Dwindling prices in the global market because of increasing use of low-cost, disposable fashion garments have started putting pressure on the bottomlines of the Indian apparel industry.
Buyers in the US, which was once a preferred destination for Indian products, have started looking for cheaper options from countries like Bangladesh and Sri Lanka which have recently made a downward revision of prices ranging between 7 and 15% in various product groups, putting India at a disadvantage, says a study conducted by US-based consultant KSA Tecknopak.
The new trend has impacted the competitiveness of the domestic industry by more than 12% and profitability by nearly 7% from last year?s 15%. Unfortunately, the competitiveness in price is not expected to get better this year, more so as China becomes quota-free this month, the report predicted.
Reacting to the recent development, Pradeep Agarwal, managing director of Prateek Apparel, said, ?Our competitors such as Bangladesh and Sri Lanka are doing well in the international market despite having nothing to offer to buyers except low-cost manufacturing.?
?The domestic industry is itself responsible for low productivity as too much focus has been laid on capacity expansion instead of improvement of core process and management. Focus should be on investment in human resources, systems and better technology.
The price war has to fought with better productivity,? Agarwal said.
Besides, improving productivity, other practical solutions include cost reduction and meeting tight price points, trim procurement according to shipment allowance and interacting with buyer directly instead of agents and mediators.
Another reason why Indian exporters are struggling to meet price targets, is their dependence on a very limited products basket. Low-value basic items and street fashion, which has portrayed India?s image as a source of cheap products is also a hindrance, whereas high-value products are preferably sourced from other countries, said Vijay Aggarwal, chairman of the Apparel Export Promotion Council.
