Sunday, July 15, 2007

Indian garment exports likely to witness zero growth this year

by Vipin Agnihotri

The sudden appreciation of the Indian rupee in a period of one month has wiped away the garment export margins. At present, Indian garment export industry works on thin margin levels of 7 to 10 per cent. Because of appreciation of the Indian rupee, the payment for orders already fulfilled is affected.

If experts are to be believed, the orders presently processed will certainly result in a loss, but will still have to be fulfilled for goodwill and to continue to be in business. On the other hand, if the players quote their prices for future orders keeping the rising rupee in mind, Indian garment exporters are bound to be ‘overpriced’ in comparison to China, which can give better prices. Apart from that, there is a cascading effect of this on the employment that the sector offers directly and with the assistance of ancillary industries.

According to one estimate, garments exports in India may reach a figure of $8.3 billion for the year ended 31 March 2007, short of the set target of $9.5 bn. It is worthwhile pointing that the exports grew by 30 per cent in 2005 over 2004 and by 12 to 13 per cent in 2006 over 2005. Though, for this year, industry may either have zero or even negative growth. In theory, US and Europe together account for 65 per cent of our exports.

 

 

 

 

 

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