India’s apparel exports fell 17 per cent in October to $603 million, from that in the month last year, as the country lost market share to China, Vietnam and Bangladesh due to uncompetitive pricing of fabrics in the domestic market.
Exporters said rising cotton prices had raised the cost of yarn, making domestic garments costlier. Overseas buyers, however, are unable to absorb this increase and are placing orders with China, Vietnam, Indonesia and Cambodia, which are selling garments at lower rates compared to India.
“Although demand from the US and EU are reviving, we are losing our share to units in neighbouring nations as they have large-scale production and also enjoy more incentives than us,” Apparel Exports Promotion Council (AEPC) Chairman Rakesh Vaid said.
He said the duty drawback rates, which sought to neutralise the incidence of Customs duty, central excise duty and service tax on items for export, given to Chinese apparel exporters, have been revised five times in the past few months from 11 per cent to 17 per cent on value of freight on board, while the Indian exporters get only 8.8 per cent rebate.
Exports’ share of Indian apparel in the US declined by 6.46 per cent to $2.27 billion during the January-September period, compared to $3.07 billion in the same period of 2008.
China’s exports, however, rose 1.95 per cent to $17.23 billion and that of Bangladesh by 2.35 per cent to $2.66 billion in the first nine months of 2009, AEPC said.
According to industry experts, premium quality cotton, which was trading at Rs 20 per metre in July 2009, has risen to 55 per cent at Rs 31 per metre now. This has forced many garment exporters to cut production or cancel orders.
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AEPC said: “Unless we get cotton yarn at competitive rates, we will not be able to compete with China, Bangladesh, Sri Lanka and Vietnam.”
Last month, the exporters had asked the government to either ban cotton exports or put a cap of 400,000 bales per month on exports of natural fibre, to encourage outward shipments of value-added items.
The government had last week said it had no plans to ban the export of cotton, as surplus stocks needed to be offloaded overseas.Textiles Minister Dayanidhi Maran had said cotton production was expected to be around 29 million bales and there was a carryover stock of 4-5 million bales, taking the total availability to 33 million bales this season. During 2008-09, peak export of cotton was 8.5 million bales.