BANGALORE, India — Indian textile and clothing exporters are generally expecting a tough year ahead on the back of shrinking profits last year, but some savvy manufacturers are not that concerned.
After global quotas were abolished in January 2005, Indian textile and clothing exports surged 25 percent in fiscal 2006 to $17.5 billion. However, the momentum did not last and the following year exports grew by only 7 percent.
A 12 percent appreciation in the value of the Indian rupee against the dollar since October 2006 now has led to a decline in apparel exports. According to U.S. Customs data, Indian apparel exports to the U.S. dipped 0.53 percent in value in 2007 over 2006.
Far from achieving a projected 18 percent growth in the current fiscal year that ends this month, textile exports are likely to shrink, the Federation of Indian Export Organizations said.
"The current state of the Indian textile and apparel industry is quite bad," said Premal Udani, chairman of the Clothing Manufacturers Association of India, and chairman and managing director of Kaytee Corp. "Exports are down and the immediate prospects for 2008-2009 are also gloomy."
"There is severe pressure on pricing, due to fierce competition from other neighboring countries," said Harish Ahuja, managing director of Shahi Export House. "Margins have dropped across the board and more than 60 percent of exporters have witnessed a decline in profit."
The U.S. accounts for about 35 percent of Indian textile exports and the rupee rising 12 percent against the dollar has reduced profits for companies. In contrast, currencies of India's competitors in the region such as Pakistan and Bangladesh have depreciated by 1.4 and 0.43 percent, respectively, while China's yuan appreciated only 4.6 percent against the dollar.
As a result, India saw its market share of apparel exports to the U.S. decline from 4.44 percent, or $3.18 billion in the 2006 calendar year, to 4.29 percent, or $3.16 billion in 2007. China, on the other hand, saw its market share rise to 30.77 percent from 25.85 percent, while Bangladesh's went up from 3.45 percent to 4.2 percent during the same period.The erosion in profits of textile companies has forced them to cut back on manpower, leading to an estimated 150,000 workers losing their jobs across the country.
Sudhir Dhingra, chairman and managing director of Orient Craft Ltd., said his company laid off about 3,000 workers last year, but the total strength is now back up by about 1,500.
"Our company has let go the temporary staff," said Udani. "So far, we have not had to retrench our permanent workforce. But if the markets remain depressed, this could become a possibility."
Like others, Mumbai-based Creative Garments Ltd. also was affected.
"We have put our growth plan on hold," said Vijay Agarwal, chairman of the company. "We have decided to stop production in two of our units for the time being, thus laying off about 400 workers."
The crisis has especially hit smaller companies. However, bigger firms such as Orient Craft and Gokaldas Exports Ltd. have managed to reduce the impact by hedging on currencies, asking European customers to bill in euros and adding value to their products.
"Orient Craft is one of the few companies that has moved up the value chain," said Dhingra. "We began the process 10 years ago and the impact of rupee appreciation is minimal."
Companies also are meeting the challenge by opening factories in Bangladesh and importing raw material from China. The House of Pearls said it finds it better to manufacture in Bangladesh, China, Indonesia and Vietnam.
Indian textile companies fear the situation will worsen with signs of recession in the U.S. The Clothing Manufacturers Association believes that apparel exports to the U.S. will come down by 15 to 20 percent in fiscal 2009.
However, Orient Craft's Dhingra, while acknowledging that recession in the U.S. will affect demand, said the impact may not be that severe.
"Clothes come next to food to Americans in priority," Dhingra said. "This is good for us."
As part of a long-term strategy, Indian companies are reducing their dependence on the American market. The share of the U.S. market, which used to account for 98 percent of Orient Craft's exports, has come down to about 70 percent. Creative Garments' Agarwal said his company also is shifting its attention to the European market.Meanwhile, the textile industry is pressing the Indian government to offer tax and fiscal concessions, but the response so far has been mixed.
Amid the general gloom, entrepreneurs such as Dhingra and Agarwal are optimistic. Dhingra said Western countries are realizing that putting too much investment into China is risky, and expects them to look at alternate locations such as India, Vietnam, Cambodia and Bangladesh. If China were to revalue its currency, its exports would fall and India could grab a larger share, Dhingra said.
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)
The @cfda has shifted the dates of #NYFW, with Men’s showing on February 5 through February 7, and Women’s will directly follow, running from February 8 through 14. The preliminary schedule will be released on the CFDA’s web site in the next few days, but Mark Beckham, VP of marketing for the CFDA, revealed that @rafsimons will be back to close the men’s-specific part of the week with a show on February 7 #wwdfashion (📷: Kelly Taub)
@ferragamo is introducing a new space dedicated to the development of women’s and men’s leather good samples. The laboratory, which is created eco-friendly materials and designed to reduce the environmental impact of the manufacturing processes, will allow the company to expand its accessories offering through traditional artisanal approaches. #wwdfashion (📷: @aitorrosasphoto)
How does a “regular, degular, schmegular” girl from the Bronx, N.Y., become a Grammy-nominated artist with a certified platinum record in less than a year? Call it the @iamcardib come up. The 25-year-old has become a musical sensation, and the fashion world is taking note. “If I could describe her style I would say drama. She’s really into the dramatics,” says Cardi B’s stylist @kollincarter. See how Carter styles her bold and out there looks with the link in bio. #wwdfashion
“There is no formula. There is no guideline. I can watch Ted Talks all day, but there is no one who can advise me on exactly what it is I should be doing,” said @ronniefieg, CEO of @kith, in an interview with WWD’s @ariahughes at the brand’s new SoHo office in Manhattan. Head to WWD.com to see how Fieg went from hanging out in shoe stockrooms at 13 to building his own business. #wwdfashion (📷: @weston.wells)
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion