The Apparel Export Promotion Council, on April 10, asked exporters to explore opportunities in markets like Brazil, Poland, Greece, Italy, Russia, Turkey and Poland. Exporters will visit Japan, Hong Kong and Russia this year under the AEPC banner to solicit business and new clients, according to a PTI report published in leading dailies on April 11.
About 60 percent of all exports from the Tirupur garment and apparel cluster heads to Europe and some 30 percent goes to the US, said Estee Exports’ proprietor N Thirukkumaran. Estee manufactures mens, womens and children’s garments targeted at the European market.
“Though garment manufacturers export 90 percent of their products to the US and Europe, there was no major increase in the export volume, but only in value terms, due to continuing recessionary trends in those countries for the last three years" AEPC chairman A Shaktivel was quoted as saying in the PTI report.
AEPC wants exporters to look elsewhere now. Japan and Brazil figure high on the list of potential markets for the Tirupur garment cluster.
“We were not interested in exploring new markets,” says Thirukkumaran.
“We were always comfortable working with the American and European markets,” Thirukkumaran added. But things will have to change now – “the Euro zone crisis has brought down the region’s purchasing power while the US market has only started recovering,” he added.
Brazil and Japan are both huge t-shirt markets for India, he opined.
In Japan, Indian garment exports account for only four percent of the country’s overall consumption, which suggests that the potential for exports to Japan is huge. Language barriers and the fact that the Chinese control that market are things that Tirupur’s garment cluster needs to factor in, when drawing up a strategy to expand into Japan, Thirukkumaran said.
“But Indian manufacturers are innovative and our factories can produce high quality goods given the we have been catering to quality conscious Western customers,” he added.
The Indo-Japanese Free Trade Agreement is expected to aid these companies.
PROBLEMS GALORE IN INDIA
Rising manufacturing costs in India, including that of labour and electricity, pose a huge problem.
Costs in neighbouring Bangladesh, Sri Lanka and Pakistan have not risen like they have in India. And costs have gone up 10 percent over the last one year, said S Sundara Moorthy, proprietor, Hero Fashion. The firm supplies garments to Calvin Klein and Timberland.
“Earlier, our production costs were USD2.80 and (western) buyers bought garments from us at USD3. Now production costs hover at around USD3.20 but the buying rate remains at USD3,” said Moorthy explaining the situation with respect to the US and European markets.
The age factor is another problem staring garment manufacturers in the face. The younger generation does not want to get into the garment business. "The business has lost its charm," added Moorthy.
THE DOMESTIC MARKET
Moorthy opined that garment manufacturers will have to explore the immature domestic market too in order to remain in business in the future.
“India is a huge market but it is still not a mature one. But our sense of fashion is changing and is very similar to what it is in the West. The likes of a large player like Walmart, when they do come in, will buy (source) and sell aggressively. This will help the Indian manufacturer,” said Moorthy.