Out of the woods, but growth still out of sight
Although some signs of improvement can be witnessed in the Western economies over the last few months, the garment export sector is still far from being on the growth track. The recessionary impact had been too deep for the SMEs in the sector to make a robust comeback. It may take some more time for the small-scale garment exporters to witness a complete turnaround.
Flat growth
The garment export sector is anticipated to record flat growth in 2009-10 as it was only in the last few months that SMEs started receiving orders from Western markets and some new countries. However, pricing still continues to be a major issue as high prices of cotton has made it difficult for SME apparel exporters to stay competitive in the global market.
'Despite positive signs in the trading market, sluggish demand continues to pull down the growth of SME apparel exporters. Besides, most small-scale garment exporting units are losing their pricing advantage to competing countries such as China, Vietnam and Bangladesh,' said Krishna Kumar Maheshwari, proprietor of Badrivishal Textiles, a small-sized garment exporting unit in Kolhapur, Maharashtra.
For the first two quarters of 2009-10, most SME apparel exporters clocked poor sales and witnessed sharp erosion of margins. Even during October 2009, Indian garment exports witnessed a slide, plunging 17% to Rs 2812.3 crore, in comparison to Rs 3068.9 crore recorded during the corresponding period last year. This is likely to have an adverse impact on the overall growth figures of the sector in 2009-10.
'Given that the garment export sector was in doldrums for the entire first half of the 2009-10 and orders have started pouring in only in the last couple of months, even a flat growth by the end of this year will be good,' said Anuj Kabra, proprietor of Aarti Textiles, a small-sized garment supplier in Surat, Ahmedabad.
The garment export industry is expected to touch US$10 billion in 2009-10, similar to last year's level of US$10.9 billion, thereby registering flat growth rather than negative growth during the current financial year.
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