The Vietnamese textile and apparel sector is heavily dependent on import of raw materials to run its thousands of factories, which is proving to be to be a losing proposition for the sector at large.
Exports of textiles and garments are surging. Shipments from the sector ascended by 18.9 percent to US $3.04 billion in the first quarter of 2010, putting the yearly target of $10.5 billion, within reach.
A recent decision of the Indian government to ban exports of cotton resulted in one more round of increase in prices of the white gold. As it is, prices of raw cotton have grown by 35-40 percent in the last 7-8 months.
On the other hand, export contracts are signed 5-6 months in advance and the ever-rising prices are putting the exporters at a disadvantage as the flare-up in cotton, fibre, yarn and chemicals prices is continuing unabated.
This can only mean losses for the apparel exporters, along with which the sector will also lose its tag as a low-cost producer. Domestic cotton production is able to meet only two percent of the requirements, while it is 8 percent for the rest of the raw material requirements.
Fibre2fashion News Desk - India
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