According to a report, global garment retailers are asking Indian exporters to reduce apparel prices as cotton prices have dropped 16 per cent and the rupee has devalued against the US dollar.
Analysts at ICICI Securities believe that if the recessionary trend in key markets of US and Europe continue, there could be a reduction in apparel exports for Spring 2023, which can negatively impact the order book of Indian apparel exporters.
"India exported clothing worth $16 billion in FY22 and is targeting $19 billion for FY23, which could be missed if the current trend prevails. However, Indian exporters are trying to mitigate the impact as they look to tap new markets in Latin America, Australia, Japan and UAE. Also, Indian exporters eye to fill the vacuum overseas as competing apparel exporting countries like Sri Lanka, Pakistan, and Myanmar face internal problems. Over the longer term, China+1 strategy of global retailers is expected to be beneficial for Indian exporters," the brokerage firm said.
Meanwhile, in FY2022, the company encountered a challenging business environment. "The Delta wave in the first quarter, Omicron wave in the early fourth quarter and logistics disruptions throughout the year tested us. High raw material prices for both Cotton and MMF products, the war in Europe and inflation in key markets were additional headwinds," the management said.
Going forward, the management anticipates that the free trade agreement (FTA) with UK by year end and FTA negotiations with Europe in 2023 will present a good opportunity.
"With a diversified customer base, the company anticipates a higher growth of its non-top five accounts, with FTA negotiations between India and UK gaining ground there is an opportunity to focus on the market going forward. With consumer getting back to work and socializing, woven products also gained traction," the management added.
Meanwhile, the board of directors of the company is scheduled to meet on July 22, 2022 to consider the un-audited financial results for the quarter ended June 30, 2022 (Q1FY23).
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