India's Apparel Export Promotion Council (AEPC) has welcomed the government's decision to suspend help for export of raw cotton and cotton yarn, claiming the move will have a "sobering impact on booming fabric prices."

Only last week, AEPC warned Indian garment exporters faced a plethora of massive price hikes coupled with a weak currency that could drive business to neighbouring Bangladesh and China.

According to AEPC, cotton yarn prices and thereby fabrics, have soared by nearly 50% during the past five months, with the cost of voile fabric, common in export garments, rising from INR22 (49 US cents) to INR33 per metre.

"We appreciate the efforts made by union textile minister Dayanidhi Maran in this regard," said AEPC chairman Premal Udani, adding the government's move to suspend a duty concession of 7.5% for cotton yarn exports under the Duty Entitlement Pass Book (DEPB) scheme would bring down fabric prices to "realistic levels."

Nearly one-third of garment production cost comes from fabrics according to the AEPC, while its chairman noted countries such as China and Pakistan had already taken corrective steps to cap exports of yarn.

Udani also welcomed the government's decision to ban cotton exports in case stocks do not exceed 50 lakh (100,000) bales in the coming cotton season - a move he said would benefit the domestic spinning industry.

According to AEPC, the Indian government has also decided to impose a "prohibitive tax" on exports of raw cotton and cotton yarn.

The apparel export industry suffered more than a 13% fall from April 2009 to February this year due to weak demand from western markets and rising input costs of Indian exporters, added Udani.