Even with orders pouring in from major export markets of the US and the EU, Indian apparel exporters are not able to cash in on the opportunity due to unprecedented rise in raw material costs and unavailability of fabric at the prices they would like in the Indian domestic market. Industry representatives today demanded policy interventions to ensure availability of fabric for exporters to guide recovery and prevent job losses in the sector.
Fabric prices have risen by 50 per cent in the past four to five months, making Indian apparel exports uncompetitive in the global market. Meanwhile, cotton exports are on the rise, as world cotton production has declined and demand for the raw material has increased. World cotton production, according to the latest release of the International Cotton Advisory Committee, is likely to decline by 4.5 per cent, the lowest in the past five years. Meanwhile global consumption is estimated to increase by 2.16 per cent. This has been the trigger for the rise in prices of cotton yarn in the last 4-5 months.
The industry had earlier demanded a temporary ban on raw cotton exports. This was rejected by the government, which said India, with 30.5 million bales, has surplus cotton to meet the domestic requirement of 24 million bales.
“We are not against cotton exports but there should be a conducive environment for exporters… The government must introduce fiscal relief measures to save garment exports out of India. If the government will not come out with a corrective package, we are looking at major collateral damage,” said Rakesh Vaid , chairman of Apparel Export Promotion Council (AEPC).
The industry, however claimed that besides high prices there is an unavailability of fabric, making it unable to honour past commitments.
“Due to unprecedented rise in fabric prices, we are not able to justify our prices quoted months ago to buyers and therefore they are deflecting to other markets. Moreover, there is also unavailability of fabric in the market which is forcing us to forgo orders at a time when orders are pouring in,” said Indu Sud, managing director of Rhiddhima Overseas Pvt Ltd.
“Not only are our margins not being met, there is a lack of availability of fabric. The demand is growing in the export markets but we are not able to tap the opportunity due to high prices and unavailability of high count cotton fabric,” said Sudhir Dhingra, managing director of Orient Craft Ltd.