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Keep check on buyer financial condition says CMAI President
Dec '08
Mr Rahul Mehta, President, CMAI
Mr Rahul Mehta, President, CMAI
In order to safeguard the interests of already suffering textile and clothing exporters, State Bank of India advices them to consult US rating agencies about the buyers before shipping the goods.

Recently SBI has issued a note to the exporters asking them to take an opinion from Dun & Bradstreet (in advance) on buyers based in the US.

Experts say that this precaution will help to avoid financial set back for the local firms who unknowingly might sell goods to weak clients in US who are not in a position to honour the payment commitments.

As the US is the largest consumer of Indian made textile and clothing products, present financial crunch in that market is posing challenge for the exporters. Even demand for the most awaited festival Christmas, has dipped in Europe and Japan.

Due to financial crisis there is a fear of late payment or no payment cases among the textile and clothing exporters. Mr Rahul Mehta, President of Clothing Manufacturers Association of India (CMAI), while speaking to Fibre2fashion.com provided some suggestion and said, “This is a difficult and obviously there cannot be a single response... I would however say that exporters must get updated information of the financial health of their buyers, must insure with Export Credit Guarantee Corporation of India (ECGC) wherever possible, and be extra careful in their documentations, delivery deadlines, and quality parameters to ensure no undue advantage is taken by the buyers.”

Distinguished US retailers like Steve & Barry's, B Moss Clothing Co, Harold's Stores, Circuit City Stores and Mervyn's LCC have been facing severe downturn in terms of sales. Many retail chains are pulling their shutters down and even some of the retailers have filed for bankruptcy.

Talking about precautions, the exporters should take to avoid inking such trade deals, Mr Mehta stressed, “As I mentioned there is now urgent need to build a data base and updated information about the credit ratings of their buyers, to minimize credit sales and insist on L/C AT SIGHT dealings, with documents in the name of the Banks, etc.”

The scenario is surely quite grim. Discussing how Indian exporters can accelerate their exports, CMAI President recommends, “Whilst efforts must be made to spread their markets and widen their product base, it has to be recognized that new markets, new buyers, and new products do not crop up overnight, and no one can wish away the fact that we are in for a tough year ahead.”

Fibre2fashion News Desk - India

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