India's innerwear exports face a Chinese problem
- According to export data, there have been sharp declines in key innerwear categories. While men’s and boys’ innerwear exports, including underpants, briefs, and pyjamas, fell by 24% from $720.86 million in FY22 to $548.28 million in FY24, exports of singlets and vests also recorded a modest drop.
New Delhi: India’s dependence on Chinese raw materials for garment manufacturing, particularly in the innerwear segment, is hurting the domestic industry. As prices of key inputs have surged, exports in this category have sharply declined over the past three years (FY22-FY24), raising concerns about the long-term impact of reliance on China, two people aware of the matter said.
The rise in raw material costs by 20% to 30% for cotton yarn, spandex, synthetic fibres and elastics, many of which are sourced from China, is a major reason for the decline in exports of innerwear, said the first of the two persons cited earlier, both of whom spoke on the condition of anonymity.
This input cost surge is largely due to the ongoing supply chain disruptions, increasing global demand, and fluctuating energy prices in China, the second person said.
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According to export data, there have been sharp declines in key innerwear categories. While men’s and boys’ innerwear exports, including underpants, briefs and pyjamas, fell by 24% from $720.86 million in FY22 to $548.28 million in FY24, exports of singlets and vests also recorded a modest drop, as per commerce ministry data, exclusively accessed by Mint.
As per the data, the women’s and girls’ innerwear category faced similar hurdles, with exports of slips and nightdresses decreasing from $627.74 million in FY22 to $499.86 million in FY24, reflecting a fall of 20.37%.
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Queries emailed to spokespersons of ministries of commerce and textiles as well as the Chinese embassy in New Delhi remained unanswered till press time.
The underwear index
As per data provided by one of the country’s leading innerwear manufacturers, Rupa, the company’s exports dipped by 42.38% in rupee terms, from ₹41.11 crore in FY23 to ₹23.69 crore in FY24.
The Men's Underwear Index (MUI), a concept introduced by former US Federal Reserve chairman Alan Greenspan, suggests that increased sales of innerwear can indicate a recovery in consumer spending.
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In the case of India, the Men's Underwear Index is relevant to the dip in innerwear exports because it reflects consumer demand trends, which are closely tied to production cycles.
"A decline in exports of innerwear signals broader economic stress, supporting the MUI’s idea that lower sales of essential goods indicate pressure on the economy," said Abhash Kumar, assistant professor of economics at the University of Delhi.
The support garments segment saw the sharpest decline, with exports of bras, corsets, and suspenders dropping by 35.30%, from $95.14 million in FY22 to $61.56 million in FY24, the data showed.
“The industry is undergoing a significant transformation, with rising demand for affordable, high-quality products in Southeast Asia and the Middle East, further enhancing India's export potential. Consumers are increasingly prioritizing comfort, sustainability and innovation, shaping the future of innerwear," said Ramesh Agarwal, director of Rupa and Co. Ltd.
The problem of limited growth
According to a report by fashion research platform Images Business of Fashion, India's innerwear market is projected to grow at a compounded annual growth rate (CAGR) of 10% between 2024 and 2029, expanding from ₹66,703 crore to ₹1.07 trillion.
“The manufacturing of innerwear garments is largely dependent on raw materials imported from China, and in recent times, rising raw material prices have led to a slowdown in production, resulting in a decline in exports," said Rahul Mehta, chief mentor of the Clothing Manufacturing Association of India (CMAI).
"The data highlights a concerning downward trend in India’s innerwear exports, with only limited growth in a few categories. Addressing these challenges is crucial to reversing the decline and strengthening India’s position in the global market," said Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI).
The major export destinations for Indian innerwear include Bangladesh, Congo, Iraq, Jordan, Kuwait, Mauritius, Myanmar, Nigeria, Qatar, Saudi Arabia, the UAE and the US.
"On trade, high tariff and non-tariff barriers on the import of raw materials make it costlier to produce and export garments from India, thereby pricing us out of the global market. It is imperative to address this, as labour-intensive merchandise exports remain the only reliable lever for India to achieve developed country status by 2047," said Mihir Parekh, associate partner at the Foundation for Economic Development, a policy advocacy firm.
“The decline in labour-intensive merchandise exports shows that we have not been able to leverage our biggest endowment—abundant manpower. A deep-dive into root causes points to sub-optimal policy choices related to labour and trade," said Parekh.
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