Rising exports to the United States keep India in the race to become the next China

India, seen by many as having the potential to become the next China, is finally making headway in the export market by entering the top 5 suppliers of Christmas decorations and T-shirts in the United States .

Ocean shipments of festival merchandise and paraphernalia to America reached $20 million last month, nearly triple the value of a year earlier, according to US Customs data. In the process, India has taken a clear lead over the Philippines as buyers diversify sources of supply amid rising labor costs and disruptions from China’s strict Covid-zero policy .

One such early Christmas gift recipient is Amit Malhotra, whose Asian Handicrafts Pvt. supplies decorative items to global brands such as Walt Disney Co., Harrods in London, Target Corp. and Dillard’s Inc. It confirmed a 20% increase in orders from a year ago and it has increased production capacity.

“This year, we shipped over 3.2 million units of Christmas ornaments, up from 2.5 million last year,” said Malhotra, director of Asian Handicrafts. “Although China exports a large share of Christmas decoration items, many early buyers have contacted us now,” he said.

The trend is not limited to Christmas products. Exporters in Asia’s third-largest economy saw a significant increase in orders from the United States and Europe, with the shift mostly seen in low-cost and labor-intensive sectors such as clothing, handicrafts and non-electronic consumer goods. While the diversification of supply chains began with the US-China trade war in 2018, India saw no significant gains at the time as countries like Vietnam cornered the essential of the orders that were moving away from Beijing.

The pandemic, which has seen China adopt strict containment measures, is helping to change that. India’s merchandise exports, which reached $420 billion in the fiscal year ending March, have already reached nearly half that level in the five months beginning in April. While this pales in comparison to China’s $3.36 trillion annual exports, analysts see it as a good starting point for the subcontinent’s largest economy, which is currently experiencing the fastest growth. fast in the world.

“Taiwan, the EU, the US, Japan – all are ready to give India a second look,” said Alex Capri, a researcher at the Hinrich Foundation, set up by American entrepreneur Merle Hinrich to promote sustainable global trade.

Indian government data showed exports of Christmas decorations in the year ending March rose more than 54% from FY20 levels, while handicraft exports saw an increase of about 32% over the same period.

China’s continued decoupling from the global economy as well as the post-pandemic recovery presents an opportunity for India to accelerate its investments in longer-term competitiveness and prioritize “winning” sectors, it said. Siddharth Jain, Operations and Performance Practice Partner at Kearney. By 2030, India is expected to have the most abundant labor force in the world and could contribute more than $500 billion a year to the global economy, according to a report by Kearney and the World Economic Forum.

“We have started to see green shoots of this with India’s exports in FY22 reaching around $420 billion, significantly more than previous years,” Jain said. “It was driven by a combination of external and internal factors.”

India has also managed to surpass El Salvador to become one of the top 5 suppliers of cotton t-shirts to the United States this year.

The garment sector, where India competes with countries like Bangladesh, has seen a surge due to several factors including the banning of all cotton products from China’s Xinjiang region due to alleged mistreatment of its Uyghur Muslim ethnic minority, said chief executive Gautam Nair. at Matrix Clothing Pvt., a medium-sized apparel export company. “The push has also increased due to the huge boom in buyer purchases and supply chain diversification.”

Medium and large exporting companies have seen their order books increase by 30-40% in the last fiscal year and this recovery would be most visible in the current fiscal year ending March 2023, Nair said. Matrix Clothing, which exports clothes to global brands such as Superdry, Ralph Lauren, Timberland and Napapijri, saw its orders jump 45% in the last financial year compared to the pre-covid year.

Still, there are barriers to the growth of low-value manufacturing in the form of non-wage costs, analysts warn.

“The biggest issues are legacy issues with contract enforcement, tax transparency, etc.,” said Priyanka Kishore, an economist at Oxford Economics. “These pose a challenge to India’s manufacturing ambitions and need to be addressed for the country to fully realize its potential as a manufacturing hub.”

Comments are closed.