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EU countries likely to cut apparel export orders
22 Jun '10
2 min read
The sovereign debt crisis in the euro zone has put garment exporters in doubt who are getting ready to grab fresh orders from major Western markets. It has been anticipated that 27 countries in the European Union (EU), where around 40 percent of the Indian garment exports are shipped, will reduce their orders for the quarter.
Depreciation of Euro hit profits of the exporters, as this depreciation has made shipments to the EU more expensive. In such situations, pricing the products to fetch orders and maintaining margins are the major challenges for exporters, said analysts.
As per an official, any currency depreciation directly hits the bottom line, so around 15 percent depreciation in Euro would hit exporters' bottom line by 10 percent. The crisis in Europe definitely hit Indian exports, as Europe is a biggest market for Indian export items and orders from this market are imperative for Indian businesses.
Due to such situations, the export orders from European markets may shift to bigger nations, who are able to control their currency as per the situation, said an expert. Since 2008, the garment industry of India has been in tight corners, as appreciation in rupee affected the earnings of the exporters.
In the year 2009-10, exports of India fell down to Rs 459.71 billion that is by 9 percent. US accounts for almost 33 percent of the Indian clothing exports. Overall retail sales of the US had gone up in the month of March by 2.1 percent and merely by 0.4 percent in April. However, sales in 27 countries of EU slipped by 0.6 percent in the month of February and similar were the case in the month of March.
Now, the situation in the US is quite better, as its retail market has started witnessing improvement. Exporters in the industry are expecting that, they will again start receiving orders, since they have raw materials at better rates compared to their competitors.
Depreciation of Euro hit profits of the exporters, as this depreciation has made shipments to the EU more expensive. In such situations, pricing the products to fetch orders and maintaining margins are the major challenges for exporters, said analysts.
As per an official, any currency depreciation directly hits the bottom line, so around 15 percent depreciation in Euro would hit exporters' bottom line by 10 percent. The crisis in Europe definitely hit Indian exports, as Europe is a biggest market for Indian export items and orders from this market are imperative for Indian businesses.
Due to such situations, the export orders from European markets may shift to bigger nations, who are able to control their currency as per the situation, said an expert. Since 2008, the garment industry of India has been in tight corners, as appreciation in rupee affected the earnings of the exporters.
In the year 2009-10, exports of India fell down to Rs 459.71 billion that is by 9 percent. US accounts for almost 33 percent of the Indian clothing exports. Overall retail sales of the US had gone up in the month of March by 2.1 percent and merely by 0.4 percent in April. However, sales in 27 countries of EU slipped by 0.6 percent in the month of February and similar were the case in the month of March.
Now, the situation in the US is quite better, as its retail market has started witnessing improvement. Exporters in the industry are expecting that, they will again start receiving orders, since they have raw materials at better rates compared to their competitors.
Fibre2Fashion News Desk - India
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