Priyanka Golikeri

Mumbai: It is not just rising exports of cotton and appreciating rupee that are playing spoilsport with the Indian textile industry.

Asian rivals like Vietnam, China, Pakistan and Indonesia are also providing stiff competition on prices front for exports especially to the European Union (EU) and the US.

According to a study by Federation of Indian Chamber of Commerce & Industry (Ficci), India’s textile export prices are not as competitive as those of Vietnam or Pakistan and have been hardening over the years. This has lead to a decline in exports to markets in the EU and the US.

“India’s exports to EU grew by 18.6% in 2005, declined to 14.9% in 2006 and to 12.6% in 2007,” says Amit Mitra, secretary-general, Ficci.

Also, India’s share in US imports of clothing rose marginally from 3.2% in 1995 to 4.3% in 2007.

“This is an insignificant increase when compared to that of Indonesia, or Vietnam which has increased by over 4% in the same period,” says Mitra.

This would surely come as a blow to the over $50 billion Indian textile industry.

A chief reason for the fall in exports to the US and EU is that prices of domestic textiles have increased significantly. Average prices of Indian textiles reached $8.54 per kg in 2007, against something like $6 per kg of Vietnamese textiles.

Furthermore, according to the Cotton Advisory Board, the export of cotton from India was about 8.5 million bales (1 bale=170 kg) in 07-08. In 06-07, India exported about 5.8 million bales.

“Increase in export of cotton leads to a rise in cotton prices within the country. This further leads to a rise in the prices of textile products,” says a textile analyst with a broking firm.

Also, the manpower costs have increased over 10-15% in the last one year leading to an increase in textile prices, says Amit Ladsaria, director of Kolkata-based men’s wear brand Turtle.

“Manpower costs coupled with rising real estate prices for setting up manufacturing units have lead to an increase in prices of textiles,” says Ladsaria.

However, some industry experts feel that it isn’t entirely true that textile exports to key international markers have dwindled.

According to Ashok Kumar Bansal, chairman and managing director of Hanung Toys & Textiles, as India is the largest producer of the finer quality of cotton, prices are still low.

“We supply to companies like Tommy Hilfiger,Nautica etc,who are not concerned about price but quality. In 2007-08, our exports to EU and US saw an increase of over 80% despite the rupee appreciation. This year we expect it to rise by another 35-40%,” he said.

Buying decisions of importers in EU and US also depend on the type of textiles.

“Certain type of textile like low-end fabric is better in Pakistan,while a particular type is better in India. So buying decisions also depend on where one gets the best type,” says Sanjay Dalmia, chairman of textile firm GHCL.

Source : DNA