Apparel exports from India fell 17 per cent year-on-year in October this year to $603 million as the country lost market share to neighbouring China, Vietnam and Bangladesh in the wake of rising input costs.
Rising prices of cotton have raised the prices of yarn and fabrics, making Indian garments and made-ups unattractive to overseas importers, who have turned to China, Bangladesh, Vietnam, Indonesia and Cambodia to buy garments at relatively cheap rates.
Despite a revival in demand in the US and the European Union countries, India has been unable to service these markets, as importers in these regions are unable to absorb this hike, said Rakesh Vaid, chairman (northern region), Apparel Exports Promotion Council (AEPC).
"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," Vaid said.
He said other exporting countries have increased the duty drawback rates several times thereby neutralising both domestic taxes and the incidence of customs duty at the importing country-end.
China has raised the duty drawback rates for textile and garment exports from 11 per cent to 17 per cent on FOB value basis over the past few years while the Indian exporters get only 8.8 per cent rebate.
The share of India in apparel exports to the US stood at $2.27 billion during January-September 2009 against $3.07 billion in the same period in the previous year.
China's exports, on the other hand, rose 1.95 per cent to $17.23 billion and that of Bangladesh by 2.35 per cent to $2.66 billion during the same period, according to AEPC.
Meanwhile, exporters of home-textiles from Karur in southern India are hoping to get good orders from the Heimtextil Fair in Frankfurt, which is scheduled in the second fortnight of January.
The Karur home-textiles sector has created a favourable impression in international markets and with recovery of global economies in sight, these exporters were looking forward to reaping rich gains at the fair.
But the incessant rise in yarn prices recently is out to spoil the party of these exporters at the fair, as it will be difficult for them to quote competitive prices along with the uncertainty of anticipated increases in the future, AEPC said in a website release.
The Karur Textile Manufacturer Exporters' Association has sought the intervention of prime minister Manmohan Singh to control the spurt in prices of cotton yarn, which have increased by an average of 15 to 25 per cent.
