Reviving exports to US puts India in race to become next China – Times of India

New Delhi: India, which many believe has the potential to become the next China, is finally making headway in the export market as it ranks among the top 5 suppliers of Christmas decorative items and T-shirts to the US.
Sea shipments of festival goods and accessories to the US reached $20 million last month, nearly three times more than the year-ago period, according to US Customs data. In the process, India has a clear edge over the Philippines as buyers diversify supply sources due to rising labor costs and disruptions from China̵
7;s strict COVID-zero policy.
One such beneficiary of early Christmas gifts is Amit Malhotra, whose Asian Handicrafts Pvt. Supplies decor items from global brands such as Walt Disney Company., Harrods of London, Target Corp. and Dillard’s Inc. They confirmed a 20% jump in orders compared to a year ago, and they have ramped up production capacity.
“This year we have shipped 3.2 million units of Christmas decorations, up from 2.5 million last year,” said Malhotra, Director, Asian Handicrafts. “Although China exports a significant portion of Christmas decoration items, many first-time buyers are now contacting us,” he said.
The trend isn’t limited to Christmas accessories. Exporters in Asia’s third-largest economy have seen a significant increase in orders from both the US and Europe, with much of the change seen in low-cost, labor-intensive sectors such as apparel, handicrafts and non-electronic consumer goods. While the diversification of supply chains began with the US-China trade war in 2018, India did not see any meaningful gains back then, as countries such as Vietnam took on bulk orders moving away from Beijing.
The pandemic, which saw China adopt a strict lockdown, is helping to change that. India’s goods exports, which reached $420 billion in the fiscal year ended March, have already slid close to half the level in the five months beginning April. While this is not comparable to China’s $3.36 trillion in exports annually, analysts believe it is a good starting point for the subcontinent’s largest economy, which is currently growing at the world’s fastest pace. .
“Taiwan, the EU, the US, Japan – all are keen to give India a second look,” said Alex Capri, a research fellow at the Heinrich Foundation, founded by American entrepreneur Merle Heinrich to promote sustainable global trade.
Data from the Government of India shows that exports of Christmas decorations in the year ended March grew by more than 54% from FY20 levels, while handicrafts exports saw a growth of around 32% during the same period.
Siddharth Jain, Partner in Operations and Demonstration Exercise at Kearny, said China’s continued decline from the global economy as well as recovery from the pandemic requires India to accelerate its investments in long-term competition and prioritize ‘winnable’ sectors. got the opportunity. According to a report by Kearney and the World Economic Forum, by 2030, India is projected to have the world’s most abundant labor force, and could contribute over $500 billion annually to the global economy.
“We have started seeing a green-shoot with India’s exports reaching around $420 billion in FY22, which is much higher than the earlier years,” Jain said. “It was driven by a combination of external and internal factors.”
India also managed to overtake El Salvador to become one of the top 5 suppliers of cotton t-shirts to the US this year.
Managing director Gautam Nair said the apparel sector, where India competes with countries like Bangladesh, saw a boom due to several factors including a ban on all cotton products from China’s Xinjiang region. In Matrix Clothing Pvt Ltd, a medium sized apparel export firm. “The boom accelerated even more as buyers increased their buying and supply chain diversification.”
Nair said that firms with medium and large exports saw a 30%-40% jump in their order books in the last fiscal and the growth will be more visible in the current financial year ending March 2023. Matrix Clothing, which exports apparel to global brands including Superdry, Ralph Lauren, Timberland and Napapizzari, has seen a growth of 45% in the last financial year as compared to the pre-Covid year.
Still, there are obstacles to the growth of low value-added manufacturing in the form of non-labour costs, analysts warn.
“The bigger problems are legacy issues of contract enforcement, tax transparency, etc,” said Priyanka Kishor, economist at Oxford Economics. “These present a challenge to India’s manufacturing ambitions and need to be addressed for the country to fully exploit its potential as a manufacturing hub.”