Staff Reporter
Hindu, India
ERODE: “Yes, we intended [to place] more quantities than ordered…the reason is simple the economic situation in Europe is not good enough and textile business has been affected,” this was a European buyer’s response to an Erode-based garment exporter’s email.
The exporter had asked the buyer why he had halved his order for the current year.
Similarly a Denmark buyer had mailed, “There is a general slowdown in the economy here as in Europe. And for sure, many shops and wholesale traders will close down.”
Statements
The aforementioned buyers’ statements reflect the garment export business. Secretary of the Textiles and Garments Exporters Association, Erode, S. Sivananthan says slump in the world economy has hit the garment export business hard.
The slump in textile trade means the buyers have not only cut down their orders but also reduced the delivery time.
“Buyers want to have a short production cycle, so that they make money quickly. This has resulted in reduced order time from 90 to 120 days to 60 days.”
Not only that, some buyers have delayed placing orders. “Earlier, the buyers placed orders in October or November, for January shipment. This time, though, a few of them are yet to place orders,” Mr. Sivananthan says. This is true of most of the garment exporting units here.
This is only one part of the story.
The second is that though the rupee has fallen vis-a-vis the dollar in the past few months, the cut in duty drawback rates and increase in interest rate for packing credit have offset what ever profits the exporters could have made.
Restored
“Earlier the duty drawback was 15 per cent. The Government brought it down to 11 per cent and then to about seven. This was restored to 11 per cent, after exporters’ associations petitioned the Government. Now again, since September 1, the Government has slashed it to 8.8 per cent,” the export association secretary says.
Lending rate
Similarly in packing credit, the Government has hiked the lending rate. From 7.5 per cent in 2014 to 10.5 per cent earlier this year, the Government has made it on a par with other interest rates, he adds.
Mr. Sivananthan says he wants the Government to provide concessions in duty drawback and packing credit, so that the garment exporters can make use of falling rupee.
