Coronavirus diverts orders to India, but exporters dither on prices

Many exporting units in India are also stuck as they aren't able to import accessories from China.

During this time of the year, buyers from the western markets usually travel to China to negotiate deals with garment exporters for the next season. But this time, due to the Novel Coronavirus most of these buyers have cancelled their trips and have started discussing with exporters from India and other countries. While this is good news, the flip side is exporters say they are not in a position to convert the enquiries into orders as they are not able to match the price. What's more, many exporting units here are stuck as they aren't able to import accessories from China.

As the 2019 Novel Coronavirus (2019-nCoV) continues to spread across China, many textile factories there have halted operations, disrupting exports of textiles and raw material from the Dragon nation.

T Rajkumar, chairman, Confederation of Indian Textile Industry, said export of finished textile goods, clothing and fabrics can grow by at least 20-30 per cent, providing immediate relief from the drop in shipments last year, due to the virus issue in China.

But the flip side, is cost and capacity. Today, made-in-India products are costlier by around 10-15 per cent compared to competition like Bangladesh, Vietnam, Cambodia and others. Exporters noted that since most of these countries source 90-95 per cent of their raw materials from China, India can still gain an edge if the government responds quickly and offers some tax benefits.

Recently, the textile industry withdrew four per cent incentive given under the Merchandise Export Incentive Scheme (MEIS) on made-ups and garments, with retrospective effect from March 7, 2019. Further, it was said that all incentives under MEIS granted to the exporters of made-ups and garments on exports till July 31, 2019 will be recovered. Further, MEIS of four per cent was also frozen for made-ups and garments from last August. Moreover, there are some pending claims under the erstwhile ROSL scheme that was discontinued on March 7, 2019.

"Enquiries may have started, but with our current infrastructure and pricing, I am not sure if we would be in a position to take advantage. Yes, accessory supply will be impacted but not in the immediate future," said Rahul Mehta, president of Mumbai-based Clothing Manufacturers Association of India.