Is Readymade Garment Export From India Profitable?

With increasing globalisation and industrialisation, the demands and preferences change within seconds. We live in an era where everyone appreciates everything done and dusted and clothing is no exception.

Therefore, it won't be wrong to say that readymade garment export is one such spectrum of the clothing industry that is quite important from a commercial point of view. But is the idea worth taking a chance, especially from the perspective of the export business?

Is readymade garment export from India profitable?

With the growing popularity of Indian fabrics like Muga Silk, Kota Doria, Manipuri cotton around the globe, readymade garment export is the best export business to consider today. Known for their superior quality, the demand for readymade garments made of these fabrics and other fabrics is high in the international market.

Not just that, the garment exporting business is also quite successful considering the talent India holds in embroidery, designing, etc., which ultimately increases the worth of Indian readymade garments worldwide. Thus, it won't be wrong to say that one has immense export opportunities in the readymade garment industry with a high-quality product.

The following table shows the readymade garment export from India from 2015-2020.

Source: Department of Commerce (Export Import Data Bank); HS Code: 6210

https://tradestat.commerce.gov.in/eidb/ecom.asp

It is quite evident from the displayed statistics that the export opportunities in the area of readymade garment export are pretty vast to consider with its ever-increasing demand.

If you plan to start a readymade garment export business in India, it could be considered a very reliable export business.

To get all the insights and all the necessary information about the readymade garment export, read this valuable step-by-step guide before setting up your garment exporting business in India. This comprehensive guide will acquaint you with all the essential steps that need to be taken.

Step-by-Step Guide on How to Start a readymade garment export business in India:

Step 1: Develop an export plan as a pre-requisite

Planning is the initial step of any successful business. Thus, a fool-proof export plan must be developed that provides you with some essential answers. This planning will help you in providing a roadmap and clarity on your production objectives.

An ideal export plan is one which is made considering the strengths and weaknesses of the respective company. This step involves some important decision-making on the following aspects of the clothing export business:

• Type of Product: Since the garment industry is a consumer-driven industry, the chosen product should be congruent with the market’s demand. Thus, a product that is trending in the global market should be chosen.
• Export Pricing: After choosing the product you want to produce, an appropriate price is a setup that makes your product suitable for the international market and helps you earn profits at the end of the day.
• Choose the market: Indian clothes are demanded highly across the globe. Thus, products must be made for selling in the highly in demand markets.
• Financial Analysis: Finance is something that will secure your business. The funds required for the production of readymade garments must be analysed both at external and internal levels, along with the sales forecast and pre-shipment, post-shipment finance options.

Step 2: Set up a production unit

If you already own a production unit of readymade garments, then this is a step you are quite familiar with. However, for newcomers who aspire to invest in the export business, it is a fairly important step.

Setting up a production unit in itself is a huge task that involves several steps that are described as follows:

• For setting up any production, a plan is made conceptualising your idea into reality.
• After that, you may have to study in-depth garment manufacturing.
• You decide the capital you want to invest in your business.
• You choose an ideal location for your factory setup.
• You choose a product category and an ideal product you want to produce and how much you want to produce.
• After choosing the product, you choose the ideal machines and skilled technicians you require for your production.
• Then various licences that are required to set up a factory are taken.
• Then, the factory is set up and run.

Thus, after a production unit is set up and production starts, you can focus solely on the export aspect of your business.

Step 3: Get Various Licences mandatory for export business

Export and Import is a highly legalised matter and requires a few licences on the part of the producer as per the foreign trade policy. After you have successfully set up a production unit for readymade garment export, these are a few of the licences you require:

• Company-Firm Incorporation

It is a legal licence that is proof of the formation of your company. It separates the assets, income of investors, and owners.

• Import-Export Certificate

It is a certificate that has a ten-digit lifetime validity code issued by the Director-General of Foreign Trade to those who want to establish an import-export business.

• RCMC

It is also called the Registration Cum Membership Certificate issued by organisations like the Export Promotion Council. It is needed for the textile & apparel option.

• GST Registration

It is also called Goods & Service Tax registration. This is issued to a taxpayer who wants to run their business under the GST scheme by the government.

• MSME Registration

It refers to Micro, Small, and Medium Enterprises registration. It is done to promote these industries by providing certain benefits.

Step 4: Get Export Orders

After completing all the legalities, your next core focus is on getting orders for export. These orders could be gained by adopting a multipotential approach, such as:

• Sending mails to international garment traders
• Running social media ads and going online
• Joining export communities
• Registering on online trade marketplaces and responding to online queries
• Attending international trade fairs, seminars & conferences

Step 5: Seek Help from AEPC

AEPC stands for Apparel Export Promotion Council. It works as a mediator by providing assistance to the exporters as well as the person who chose India as their sourcing destination for export business. It helps every entity involved in the export business through its invaluable guidance. It works on several objectives and Memorandums of Understanding (MoU).

In today’s style-conscious era where global trends prevail and fashionable clothes are becoming a necessity, it is certain that trendy clothes will never go out of business. So, the garment export business is the best export business you can consider in India. Being a land that has an abundance of labour-intensive skill, garment export business is a worthy opportunity to consider.

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FAQs

Q. Is there any other organisation except AEPC for promoting readymade export business opportunities in the country?

Ans: There are other exports promoting organisations, but for different areas. For assistance in the apparel industry, AEPC (Apparel Export Promotion Council) is the sole existing body.

Q. Is it mandatory to set up a new production unit for export business?

Ans: No, you can start your export business with your existing production unit as well. However, the products you produce must meet the international standards and demands of consumers globally.

Q. What are the crucial factors that determine the export pricing?

Ans: The factors which influence export pricing in the apparel industry are the cost of production and distribution, international taxes, bilateral agreements, type of garment, nature of demand, ease of availability of fabrics and accessories, design, etc.

Q. What is the cost of all the documents that need to be procured for the export business?

Ans: The average cost ranges from around 12,000 INR to 37,000 INR for procurement of all the documents for this business, varying on the basis of the size of the firm.

Q. Name some important markets for export business.

Ans: The main market for clothing export business involves the USA, Parts of Asia, the Middle East, and the European Union.