Exporters' order books begin to shrink due to low demand in key markets
High inflation in the US and the EU slowed take off for cotton yarn, ready-made garments, leather goods and handicrafts, impacting the pace of India's exports in June, which rose 16.8% on-year at $37.9 billion, slower than 20.5% in May.
Order books of Indian exporters have begun shrinking as inventories pile up in key export destinations on low demand. Order books have shrunk 15-20% for leather and footwear,while in yarn, volumes have witnessed a sharp 70% fall.
High inflation in the US and the EU slowed take off for cotton yarn, ready-made garments,leather goods and handicrafts, impacting the pace of India's exports in June, which rose 16.8% on-year at $37.9 billion, slower than 20.5% in May.
"The clients in the US are doing cautious buying as their budgets are tight due to high interest rates. While orders had increased last two years, we expect a 15-20% decline now, "said Rafeeque Ahmed, chairman of Farida Group, one of India's largest shoe manufacturers and exporters, which is a vendor to overseas firms such as Adidas, Clarks, Marks & Spencer, Debenhams and Bally Shoes.
Exports of yarn, fabric, madeups and handloom products have shrunk 22.54% in June.
"Our cotton prices are higher than global prices and domestic demand has vanished because of stagflation. The order book for yarn is down 70-80% and for fabric 30-40% against a few months ago," said Sanjay Jain, chairman of ICC National Textile Committee.
"Large retail chains are delaying their purchases because of which the orders that were to be picked up in April, have been postponed to October. Our MSME s are bearing the brunt of this impact," said a Delhi-based exporter of readymade garments.