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Textile exporters look at new markets

By Devika Banerji in New Delhi
April 27, 2009 14:04 IST
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To counter demand contraction in key markets like the US and Europe, Indian textile exporters are exploring alternative markets like Japan, South Africa and Latin America. At present, only 4 per cent of India's textile exports go to these markets.

In contrast, the US, which is the single-largest buyer of textile products from India, accounts for nearly 20 per cent and 33 per cent of textile and apparel exports, respectively.

Though most Indian textile exporters believe that situation will improve by October, attempts are being made to reduce the dependency of Indian exporters on US and European markets.

"We are over-dependent on US and EU markets and to compete with the likes of China and Bangladesh we will have to extend our markets to countries like Japan, South Africa and Latin American countries", said Vimal Kirti Singh, secretary general of the Apparel Export Promotion Council (AEPC), the apex body for promotion of garment manufacturing and exports.

The AEPC, in order to facilitate exports into these markets, organised a buyer- seller meet in South Africa last month. The meet saw participation of 36 exporters from India who did a business of around $2 million.

The export promotion body is also organising an apparel export show in Japan and Brazil in July. "Considering the recession, these interactive shows expose the exporters to these markets and help reduce their dependency on the US-EU market," Singh added.

Shigeru Takegi, director of Japan's International textile and clothing trade office at Japan's Ministry of Economy, Trade and Industry, had issued a statement on March 2 this year that Japan wanted clothing and textile imports from China to drop to around 50 per cent from the current figure of 77 per cent.

At present, China's textile exports to Japan are worth around $19 billion. Reducing sourcing from China would create an opportunity worth $5 billion.

MK Mehra, managing director of the Okhla garment and textile cluster, a group of small exporters, said new markets like Japan and South Africa were being explored by exporters to create a sustainable customer base to offset the decrease in demand in the US and the EU.

Dilip Jivrajka, managing director of Alok Industries Ltd, said that besides the US, his company had a strong presence in the African market. "Currently, the South American market is entirely untapped," said Jivrajka.

However, experts say these new markets cannot substitute the US and Europe.

"It would not be easy to break into markets like Japan. For now, the exporters will have to shift focus on the domestic market or increase their business by being suppliers to bigger export firms," said Prakash Agarwal, a textile consultant with Technopak, a business consultancy firm.

Seji Ota, an Indo-Japanese trade expert with BMR advisors, a business advisory firm, said, "Japan is trying to hedge risk by deflecting Chinese imports. Indian textile industry has to be more competent to meet the high quality standards of the Japanese market."

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Devika Banerji in New Delhi
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