Indian apparel exporters encounter challenges again and may lose their low-cost competitive advantage
As international buyers gradually turn to low-cost neighboring countries, India’s apparel exporters show little signs of recovery this autumn and winter. India’s garment exports fell sharply, even as exporters slashed prices by 11-12%.
Major purchasers, such as Walmart, JC Penney, Li&Fung, Gap and Target, have all introduced plans to cut purchases from India by 12%-15% this year, while increasing purchases from neighboring countries, Indian Clothingsaid Rahul Mehta, president of the Manufacturers Association. Countries such as Vietnam and Bangladesh have lowered import taxes, lowering production costs and encouraging local producers to offer more competitive prices, an industry official said.
Industry analysts say apparel exports from India will be lower than those from Bangladesh, Vietnam, Indonesia and Cambodia. It is expected that in this fiscal year, India’s apparel exports are expected to reach US$9 billion, a 10% decrease from last year. Bangladesh is expected to export $12 billion in apparel.
With the economic recession in Western countries, buyers have cut back on purchases. Premal Udani, general manager of Kaytee, said the industry may face challenges again if orders for autumn and winter fail to meet expectations.
Currently, orders signed in India are 20-25% lower than the same period last year, as the outlook for the textile industry is bleak and the mood of exporters is low. The two relief policies provided by the government and the 2% credit interest rate before and after exports were extended to September 2009, but this seems to have limited relief to the industry.
Exporters say they want the scrapping of fringe benefits taxes and higher tariff rebates. However, reintroduction of mitigation policies will have to wait until before the congressional elections, a government official said. AAZXCASFWEFERH
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