Sad side of India's export story - losing to neighbours
Uncompetitive pricing of fabrics in the domestic market and rising cotton prices are making domestic garments costlier and with reduced demand and consumers looking for low-cost alternatives, buyers have given India the cold shoulder and are opting for nations like China, Vietnam, Indonesia and Cambodia for the sole reason that they are selling garments at lower rates compared to us.
Interestingly, it's not that there is a dearth of demand from India's traditional markets. Exporters are aware that demand from the US and European Union is reviving. The question, however, is: If there is demand in the markets why are we then not getting enough orders? The answer is simple - our competitors are perhaps enjoying more incentives than what our government has given us and that they are into large scale production.
I completely agree with Apparel Exports Promotion Council (AEPC) that 'the Duty Drawback rates, which seek to neutralise the incidence of customs duty, central excise duty and service tax on items for export, given to Chinese apparel exporters have been revised five times in the past few months from 11 percent to 17 percent on value of Freight on Board, while the Indian exporters get only 8.8 percent rebate.'
I think this is perhaps the sad side of India's story. While the government on one hand is setting targets for the Industry, on the other hand the tax regime is by no means helping it. I strongly believe that if this trend persists, the export target set by our Textiles Minister Dayanidhi Maran of $25 billion worth garments by 2012, will only remain a distant dream.
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