bangladesh, India, Indonesia, Cambodia and Pakistan all ranked in the top ten group of apparel exporting nations to America. These five countries account for 27 percent of the US apparel imports in 2023.

In 2013, India held a modest 4% share of US apparel imports, which has risen to 5.8% by 2023, reflecting India’s increasing competitiveness, the report said. As America continues to diversify away from China, India is emerging as a reliable and strategic partner for apparel sourcing, said the USITC report. The report said United States is India’s top export market, accounting for 32 percent of the $14.5 billion worth of global apparel export in 2023, which amounts to $4.6 billion.

The report by USITC also said political stability has been a key factor driving more US buyers to source apparel from the countries like India and Vietnam in recent years. The report added that India offers guaranteed production timelines, and helps mitigate risks associated with political instability, which is making it an increasingly attractive option for American buyers.

The USITC report said political stability as a factor that brands and retailers consider when searching for new suppliers. "Brands are more willing to source high-value or fashion items from India compared to less politically stable countries, as they are confident they will be able to produce and receive their products." However, the report mentions that India's apparel sector has difficulties in attracting new buyers, and has seen customers leave because of comparatively higher costs versus other Asian peers.

Some industry representatives have said that India’s compliance and sustainability quotient is improving, which has helped its competitiveness in recent years. However, India still remains a costly sourcing destination for apparel, compared to other regional suppliers, the report said. India's largest domestic demand makes exporting less attractive. Some US retailers have also raised concerns over long transit times for final goods coming out of India, the report cited.

Another factor that has worked in India's favour is the production of nearly every apparel input, from fiber to accessories. This, the trade report says, has allowed for vertical integration, making India more appealing to buyers that are looking to mitigate risk to supply chains and cut down on costs.

The report mentions Bangladesh is the world's second-largest apparel exporter, with capabilities in manufacturing and bulk orders of basic garments. Low cost of labour, benign input costs, and duty-free access to export destinations contribute to Bangladesh’s cost competitiveness.

Bangladesh's garment industry remains powerful within Bangladesh, and apparel associations, the government and factory owners have deep association. In some instances, factory owners also serve as elected government officials, which may increase stability, but others note that it may prevent higher unionization rates and wages, or worker empowerment.