Current orders for garments are reported to be about one half of what it was before. US Buyers are asking for price reduction of as much as 35 percent of their earlier price some apparel industries are accepting such loss- making offers hoping the crises would be temporary and that some of their costs would be covered even at such low price. Labour protests and picketing have begun. The global recession would impact heavily on the country's export of garments owing to the nature of the product, the extent of the recession, and the destinations of the countries export market being recession struck countries. Latest evidence of the recession affecting retail buying is seen in the lower placement of orders for garment recently. Already some garment industries have either shut down, cut-off overtime payments or reduced their work force. Consequently, a serious setback to garment export would have a severe impact on employment, incomes, export earnings, the trade balance and the balance of payments. The current crisis in garment exports is a serious threat to the countrys industrial and economic growth and development.

The recession has also affected Japan and rest of the World, including India and China, whose robust growth is receiving a setback. As a result, the global recession is affecting other exports as well. Prices of Tea and rubber have declined and the exports of other industrial goods are also facing decreasing demand. The ultimate duration and intensity of the global recession is uncertain at present. Even before the reversionary conditions had a serious effect on garment exports, the competitive of our industrial exports and sustainability of export industries were in danger. The problems in the countries manufacturing industries, including the apparel trade, began much before the global recession affected it. The manufacturing industry has faced severe problems of late. This is particular so with respect to export industries. The escalation of costs of raw material, transport, electricity, fuel costs, wages and financial cost have jacked up costs of production significantly. The escalation of costs has cut into profit margins and capacity of the country, exports to complete in international markets with other countries like Vietnam, China, Nepal and Bangladesh with their lower inflationary pressures. While the local costs of production were rising, the exchange rate of the rupee was kept relatively stable this year. This did not help the garment industry to be competitive in world markets. It is in this economic backdrop that garments exports, and industrial exports in general, have not fared too well. The recession in our export markets is compounding the problem severely.

There is nothing we could do to mitigate the global recession. There is much we could do to get our house in order. Countervailing policies that mitigate the effect of the recession must be put in place immediately. The weakness in our macro-economic policies that stem from bad fiscal management must be addressed to control inflation and bring it to a single digit level. Fiscal policies must address the serious imbalance in the economy. Inability to address economic problems owing to a myopic political vision could lead the country to serious economic difficulties in the not too distant future. Allowing the countrys main industries to languish is akin to killing the goose that lays the golden eggs.

About the Author

The views expressed are of the author who is a research scholar at University of Mysore, Mysore, Karnataka, India.