The Clothes Show

Exporters pin the blame on a host of factors:

Slowing down of demand in Europe and the US;

Competition from China, Bangladesh and Sri Lanka;

A global trade slowdown;

This slowdown is on account of the business cycle downswing and recessionary conditions in Europe and the US, explains D K Gupta, senior director, AEPC. Exporters are experimenting with new markets, new products and streamlining manufacturing processes to beat the slowdown. Many are also looking at low margin segments in an attempt to maintain their shares of the global market.

Almost everyone is foraying into new, non-quota markets like Australia, Latin America, Middle East and Japan. Although 70 per cent of readymade garments exports still go to Europe and the US, the share of non-quota countries is expanding. During April-June 1996, exports to the United Arab Emirates rose by 47 per cent, to Australia by 42 per cent and to Russia by 28 per cent. A number of exporters are also setting up shop in the Middle East to capture the market.

 

The crisis has also forced exporters to think in long-terms. A company, Leela Scottish Lace Pvt Ltd, has set up an overseas branch in New York. This helps them to locate long time buyers. Since we have fixed buyers abroad we are not perturbed by the recession, says D T Kamath of the export division. He is however tightlipped about the companys survival strategy and is unwilling to reveal any details about the New York operations, since there are too many sellers chasing very few buyers.

Exporting companies are also streamlining their production process, while adhering to strict international norms of stitching, buttoning, packaging etc. Even small exporters who were negligent about such specifications earlier, say that they are finding it difficult to get by without changing over. Besides, measures like hiring more of casual labour, reducing the use of electricity, etc, are being used to bring down the operation costs.

According to Mr Gupta the present share of readymade garments at 17 per cent of total exports would go down by another three to four per cent this year, but he feels this is only a temporary phenomenon.

However, Mr Gupta might be too optimistic. Especially, as the quotas begin to tumble for textiles, under the multi-fibre agreement, and China and other developing nations begin to claw into Indias share of the international markets.