Leap in India’s Garment Imports – An Analysis

The Garment imports in India has leapt by 47% in the Year 2022 from Million US$ 1,157 in 2021 to Million US$ 1,701 in 2022.

This is a significant jump of Million US$ 544 in just one year.

Analysis of past 10 Year (2013-22) data from Commerce ministry (GOI) website shows:

1. The Garment Imports are galloping at a phenomenal growth of 17% CAGR.

2. The Garment Exports are practically stagnant with a meagre growth of 2% CAGR.

3. Imports as a % of exports has jumped from meagre 3% in 2013 to 10% in 2022.

Analysis of Year 2022 Imports

1. India has imported Garments worth Million US$ 1,701 against the exports of Million US$ 16,741.

2. Imports were 10% of Exports.

What kind of Garments do we Export and Import?

The major volumes of imports are traditional garments like Trousers, Shirts & T-Shirts.

Wherever % Imports to the volume of exports is high, it shows we lack competitive strength in exporting those items. Such items are:

1. Jerseys & Pullovers,

2. Overcoats & Windcheaters,

3. Pantyhose & Tights,

4. Brassieres, Girdles & Corselettes

5. Gloves & Mittens

6. Ties & Bows, etc.

What kind of Garment Blends do we Export and Import?

Other blend mainly include garments made out of artificial fibers like Viscose Rayon.

The major volumes of imports are Garments made out of Cotton blend.

Wherever % Imports to the volume of exports is high, it shows we lack competitive strength in exporting garments of those blends. Such blends are:

1. Synthetic,

2. Wool & Silk

3. Technical Coated Garments.

Share of top 5 items in Garment Imports?

Trousers (HS 6203/04 & 6103/04) have a major share of imports at 38%, followed by Shirts and T-shirts. Rest of the Garment's share is miniscule.

Share of different blends in Garment Import?

Cotton Garments make up for 50% share in the imports, followed by Synthetics at 29%. The share of rest of the blend types is miniscule. The high end Technical Coated Garments have meagre 2% of the imports share.

Which countries do we Import our Garments from?

The major Garment imports come from Bangladesh & China at 42% and 21% respectively, followed by Spain at 7%.

Which Garment Blends we import from these top 3 countries?

1. Garments of cotton blend form the major chunk of imports from Bangladesh at 68%.

2. Both Synthetic & Cotton blends in nearly same proportion of between 30% to 40% are imported from China & Spain.

3. Share of Technical Coated Garments is negligible from all the 3 top countries of import.

Imports Jumped 47% in 2022 – Major Increase was in which Garment Type”?

In 2022, Garment Imports in India jumped by whopping 47% = Mil. US$ 543.

The share of various Garment types in this increment was as under:

1. Trousers had a share of 37% in this incremental imports.

2. Shirts & T-Shirts had a share of 15% & 12% respectively.

3. Jerseys % Bras had the share of 9% & 8% increase respectively.

Imports Jumped 47% in 2022 – Major Increase was in which Blend Type”?

In 2022, Garment Imports in India jumped by whopping 47% = Mil. US$ 543.

The share of various Garment blend types in this increment was as under:

1. Cotton Garments had a share of 54% in this incremental imports.

2. Synthetics had a share of 25%.

3. Other Blends mainly comprising of Viscose Rayon had a share of 17%

Share of incremental imports for rest of Garment Blend types was insignificant.

Conclusion:

1. Though Garment Imports in India are 1/10th of its Exports, but looking at the significant import jump of 47% in 2022 alone and the fact that it has been growing at a healthy CAGR of 17% over past 10 years, the issue has to be taken up seriously by the Industry.

2. On top of it our Garment Exports have stagnated. They have grown by meagre 2% CAGR over the last decade against our competitors like Bangladesh & Vietnam who have grown at CAGR of 8% and 9% respectively.

3. Bangladesh & Vietnam, both have exported 2.75 times and 2.25 times respectively higher quantities of Garments as compared to India in the Year 2022.

4. It appears we have lost the game as far as Garment Exports is concerned, and if things do not change, we may become net importers of Garments after a decade and a half or so.

5. India has the skillsets to manage and run the garment industry, however it lacks the size and economies of scale.

6. Most of the units are MSME size factories fragmented and scattered over multiple locations, even if owned by the same owner. This brings in host of operational problems thereby losing out on productivity and speed to execute the order. Most of the labor employed is informal contract labor which is not aptly skilled, thereby resulting in increased rework & wastage.

7. Less productivity coupled with increased rework & wastage results in higher cost of production. This makes India less competitive in the international market.

8. Both the Industry and the Government should brainstorm on what kind of business environment has to be created to achieve the following objectives:

   1. Entrepreneurs should come forward to set up large Garment Factories under a single roof employing 5000 workers or more on the lines of China, Vietnam & Bangladesh. Only then we will be able to compete on productivity with the peers.

   2. Formal labor should be employed in the factories instead of informal contract workers. This will bring in higher commitment towards quality and work practices. The factory owners will also be willing to spend higher resources to train their own formally employed workforce, rather than spending money on a contract worker, where there is no guarantee that he/she will come to work the next day. These contract workers may be lured by the neighbors factory for marginally higher wages.

   3. As an exception should be made for the Garment industry as far as the labor disputes law is concerned. For the Garment industry, the labor disputes should be governed by only the 'Chapter VA of the Industrial Disputes Act 1947' irrespective of the size of the unit. This is will remove the fear from the hearts of the entrepreneurs from setting up large units under a single roof. For units employing over 300 workers, unreasonable restrictions prohibiting the Layoff, retrenchment & closure were introduced by insertion of Chapter VB in the ID Act in the year 1976 during the 'Emergency'. No subsequent government had the courage to remove this amendment due to fear of backlash from the labor Unions.

   4. I am of the firm belief that, without addressing the above listed issues, no amount of Subsidies, Incentives, Policy initiatives like PLI and Mega Parks will help. It will only deaccelerate the industry's downfall. We have to be fundamentally competitive to fight the international competition. It is the 'survival of the fittest'.