New Directions for Industry in 2019
Starting a new year always brings in a sense of nostalgia. Besides reviewing the year gone by, it is a fulfilling experience to seek out directions and potential growth areas.
In technology, the one movement that I see as a potential trend going forward is the willingness to invest in robotics for factory management. Using robotics in sewing may still be far away but garment manufacturers have started looking at home-grown robotic systems in transportation, to save on labour.
Recently, Pearl Global installed robotic systems at its Chennai factory and is very optimistic of the results. I am sure many more factories will follow lead and invest in similar technologies. The days are gone when labour was abundant and cheap… now cost efficiencies are also dependent on how much labour saving can be done.
Another movement that I strongly see in the garment industry is what I had predicted years ago – the convergence of markets into one big marketplace. For a manufacturer, a market is one that is profitable and not necessarily an export market.
There is no debate on the fact that apparel buying in Western world has slowed down. Whereas the share of spending on clothing and footwear in total consumer spending in India is 6.7 per cent higher than what is seen in the US (3 per cent) and the UK (5.7 per cent). Also, the year-on-year expenditure growth in India at 12 per cent is more than double the anticipated global rate of 5 per cent.
In this scenario, is it not more viable to work with the Indian market rather than struggle with issues that are not really in the hands of the manufacturer, to be competitive in the export market, even as the market shrinks!
Every industry observer knows that the garment exports have been hit by many factors over the last two years, starting from demonetisation leading to liquidity crunch, followed by GST implementation and reduction in duty drawback rates. This is in addition to increase in wages of all these leading to the increase in cost of manufacturing.
The impact has been even greater due to the lack of any trade boosters such as the FTA with Europe. These factors, put together, have been a dent in competitiveness, of the global export industry in the past few years.
But last year, the impact of all these negative factors evened out, as GST refunds started coming in; the liquidity issues decreased and exporters learnt the hard way of how to survive on practically no duty drawbacks.
However, the factor that really brought cheer was the depreciation of the rupee, which meant that Indian exporters automatically became cheaper, without any extra effort.
This year has started on a positive note with crude prices, currency and other external influencing factors being stable. But the reality is that export is now very competitive and uncertain, so the best bet today is to address the challenges of local market and grow the business.
Starting a new year always brings in a sense of nostalgia. Besides reviewing the year gone by, it is a fulfilling experience to seek out directions and potential growth areas.
In technology, the one movement that I see as a potential trend going forward is the willingness to invest in robotics for factory management. Using robotics in sewing may still be far away but garment manufacturers have started looking at home-grown robotic systems in transportation, to save on labour.
Recently, Pearl Global installed robotic systems at its Chennai factory and is very optimistic of the results. I am sure many more factories will follow lead and invest in similar technologies. The days are gone when labour was abundant and cheap… now cost efficiencies are also dependent on how much labour saving can be done.
Another movement that I strongly see in the garment industry is what I had predicted years ago – the convergence of markets into one big marketplace. For a manufacturer, a market is one that is profitable and not necessarily an export market.
There is no debate on the fact that apparel buying in Western world has slowed down. Whereas the share of spending on clothing and footwear in total consumer spending in India is 6.7 per cent higher than what is seen in the US (3 per cent) and the UK (5.7 per cent). Also, the year-on-year expenditure growth in India at 12 per cent is more than double the anticipated global rate of 5 per cent.
In this scenario, is it not more viable to work with the Indian market rather than struggle with issues that are not really in the hands of the manufacturer, to be competitive in the export market, even as the market shrinks!
Every industry observer knows that the garment exports have been hit by many factors over the last two years, starting from demonetisation leading to liquidity crunch, followed by GST implementation and reduction in duty drawback rates. This is in addition to increase in wages of all these leading to the increase in cost of manufacturing.
The impact has been even greater due to the lack of any trade boosters such as the FTA with Europe. These factors, put together, have been a dent in competitiveness, of the global export industry in the past few years.
But last year, the impact of all these negative factors evened out, as GST refunds started coming in; the liquidity issues decreased and exporters learnt the hard way of how to survive on practically no duty drawbacks.
However, the factor that really brought cheer was the depreciation of the rupee, which meant that Indian exporters automatically became cheaper, without any extra effort.
This year has started on a positive note with crude prices, currency and other external influencing factors being stable. But the reality is that export is now very competitive and uncertain, so the best bet today is to address the challenges of local market and grow the business.
