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Textile exporters seek more support

COIMBATORE: After a long period of export acceleration, textile and clothing exports seem to face the threat of a downslide this year.

These exports slumped by 17 per cent (in value terms) during the first three months of 2007-08 as compared to the same period last year. And, exports were 36 per cent lower than the expected $7.5 billion target during the same period.

A senior official in the Union Ministry of Textiles said the decline in exports was felt across all segments of the sector and more so in made-ups and clothing. The Government was in the process of initiating some measures and exports were expected to improve in the second quarter, he said.

With the rupee appreciating nearly ten per cent during the last four to five months against the dollar, “exporters are struggling to meet the existing orders,” says S. V. Arumugam, Chairman, Southern India Mills’ Association. “We are losing out on the price front.” The Government has announced an increase in duty drawback and duty entitlement passbook (DEPB) scheme rates, and “the industry feels relieved to some extent with it.”

However, the impact of the rupee appreciation is far higher.

The exporters will have to honour the orders they have accepted and with the rupee appreciation, price realisation is less. For the new orders, they are unable to get a higher price, he explains.

“There is a need for an additional relief package,” argues D. K. Nair, general secretary of the Confederation of Indian Textile Industry. While the rupee has appreciated by at least ten per cent, the current sops add up to just three to four per cent. “We have to get the State duties reimbursed,” he says.

Apart from the Government support, the industry is considering what it needs to do to deal with the crisis situation.

“An action plan is needed from the industry and the Government,” he says. Though yarn and fabric exports have not declined to the extent of garments, there is a general downtrend across the entire textile value chain. Countries such as Cambodia, Bangladesh, Vietnam, and Indonesia are able to increase their share in the U.S. garment market, whereas India is witnessing a decline, he points out.

A high-level official in the Ministry points out that the industry does get a relief to some extent with the increase in duty drawback and DEPB rates and “we are working on how to offer greater support to the exporters,” he said.

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