Apparel exports from India fell 17 per cent in October to $603 million compared to the year-ago period as the country lost market share to China, Vietnam and Bangladesh due to uncompetitive pricing of fabrics in the domestic market.
Exporters said rising cotton prices have raised the cost of yarn, making domestic garments costlier. Overseas buyers, however, are unable to absorb this hike and are placing orders with China, Vietnam, Indonesia and Cambodia who are selling garments at lower rates compared to India.
"Although demand from the US and European Union are reviving, we are losing our share to units in neighbouring nations as they have large scale production and also enjoy more incentives than us," Apparel Exports Promotion Council (AEPC) Rakesh Vaid said.
He said, the Duty Drawback rates, which seeks to neutralise the incidence of customs duty, central excise duty and service tax on items for export, given to Chinese apparel exporters have been revised five times in the past few months from 11 per cent to 17 per cent on value of Freight on Board, while the Indian exporters get only 8.8 per cent rebate.
Exports share of Indian apparel in the US declined by 6.46 per cent to $2.27 billion during January to September 2009 compared to $3.07 billion in the same period in 2008.
But, China's exports rose 1.95 per cent to $17.23 billion and that of Bangladesh by 2.35 per cent to $2.66 billion during the first nine months of 2009, AEPC said.
Source : Business Standard