Textile exports may not meet target

Rising raw material costs making life tough for Indian exporters.

The country’s textile and clothing exports are all set to fall short of the target for the second year in a row. The gap between actual exports and the target for 2008-09 may be as high as 21 per cent, industry experts said.
 

UNDER PRESSURE

• The shortfall this year is expected to be more severe than last year. Against the target of $24.6 billion, actual exports were $20.5 billion
• With cotton and other raw material prices increasing, industry experts believe that $24 billion exports this year may be tough
• The steep depreciation of the rupee is another source of worry as many exporters have hedged their orders at a higher exchange rate
• The textile sector is among the top three foreign-exchange earners, along with gems & jewellery and IT

According to the latest textile ministry estimates, at $24.6 billion, exports will be 20 per cent higher than last year’s level of $20.5 billion. The government had estimated textile exports of $31.17 billion this year but a rise in cotton and other raw material prices is making life tough for companies, many of whom are finding it tough to stay competitive in the global market.

Prem Malik, chairman of the Cotton Textiles Export Promotion Council, said, “Total exports will be somewhere around $23 billion. With the rise in the minimum support price of cotton, production cost will go up which, in turn, will affect exports.”

The gap between the actual exports and the projections made by the the working group on the textile and jute industry for the eleventh five-year plan (2007-12) indicate that the calculations may be faulty, said industry players

The target set by the government to reach exports worth $55 billion by 2012 may also remain a distant dream. Senior government officials admit that “this export target is highly ambitious”.

The textile sector is among the top three foreign-exchange earners, along with gems & jewellery and IT. The government estimates that by 2012, the industry size will be around $110 billion, of which around $60 billion will be domestic market size.

Moreover, the steep depreciation is another source of worry as many exporters have hedged their orders far above the current ruling exchange rate of the rupee against dollar.

The textile and clothing exports have shown an increasing trend in April 2008-09 (the latest statistics available with the ministry), at $2.3 billion – a rise of 36 per cent in dollar terms – over the same month last year.