Indian Textile Exports Hit In 2016 Due To Higher Production Cost And Rising Rupee

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Indian Textile Exports Hit In 2016 Due To Higher Production Cost And Rising Rupee

Indian textile exports contracted in calendar year 2016 for a consecutive year, due to weak global demand as well as India's losing competitiveness, despite the Indian government’s booster package, according to Union Ministry of Textiles data. Data from the ministry of textiles has shown a five per cent fall in Indian textile exports to US$34.9 billion (Rs 2.3 lakh crore) for calendar year 2016, from US$36.7 billion in 2015.

In September 2016, the central government announced a Rs 6,000-crore package to boost textile export. This was on recommendations from the industry, and a commitment from it to raise annual export to US$50 billion and create around 100,000 new jobs.In spite of continued support from both central and state governments, the textile industry has failed to achieve growth in terms of exports. While Indian exporters points to slackness in global demand for poor export performances, neighbouring Bangladesh, Vietnam and Myanmar have registered healthy export growth year on year.

"Textile demand remained sluggish, following uncertainty in the global economy while India has been losing its competitiveness to China, due to almost flat (rise in) cost of production there and depreciation in their currency,” Clothing Manufacturers' Association of India (CMAI) President Rahul Mehta said.

“In contrast, the cost of production increased sharply in India over the past year. Additionally, the rupee has appreciated around five per cent. So, India's receivable export proceeds have declined proportionately," Mehta said. Meanwhile trade sources stated that the past year witnessed a 25% to 30% jump in apparel production's labour cost. Since labour is a major component of the overall cost, this rose proportionately. Besides, while the Chinese yuan weakened by nine per cent over the year, the Indian rupee rose against the US dollar by five per cent.

"Therefore, overall, India's textiles and apparel export have been estimated to remain flat in calendar year 2017, since benefits offered by the government are negated by a sharp increase in the cost of production and appreciation in the rupee," Mehta said.