India is clearly losing its competitive edge in global markets

AEPC has demanded the duty drawback rates be increased to 14.64% from the current 8.8% for cotton apparel, 9.8% for blended garments and 10.5% for synthetic garments. Apparel exporters have demanded an increase in the duty draw back rate to 14.64% to fight the rapid decline in order from foreign retailers, many of whom are facing bankruptcy and have closed hundreds of stores as much of industrially advanced economies has slid into recession. Duty drawback rate is the percentage of total value of exports, which exporters get back as soon the shipment is sent. This is a refund of all duties paid by exporters on raw materials for apparel products, which exporters claim back from the government as exporters are expected to have a level playing field with exporters from other
countries. Apparel Export Promotion Council (AEPC) estimates that around 5 lakh jobs have been lost in the past six months. Textile hubs of Tirupur, Noida and Gurgaon have been badly affected with several factories getting closed. According to AEPC, apparel export declined 0.2% between April and November 2008, compared to the same period in the pervious year. Apparel exports may touch only $8.78 billion in the current fiscal, 24% less than the target of $11.62 billion and 9.3% down from 2007.
India is clearly losing its competitive edge in global markets. Even as exports from India have declined, Bangladesh, Vietnam and Indonesia have been able to increase their market share. Lower labour cost and higher government incentives have kept neighbouring countries in better health than India. "India doesn't produce as cheap a product as Bangledesh or Vietnam and supplies to several mid-market and high-end retailers, who are much worse hit than value retailers such as Wal-Mart. Retailers are rushing to low-cost countries in the downturn, reducing orders to India