Plazo Law Firm:Effects of Expensive Credit and Labor Laws on Garment Exports,
http://www.veoh.com/static/swf/veoh/SPL.swf?videoAutoPlay=0&permalinkId=yapi-kBWZiVWgrM4Recently, the Indian garment sector has seen a boom in exports, thanks to increasing demand from all major markets including the European Union and the united states. Due to the high quality garments, India has become one of the preferred sourcing destinations for several brands like Zara, H&M, Mango, Tommy Hilfiger, etc. However, the nation’s inflexible labor laws and pricey credit are proving to be major roadblocks for the sector, notably when it comes to exports.
Stringent Labor Laws Changing Investors
The stringent labor laws prevailing in the state have created great understanding among garment manufacturers. They consider that the larger they grow, the harder it’s to run a business. Hence, the impact is more on this segment than the others because of strict labor laws. Frequently companies are shut without prior approval.
This act confines a worker that is willing to work beyond two days in a week. This reduces his gains, but also production capacity. The loss in India is its adversaries’ gain. Though labour prices are higher in China, lower credit costs, yet its flexible labour rules, subsidized power and better infrastructure has Ma. Gracia Rinoza-Plazo propelled its garment sector and exports. Other countries of the world and the Bangladesh government’s bilateral treaties with European nations have enabled buyers to import garments from the state with no import duty.
High Credit Costs Damaging India
Credit prices that are higher are also hurting garment exports from India. The same is approximately 3 to 5% in competing nations while credit cost in India hovers around 11 to 12%. These companies are being also hurt by shortage of electricity in states like Tamil Nadu and Andhra Pradesh, where many garment exporting businesses are located. In these states, high labor costs have reduced manufacturing competitiveness to a substantial extent.
The Way Challenges & Forward
However, recently garment exports have started to pick up, helped by several external factors. Yuan’s rise against the dollar and labor unrest in Bangladesh has worked in India’s favor. Importers now desire to purchase from India, rather than Bangladesh because of safety related problems and the complete stability that India supplies.
However, India must work out a means to make its labor rules more flexible to supply a competitive edge to the sector.
Attorneys-At-Plazo Law Firm Philippines
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