Revving Exports to US Keeps India in Race to Be Next China


India, believed by many to have the potential to become the next China, is finally making headway in the exports market as it broke into the top 5 suppliers of Christmas decorative items and T-shirts to the US.

Sea-borne shipments of festival goods and accessories to America touched $20 million last month, almost triple the value from the year-ago period, according to US customs data. In the process, India gained a clear lead over the Philippines as buyers diversify supply sources in the face of rising labour costs and disruptions from China’s strict Covid-zero policy.

One such beneficiary of the early Christmas present is Amit Malhotra, whose Asian Handicrafts Pvt. supplies decoration items to global brands such as Walt Disney Co., London’s Harrods, Target Corp. and Dillard’s Inc. He confirmed a 20 percent jump in orders compared to a year ago, and that he has bumped up production capacity.

“This year we have shipped over 3.2 million units of Christmas decoration, up from 2.5 million last year,” said Malhotra, director at Asian Handicrafts. “Though China exports a significant share of Christmas decoration items, many first-time buyers have been approaching us now,” he said.

The trend isn’t limited to Christmas goods. Exporters in Asia’s third-largest economy have been witnessing a significant increase in orders from both the US and Europe, with the shift mostly seen in low-cost, labour-intensive sectors such as apparel, handicrafts and non-electronic consumer goods. While diversification of supply chains began with the US-China trade war in 2018, India hadn’t seen any meaningful gains back then as countries such as Vietnam cornered the bulk of orders that were moving away from Beijing.

The pandemic, which saw China adopt strict lockdowns, is helping change that. India’s goods exports, which touched $420 billion in the fiscal year ended March, have already reached close to half that level in the five months beginning April. While that’s hardly worthy of comparison to China’s annual $3.36 trillion of exports, analysts view it as a good starting point for the sub-continent’s largest economy, which is currently growing at the world’s quickest pace.

“Taiwan, the EU, the US, Japan — all are willing to give India a second look,” said Alex Capri, a research fellow at Hinrich Foundation, set up by US entrepreneur Merle Hinrich to promote sustainable global trade.

Indian government data showed Christmas decoration exports in the year ended March increased more than 54 percent from fiscal year 2020 levels, while handicraft exports witnessed a jump of around 32 percent during the same period.

China’s continued decoupling from the global economy along with post-pandemic recovery presenting an opportunity for India to accelerate its investment in longer-term competitiveness and prioritise ‘winnable’ sectors, Siddharth Jain, a partner in the operations and performance practice at Kearney, said. By 2030, India is projected to have the world’s most abundant labour force, and could contribute over $500 billion annually to the global economy, according to a report by Kearney and the World Economic Forum.

“We have started to see green-shoots of this with India’s exports in FY22 reaching around $420 billion, far higher than earlier years,” Jain said. “This was driven by a combination of external as well as internal factors.”

India also managed to surpass El Salvador to become one of the top 5 suppliers of cotton T-shirts to the US this year.

The apparels sector, where India competes with nations like Bangladesh, saw an up-tick owing to multiple factors including a ban of all cotton products from China’s Xinjiang region over alleged ill-treatment of its ethnic Uighur Muslim minority, said Gautam Nair, managing director at Matrix Clothing Pvt., a medium-sized garment export firm. “The surge also further accentuated due to huge boom in buyers’ purchase and supply chain diversification.”

Medium- and large-export firms saw a jump of 30 to 40 percent in their order books last fiscal year and the upswing would be more visible in the current financial year ending March 2023, Nair said. Matrix Clothing, which exports apparels to global brands including Superdry, Ralph Lauren, Timberland, and Napapijri, has seen orders climb by 45 percent last fiscal year compared to the pre-Covid year.

Still, there are hurdles to the growth of low-value added manufacturing in the form of non-labour costs, warn analysts.

“The bigger problems are the legacy issues of contract enforcements, tax transparency etc.,” said Priyanka Kishore, an economist at Oxford Economics. “These do pose a challenge to India’s manufacturing ambitions and need to be addressed for the country to fully tap its potential as a manufacturing hub.”

By Shruti Srivastava

Building Resilience and Value in Fashion's Supply Chain.

Learn more:

Building Resilience and Value in Fashion’s Supply Chain

Read the latest BoF Insights report to get BoF’s perspective on the state of the fashion industry’s supply chain model, plus data-driven guidance on how companies can strengthen their supply chains in the face of pandemic and geopolitical challenges.



Credit: Source link

Discover

19,463FansLike
232,230FollowersFollow
77,435FollowersFollow
13,882FollowersFollow
2,920SubscribersSubscribe

Sponsor

spot_imgspot_img

Latest

Taylor Lautner’s fiancée disclosed she was in adoration with Robert Pattinson

Many girls who grew up in the 2000s once faced one of the most...

Launch List: The Best Skin Care Launching in June

Ameliorate Transforming Clarity Facial Serum ($39)Another anti-acne launch during Acne Awareness Month, this lightweight serum is a perfect pick to battle blemishes while...

Adidas launches new products to support women’s fitness

Adidas has extended its women’s sportswear portfolio with new high-performance bra and leggings “for more bodies and activities” launching worldwide in its stores and online.Its introduction comes...

Where Are Anna Paquin, Stephen Moyer And The Cast Today?

At nine, Anna Paquin entered an open casting call and stumbled onto the set of "The Piano" – she went on to earn an...

How to Improve Your Wellness As a Sedentary Professional

Opinions expressed by Entrepreneur contributors are their own. If you are reading this, it means you are wondering how you can do better to...
en English
X