Interviews
25% drop in winter season garment export orders
27 Nov '08
6 min read
During April to September 2008, readymade garments worth 4.87 billion dollars were exported from India, up 7.04 per cent from 4.56 billion dollars in the corresponding period of previous year. In rupee terms, the figures work out to Rs 20,760 crore, up 11.47 per cent from Rs 18,631 crore during April to September 2007.
"Many buyers like Steeve and Barry's alongwith Mervyns have filed for bankruptcy and more are expected," said Mr Vaid. Pacific Sunwear has closed 150 stores while Lane Bryant, Fashion Bug and Catherines are closing 150 outlets which are under-performing. Foot Locker is winding up 140 stores and Ann Taylor is closing 117 outlets.
Many others like Eddie Bauer, Cache, Talbots, J Jill, Gap Inc, Foot Locker, Goodbye Levitz, Home Depot, Macy's, Pep Boys, J C Penney, Lowe and Office Depot are scaling down operations as well due to falling sales.
The falling rupee has not helped either, said Mr Vaid. A large number of exporters had hedged their exposure and though the rupee is hovering between 49 and 50 against the dollar now, the actual realisation is between Rs 41 and 42. "The export contracts for which foreign remittances are being received now were signed in May or June. In the absence of an alarm system for conversion rate, exporters could not anticipate the exact exchange rate," he said.
Overseas buyers are now renegotiating contracts due to depreciating rupee. So freight-on-board (FoB) values are falling, said Mr Vaid.
On the other hand, neighbouring countries like China and Pakistan are helping their industries with export incentives. On August 1, China's ministry of finance and the state administration of taxation increased export tax rebate on some textiles and apparels from 11 to 13 per cent. The move was expected to fetch additional profit of 2.6 billion dollars to the industry.
The rebates were raised to 14 per cent on November 1 and will be further hiked to 17 per cent on January 1, 2009, said Mr Vaid. A total of 3,486 products involving labour-intensive and value-added items will benefit from the move. Chinese export-oriented companies, especially small and medium-sized firms, have seen their earnings decrease sharply due to falling overseas demand, rising yuan as well as surging raw material and labour costs.
Pakistan has reintroduced research and development assistance at six per cent for garments to boost exports. The move will ease operating pressure on companies and enhance their competitiveness.
In India, however, the government cut duty drawback rates from September 1. The rate for cotton apparel declined from 11 per cent to 8.8 per cent, for blended apparel from 11.2 per cent to 9.8 per cent and for synthetic apparel from 11.5 per cent to 10.5 per cent.
In other words, the rates have been reduced by 20 per cent in case of cotton garments, 12.5 per cent in case of blended garments and 8.7 per cent in case of man-made fibre garments.
"Many buyers like Steeve and Barry's alongwith Mervyns have filed for bankruptcy and more are expected," said Mr Vaid. Pacific Sunwear has closed 150 stores while Lane Bryant, Fashion Bug and Catherines are closing 150 outlets which are under-performing. Foot Locker is winding up 140 stores and Ann Taylor is closing 117 outlets.
Many others like Eddie Bauer, Cache, Talbots, J Jill, Gap Inc, Foot Locker, Goodbye Levitz, Home Depot, Macy's, Pep Boys, J C Penney, Lowe and Office Depot are scaling down operations as well due to falling sales.
The falling rupee has not helped either, said Mr Vaid. A large number of exporters had hedged their exposure and though the rupee is hovering between 49 and 50 against the dollar now, the actual realisation is between Rs 41 and 42. "The export contracts for which foreign remittances are being received now were signed in May or June. In the absence of an alarm system for conversion rate, exporters could not anticipate the exact exchange rate," he said.
Overseas buyers are now renegotiating contracts due to depreciating rupee. So freight-on-board (FoB) values are falling, said Mr Vaid.
On the other hand, neighbouring countries like China and Pakistan are helping their industries with export incentives. On August 1, China's ministry of finance and the state administration of taxation increased export tax rebate on some textiles and apparels from 11 to 13 per cent. The move was expected to fetch additional profit of 2.6 billion dollars to the industry.
The rebates were raised to 14 per cent on November 1 and will be further hiked to 17 per cent on January 1, 2009, said Mr Vaid. A total of 3,486 products involving labour-intensive and value-added items will benefit from the move. Chinese export-oriented companies, especially small and medium-sized firms, have seen their earnings decrease sharply due to falling overseas demand, rising yuan as well as surging raw material and labour costs.
Pakistan has reintroduced research and development assistance at six per cent for garments to boost exports. The move will ease operating pressure on companies and enhance their competitiveness.
In India, however, the government cut duty drawback rates from September 1. The rate for cotton apparel declined from 11 per cent to 8.8 per cent, for blended apparel from 11.2 per cent to 9.8 per cent and for synthetic apparel from 11.5 per cent to 10.5 per cent.
In other words, the rates have been reduced by 20 per cent in case of cotton garments, 12.5 per cent in case of blended garments and 8.7 per cent in case of man-made fibre garments.
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