Apparel exports from India have risen exponentially in the last few years, and are expected to touch the $10 billion mark by the end of the current fiscal, up from $8.4 billion in the last financial year.
The reimposition of quotas on China, the biggest apparel exporter ($55 billion), by the US, a few European countries and South Africa is believed to be the single largest reason for this development. The quotas, imposed in 2005, will remain in effect till 2008.
According to the Apparel Export Promotion Council, the future of apparel exports is bright. "In the last few years, we made rapid strides. We expect apparel exports to grow at a healthy rate of 12 percent year-on-year. Next financial year, we expect the exports to be in excess of $10 billion," says AEPC secretary general K K Jalan.
"Indian apparel exporters have three years to explore inaccessible markets and establish their presence. We may not catch up with China but this is the best chance for us to increase our footprints. Most of the apparel exporters have responded well," says Rajendra J Hinduja, executive director (finance), Gokaldas Exports, the largest apparel exporter from India.
During 2003-04, Indian apparel exports stood at $4.6 billion. In 2004-05, it increased to $5.8 billion. It rose to a high of $8.4 billion during 2005-06 following the reimposition of quotas on China. "International brands are showing more faith in India," Hinduja points out.
Gokaldas Exports, which supplies apparel to well-known international brands like Adidas and Reebok, is set to record Rs 1,000 crore in revenues (Rs 880 crore in 2005-06). Indus Fila, another garment manufacturer, is expecting Rs 190 crore in revenues from exports alone this fiscal, compared to a modest Rs 18 crore in 2005-06.
"Indian apparel is considered value for money. The confidence the international brands have in Indian exporters is very high. That has enhanced the brand value," says Nitin Mandhana, chairman and managing director, Indus Fila. "International brand GAP now sources nearly 30 percent of its apparel goods from India. That is a very encouraging sign."
Gokaldas Exports is in the process of setting up a 100 per cent export-oriented apparel special economic zone near Bangalore.
With an estimated investment of Rs 2,000 crore from 50 players, the SEZ alone is likely to export apparel and accessories worth Rs 5,000 crore every year.
Expansion mantra
As international brands enter the Indian apparel market, the existing brands are foraying into related categories to expand their product basket.
Popular brands like Pepe, Zodiac, Arrow, Killer, Adidas and Van Heusen, known for their jeans, shirts or shoes, are taking their lifestyle product positioning further by entering categories that range from women's wear to sun glasses and footwear.
Recently, Madura Garments, in partnership with Sierra Enterprises, launched Van Heusen's premium footwear collection while Pepe, the well known jeans brand, intends to foray into innerwear and timewear. Zodiac Clothing is extending its brand portfolio by introducing ladies trousers.
Killer intends to launch fragrances and watches in India.
Even older players like Century Mills are extending their Cottons by Century label to ladies wear.
Pantaloon has introduced a range of in-house brands like Jealous 21 and Urban Yoga, offering fashion and accessories.
Explaining the rationale behind branded players foraying in other categories, Prashant Agarwal, apparel analyst, KSA Technopak says, "The trend of family shopping in malls has prompted apparel brands to offer a wide range of products to customers. Brand expansion is the next step in the Indian branded apparel sector."
He adds that women's wear is expected to offer better margins to the brands while accessories will help attract customers.
Retail fever
Apparel exporters are setting up retail chains to take control of the distribution side of business and enhance margins.
Tamil Nadu-based Sabare International, which produces and exports home furnishing textiles, is targetting metros and tier-II cities for its retail foray.
Texport, a garment export firm, has opened the first showroom, Sepia, a women's wear brand at Atria, a luxury mall in Mumbai. The emergence of organised retail, and the demand for high volume of ready-to-wear segment has prompted exporters to look at the lucrative branded apparel segment.
While Alok Industries has opened eight retail stores, Sabare International aims to sell all merchandise required by households, except grocery, through its retail chain.
Texport plans to open 20 stores by the end of 2007.
Creative Garments has unveiled women's wear brand 109F and home furnishing brand Portico.
With inputs from Tejal Deshpande