Textile exporters cut down on prices to remain competitive

Top Stories

»	Centre exempts nuclear power goods from customs duty for past imports
»	Indian markets trade higher despite West Asia tensions
»	Sensex, Nifty open 1 pc lower amid West Asia tensions, weak global cues
»	India clocks robust 7.7 pc GDP growth in 2025-26, Q4 growth at 7.8 pc
»	RBI keeps repo rate unchanged at 5.25 pc, maintains ‘Neutral’ stance

Namrata Kath Hazarika | 31 Oct, 2009
Textile exporters reeling under the pressure of the recession have been slashing down their prices to keep themselves competitive in the international market.

Commenting on this context, Subhash Mittal, Chairman and Managing Director, Payal International Ltd. who exports goods to some key international export markets said that as they are booking orders for the third quarter of this fiscal, they (exporters) have to slash down their price margin by at least 5 percent as compared to the previous year.

Mittal told SME Times that the overseas buyers are demanding goods at a much lower prices, which is the reason why many exporters are quoting low prices.

In fact, many exporters are using cheaper materials during production of goods to remain profitable, he added.

Several exporters from the textile industry are saying that their order books are filled up to at least December which is the peak sale season for retailers in the US and Europe for the run-up to Christmas.

Jagdish Hinduja, Chairman, Gokaldas Images quoted to a business daily recently that the demand trend from the key export markets have changed. They (buyers) are placing orders for cheap and reasonable products which looks appealing as well.

The usage of cheaper material, lower thread counts, or a more cost-effective design, has helped many exporters to book orders prior the festive season.

On the other hand S.P. Aggarwal, President of Delhi Exporters Association (DEA) told SME Times about the obstacles that exporters are facing at this juncture.

Aggarwal said that demand has not picked up excessively. So, it is vital for demand to pick up and show some steady growth. In fact, the festive orders those were booked has already been delivered to the respective buyers and they (exporters) are booking fresh orders as of now.

He added, "The last orders those were booked, we kept a lower price margin in order to remain competitive and exist in the potential market. We need to survive at the moment, so we decided to book orders at lower price."

Mittal also mentioned that most of the exporters have already hedged orders keeping in mind the fluctuating exchange rates. "About 50 percent of Indian exporters have hedged orders for the next couple of months," he said.

Meanwhile, few exporters are planning to expand the industrial-base by opening up new production facility which would add on to the capacity. Gokaldas Exports Ltd. is one such company, which is likely to open new production unit in Hyderabad.

The unit would produce 100,000 pieces a month and would generate Rs. 50 crore business, the business daily reported.

Oriented Craft Ltd, an export house based in Gurgaon in the National Capital Region (NCR) has also decided to slash price by 8-10 percent, which thereby squeezed their profit margins.

Few exporters have witnessed an increase in order bookings at present. Payal International Ltd. has witnessed an increase of 25 percent of order bookings. Mittal said, "Export market is slowly picking up but it will require more time for stabilization."

Mittal denies to set up new production units currently as the economy has not recovered completely from the recession. He says that plans are on pipeline and soon they would implement the plans and programs in action.

The USD 63-billion Indian apparel and textiles industry is the second-largest employment generator after the agriculture sector, which employs about 35 million workers. The Indian textile sector is worth USD 62 billion and is expected to reach USD 110 billion by 2015, which includes USD 65 billion domestic and USD 45 billion export market.