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Depreciating rupee does not enthuse apparel exporters
07
Mar '09
The Bangladesh garment industry was able to pip India in clothing exports to the US markets by jumping to fifth place and in the process pushing India to the sixth place. This has come about due to the cost competitive rates quoted by Bangladeshi exporter's vis-à-vis Indian manufacturers.

The sliding rupee which also has depreciated to historic highs should have in better times been welcomed by exporters of all hues with smiles. But this time around, quoting competitive prices, which has to be less than those quoted by its competitor countries, is taking the shine off the depreciating rupee.

Global retailers have latched on to a new system of placing orders. They are now resorting to a system, akin to global tendering, which is taking its toll on the Indian apparel exporter. Orders are gained or lost by very thin margins and unless the manufacturer has not been able to improve his overall cost competitiveness, the orders end up going to neighbouring countries.

The only objective as on date adopted by each and every garment exporter, worth his weight is to ensure that ongoing orders do not slip out of his hand and get redirected to other countries, on the premises that he may not be able to regain them for good. Under these conditions they are quoting rates, which may even mean incurring losses on each and every order.

Though April-August 2008 figures delivered promising growth, clothing exports started registering negative rates, with the unveiling of the economic turmoil in September last year. Experts fear the cost competitiveness of Bangladesh garment industry is responsible for orders going their way, rather than to Indian apparel manufacturers.

Other than quoting rates lower than those cited by their competitors in other countries, the garment exporters are resorting to other ways to retain their existing clients. Some of them are holding ready stocks, so that there is no delay in dispatching orders, but this only adds to the troubles of the already financially strained Indian exporter.

Fibre2fashion News Desk - India

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