Exports of textiles and apparel decreased by 8.5% in the first half of FY23 compared to the same period last year, significantly behind the 17.8% increase in merchandise exports as a whole. In H1FY23, textile and clothing exports totaled $18.3 billion, down from $20 billion in H1FY22, according to the most recent data from the trade ministry. Such shipments suffered from a downturn in demand in important countries as well as cotton scarcity, according to exporters.
Even worse, over the past 15 years, the percentage of textile and clothing exports has been continuously dropping, and as of September’s current fiscal year, it was just 7.8%, down from 13.7% in FY16. This raises worries about job creation in the nation and implies that export competitiveness is steadily declining despite government efforts to revive the fortunes of the second-largest labor-intensive sector after agriculture.
Shipments of these goods will continue to be under pressure as the US and the EU, the nation’s top two export destinations for textiles and clothing, experience a downturn in demand. The ambitious goal of achieving annual textile and apparel exports of $100 billion in five years is likely to be missed unless prompt corrective action is done.
More importantly, this sector has been harmed by historical policy bias in favor of the cotton-based value chain when the global consumption pattern is shifting toward products made of manmade fiber and technical textiles, the dominance of small and medium-sized businesses with constrained scale, decades of inflexible labor laws, and high logistics costs. As a result, Bangladesh and Vietnam have gained a sizable export market share during the past ten years at the expense of India.