Govt initiatives to help India cross $30 billion readymade garment exports by 2027: Report

New Delhi, Nov 22 (KNN) India’s ready garment exports are expected to cross the mark of USD 30 billion by 2027, due to multiple incentive schemes rolled out by the government, CareEdge Ratings said in a report on Monday.

The report pointed out that the trade agreements with key nations and the declining share of China in the ready-made garment (RMG) market are likely to benefit India as its exports are expected to grow at CAGR (compounded annual growth rate) of 12-13 per cent.

“This will help India to achieve an ambitious textile export target of USD 100 billion by 2030," it said.

CareEdge Ratings, in their report said that ready-made garments constituted a major share of around USD 500 billion in the global textile & RMG trade of around USD 850 billion in calendar year 2021. The global RMG market is expected to reach around USD 650 billion by 2027.

The global RMG market primarily comprises the European Union (EU), the US, the UK, Japan, Canada and South Korea together accounting for nearly 60 per cent of the total global imports.

The report highlighted that countries such as China, Bangladesh, Vietnam, Germany, Italy, Turkey, Spain and India dominate the export market, with China accounting for a lion’s share of 33 per cent of total RMG exports backed by high labour productivity along with economies of scale.

“Having adequate raw material and a large labour workforce, India is well poised to grab the opportunity in the global RMG market. India has a very good presence across the cotton textile value chain from fibre to fabric, while it has a limited presence in man-made fibre, which is expected to get a boost by expected FTA with the UK and PLI scheme,” said Krunal Modi, Associate Director - Corporate Ratings.

“Furthermore, having presence across entire-value chain reduces transportation costs and lead time, thereby providing a cost-effective solution to the customers. With all these, Indian RMG exports are expected to surpass the USD 30 billion mark by CY27. This shall translate into 4.6-4.9 per cent share in world RMG exports as against the current share of around 3 per cent," he added.

India’s share in global RMG exports has remained sluggish from 2017 to 2021, with RMG exports at around USD 15 billion in CY21. Countries such as Bangladesh and Vietnam have captured a large part of China’s declining share in global RMG exports.

“Competing nations have gained due to duty-free access to key export markets, i.e., EU, the UK and Canada apart from their higher labour productivity and economies of scale. India’s dependency on cotton-based textiles as against the high share of man-made fibres in the global RMG market also impacted its RMG exports," the report said.

“With a level-playing field due to trade agreements, India’s share in the UAE and Australian markets could rise and the free trade agreement (FTA) with the UK (likely to be completed in CY23) will be a game changer.

However, challenges from competing nations such as Bangladesh and Vietnam remain as they have gained market share to some of the major export markets due to duty-free access amid China’s decline," CareEdge Ratings said.

The government has set an ambitious target of taking Indian textile exports to USD 100 billion by 2030 to boost foreign exchange inflow and generate employment.  (KNN Bureau)