India races to be the next market as exports to the US triple in a year China.
India exported $420 billion worth of commodities in the fiscal year that ended in March. (File)
India, which many people think has the potential to overtake China as the world’s largest exporter, is now among the top five countries sending t-shirts and holiday decorations to the US.
According to US customs data, seaborne exports of festival items and accessories to America reached $20 million last month, nearly tripling the value from the same time the previous year. With purchasers diversifying their supply sources in response to growing labor costs and disruptions from China’s strict Covid-zero policy, India emerged as the apparent winner over the Philippines in this process.
Amit Malhotra, whose Asian Handicrafts Pvt. sells holiday decorations to major corporations, including the Walt Disney Co., London’s Harrods, Target Corp., and Dillard’s Inc., is one of the recipients of the early Christmas gift. He acknowledged that orders are up 20% from a year ago and that he has increased production capacity.
According to Mr. Malhotra, director of Asian Handicrafts, “this year we have shipped over 3.2 million items of Christmas décor, up from 2.5 million last year.” Even though China exports a sizable portion of Christmas décor items, he added many first-time customers have just begun approaching us.
The craze is not just for Christmas products. The third-largest economy in Asia has experienced a sharp rise in orders from the US and Europe, with the move concentrated in labor-intensive, low-cost industries, including garments, handicrafts, and non-electronic consumer products. While supply chain diversification started due to the US-China trade war in 2018, India hadn’t made any significant progress as nations like Vietnam had monopolized most of the orders that were shifting away from Beijing.
The pandemic, which prompted China to impose stringent lockdowns, is aiding in this change. India’s exports of products, which totaled $420 billion in the fiscal year that ended in March, have already fallen by over half in the five months that started in April. Analysts consider that to be a fair starting point for the largest economy on the subcontinent, which is expanding at the fastest rate in the world, even if it is scarcely comparable to China’s yearly $3.36 trillion exports.
Taiwan, the EU, the US, and Japan are all eager to give India another chance, according to Alex Capri, a research fellow at the Hinrich Foundation, which US businessman Merle Hinrich founded to support international ethical trade.
According to government statistics, India’s exports of Christmas decorations rose more than 54% from the fiscal year 2020 levels, while handicraft exports witnessed a jump of around 32% during the same period.
According to Siddharth Jain, a partner in Kearney’s operations and performance practice, China’s ongoing decoupling from the global economy and the post-pandemic recovery allow India to accelerate its investment in longer-term competitiveness and target “winnable” areas.
According to a report by Kearney and the World Economic Forum, India is expected to have the most productive labor force in the world by 2030 and might contribute more than $500 billion yearly to the global economy.
With India’s exports in FY22 hitting almost $420 billion, far more significant than in prior years, Mr. Jain stated, “We have started to see green shoots of this.” “A combination of internal and external causes were responsible for this,”
India also passed El Salvador to rank among the top 5 suppliers of cotton t-shirts to the US this year.
According to Gautam Nair, managing director of Matrix Clothing Pvt., a medium-sized garment export company, the apparels sector, where India competes with countries like Bangladesh, saw an uptick due to several factors, including a ban on all cotton products from China’s Xinjiang region over allegations of mistreatment of its ethnic Uighur Muslim minority. The massive increase in consumer spending and the supply chain diversification “further amplified the spike.”
According to Mr. Nair, order books for medium- and large-export companies increased from 30% to 40% in the previous fiscal year. This upswing will be more evident in the current fiscal year, which ends in March 2023. For Matrix Clothing, orders increased by 45%, which sells clothing to international companies like Superdry, Ralph Lauren, Timberland, and Napapijri.
Analysts caution that non-labor costs remain a barrier to expanding low-value-added manufacturing.
According to Oxford Economics analyst Priyanka Kishore, the historical problems with contract enforcements, tax transparency, etc., are the significant problems. For India to fully realize its potential as a manufacturing center, these issues must be resolved because they do provide a hindrance to its manufacturing objectives.
