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Indian apparel exports decline despite strong dollar

06
Oct '12
Despite the rupee depreciating by around 16.2 percent to the US dollar in the first seven months of 2012, exports of apparels have slumped 12.1 percent to US $5.2 billion in the first five months of FY 2012-13 beginning from April. In this period, the rupee touched a high of 57 against the US dollar.

In comparison, in the first seven months of 2012, Chinese clothing exports earned $82.93 billion, down by just 0.2 percent year-on-year and Vietnam’s garment exports grew 7.5 percent from a year earlier to $9.2 billion in the same period.

“Two major markets - EU and USA which account for 75 percent of overall garment exports from India have registered a downfall in demand due to declining income of the consumers”, Mr A Sakhtivel – Chairman of Apparel Exporters Promotion Council (AEPC) said. 

He added, “Economic turmoil in both the regions has led to the downfall in apparel demand. Purchasing power of consumers has declined substantially in these markets.

Besides the economic turbulence, increase of input prices and wage rates and currency depreciation against dollar has accentuated the situation”.

Mr Shanmugham – Director of Warsaw International - a clothing exporting company blames the global recession mainly for export value falling despite the depreciation of the rupee.

He says, “Among others, cost of accessing funds went up during the same period. The other main factor is the massive electricity cuts in Tamil Nadu, which extends up to 14 hours per day. Using a DG during the day time power outages also increases the costs of production and despite increase in input costs, per unit realizations have not gone up”.

He informed, “Currently we have a global apparel market share of just 3 percent, despite being the second largest cotton producer in the world, while Bangladesh which imports cotton and yarn from India, has a share of around 8-9 percent in the global apparel market”.

Mr. Dhanaasekar Rangasamy – Marketing Director at CBC Fashions (Asia) Pvt Ltd reveals that if the rupee had not depreciated against the dollar, the value of exports would have been far lower than that has been achieved.

“Today’s customer is not loyal. They will purchase from whichever country offers the lowest rate. In earlier times, an overseas buyer would purchase 70 percent of his requirements from India and the rest from Bangladesh or China. Now that ratio is 40:60. We are also not able to match prices quoted by Bangladeshi or Chinese exporters”.

He further added, “Frequent policy changes mainly related to cotton exports is also impacting in a big way. Secondly, a Chinese exporter delivers samples within a day or two, while it takes 6-7 days from our side, as the various processes are outsourced to various units, which cannot operate during the day time due to power outages”.   

He is also of the opinion that Indian apparel exporters are losing their global competitiveness and that India is weak in manmade fibre (MMF) garments, unlike China which is strong in both MMF and cotton. 

Mr Sakhtivel feels that cost and inflation management could be the best way to revive exports. Alongside, diversification, especially to Latin America and Russia would help in reviving the Indian apparel export growth story. 

Fibre2fashion News Desk - India


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