Indian apparel exporters are renewing calls for a tax on cotton yarn shipments after new data showed the value of the country's garment exports fell by 2.6% in the year to March.

According to figures released yesterday (3 June) by the Apparel Export Promotion Council (AEPC), garment exports dropped to US$10.6bn in fiscal 2009-10 (which runs from April to March), compared to $10.9bn a year earlier.

All months except July, August and November saw a slide in shipments.

In rupee terms, however, there was a negligible recovery of 0.37%.

"Exporters are in deep trouble as the garment industry is reeling under unprecedented price hike of yarns and fabrics," said AEPC's chairman Premal Udani. 

"The past four months have witnessed a mind-boggling 50% to 80% increase in prices of basic raw materials. 

"Just when there were signs of initial recovery, the industry has been plunged into a gloom because of high raw material prices and their erratic supply."

Mr Udani wants the government to impose a 15% tax on exports of cotton yarn in an attempt to discourage exports and meet surging domestic demand for fabrics and yarns.

He also appealed for the removal of a 16% duty on imports of yarns. 

Over and above the raw material costs, he said, the industry has been impacted by high labour costs, non-refund of central and state levies besides infrastructure deficiencies. 

"Our share in world global market of clothing is going down," said Mr Udani. "Bangladesh has become a larger garment exporter than India. By next year, Vietnam will also overtake us."