Financial Daily from THE HINDU group of publications
Wednesday, Sep 04, 2002

News
Features
Stocks
Port Info
Archives

Group Sites

Industry & Economy - Readymade Garments


Colour fading out for the garment sector?

Nina Varghese

The industry, in the words of Mr N.F. Mogrelia, President of the Apparels and Handloom Exporters Association, is old and fatigued. There is hardly any young blood entering this industry at this stage.

CHENNAI, Sept. 3

INDIAN garment exporters seem unable to keep pace with the rapid changes taking place in the global marketplace.

The industry, in the words of Mr N.F. Mogrelia, the President of the Apparels and Handloom Exporters Association, is old and fatigued — literally. There is hardly any young blood entering this industry at this stage.

In Chennai, more than 20 per cent of the garment units have closed down. The dynamism that these entrepreneurs showed in setting up a world-class manufacturing base not just in Chennai but in other parts of the country as well was missing from the business today, he said.

One good example of this has been inability of the entrepreneurs to take advantage of trade policies and groupings, like the Africa Growth and Opportunities Act or the North America Free Trade Agreement. Taiwanese companies are making the most of the perks offered by the Africa Growth and Opportunities Act by setting up factories in the sub-Saharan region, Swaziland and Lesotho. Preferential treatment is also given to companies setting up factories in the East European bloc. In the sub continent, Pakistan seems to have faired well in negotiations, as it has been given additional quotas to the US in recognition of its support in the war against terrorism.

On the flip side, reports indicate that the Taiwanese are closing factories in Central America, as the benefits are not as good as expected.

Turnaround time has become an important aspect in the garment business. Buyers ask for 30 days lead-time. Indian manufacturers, hamstrung by low productivity, are unable to deliver within this timeframe.

Incidentally, according to industry sources, the Indian worker has one of the lowest productivity levels in the world at six to seven shirts by a worker per day per machine compared to the Chinese average of 30 to 40 shirts. Very often, consignments initially meant for sea are diverted to air to meet deadlines, pushing the prices up.

For a long time, the garment industry been the preserve of the small-scale sector. In the initial years, this served the purpose as the SSI sector was given a number of benefits. On the flip side, most garment units are small.

But the growth of large retailing chains in the developed markets, which went in for volumes, changed buying patterns. In the past few years, buyers want suppliers who can undertake large orders. Very few Indian manufacturers have the capacity for it, industry sources said.

In India, a sign of success has been the ability to manipulate the system. The quota system is a good example of this. Despite the Government setting up an electronic quota exchange at the cost of several crores, the old manual exchange continues to flourish. High quota premiums continue to prevail. Ms Reshma Rao, Secretary General of the AHEA, gave the example of ladies dresses, something of a speciality in these parts.

The high premiums have driven the buyers away as they know that the exporter will never be able to get that many quotas and the investment will be too high, which in turn will push the prices up. All exporters agree that cost has become the only decisive factor and the grim reality is that most buyers are willing to pay only 75 cents per garment.

At a recent meeting of the exporters with the Government officials, one of the points put forward as a problem was the social audits that exporters have to implement. But social audits are the order of the day and exporters who want to stay in line will have to toe the line, says Mr Ajay Badaga, Product Development Manager, Sports Authority (one of the largest sports goods retailers in the US).

Send this article to Friends by E-Mail

Stories in this Section
Debt or equity... a tough choice indeed!


Differing views on safeguard duty on ECH
Growth rate steady, says AP Finance Minister
`More scope for export of engg goods'
First BoT project future uncertain
Consensus on issues at Earth Summit
Norwegian aid for KSPCB
Pampa river action plan yet to take off
Clinic for metabolic disorders
IOC dispensers in Chennai by year-end — TN Govt drive to enforce norms for LPG as auto fuel
NTPC to float arm for power trading — Maiden deal with Kayamkulam
Maharashtra rejects Dabhol lenders' rate for power
Industry may raise hank yarn premium issue at meeting
CII survey upbeat on SSI export growth
Central sops to SSIs `disappointing'
Vijay TV turns pay; operators pull the plug
Kerala: Scheme to settle property cases
CII plans trade fairs abroad
Colour fading out for the garment sector?
`Karnataka Govt taking steps to help farmers'
PM gets into huddle with Ministers
3.32 lakh families covered under IBRD-aided project
Tax relief for titanium dioxide
Hyderabad Engagements
Training course on export mgmt
KSTDC to hardsell tourist destinations
SDG unveils software to detect money laundering


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line