NEW DELHI: Improved demand in the European Union, West Asia and the US has boosted export order books by at least 10% from six months before, companies said, signalling a possible recovery from last year. Leather goods, footwear, and apparel are driving demand but engineering goods shipments for new projects are facing a challenge due to geopolitical tensions, exporters said.
“Overall, compared to the last six months, the order position has improved 15-20% for leather footwear especially from the US and partially Europe,” said Rafeeq Ahmed, chairman, Farida Group, one of India’s largest shoe manufacturers and exporters. “The demand for non-leather footwear is also coming up.”
India’s total goods exports in FY24 fell 3.1% to $437 billion from $451 billion in the previous fiscal. Apparel exporters cited an increase of over 10% in orders starting February, mostly from the UK, US and the EU. “The decline in demand has slowed and there are obvious signs of improvement. Industry has an ambitious target of $20 billion apparel exports in FY25,” said Mithileshwar Thakur, secretary general, Apparel Export Promotion Council.
He said India’s free trade pacts with Australia and Mauritius have also had a positive impact.
India exported apparel worth $14.5 billion in FY24. Ahmed said the inventory decline in India’s key markets is driving demand. A Gujarat-based apparel exporter who did not want to be identified said there has been a 20% increase in new inquiries, clientele and conversion of inquiries to orders since February.
“While logistics issues are still causing a problem, there is a recalibration of the market after six quarters of issues such as inventory pile up in the US, besides the Ukraine and Israel wars and demand slowdown,” he said.
“Buyers have a better liquidity position for the upcoming sales season compared to last year and they are using that to fill their shelves.” Rupee-based trade will also help increase volumes to Russia, he said.
Ludhiana-based engineering exporter SC Ralhan has seen a 10% growth in the order book since December, especially for hand tools, fasteners, agricultural parts and forging. “There is good growth mostly in the US and Europe… Inquiries have risen 5%,” he said.
Many exporters have managed to pass on higher freight charges due to the Red Sea crisis to their clients.
“We’re seeing a 10% improvement in engineering goods exports like scaffolding but among the markets; there is no improvement in Europe,” said Sharad Kumar Saraf, founder chairman of Technocraft Industries India, a manufacturer and exporter of engineering goods and textiles.
A Kolkata-based engineering goods exporter said, “Exports to the European market are affected. While 40% engineering exports are for maintenance, 60% exports are for new projects that will get impacted. We expect a 30-35% reduction on new project exports.”
Federation of Indian Export Organisations (FIEO) director general Ajay Sahai said that the demand scenario is better than six months back and there is a 15% improvement, especially in apparel and footwear.
Source: The Economic Times
