Kolkata: Faced with the economic slowdown in the US and Europe, and stiff competition from cheaper Chinese products, Indian silk exporters are looking at new markets in Southeast Asia, South Africa and the Scandinavian countries.

And they are seeking government support to promote Indian silk in these lucrative markets.

Export of Indian silk products to US and European countries has reduced substantially due to slowdown in these economies. A lot of buyers there have shifted from silk-made items to cheap yarn-made products like polyester and synthetic.

"Silk products are luxury items. Cost of production of finished silk-made items has increased by on an average 20 percent per year over a period of the last three years in India. Following that prices of Indian silk have increased tremendously in the international markets in recent times. So economic turmoil in the US and recession in the European Union (EU) have caused a substantial fall in demands for our silk products in those countries," Indian Silk Export Promotion Council vice chairman A.K. Gupta told IANS.

"Due to the price hike, we are losing our competitive edge in the US and EU. We are facing viability crisis there."
The Mumbai-based Council is the nodal agency for promotion of silk exports from India.

According to Gupta, high prices of raw silk yarn, stiff rise in labour cost, high power and transportation costs are causing the production cost of Indian finished silk products to rise, resulting in the increase in prices of the products exported to international markets where China is a major competitor.

"China is playing the old game here- it is supplying raw silk yarn to India at a price which is competitively higher than the price at which it is exporting the finished silk goods to the international markets."

Silk yarn prices this year have shot up by more than 100 percent over the last year's prices with peak price moving up to $58 a kg. According to Silk Association of India president Vikram Tantia, the country ended 2010-2011 exporting $560 million worth of silk.

"Silk export this fiscal would all likely fall by 20-25 percent over the last year's export," said Gupta.

Arun Kumar Agarwal of the Indo-American Chamber of Commerce said exports of silk-made items from the country to the US had declined by more than 30 percent in the last five years. "Silk exports to the country are falling day by day."

That's why the Indian silk exporting community is now looking out for new markets for survival.

"We are trying to looking for new markets like Scandinavian countries, South Africa, Singapore and Southeast Asia as buying capacity in those emerging markets is currently much more than that of the developed markets," Gupta said.

He, however, sought the government's support to promote Indian silk products in these new markets.

"Till now the government's expenditure on the promotion of Indian silk in the international markets is very negligible. Unless the government takes initiatives to promote the silk in foreign markets, the success rate of exporters in the new markets will not be as good as we expect."

"A huge expenditure is essential for the promotion of good quality silk. The government has to give subsidy for organising exhibitions and putting up stalls to showcase the success story of handlooms in the country. Thai silk has been promoted by similar ways in international markets," Gupta said.

Silk garment manufacturers of India, Gupta said, were also looking into producing products mixing silk with other cheap yearns to reduce cost.

"Our strength lies in embroidered fabrics. Our silk products are much specified than that of China. Thus we should continue to emphasise on our area of strength," Tantia averred.