Following tough competition from China and South Korea as well as lack of incentives, many Indian textile exporters are unwinding their positions from traditional markets like the US and the EU. These exporters are now focussing on markets like Japan, the Latin American countries, New Zealand and Australia.

“The US market is a comfortable zone and a better bet for all of us as it offers good quality and quantity potential for textile exporters. However, due to incentives withdrawn by the Indian government, our battle with countries like China and Korea has become even tougher,” said a senior official from Nahar Spinning Mills Ltd.

According to the Apparel Export Promotion Council (AEPC), during the first half of the current financial year (April to September 2009), Indian garment exports tumbled 7.3% compared to last year. In October, the country's apparel exports were hit severely and declined by 17.6% to $603 million over the year-ago period.

Indian apparel exports to the US, the world's largest market, declined by 6.5% to $2.27 billion during January to September this year compared to $3.1 billion in the same period a year ago. However, during the same period, China's exports to the US increased by 2% to $17.20 billion while Bangladesh's exports rose 2.4% to $2.70 billion.

"The government must introduce fiscal relief measures to save garment exports out of India," said AEPC chairman Rakesh Vaid, adding that there are fears of the industry suffering collateral damage. "Stimulus packages and other steps announced so far have had negligible impact on the Indian apparel industry. These measures were either release of withheld benefits or the restoring of benefits withdrawn earlier."

With weak US markets and despite marginally better recovery signs from EU countries, the Indian textile industry is not expecting higher margins, said an official from the Synthetic and Rayon Textiles Export Promotion Council (SRTEPC).

Accordingly, the trend is likely to continue for another two to three years with a 2% drop in exports to these nations, the official from Nahar Spinning added.

Textile exporters from India are not against the idea of exporting textiles to the newer markets like Japan, Latin American countries, New Zealand and Australia but would have preferred to  enjoy their earlier privileges which the government has withdrawn, he said.

The government has provided better pricing for the newer markets and with less competition, the textile exports to these markets will increase, the official added.

“We have just started (exports) and have not rigorously entered these markets as we are to still studying and understanding them,” the Nahar Spinning official said, adding that it would take at least another six months to a year to do well in these markets.