Textile exports stitch up a good yarn

Exports to US up 24% in January-June 2005.

Indian textile exporters have started weaving a colourful yarn in the competitive quota-free regime.

Latest data released by the Office of Textiles Export of America (OTEXA), on Friday, showed that textile exports to the US, the largest market for India, grew by 24.18 per cent in January-June 2005 at 1169.28 million square metres against 941.53 million square metres in the first six months of the last year.

Apparel exports, the largest contributor to textile exports, went up by 32.31 per cent at 413.75 million square metres against 312.70 million square metres in the corresponding period of last year. Overall, India's textile exports growth rate is higher that the world average growth rate of 9.13 per cent.

The growth in the first six months of calendar year 2005 has far outpaced the rise in exports in the last calendar year. In 2004, textile exports to the US grew by 14.94 per cent at 1914.78 million square metres from 1665.79 million square metres in 2003.

China, however, has emerged as the biggest beneficiary of the abolition of quotas. Its exports to the US in the first six months went up by 46.64 per cent at 7882.24 million square metres.

Significantly, Indian exporters have managed to post a rise in the unit value realisation in the US market. This means that the growth in value exceeds that in volume.

Amit Goyal, president, Confederation of Indian Apparel Exporters, the apex body for readymade garment exporters, said although the margins came under pressure in the quota-free world, Indian players scaled up their unit value realisation in the US market by launching value-added products.

Goyal said margins shrunk on account of competition from other countries, mainly from China. Apparel exporters have been hit by a 5-10 per cent drop in margins, against their 15-20 per cent margin last year, while fabric markers now forgo half of their previous margins of 5-7 per cent.

A study released by Mumbai-based stock broking outfit Motilal Oswal Securities, said, "The world unit value realisation for imports to the US registered a three per cent drop while in some countries like China, it decreased by almost 15 per cent. However, India registered an encouraging nine per cent increase in the unit value realisation."

An analyst working with a foreign broking house said the initial months of the current year experienced a slowdown in exports.

"This was a carry forward effect of the last year. In 2004, almost all segments of textile exports exhausted their quota by October. Global importers did not place huge orders in the last few months of 2004 as they were waiting for a price reduction in 2005. Orders have started pouring in now," he added.

To drive his point home, he said the export quota of 34 lakh-odd dozens of men's shirts to the US was exhausted in October.

Exporters are bullish that the 24 per cent growth posted in the first six months will be maintained through the year.

"The re-evaluation of the Chinese currency and the recent US ban on some Chinese products will help Indian exporters a lot," pointed out an exporter.