INDIA: Garment exporters warn against rising costs
Indian garment exporters have warned that a cocktail of swingeing cost increases and a weak currency are in danger of driving business to neighbouring Bangladesh and China.
The Apparel Export Promotion Council (AEPC) also attacked plans to hike customs and excise duties on petroleum, at the same time as textile mills have revised yarn prices upwards in the past four months.
AEPC equally cited a 40% increase in cotton yarn, a tumbling dollar and euro against the Indian rupee as well as a sharp increase in minimum wages for Delhi workers as detrimental.
The organisation says textile mills have frequently revised yarn prices upwards in the past four months while citing a rise in prices of cotton, power and labour.
"But the abnormal increase is without any correlation to the rise in yarn input costs," said AEPC chairman Premal Udani.
"The planned increases in customs and excise duties on petroleum products will seriously affect the textile and clothing industry as power shortages will further increase production costs."
Indian exporters have been hit by a steady downward spiral in the past three months as the rupee has appreciated more than 4% against the dollar and 10% against the euro.
AEPC added small and medium-sized export companies who worked on 7%-8% operating margins had taken "a huge" hit.
"Many exporters are not able to confirm new orders and bookings have come down sharply as retailers in the West who are just emerging out of the worst recession in decades are in no mood to give better rates," added Udani.
The Delhi state government has also apparently increased the minimum wage by between 33% to 49% from 1 February.
"We are still not out of recession," added Udani. "Such [an] unprecedented increase will jeopardise our sustainability. Once we lose our competitiveness to countries like China and Bangladesh, it will not be easy to regain the lost ground."
In the current fiscal year, AEPC said India exported garments worth US$7.9bn between April and January - down 10.2% from $US8.8bn compared to the previous year.
Help test our new apparel sourcing tool.
- What TTIP might mean for US, EU textiles & apparel
- Four steps to reduce product defects
- Geo-political uncertainty and how to survive it
- Adidas raises the bar for North America sales
- Finding value in fashion retail reverse logistics
- H&M, VF Corp and Levi among most ethical companies
- US Q4 in brief – Destination XL Group, Caleres
- PVH Corp to acquire e-commerce retailer True&Co
- Vietnam limits hazardous chemicals in apparel
- Target unveils "ambitious" store re-design plans
- Central and East Europe Report Package
- When Things Go Wrong - A Practical Guide to Managing Common Problems in Apparel Sourcing
- Central America strategic sourcing review - a focus on Guatemala, El Salvador and Honduras
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Outdoor performance apparel 2016: A broader perspective