As curtains come down on 2016, we speak to industry experts to reflect on how apparel fared in the year, what worked and what did not.
Year in Perspective
The apparel industry has definitely seen a positive performance and significant growth in 2016. The Indian textile and market size stands close to $67 billion USD in the year 2016. Increased incomes, high growth of GDP leading to rapid urbanisation, growth of organised retail with the entry of a large number of domestic and international players leading to greater exposure of the Indian consumer and increased competition in this sector are auguring well. The apparel industry in India is a perfect example of ‘order in chaos’ where everyone thrives – from the unorganized small players, domestic players and international chains. Others however feel that 2016 has not been the best year in the apparel industry as there has been a lot of consolidation going on in the industry. “There was a marginal decline even last year, and while this year is seemingly on-par, it remains to be seen, if any of the new government schemes towards textiles and apparels, help to revive the same,” says Prmod Bafna, Creative Director, President Group, Warp & Weft, the Fabric Gallery. Adds Swappan Dutta, President, Retail, Monte Carlo Fashions Pvt. Ltd., “the apparel industry has been badly hit due to the seasonality factors. The bulk of apparel trade sales takes place between Oct – Feb, as all festivals, marriages & other occasions happen during this period and also winter wear sale is at a peak in these months. Unfortunately last year, winters got delayed and in most of the regions winters were mild which resulted in poor buying sentiments.”
India has emerged as the fastest growing major economy in the world as per the Central Statistics Organization (CSO) and International Monetary Fund (IMF). According to the Economic Survey 2015-16, the Indian economy will continue to grow more than 7 per cent in 2016-17. Basically, a lax nature on promoting the industry meant that over the last couple of years, a very large chunk of the production went to Bangladesh and Vietnam who went ahead of the Indian market. This year, the Government having announced a fresh infusion of Rs. 74000 crores towards the industry with an aim to create one crore jobs over the next 3 years is a definite boost, along with increased subsidiaries in industry packages such as Amended Technological Upgradation Fund Scheme should definitely help things going forward. “With international high street brands entering the market the Indian customer becomes more aware of global trends and fashion has become increasingly whimsical and less functional which was not the case earlier in India. The apparel manufacturing sector is also seeing a trend towards becoming more organized with these entrants and the increasing exposure. India has become a major apparel manufacturing hub as it enjoys access to cheap raw material like cotton, jute, silk and wool. The Make in India campaign is also a significant contributor in raising the profile of the Indian apparel industry and making it surge ahead. By making India a larger part of a global initiative the apparel industry shall be more open to foreign investments and partnerships,” says Priyanka Agarwal. Founder, Uptownie 101.
Jai Singh, Founder, Polofactory opines, “there has been an increase in the focus from the government towards the apparel industry this year and increase in FDIs with policies promoting exports have led to a lot of industry growth as well. Apart from this, the growth is fuelled by the easy accessibility of fast internet and many portable devices including smart phones, tablets and so many more- making shopping even more convenient and personal than before. This has impacted the behaviour of consumers in a massive way as there has been a noticeable rise in the online retail demand. People are choosing to shop online right from small purchases to big ones alike as they find more variety and also better assistance in some cases.” This year, the apparel industry looks quite happy with the news of GST. With the government allowing 100 percent FDI in the Indian textiles sector, there have been several improvements and changes for the better. Many textile parks are being set up across the country. To further propel this, several export promotion measures are being implemented.
E Commerce Rules
This segment is expected to reach Rs 72,639 crore by end of 2016.The apparel market is becoming competitive, yet India has a consumer for every type. “Then there is the secondary apparel and fashion industry, in nascent stages and just starting to blossom. This is pre-used fashion sales on sites like Luxepolis.com and Fashion Rentals like The Clothing Rental,” says Shilpa Bhatia, Founder, The Clothing Rental. Indian consumer is just adapting to the convenience of online shopping, many major players offered free shipping, heavy discounts and COD to entice the consumer, show traction on their business and impress the investors to increase valuation of the company on paper. E-commerce will continue to grow in India as the consumer starts adapting to it. Being online will become extremely important for businesses to stay relevant, however there are many business which the consumer might prefer to shop offline and experience the product. “The industry is estimated to grow further reaching to US$2021 by 2021. The e-commerce apparel sector is also blooming contributing to the expansion of apparel industry in general. The e-space expansion is on the forefront and many start-ups are considering e-commerce to launch their brands. There has been considerable amount of influx in 2016 thereby increasing the worth of the sector,” says Rahul Jashnani, MD of Jashn.
Weighing Pros & Cons
Many major International players with rich pockets are entering India in an organized manner with power to pour in tons of money into the Indian consumer before turning any profit. Shilpi Modi, Director, Manyavar says, “India has positioned itself as a manufacturing destination with cheap labour, cotton-based raw material and easy access to US and Europe markets. With the abolition of quotas, India surged ahead of other non-competitive countries and positioned itself as a value-added manufacturer with a varied material base, an educated and English-speaking class of executives with high product development and design orientation. India’s textiles sector is one of the oldest industries in Indian economy dating back several centuries. Even today, textiles sector is one of the largest contributors to India’s exports. Indian textiles and apparel have a history of fine craftsmanship and global appeal.” Cotton, silk and denim from India are highly popular abroad and with the upsurge in Indian design talent, Indian apparel too has found success in the fashion centers of the world. “Due to the recent demonetization customer spends will be affected and in turn slow down retail growth. Speed will remain the biggest challenge, and opportunity, the industry will face. The traditional approach to business has been based on a Supply and Demand model. The problem is we now live in a Demand and Supply world. The customer wants the product to her/his personal specifications and they want it delivered now. On-demand, customised, products are no longer offered only by niche companies. This means long-standing business models, and processes, need to change, in a collaborative manner,” opines Sanjeev Mukhija – Managing Director Breakbounce.
Trade between foreign markets namely the US, the UK, parts of Asia and Middle East has led to handsome export earnings in 2016. According to Ministry of Commerce, textile exports from India stood at US$ 40 billion in FY 2015-16, contributing 15 per cent to the total export earnings of the country. These numbers are expected to increase considerably to touch US$ 82 billion by 2021. “The major industry development was the discussion around the Goods and Services Tax (GST). While some believe that the 12% GST rate will have a negative impact on the textile and apparel industry, the Union Ministry deliberates the textile industrialists to weigh the benefits and not let this advantage go away. In my opinion, we should wait for the decision to unfold and changes that will follow. Branded apparel may get costlier as the tax incidence could rise at least three-four per cent,” says Rushika Jain, Founder-Designer, Swada. Despite the immediate scenario, which isn’t in its fully explored potential, the industry is definitely set to grow thanks to many efforts coming together, which will materialise in good form upwards of 2019 from the look of things.
This story appeared in the Dec-2016 issue of Apparel here: APPAREL ROUNDUP