Being the fourth largest garment importer in the world, accounting for roughly 5% plus of global apparel imports, Japan has to be the obvious first choice outside USA and EU. The advantage gained through zero duty access by abolition of tariff through India-Japan Comprehensive Economic Partnership Agreement (CEPA) in 2011 hasn’t worked. To our dismay and disappointment, Japan, which was our 11th largest export destination for Indian RMG prior to India-Japan CEPA, did slide down to 12th position by 2020. Overall trade balance for all commodities also had worsened. In Japan’s overall garment imports of $25 billion, India is hardly a player accounting for abysmally low share of less than 1 percent. China has lion’s share in Japanese RMG imports. Though Chinese share has consistently come down from a high of 84% in 2008 to around 55% in 2022, yet it is still quite significant. This despite the fact that Chinese exports, unlike India, face tariff barrier of approx. 9% in Japanese market. India’s dismal show in Japan coupled with China’s dominant share has only reinforced the argument that the international trade is not all about tariff and the role of tariff in enhancement of exports is unjustifiably overhyped at times. The international trade is increasingly getting complex with each passing day and there are variety of several other factors at play, which are equally important role, if not more.
To achieve the goal of $50 Bn apparel exports by 2030, the diversification to market like Japan is no longer a luxury anymore but has become a dire necessity. Let’s identify the obstacles and try formulating strategies to overcome those:
Indian RMG exports are not in sync with the Japanese demand. The top RMG products exported to Japan are not the ones which are in great demand in the Japanese market. Only one among top five Indian apparel export products figures in the list of top five Japanese import items of apparel. This implies that we have not been focusing on the right areas. In sharp contrast, Chinese RMG exports to Japan are more or less aligned to the Japanese demand and their apparel export items are mostly the ones which are in great demand in Japan.
India should follow two-fold strategy: The short-term strategy should be to focus on those products exported by India which have reasonably good share in India’s exports and have decent demand in Japan as well. Items like Knitted T-shirts and vests of cotton and other materials, trousers and shorts of cotton of both women/ girls and men/ boys would fall in this category. The long-term strategy should be on development and exports of products which are high in demand in Japan like knitted cardigans, jersey, pullover of cotton and MMF, Men’s or boys’ trousers of synthetic fibres and men’s or boys’ windcheaters of MMF.
Extremely high level of quality consciousness and process orientation: Japanese obsession with quality consciousness is legendary. The land of Six Sigma and Kaizen’s fetish for extremely high level of quality and zero defect is almost unmatched in the history of mankind. There is need to establish robust Quality Control framework in India to gain confidence of Japanese Buyers. Nissiken’s MoU with the Textiles Committee is a welcome development. We require to co-ordinate with Nissiken to establish Quality Control labs across prominent garment clusters in India to audit and certify companies as reliable quality suppliers. Weakness in MMF apparels: One of the major stumbling blocks to India’s apparel growth story is low share of manmade garments in its export basket, quite in contrast to the global norm. This also has contributed to India’s miniscule share in Japanese imports. Japan’s import requirements is primarily in MMF and synthetic fibre garments where India’s below-par performance leaves lot to be desired. Schemes like PLI for MMG garments are expected to augment India’s capacity to manufacture MMF fabrics and garments by attracting investment in this segment, which will enable Indian industry to cater to the increasing demand of MMF winterwears and trousers in Japan.Take time to develop trust and gain confidence: Developing Japanese market is a long haul. Besides patience and perseverance, it requires compliance with prescribed processes. To build trust and confidence, all garment factories in India should be mapped for their quality standards and the information be shared with prospective Japanese buyers. Identified Japanese technicians be also invited to India to actually aid the Indian factories at the ground level to improve processes & methods and enhance work efficiency and effectiveness.
Cultural orientation, style, design, ethnicity: A realisation is dawning upon Indian garment industry that penetration in the Japanese market is linked to designing apparel strictly in accordance with their cultural orientation, style and ethnicity. Indian designers should thus collaborate with Japanese designers and produce garments for this niche market. It has to be market based unique solution approach rather that “one size fits all” approach.
Chain’s share is declining: China’s consistently declining share in the Japanese market (from a high of 84% in 2008 to 56% in 2022) coupled with major slowdown in the Chinese economy and consequent sharp dip in its exports provides Indian apparel industry a huge opportunity which it must grab with both hands. Japanese businesses minimum order quantity is relatively smaller which provides an edge to Indian garment industry which is predominantly MSME driven.
There is great enthusiasm, excitement and zeal currently in the apparel industry to explore and engage with the Japanese market. This was more than evident in Indian exhibitors’ record participation in 12th India Trend Fair 2023 at Tokyo. Strategies outlined above combined with in-depth research of market and fashion trends, robust mechanism for regulatory, quality and ESG compliance, technological and R&D tie ups for aligning Indian standards and testing norms with Japanese requirements, constant engagement of Japanese designers and deployment of their technicians in Indian factories for process improvement and re-engineering can go a long way in building and establishing trust and do the trick for Indian RMG sector.
The writer is Secretary General Apparel Export Promotion Council (AEPC)
