India's Garment Industry: Many Problems but Great Potential

Bangladesh may dream of becoming the next China, but that is only a dream. India can become the next Italy, and that can be a reality.

#Apparel manufacturing #Bangladesh #India

? Both have poor records for corporate social responsibility. Among the seven largest garment exporting countries India and Bangladesh are tied for last place.

? Both have poor records for reducing customer cost. Among the seven largest garment exporting countries again India and Bangladesh are tied for last.

? Apart from price, where Bangladesh ranks first, in the other areas ? lead-time and quality India and Bangladesh are tied for last.

? Both have poor records for business culture. Yet again, among the seven largest garment exporters Bangladesh and India are tied for last.

? Both have poor records for business culture. Yet again, among the seven largest garment exporters Bangladesh and India are tied for last

The litany of problems facing both countries would appear to be inexhaustible. 

However, of all the problems facing Bangladesh and India, the greatest would appear to be rising FOB prices. In 2006 Bangladesh FOB prices were 30% below world average. By the year ending July 2017 that price advantage had shrunk to 6.2%. India appears to be in an even worse position. In 2009 FOB prices were 6% above world average. By the year ending July 2017 FOB prices had increased to 16.9% above world average.

All the data would indicate that exports from both Bangladesh and India should be moving towards a state of decline.

Here comes the hitch!

Bangladesh is indeed trending down. U.S. market share peaked in 2008 showing a 14.5% increase over 2007. From that date forward, the trend reversed. By the year-to-date July 2017 (the latest period for which we have data) the trend showed a 4.1% decrease when compared with the same period in 2016. India, on the other hand which would appear to have worse problems reached bottom in 2012 when U.S. market share declined by 7.3% when compared with the 2011. However, from that date forward the trend completely reversed, with every subsequent year showing increased market share compared with the previous year.

The data is clear. U.S. garment importers are pulling out of Bangladesh, while at the same time they are moving into India. 

When we look at all the negative data for both Bangladesh and India, it is clear that both countries are difficult places to work. It is no secret to garment professionals, that if you want to place orders in Bangladesh you must accept Bangladesh for what it is. Likewise, if you want to place orders in India you must accept India for what it is. The difference is that importers are willing to put up with India, but not Bangladesh.

Clearly, there is a fundamental difference between the two countries: That difference is between commodities and fashion 

Bangladesh is for the most part a mass market producer of basic commodity goods. India is in the fashion business. This puts India in a very favorable position. It is relatively easy for importers to find basic commodity producers. The world is filled with least developed countries that can offer nothing but cheap labor. Fashion is different. A fashion industry is built on talent. Yes, India is a difficult place to work, but fashion customers accept the difficulties because there are not many countries able to meet their needs.

If we look at fashion garments, the industry can be divided into two national groups: the design centers and the production centers.

The major design centers include the U.S., UK, France, Spain, Japan, Italy and India

The major producers include China, Bangladesh, Vietnam, India, Indonesia, Turkey and Cambodia.

In the entire fashion world, India is one of the very few countries that is both a design center and a production center. Another is Italy.

I cannot explain just why Indian people have this aesthetic talent. I along with many fashion professionals just know it not only exists, it permeates the country. China may have better product development because it has a more developed industry. India ranks second despite the fact that its industry is underdeveloped.

Every national garment industry hopes to be the next China. However, for India China is the wrong model. 

India’s garment industry and government would do better to study Italy, the greatest and most successful fashion maker in the world. India has the potential to become the second great fashion producer. 

Both India and Bangladesh have a long road to travel before becoming successful industries. Both face serious problems. The difference is that India is traveling in the right direction.