India's apparel exports are expected to remain flat during this financial year and the first half of next year due to decline in overseas demand, especially in the UAE, according to a report.
According to a 'Commodity InsightsApparel' report by US-based trade finance company Drip Capital, apparel exports which was expected to grow steadily in coming years, maintaining a CAGR of 12.06 percent to touch $82 billion by FY21, has dampened due to recent decline in overseas demand.
The overall market demand is pessimistic and the exports has been declining in the key export markets.
UAE markets witnessed a sharp decline in imports, necessitating Indian exporters to shift to new import markets, it added.
The problem is further compounded by increasing competition from other exporting nations like Cambodia and Bangladesh, that enjoy low labour costs that India cannot compete with.
"Perhaps the relative stability of apparel vis-a-vis other exports has created the perception of strength in the sector, but the issues are clearly there. Now, most exporters are predicting flat growth prospects for 2019. However, with the right interventions and policies, the government and other stakeholders can change this completely," Drip Capital co-founder and co-CEO Pushkar Mukewar added.
Tech upgrade incentivisation, market diversification, and innovation are good starting points to help India's apparel exports regain their upward growth, he added.
As India cannot compete on lowering labour costs, the focus should be on expanding schemes for tech upgrades and introducing more policies that incentivise apparel exporters to upgrade technology, he said.
Exporters must also look to new and emerging markets to keep export momentum going.
Four new markets show high potential for future growth including the UK, Chile, Israel and Japan.
The report further said that by identifying products with high growth potential, and leveraging individual strengths like tech innovation, exporters can start to push their profits and efficiency margins.
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