NEW DELHI, February 4: Garment exporters are expected to be hit hard after the devaluation of the south-east Asian currencies as international buyers are turning to countries like Malaysia, Thailand and Indonesia.This may make apparel export target of $5.2 billion set by the textile ministry for the current fiscal difficult to achieve. Apparel exports in the months of April-December period stood at $3.5 billion.
A top functionary of the Apparel Exports Promotion Council (AEPC), said: "we have started receiving complaints from the exporters since last month that exports are likely to dip in the next three months".
This was confirmed by HKL Magu, vice-chairman, AEPC (North region), chairman of the Garment Exporters Association (GEA) and managing director, Jyoti Apparels. Magu said from the beginning of January some of the buyers are turning to countries like Thailand, Malaysia and Indonesia for cheaper buys."They had initially had talk with us but once they came back from south-east Asian markets theystarted complaining about high prices for our products", Magu added.
Magu further said that the situation has already deteriorated for the exporters as the international buyers are currently making their purchases on a seasonal basis unlike the earlier practice of placing orders six months month in advance.
According to Magu, the best solution in this situation is devaluation of rupee, which is unlikely to take place. Magu stated that it is difficult for the exporters to retain their competitive edge when the rupee has had only a 9.5 per cent depreciation between January-December, 1997 as compared to 72 per cent and 117 per cent devaluation in South Korean and Indonesian currencies in the same period.
As a corrective measure AEPC is in favour of promoting man-made fibre-based and mill-made fibre-based garments.
The council has already made representation to the ministry in this regard. Further AEPC is of the view that import of raw materials such as cotton should be made easy and smooth in order toprovide the necessary impetus to the exporters.
AEPC also feels that the labour laws should be reviewed and the infrastructure should be improved for the domestic manufacturers to undertake any diversification.
Talking on the spill-over of the cash crunch in the south-east Asian economies, Rakesh Vaid, chairman, Export Promotion Committee, AEPC and managing director, Shweta Apparels, said that the advantage these economies over India is temporary and will be evened out when their raw material import cost will go up.
He felt that the crisis is not going to have any detrimental effect on the exporters in the next fiscal.
Similar sentiment was echoed by AEPC officials who felt that the south-east Asian crisis is not restricted to the realm of currency alone and would affect the investment in general in these countries. Magu said that the situation cannot continue in this fashion for long.
When asked on the possible way out Vaid said the greatest drawback of the domestic garment industry is the quotasystem, which should be removed in order to make the products more competitive.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
