Panipat exporters in trouble as US, European buyers postpone orders

The goods stuck are mainly home furnishing items like bed sheets, curtains, carpets, pillow cover, sofa cover, etc.

Vibhu Paliwal, Secretary, Panipat Exporters Association, told Fibre2Fashion, “Large number of small exporters have run into trouble due to postponement of export consignments. They have very limited capital.” He estimated that goods worth about ₹200 crore are stuck at various levels. Buyers have postponed the supply citing the reason of limited capacity in their warehouses. Importers’ warehouses are full because of weaker demand at retail stores in the US and Europe.

According to industry sources, economic activity picked up after the COVID-19 pandemic, resulting in flow of orders. However, high inflation sucked liquidity in hand in the US and Europe, and consumers started spending only for their essential needs, and are deferring buying of non-essential items.

Pradeep Tayal, another exporter from Panipat, said that the goods stuck at ports and under transportation create more serious problem for exporters, who are unable to find a solution to the current crisis.

According to industry sources, hundreds of small exporters in Panipat export to the US and Europe without getting letter of credit (LC). They need to wait for payment for up to 60 days after receiving the consignments by importers. About 70-80 per cent stuck consignments belong to such exporters.

Paliwal said that exporters who had received advance payment or LC, their consignments are being accepted by the importers sooner or later. But orders received without advance payment are stuck for indefinite period.

It is also not easy for the exporters to find alternative buyers for the goods. According to sources, most of the home furnishing items in the domestic market are made of polyester yarn as buyers prefer low-priced items. In contrast, cotton home furnishing products are popular with consumers in America and Europe. These products are quite expensive for the domestic market.

Exporters have very limited options, according to Paliwal. “It is not easy to find foreign buyers, but it is the only alternative for them. It is also difficult for them to get a fair price from the buyer when they are under pressure.”

When asked about the role of the Indian government, Paliwal said, “The government has no role in export transaction as it is individual exporters’ problem. But small exporters are stuck in financial crisis due to the development. They need support from the government in terms of additional capital and interest subvention. Our association is planning to approach the government as large number of small exporters are facing an existential crisis.”

ALCHEMPro News Desk (KUL)