Indian Apparel Sector On A High Growth Trajectory: AEPC Chief

India’s apparel export sector is navigating turbulent waters with resilience and innovation. Despite global challenges like inflation and fluctuating demand, the readymade garment (RMG) segment reported a 9.8 per cent growth in November, and cumulative exports for April-November 2024-25 reached $9,853.9 million, marking an 11.4 per cent increase year-over-year.

Sudhir Sekhri, Chairman of the Apparel Export Promotion Council (AEPC), attributes this progress to adaptive strategies and robust government support. “The Indian apparel sector’s growth trajectory shows its potential to outpace global competitors with the right investments and reforms,” Sekhri told Bizz Buzz. In an exclusive conversation, Sekhri highlights key challenges like capacity limitations and labour issues while shedding light on innovative solutions, the role of upcoming initiatives like Bharat Tex Expo 2025, and the sector's growing embrace of AI and sustainability

How is the apparel sector faring in general in India?

The apparel sector in India has been on a high growth trajectory in the last few months despite global headwinds and continued inflationary pressure. While some major apparel exporting countries have witnessed a slowdown in the RMG export growth, the cumulative RMG exports for April-November was $9,853.9 million showing a growth of 11.4 per cent over April-November 2023-24.

The long-term outlook for Indian apparel exports remains positive, supported by improved product acceptance, changing consumer trends, and focus of factories on compliance supported by the government initiatives.

What are the biggest challenges that it faces today?

The biggest challenge relates to capacity. The textile sector needs additional investment to meet the rising global demand. The lack of economies of scale is another major handicap in the apparel manufacturing sector.

Countries such as China and Vietnam have developed large production units, whereas in India the textile sector is still dominated by smaller units that lack economies of scale. Due to the lack of large manufacturing capacities, Indian manufacturers cannot cater to large orders and become globally competitive.

To attract large-scale investments, we must acquire a global scale and bring the Indian sector to par with other competing countries. Besides, there is an immediate need to review the labor laws to make them industry- and investor-friendly.

What should be done to address these issues?

We have requested the government for the PLI 2.0 Scheme for all kinds of garments with a lower investment threshold. Also, there is a plan to have dedicated sessions on investment during Bharat Tex Expo 2025.

For returns on investments to appear attractive, enough investments must be adequately incentivized. The most important requirement is the maintenance of a competitive exchange rate. The other essential prerequisites for getting investments would be the availability of developed land with adequate infrastructure, skilled manpower, and easy connectivity to ports.

Creating new mega textile parks would be the way forward which the government is already exploring through its flagship initiative PM MITRA (PM Mega Integrated Textile Region and Apparel) Scheme.

Additionally, lowering the cost of production as well as the cost of logistics would be of immense importance and should be given high priority. Attracting new players, both start-ups and foreign direct investment (FDI) are required. Both need to be given focused attention.

What are your expectations from Bharat Tex Expo 2025?

Bharat Tex 2025 will celebrate successful partnerships with brands and retail chains, underscored by shared values of quality, innovation, and sustainability. This fair will help India's position as a global leader in textile production and the opportunities for further growth in export and innovation.

Efforts will be made to explore the role of sustainable materials in reducing environmental impact and enhancing India’s reputation in eco-friendly textile production. There will be knowledge-sharing sessions to discuss the potential partnerships and collaborations that could help elevate India’s textile industry, including research, development, and export strategies.

I am sure that this platform will enable great collaboration and expand sourcing networks while promoting FDI in India. Bharat Tex Expo will provide a dynamic landscape of the textile industry, and the synergy between innovation, sustainability, and global branding for growth.

What kind of government support would you desire?

The RMG sector has been making rapid strides and India is fast emerging as the preferred sourcing destination for international buyers and big brands. The support of the government at this juncture could turn the table. The AEPC has advocated that the Indian apparel industry, being labor intensive, requires a four-wheel approach:

i) Import liberalization of raw materials that are not available in India: The Indian apparel industry needs quality MMF fabric which needs to be imported. The current system of SION under SAAS is cumbersome and the industry needs a new scheme that allows garment exporters to import duty-free fabric by fixing import entitlement in value terms only, based on achieving a minimum value addition on exported garments, without following input-output norms.

The DGFT [Directorate General of Foreign Trade] may introduce adequate safeguards so that the imported fabric can be used solely for exports and not diverted to the domestic market.

ii) Capacity augmentation: We have requested for PLI 2.0 scheme with lower threshold of Rs 20-25 crore as the investment criterion. We also want its gamut to be enlarged to include all kinds of garments.

iii) Labor and skilling-related issues: The current government schemes like SAMARTH have not yielded the desired results. We need skilled workers, mainly tailors, so there is a need to launch a new skilling scheme or revamp the existing scheme which can create skilled workers for the industry.

Secondly, the working hours and overtime rates in the industry are very high. Overtime rates, as per the norms of the International Labor Organization, are 20-25 per cent in excess of the normal wage rate. The Indian apparel industry gives almost twice the normal wage rate for overtime. Labor laws should be amended to align Indian overtime wage rates with ILO norms.

iv) Capital availability: The cost of capital is very high in India, so there is a pressing need to bring it down. The AEPC has requested not only the continuation of the interest equalization scheme but also the enhancement of the interest equalization rate to 5 per cent to offset the high cost of capital.

Which are the areas where deregulation is urgently needed?

The Indian manufacturers do not have in-house capability of manufacturing certain MMF fabrics, and apparel exporters are currently sourcing these fabrics mostly from buyer-nominated suppliers from overseas. Such imports by apparel exporters do not hurt the domestic industry as these are essentially used for export purposes only. Therefore, imports of such fabrics that are not available in India must be duty-free.

What can the Reserve Bank of India (RBI) do to help your sector?

The RBI can help a large number of small and medium exporters by arranging loans at lower or affordable interest rates so that liquidity is maintained and businesses run smoothly. Additionally, it can stabilize currency fluctuations as it has a huge impact on operations. This will provide long-term predictability.

What do you suggest to the entrepreneurs in your sector to do to become globally competitive?

There are immense opportunities now, many more than there were ever for aspiring fashion entrepreneurs. The apparel market is huge and growing, and brands and retail chains are looking for the next big thing when it comes to style. They must cultivate ideas for an innovative new fabric, a trendy clothing line, or a branding plan for your business. The possibilities are endless.

Growth in the United States and the UK is picking up which are our top markets. I am happy to see that we are also witnessing green shoots from our FTA markets such as Australia, Korea, Japan, Mauritius, Netherlands, and UAE. I am hopeful that with the changing geopolitical equations, a lot more business will shift to India in the near future.

The textile industry continues to evolve with new technologies, sustainable practices, and global influences. While the field is competitive, the rewards of building a successful brand or business can be very lucrative. If you have the vision, passion, and work ethic to make it in this fast-paced industry, the world of textiles and apparel could be your canvas to create something amazing.

A few suggestions are:

♦ Do market research: Conduct thorough market research to understand the market and your customers

♦ Have a business plan: Develop a business plan that includes a profit margin

♦ Secure funding: Secure funding for your business

♦ Secure licenses and permits: Obtain the necessary licenses and permits for your business

♦ Materials and equipment: Source materials and equipment for your business

♦ Build a team: Hire a skilled team for your business

♦ Work on brand identity: Develop your unique brand identity through product differentiation and branding

♦ Diversify products: Diversify your products to complement each other

♦ Enter new markets: Move into new markets and find new customers

How keen are the entrepreneurs in adopting new technologies like artificial intelligence and machine learning?

Entrepreneurs in the textile’s domain are keen to embrace AI and machine learning. These smart tools can generate patterns that could be optimized for certain objectives such as fit, material use, or waste reduction, thereby making business sense.

Textile factories can use AI-powered robots to automate tedious tasks like material handling and cutting to improve precision and accuracy, leading to higher productivity and fewer errors. They can use AI to analyze large amounts of data from textile production to optimize production schedules. Gradually, Indian factories are introducing these tools to optimize their business operations.