Rise in rupee, sluggish sales take toll on apparel exports to US
Sluggish apparel sales in the US, rupee appreciation and a general decline in Indian textile industry’s competitiveness has led to a slowdown in the domestic textile and apparel export to the US in the first half of 2007.
By Sanjeev Choudhary, TNN |
NEW DELHI: Sluggish apparel sales in the US, rupee appreciation and a general decline in Indian textile industry’s competitiveness has led to a slowdown in the domestic textile and apparel export to the US in the first half of 2007
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According to the US Department of Commerce data, India’s textile and apparel export declined by 0.21%, whereas the total import by the US increased by 5.70% in the same period. China maintained the lead by posting a growth of 33.78%, with low-wage countries like Vietnam (21%), Cambodia (18.5%), Indonesia (16.5%) and Bangladesh (13.6%) showing impressive gains.
Several apparel retail majors in the US have reported weak sales in the past few months. “The market is dull and apparel buying has been low in the US market,” says Gokaldas Exports executive director Rajendra Hinduja. His firm is the biggest garment exporter in the country. Many others blame it on the hardening rupee, which appreciated by almost 9% between January and June this year.
“The rupee appreciation has eroded our competitiveness as against countries like Bangladesh or China. It is not easy for Indian garment-makers to get orders these days,” says Orient Craft CMD Sudhir Dhingra. Rupee appreciation, however, could have only partially contributed to the export decline.
Following the waiver of quantitative restriction on textile export to the US, India registered close to 25% export growth in 2005. The growth rate almost halved next year and this year it is on a decline.
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“We lack capacity to handle big volume orders. Industry didn’t make much investment to add capacity in the past and now we are paying for it,” says Alok Industries MD Alok Jiwrajka, explaining as to why the country is falling behind expectations. Adds an industry observer: “Quota had also made many manufacturers complacent. Now that they are faced with severe competition, they are trying hard to catch up.”
Confederation of Indian Textile Industries secretary general DK Nair cites lack of reforms in Indian labour laws as a disincentive for entrepreneurs to go for bigger units.
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