With global crude oil prices rolling over $70 a barrel and expected to rise further, an industry study has highlighted that this could knock countrys textile export target of $50bn by 10. "Indias textile exports are expected to fall from the targeted $50bn by 10 to $35bn if the rising crude oil prices continue to surge over $80 a barrel, as these will add to the already rising input costs to make exports virtually uncompetitive," Associated Chambers of Commerce and Industry of India (Assocham).
Countrys textile exports are currently a little over $14bn. Releasing the report Monday, Assocham president Mahendra K Sanghi said that global crude prices are estimated to even go up over $80 a barrel to further propel the input cost for the textile industry which is already high and added that the transaction cost in case of textile exports, which at present ranges over 10%, will also go up with rising crude oil prices and put domestic textile trade into jeopardy.
Mr. Sanghi pointed out that textile exports had already witnessed a 20% decline in the first five months of the current fiscal. Given the instability in global crude prices, the future scenario is not very favourable. India has high energy and capital costs, multiple taxation and low productivity, all of which add to production costs. As a result, textile and apparel products from India are less competitive than those made in China and other developing countries.