India: Textile & garment sectors under price pressures

The elimination of global textile quota system has certainly been a reason for textile and garment industry to celebrate. However, the celebrations turned sour as the global textile industry entered cut-throat competition era.

Now exports firms have to keep prices down as they compete with cheap garment producers from China, Pakistan Sri Lanka and Bangladesh.

In the seventh month running, post textile quota phase, the industry suffers from price pressures. Average prices on major products such as T-shirts, trousers and cotton shirts, have dropped nearly 10 percent; additional five percent cut is anticipated for apparels from all categories.

Domestic garment and apparel producers are engaged in competing with producers from neighbouring China among others, who offer clothings at about 25-30 percent cheaper rates. Bangladesh and Sri Lanka also offer low-priced clothings.

Apart from garment makers facing problems, the home textile sector also faces declining margins or receeding profit lines.

Garment and textile exporters now pin hopes on revaluation of the Renminbi (Chinese Currency - Yuan) and possibile protectionist measures coming up against Chinese textile exports to the American and European markets.

However, the domestic industry does not have to suffer from the China syndrome and there is hope that labour reforms could help make the industry more competitive.

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