Apparel exports drop 2.6 % as yarn pricesshoot up.


Figures down to $ 10.64 billion, apparelexport promotion council seeks removal of import duty.


Although India managed to hold on to the$.10-billion apparel export figure in 2009-10 fiscal fresh data released by theApparel Export Promotion Council (AEPC) on Thursday indicated that exports from India dropped by 2.64% to $10.64 billion in 2009-10 compared to $10.93billion in the last fiscal.


Amid high prices of cotton yarn during thecurrent crop year, Tirupur, one of the biggest knitwear hubs of India, saw exports falling by 2.17% by 2009-10 end. Tirupur's exports stood at Rs 11,250crore in 2009-10. "Exporters are in deep trouble as the garment industryis reeling under unprecedented price hike of yarns and fabrics," said AEPCchairman Premal Udani calling for a 15 % tax on cotton yarn exports.


"The past four months have witnessed amind boggling 50-80% increase in prices of basic raw material. Just when therewere signs of initial recovery, the industry has plunged into a gloom becauseof high raw material prices and their erratic supply. At a time when domesticdemand for fabrics and yarns is booming, free exports of basic raw materialslike cotton and cotton yarn take millions of jobs away from the country,"he said urging the government to have long-term calibrated exports of cottonand yarn.


As far as possible, exports of raw materialsshould be discouraged. "The government needs to encourage the readymadegarment sector which not only earns more foreign exchange per kg exports, butcreates millions of II in the process."


Mr Udani also appealed for removal 16% duty onimports of yams. Over and above the raw material costs, he said, the industryhas been impacted by high labour costs, non refund of central and state leviesbesides infrastructure deficiencies.


Tirupur Exporters' Association president ASakthivel, too, in the recent past wrote to the Union textiles minister aboutthe disproportionate increase in prices of cotton yam compared to that of rawcotton. "With the removal of DEPB, duty drawback rate benefits availablefor cotton yam exports and suspension of cotton exports, for reduction ofcotton prices, the textile mills had actually brought down the yarn prices byRs 5 per kg on May I. However, the mills have resorted to the new practice ofincreasing the yarn prices intermittently, three times in this month itself,against the normal practice of revising the prices in the beginning of themonth.


Altogether, the total increase is Rs 25 per kg.Cotton constitutes only 60% of yarn prices, and the increase in the yarn pricesshould have been 4.33% and not 14.12% as it stood by the end of the month," he said requesting to regulate cotton yarn exports to softenincreasing yarn prices.



Originally published in The Economic Times: 4th June2010