New Delhi Due to the economic adverse conditions in Sri Lanka, Indian apparel exporters have started getting orders from UK, EU and even Latin American countries where there was little or no presence of Indian garments.
Textiles and textiles contribute about half of Sri Lanka’s exports, but fuel shortages and power outages amid its worst financial crisis have disrupted production of key exports such as apparel and tea.
Experts say that most of the tea orders have already started arriving in India and now a similar trend is being seen in the textile sector, especially when India and Sri Lanka produce similar types of apparel and fabrics.
However, unlike Indian exports, Sri Lankan apparel and clothing exports get duty free access to various countries.
“There may be some gains in the long run. Their export is duty free and that makes a difference. Also they are trying to preserve their textile sector despite the crisis,” Federation of Indian Export Organization (FIEO) president A. Sakthivel told Mint.
Sakthivel said discussions are on and exporters are getting questions from several European countries.
Apparel Export Promotion Council (AEPC) chairman Narendra Goenka agreed that India can emerge as an alternative to Sri Lankan apparel as it can produce most of the similar products at a lower cost.
“The change in demand from Sri Lanka to India may not be big, but exporters have started getting orders from markets where we had little presence like Latin America. Demand is also high from UAE and Australia. What can work in our favor is pricing. The cost of apparel production in Sri Lanka was much higher than in India and that is why customers are looking at us,” Goenka said.
According to the US International Trade Administration, the apparel export industry is key to Sri Lanka’s economy, as it accounts for about 44% of total exports and 33% of manufacturing jobs.
Sri Lanka’s earnings from apparel exports have declined over the years – they stood at $4.4 billion in 2020, which is about $1.3 billion less than in 2019.
However, the Indian textile sector is also facing challenges like high cotton prices.
The government earlier this month removed the basic customs duty of 5% on cotton imports, but officials said it may not bring down prices significantly as raw material prices are rising globally and the demand for cotton has increased. The gap between production and international demand is wide.
In particular, India is taking steps to boost its textile exports. Eyeing a large segment of the international market, which is dominated by man-made fiber (MMF), the government earlier this month approved 61 applications, more of which had investment potential. 19,000 crore under the Production Linked Incentive (PLI) scheme for textiles.