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Statistical error or reality? India’s apparel export nosedives by 59 per cent in the second largest market UAE

by Nitish Varshney

07-September-2018  |  6 mins read

Image Courtesy: arabianbusiness.com

The United Arab Emirates (UAE) was India’s second largest apparel market after USA with US $ 3,463.13 million worth of exports in 2017, according to data available with Department of Commerce (India). However, India fell drastically by 59.26 per cent in its apparel exports to UAE during the first half of 2018. The country exported apparels worth US $ 976.15 million to UAE in January to June ’18 period as compared to US $ 2,395.88 million in the corresponding period last year.

As per Apparel Resources’ analysis on the data, India dwindled both in knit and woven categories significantly. Knitted apparels export witnessed a massive fall of 60.73 per cent and came down from US $ 1,348.62 million in H1 ’17 to US $ 589.55 million in H1 ’18, while woven garments declined by 57.36 per cent to earn US $ 446.6 million in the review period which, last year, stood at US $ 1,047.26 million.

On the other hand, India continued marking growth, though on a slower pace, in its other strong markets including USA (2.73 per cent), UK (2.26 per cent) and Spain (6.26 per cent) in H1 ’18, indicating India has started picking up in 2018 after a couple of years’ slowdown. However, amidst this growing trend in other countries, the declining trend in UAE is certainly a worry for India, seeing UAE contributes 20.14 per cent in overall Indian apparel export values.

Comparative export statistics:

Apparel Export from India to top destinations

Period Exports to UAE Exports to USA Exports to UK Exports to Spain
Jan. to Jun. 17 US $ 2,395.88 million US $ 2,058 million US $ 903.46 million US $ 770.74 million
Jan. to Jun. 18 US $ 976.15 million US $ 2,114.19 million US $ 923.85 million US $ 819 million
Per Cent Change (-) 59.26 per cent 2.73 per cent 2.26 per cent 6.26 per cent

Reasons which let the Indian export to UAE fall

Markedly, in 2017, Apparel Export Promotion Council (AEPC), India also raised this issue and claimed there might be some discrepancy in the data uploaded on Directorate General of Commercial Intelligence and since then, there is no official update on this claim.

It’s pertinent to mention here that last year in April to July period (first four months of FY18), the statistics showed 17.8 per cent growth in RMG export to the UAE. “The otherwise top destination, United States, saw only a 1.5 per cent growth in Indian shipments. Nor have any of the other top 27 large apparel exporting countries seen any significant jump in shipment to UAE, says AEPC which defies all logics,” said AEPC in 2017.

India’s apparel export
India marked massive fall in UAE apparel market during the first half of 2018

Considering the data might have been exaggerated or it is possible that some technical glitch must have been occurred while uploading the data on the Indian Department of Commerce website, the negative aberration of 59.26 per cent in January to June 2018 may not be the real figure. But, on the other hand, if data is real, there may be some strong reasons why India has fallen drastically this year in its apparel exports to UAE.

The falling export can be attributed to many reasons, majorly UAE’s overall textile and apparel imports have been declining for 3 years. In 2015, the import values stood at US $ 9.03 billion and it sharply reduced to US $ 7.98 billion in 2016 which further decreased in 2017 to US $ 7.43 billion. The recent introduction of 5 per cent Value Added Tax (VAT) as well as an increase in fuel and electricity prices following the crash of oil prices in the international market has hit the country negatively. The ongoing recession in UAE is hurting consumer spending badly as they are unwilling to splurge on apparel, at least for now. According to reports, 41 per cent of consumers preferred buying apparels from their favourite brands in 2017 and the number has reduced to just 34 per cent during 2018 which says brand loyalty is on wane in UAE. The changing consumer shopping pattern is certainly impacting the retail business in UAE, pushing the buyers to cut their import orders and that can be noted in the trade statistics.

Secondly, it’s a fact that consumers in UAE are more inclined towards value-added and quality apparels and there is no denial India has always had an upper hand in producing such kind of garments, but, since UAE is shifting towards the countries located in close proximity such as Turkey and Egypt, the exports from India is registering negative trends. These two countries are making headlines in apparel and textile exports for all the good reasons. Shorter lead time to the countries in vicinity to Europe and Middle East is the biggest advantage Egypt and Turkey get. Apart from UAE’s shift towards these countries, it is also getting due advantage of the cultural similarities.

Simply put, the Government of India has to timely analyse all the possible reasons as why it is falling in one of its biggest markets. Apparel Resources will further look into the data by the end of H2 this year to let its readers have a better clarity on the export trends in UAE.