Bangalore: Soaring fabric prices has badly hit penny-pinching garment exporters. With a 55-60% surge in fabric prices, domestic garment manufacturers are freezing overseas orders to protect their bottomlines.
For instance, prices of cotton voile have increased 55% since July, while cambric fabric has risen by 50%.
To make matters worse, China and Bangladesh are competing on margins.
"The volatility in the rupee and the economic crisis in select export markets, coupled with price hike of fabric and reduced government incentives has lead to tough times for the Indian garment exports," said Ganesh R Shermon, industry head, textile and apparel, KPMG India.
According to Apparel Exports Promotion Council, Indian apparel exports to the US declined by 6.46% to $2.27 billion during the January-September period this year compared with $3.07 billion in the corresponding period last year.
However, Chinese exports gained by 1.95% to $17.23 billion and Bangladesh's were up 2.35% to $2.66 billion.
In October alone, the country's apparel exports were hit severely and declined by 17.62% to $603 million in the corresponding period last year, said the apex textile body.
"In the wake of the rise in fabric prices, we are not taking any new orders from overseas buyers as it is almost impossible to deliver on prices asked by them," Rajan Hinduja, managing director of Gokaldas Exports said.
Exporters feel they are unable to benefit from the recovery US and European Union markets."Order flow has seen a rise due to improved sentiment in the US & EU.
However, Indian garment exporters can't deliver on prices dictated by overseas buyers due to rising fabric prices," Hari Kapoor, managing director of Allied Industries said.
As most of the orders are negotiated 2-3 months back, we are forced to honour our contracts with a wafer-thin margin, he added.
Tirupur in Tamil Nadu, one of the country's biggest textile-apparel hubs, has see a 15% drop in exports. "Tirupur has registered a 5% dip in knitwear exports," added Shermon.
Garment manufacturers have put the ball in government's court to provide the much-needed fillip to garment exports.
Apparel export industry earns foreign exchange to the tune of Rs 50,000 crore and employs over 60 lakh people.
Source : dnaindia.com