Apparel exports from India fell 17 per cent year-on-year in October this year to $603 million as the country lost market share to neighbouring China, Vietnam and Bangladesh in the wake of rising input costs.
Rising prices of cotton have raised the prices of yarn and fabrics, making Indian garments and made-ups unattractive to overseas importers, who have turned to China, Bangladesh Vietnam, Indonesia and Cambodia to buy garments at relatively cheap rates.
Despite a revival in demand in the US and the European Union countries, India has been unable to service these markets, as importers in these regions are unable to absorb this hike, said Rakesh Vaid, chairman (northern region), Apparel Exports Promotion Council (AEPC).
"Although demand from the US and EU are reviving, we are losing our share to units in neighbouring nations as they have large scale production and also enjoy more incentives than us," Vaid said.
He said other exporting countries have increased the duty drawback rates several times thereby neutralising both domestic taxes and the incidence of customs duty at the importing country-end.
China has raised the duty drawback rates for textile and garment exports from 11 per cent to 17 per cent on FOB value basis over the past few years while the Indian exporters get only 8.8 per cent rebate.
The share of India in apparel exports to the US stood at $2.27 billion during January-September 2009 against $3.07 billion in the same period in the previous year.