For the first time during the present calendar year, exports declined both in quantity (17.07 per cent) and value terms during a month in the first quarter compared to the corresponding month of the previous year.

The Tirupur region, which claims to account for over 80 per cent of the country's cotton knitted garment exports, could export only 3.45 crore pieces worth Rs 243 crore ($64.1 million at the exchange rate of Rs 38 a dollar) in March 1998 compared to 4.16 crore pieces worth Rs 302.90 crore ($86.50 million at the exchange rate of Rs 35 a dollar) shipped in March 1997. Some of the exporters feel this is indicative of the trend in store for the next few months.

Indian knitwear exporters are facing stiff competition from Indonesia, Thailand and South Korea. Most of the European buyers are believed to have switched over to these countries for sourcingcotton knitwear "since they are able to sell more than 25 per cent cheaper than Indian exporters".

"After the currency crisis in south-east Asia, these countries have an edge over us. However, this may not last for long since the cotton they had purchased earlier will be exhausted soon," said A Sakthivel, chairman of the Apparel Export Promotion Council (AEPC) and President of the Tirupur Exporters' Association (TEA). Indian yarn exporters also face a similar problem from Indonesia which has found many buyers for its cheap cotton yarn.

"It is mostly European buyers who are switching over to other countries. More than 80 per cent of them attach more importance to prices than long-standing relationships," said one leading exporter.

Though Tirupur exporters managed to retain a little over eight per cent margin on account of the devaluation of the Indian rupee during the first two months of 1998, they had to pass on this benefit to buyers for subsequent exports. Much worse, in their bid to retaincustomers, exporters had to lower prices, further resulting in a sharp erosion of realisations.

The loss in realisation in rupee terms for March 1998 compared to March 1997 (at the average exchange rate of Rs 35 prevalent in March 1997) is around 10.65 per cent. A point to be noted here is that even last year export realisations from Tirupur had slipped, mainly due to shipments of huge quantities of low-end garments (which were also treated as a "piece" in the total export basket).

According to a manufacturer-exporter, Tirupur exporters have to currently work in a fixed target price range stipulated by the buyer. Moreover, competing countries in south-east Asia have integrated knitwear factories and margins are not added up at each stage of the production process unlike Indian units which have to source yarn from mills, process the fabric with processing units and pay for the job work on the designs.

Even as exports of spring and summerwear to Europe in the present calendar are nearing the fag end ofthe season, exports towards the US are likely to continue for some more time. But a major turn of events in favour of Indian knitwear exports will happen only after Indonesia runs out of its cotton stock.

Further, exports could hit a low this calendar if the anticipated orders for autumn/winter wear fail to come through.