India's carpet industry could miss export target | SupportBiz

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India's carpet industry could miss export target

A drop in export orders from Europe and the US, and the labour crunch back home, together, could make it difficult for India’s carpet industry to realize its exports target for the current financial year, according to a trade body.

Export orders from the European region and the US combined have dropped by around 40 percent, said Siddh Nath Singh, chairman, Carpet Export Promotion Council.

Local units have successfully tapped newer markets such as Brazil, Ukraine and Australia, Singh said, but this may not be sufficient to meet the target – a 15-20 percent annual increase in exports – because the US and Europe together account for 60 percent of India’s carpet exports.

India earned Rs. 3,800 crore from carpet exports during the 2011-12 financial year.

A shortage of skilled labour adds to carpet makers’ woes, forcing several units to shut shop over the years, Singh said. The country has about 1,800 small to big carpet making units, down from 2,500 in the past. A majority, close to 900, are located in the Uttar Pradesh state. Some 2.5 million people are employed in carpet making, down from 3.5 million. CEPC blames the government’s national rural job-guarantee scheme for the labour crunch.

“The previous generation of skilled labourers are too old to work. The government should consider re-open training centres for us to train youngsters in carpet making, “Singh said.

Rising input costs, like yesterday’s hike in diesel prices, higher interest rates, and taxation are bad for the industry, Singh said. “The costs involved in carpet making in Pakistan, Afghanistan or China are much lower. It is getting tougher to compete with these countries in the global market,” Singh said.

The government could lower interest rates, to six percent, for carpet makers. The central bank’s current interest subsidy scheme is not enough, said Singh.

Labour-oriented, small scale units exporting carpets enjoy a two percent interest subsidy up to March, 31, 2013 . “Interest rates, after the subsidy, hover around 10 percent. In China, the rate is 4.37 percent and in Pakistan it is three percent,” said Singh.