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New Delhi: India’s export of readymade garments grew significantly in terms of value in January as shipments stuck due to the Red Sea crisis were able to reach their destinations by taking the longer route around the Cape of Good hope in Africa.
The export of ready-to-wear textile products increased 11% to $11.57 billion in January from $10.13 billion in December 2023, according to the commerce ministry data analyzed.
To be sure, volume data for these shipments was not available on NIRYAT portal of commerce ministry.
In the first 10 months (April 2023-January 2024) of the current fiscal year, the export of all textiles stood at $27.69 billion, less than the $29.41 billion in the corresponding months of 2022-23.
The main buyers of Indian readymade garments (RMG) were European nations led by Germany, the Netherlands, Italy, Poland and Denmark. These countries recorded a month-on-month growth of 19%, reaching $4.30 billion in January.
According to a government official, who wished not to be named, the increase in RMG exports in January could be attributed to the movement of shipments that had been booked in advance but were on hold due to the Red Sea crisis that began in early November.
“We are currently analyzing the data. It is possible that new bookings were fulfilled in January, as there is a conventional trend of export growth in the last quarter following a sluggish start in the first two quarters,” the official elaborated.
Yemen-based Houthi rebels have been targeting ships in the Red Sea–a busy trade route–in reprisal for Israeli bombing of Gaza. As much as 80% of India’s merchandise trade with Europe passes through the Red Sea. Key products such as crude oil, auto and auto ancillaries, chemicals, textiles and iron and steel have been affected by the crisis.
“Red Sea crisis will make things a little more expensive, and it is impacting everybody. India cannot be seen separately. It will also impact exports of Bangladesh, China, and others. Overall, global trade has become more expensive because of the Red Sea crisis,” said Rahul Mehta, president, Clothing Manufacturers Association of India (CMAI).
“I don’t see any significant upswing in textiles export in global trade. The sentiments continue to be depressed. The next months of this fiscal will remain the same; no major upswing is expected,” Mehta said.
Queries sent to the textiles ministry remained unanswered till press time.
Indian exports are facing higher shipping costs due to rerouting from Africa. Around 95% of vessels have rerouted around the Cape of Good Hope adding 4,000-6,000 nautical miles and 14-20 days to journeys, the commerce ministry had stated in a report last month, a copy of which has been seen by Mint.
India is the world’s sixth-largest exporter of textiles and apparel, with the domestic apparel and textile industry contributing about 2.3% to the country’s GDP, 13% to industrial production, and 12% to exports.
India’s textile and apparel market size is growing at a CAGR of 14.59% from $172.3 billion in 2022 and is expected to reach $387.3 billion by 2028, according to Indian Brand Equity Foundation (IBEF), a body established by the ministry of commerce and industry.
The textile industry is also the second largest employer after agriculture, providing direct employment to 45 million people and 100 million people in the allied sector.
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Published: 22 Feb 2024, 06:24 PM IST
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