US, German slowdown strike India`s silk exports
[2008-5-19]
Slowdown in US and German economies coupled with rupee appreciation against dollar and Chinese competition have eaten into India's silk exports, which have fallen by over 25 per cent last fiscal.
"Total silk exports declined by about 25 per cent last fiscal, mainly due to slowdown in the US and Germany," Indian Silk Export Promotion Council Vice-Chairman Subhash Mittal said.
Silk exporters are already hit by rupee appreciation and competition from Chinese firms, Mittal said, adding that of the total 50 lakh workers in the sector, over one lakh have lost jobs.
Rupee had risen over 12 per cent against dollar in 2007.
The industry is apprehensive that the situation could worsen this year due to deepening of the US economic slowdown, which is spreading to other economies as well.
According to a senior official in the textiles ministry, silk exports for 2007-08 stood at 650 million dollars, falling short of the 825 million dollar export target by 27 per cent.
During April-December 2007, silk exports from India declined by 28 per cent and stood at Rs 1,927 crore (476.73 million dollars) against Rs 2,464 crore (540 million dollars) during the corresponding period of the previous year.
Of the total silk exports, shipments to Germany constitute about 35 per cent, while to the US, it is 20-25 per cent, Mittal said. Silk exports to the US declined to 104.42 million dollars in 2007-08 from 145.9 million dollars in the previous fiscal, while shipments to Germany declined to 25.39 million dollars from 30.80 million dollars, he added.
In order to boost overseas sales from the sector, the government has decided to give export benefits like duty-free credit facility at 2.5 per cent to exporters of certain silk products with effect from April 1, 2008.
"Silk has been always considered as a luxury item and faces severe consumer resistance during economic slowdown. Due to rupee appreciation and slowdown in US economy, India's silk exporters are facing hardship in competing globally. This situation is likely to continue for at least one more year," the ministry official said.
In addition, India is facing tough competition after abolition of quota restrictions in major silk producing countries like China.
"Silk exports target of over 800 million dollars for this fiscal would be achieved only if suitable measures are implemented," Mittal said.
The industry has asked the government to provide assistance in tapping new markets like Russia, Chile and Brazil, besides enhancing duty drawbacks and removing infrastructural and procedural bottlenecks.
The transaction cost in India is high as compared to competing countries like china. Electricity, Mandi tax, VAT should not constitute more than 3-4 per cent of the total cost, but exporters are currently paying about 15 per cent, Mittal said.
India exports natural silk yarn, fabrics, readymade garments, silk carpet and silkwaste. It mainly exports mulberry silk to the US, Germany, European Nations, Japan and Canada.
"Total silk exports declined by about 25 per cent last fiscal, mainly due to slowdown in the US and Germany," Indian Silk Export Promotion Council Vice-Chairman Subhash Mittal said.
Silk exporters are already hit by rupee appreciation and competition from Chinese firms, Mittal said, adding that of the total 50 lakh workers in the sector, over one lakh have lost jobs.
Rupee had risen over 12 per cent against dollar in 2007.
The industry is apprehensive that the situation could worsen this year due to deepening of the US economic slowdown, which is spreading to other economies as well.
According to a senior official in the textiles ministry, silk exports for 2007-08 stood at 650 million dollars, falling short of the 825 million dollar export target by 27 per cent.
During April-December 2007, silk exports from India declined by 28 per cent and stood at Rs 1,927 crore (476.73 million dollars) against Rs 2,464 crore (540 million dollars) during the corresponding period of the previous year.
Of the total silk exports, shipments to Germany constitute about 35 per cent, while to the US, it is 20-25 per cent, Mittal said. Silk exports to the US declined to 104.42 million dollars in 2007-08 from 145.9 million dollars in the previous fiscal, while shipments to Germany declined to 25.39 million dollars from 30.80 million dollars, he added.
In order to boost overseas sales from the sector, the government has decided to give export benefits like duty-free credit facility at 2.5 per cent to exporters of certain silk products with effect from April 1, 2008.
"Silk has been always considered as a luxury item and faces severe consumer resistance during economic slowdown. Due to rupee appreciation and slowdown in US economy, India's silk exporters are facing hardship in competing globally. This situation is likely to continue for at least one more year," the ministry official said.
In addition, India is facing tough competition after abolition of quota restrictions in major silk producing countries like China.
"Silk exports target of over 800 million dollars for this fiscal would be achieved only if suitable measures are implemented," Mittal said.
The industry has asked the government to provide assistance in tapping new markets like Russia, Chile and Brazil, besides enhancing duty drawbacks and removing infrastructural and procedural bottlenecks.
The transaction cost in India is high as compared to competing countries like china. Electricity, Mandi tax, VAT should not constitute more than 3-4 per cent of the total cost, but exporters are currently paying about 15 per cent, Mittal said.
India exports natural silk yarn, fabrics, readymade garments, silk carpet and silkwaste. It mainly exports mulberry silk to the US, Germany, European Nations, Japan and Canada.
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