INDIA: Indian garment exporters may lose out to low-cost competitors
Garment exports from India show little signs of picking up this winter-autumn season, following a gradual shift of international buyers towards low-cost neighbouring countries. International bookings of garments have dropped sharply, although exporters slashed prices by 11-12%.
“Major global buyers like Wal-Mart, JC Penney, Li & Fung, Gap and Target have indicated plans to cut offtake from India by 12-15% this year, while they are increasing their offtake in neighbouring countries,” said Rahul Mehta, president of the clothing manufacturing association of India. Countries like Vietnam and Bangladesh have lower import duties and cost of production enabling them to offer more competitive prices, said industry officials.
According to the industry analysts, garment exports from India would be lower than Bangladesh, Vietnam, Indonesia and Combodia. It is expected that India would end up exporting garments worth $9 billion this fiscal, down by almost 10% compared with the last year. Bangladesh is expected to export worth $12 billion garments.
Global buyers have also cut down purchases in the wake of a global meltdown and recessionary trends in western economies. Premal Udani, managing director of Kaytee Corporation said that the industry is likely to face further challenges, if the winter-autumn order booking fails to meet expectations.
“Currently, bookings are 20-25% lower than the same period last year and sentiments are weak ahead because of gloomy outlook of textile industry,” said Mr Udani. Two relief packages and a 2% interest rate subvention in pre-and post-shipment credit up to September 2009, seem to offer little relief yet to the industry.
Exports said that they had hoped for sops like scrapping of the fringe benefit tax and higher duty drawback rates. However, any further relief packages have been ruled out before Parliamentary elections, said a government official.
Added: February 20, 2009 Source: Agencies