Why UAE Retailers Prefer Indian Apparel Suppliers Over China
Introduction
In recent years, retailers in the UAE have been switching from Chinese manufacturers to Indian Apparel Suppliers. A combination of trade deals, costs, flexibility, consumer spending habits, and strategic advantages have made India a more viable sourcing location. This article aims to discuss why UAE retailers prefer Indian apparel suppliers over Chinese suppliers, especially through apparel sourcing companies, and what is contributing to this trend.
1. Trade Agreements & Tariff Advantages
1.1 Role of CEPA (Comprehensive Economic Partnership Agreement)
The India-UAE CEPA, which took effect in 2022, eliminated import tariffs on the vast majority of goods shipped from India to the UAE, including ready-made garments. As a result of CEPA, apparel from India is often duty-free, or pays much lower duties than apparel importations from China. UAE retailers who import garments on a regular basis enjoy immediate cost savings.
1.2 Comparison with China’s tariff status
Under CEPA, China has not been able to negotiate similar preferential duty rates. Many lines of apparel imported from China still incur an import duty or are facing even stricter terms of trade compliance. The difference in duty rate has allowed Indian suppliers to be more price competitive for UAE importers.
2. Flexibility, Order Size & Customisation
2.1 Smaller minimum order quantities (MOQs)
Indian suppliers are now able to accommodate smaller order quantities than in the past. In addition to being model factories, many, but not all, Indian apparel exporters are willing to offer MOQs as low as approximately 150 pieces, and sometimes less, depending on the type of garment. This is unlike many Chinese manufacturers who would require MOQs that are often much larger than their Indian counterparts. This offers UAE retailers an advantage to always have current styles on the floor for their consumers, while dealing with smaller shipments and order quantities.
2.2 Customization & design responsiveness
Indian suppliers are perceived as more willing to integrate new design aspects – whether pattern, colour, fabric finishes, embroidery or other forms of ornamentation, which is attractive to UAE stores looking at addressing international styles with domestic or cultural sensitivities.
3. Quality, Standards & Sustainability
3.1 Improving quality compliance
Indian exporters have also invested time and energy to improve compliance with international standards for safety, worker welfare, environmentally sustainable practices and standardization of finishes. Retailers in the UAE pay attention to these types of issues, partly as consumers increasingly ask about words like “ethical” in relation to their sourcing.
3.2 Value for money
While China has been a leader in exporting textiles based on the strength of large-scale production for decades, Indian suppliers are now offering price points and quality factor. Cost accounting in terms of labour and textile costs in India, plus tariff reduction under CEPA, provides a solid proposition for Indian Apparel Suppliers.
4. Geographical Proximity & Logistics
4.1 Lower shipping and lead-time costs
Although struggles exist to get consistent quality, meeting supply chain timing becomes an issue to get product from initially retailer ordering to translated into consumable product reducing navigating through Hidden costs. Especially when looking at replenishment of seasonal lines with an urgency. The relatively closer distance from India to the UAE than most of the Chinese export hubs provides less transit time, lower freight and risk to delays.
4.2 Better supply chain resilience
Worldwide disruptions (e.g., effects of the pandemic, geopolitical tensions) have revealed weaknesses in long, complex supply chains. Retailers in the UAE are more inclined to work with suppliers that are closer, or to have a more predictable logistics path, to reduce risk of disruption. India is close and experiencing increased infrastructure investment to help meet that need.
5. Cultural Affinity, Consumer Preferences & Branding
5.1 Large Indian diaspora in UAE
With a significant part of the population being Indian, there is already a a demand to have Indian styles, motifs, cuts, traditional garments, and established Indian brands in the market. This consumer group tends to trust Indian craftsmanship, and as a result, retailers will have Indian lines.
5.2 Trend towards ethical and sustainable fashion
Consumers in the UAE, especially younger consumers, are increasingly interested in sustainable textiles, traceability, and artisan stories of the brands they choose. Increasingly, Indian manufacturers are marketing natural fibres, organic dyes, and sustainable production models. This coincides with the desires of an emerging set of consumers in the UAE.
6. Challenges for China & Competitive Pressures
6.1 Rising labour and operating costs in China
We are seeing increases in wages, stricter environmental regulations, and increases in overheads in China’s manufacturing sector. Like all these costs can chip away at China’s cost advantage for certain categories of apparel, producers in India, for example, can often be more cost-effective, especially for labor-intensive garments.
6.2 Disruptions & diversifying sourcing
Retailers worldwide, including those in the UAE, realize that it is unwise to rely too heavily on a single country. Supply chain bottlenecks, raw-material shortages, or trade tensions (tariffs or effective policy changes) have encouraged diversification of sourcing strategies. India is viewed as an additional sourcing option as part of a “China plus one” strategy.
7. The Role of Apparel Sourcing Companies
For retailers in the UAE, working with apparel sourcing companies in India can often provide unique value when sourcing apparel compared to working directly with individual manufacturers for several reasons:
- Aggregation: Sourcing companies can provide aggregating production from multiple smaller manufacturers to gain economies of scale.
- Quality: These firms often provide better quality control, sampling and pre-shipment inspection options.
- Coordination: These firms can provide a single point of coordination for managing design, compliance, shipping, and documentation, providing a benefit for retailers to reduce their burden.
These value-added service benefits end up contributing to cost advantage, logistical reliability, and lower risk for retailers in their entire sourcing chain compared to some sourcing chains in China where shipping and buying-pricing arrangements may be available but less affordable.
8. Implications for UAE Retailers and Importers
- Better margins: combining cost savings (tariffs, freight) plus customer willingness to pay for quality provides space for higher margins or, at least, more competitive pricing at retail.
- Faster design cycles: ability to place small, custom orders enables retailers to react more quickly to consumers’ changing preferences.
- Brand differentiation: carrying Indian brands or designs gives retailers something to offer that is distinct from the mass of imports.
- Regulatory and reputational benefits: compliance with labour and environmental standards increases reputational capital among consumers who care.
Conclusion
In conclusion, UAE retailers are increasingly choosing Indian apparel suppliers over China because they offer a combination of tariff advantages (thanks to CEPA), competitive prices, flexibility, shorter lead times, improved quality standards, deep cultural and fraternal links, and a growing degree of capacity for sourcing companies to provide end-to-end service. While China remains a significant factor, the shift is real and appears to be likely to grow in the years ahead.
Frequently Asked Questions (FAQ)
Sourcing services companies are professional firms that assist businesses with supplier relationship management, with an emphasis on efficiency and compliance, enjoying a long-term relationship and collaboration.
Agents usually manage single transactions, whereas sourcing companies create a working relationship with suppliers by employing a complete supplier relationship management process with strategic oversight.
Because trust and compliance help assure quality, minimize risk, and ensure delivery performance.
Technology provides transparency, risk monitoring, and automates and enables collaboration between buyers and suppliers across borders.
Sourcing services firms help mediate disputes, enforce contractual obligations and formalize a corrective actions plan, whilst assuring business continuity.
No. Small and medium-sized enterprises will also leverage the knowledge of sourcing services companies and access to their network to connect to global suppliers without excess overhead.
