Higher input costs affect wool exports

After battling a rising rupee last financial year, the exporters of woollen items are now facing rough weather owing to high production cost, which is eating into their plans of expanding customer base.

“Exporters incurred losses last financial year due to the rupee appreciation. This time around they are cautious in adding new clients since high raw material prices has impacted the production cost,” Wool and Woollen Export Promotion Council (WWEPC) executive director R K Gupta said.

He said production cost has risen by 20-25 per cent mainly on account of high raw material and packaging cost.

India exports woollen items (shawls, knitwear, strolls, fabric and blanket) mainly to the Australia, Middle East and the US. Woollen exports fell by 6.19 per cent in 2007-08 to Rs 1,800 crore from Rs 1,919 crore in 2006-07, WWEPC said.

Besides the raw material prices, cost of freight and packaging material has also increased in the range of 10-30 per cent, adding to the woes of the exporters.

“Our firm is not exploring new clients and we would limit exports to our existing customers only,” owner of Ludhiana based Camel Knitting and Textile Mills Sushil Kaura said.

Higher custom duty on wool waste (15 per cent) and low export incentives are some of the problems faced by the industry, due to which the export target of about Rs 2,300 crore ($550 million) for 2008-09 is unlikely to be met, Gupta said.

As per the figures of Wholesale Price of India (WPI) Index for the week ended July 26, price of woollen yarn increased by 8.1 per cent and woollen cloth by 5.67 per cent over the previous week.