Japan beckons Indian textile firms

Anil Sasi New Delhi | Updated on January 25, 2011

Mr Vimal Kirti Singh, Secretary-General, AEPC.

Preferential access under proposed partnership pact big draw

Amid subdued demand in the recession-hit Western markets, Indian textile and apparel exporters are gearing up for the prospect of preferential access to the $37-billion Japanese clothing and textile market.

With the implementation of the Economic Partnership Agreement between India and Japan expected shortly, under which export of textile and clothing products could qualify for zero Customs duty, Indian players will get to compete with competitors from Vietnam, Bangladesh and the Asean nations. Indian players, who make up for less than one per cent of the total Japanese textile imports at present, can also take advantage of the overwhelming sentiment within the Japanese industry to spread their sourcing beyond China, which accounts for over 90 per cent of Japan's textile and apparel imports currently.

“India's share of the $23.5-billion Japanese readymade garments market is miniscule, as against nearly 92 per cent share of China. The Economic Partnership Agreement (EPA) can definitely change this… and we should go up to $1.5-2 billion in a few years if we can adequately capture the opportunity,” Mr Vimal Kirti Singh, Secretary General, Apparel Export Promotion Council, said.

Fashion forum

The Indian industry is already gearing up for the opportunity, with an Indo-Japan fashion forum being formed to assist textile and clothing players. The proposed forum will have an advisory board in Japan and an advisory board in India.

Mr Singh said that while the Japanese were keen on a China-plus-one sourcing model, Indian exporters need to improve the general perception among the Japanese clients about India being just a low-cost producer, besides matching the demand for faster delivery schedules of consignments. Also, Indians need to adapt to the Japanese sourcing model, where orders are not placed directly but mostly through designated buying agents and trading firms.

According to sources, negotiations on the Japan-India EPA have been concluded and the final pact is likely to be signed in the coming months. Bangladesh, Vietnam, Myanmar, Indonesia and some of the other ASEAN nations are among those currently enjoying duty-free status to the Japanese market.

“With India being given the same status, the supplies of textile and clothing from India to Japan should see a big boost. While Japanese firms such as Kawashima Selkon and buying houses such as Nagase & Company are already doing some business in India, the scale of the engagements would increase once the duty is pruned. The same would be true of Japanese companies that can expand their presence in the Indian textile and clothing market, especially man-made fibre and fabric companies,” an executive with a Delhi-based export firm said.

Japan's exports

According to published estimates, in 2009, Japan's textile exports were pegged at ¥714 billion ($$8.6 billion) and imports were ¥3023 billion (around $36.5 billion). More than 70 per cent of India's $22 billion textile and apparel exports are currently to the US and European markets.

Published on January 25, 2011

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