Rising cotton prices coupled with a spurt in fabric costs are taking a heavy toll on garment exporters already reeling under the global economic downturn. Fabric prices have jumped over 50% during the last three months forcing garment exporters to cut production or honour contracted quantities at a loss, said Apparel Export Promotion Council (AEPC) Chairman Rakesh Vaid.

He said global economic recession has resulted dip in retail sales in all importing countries. The fresh Dubai financial crisis has also led to doubts over an imminent recovery. By January next year, there could be massive job losses in unprecedented scale which could lead to social problems in apparel manufacturing clusters across the country.

Garment exports to the US, the world's largest market, declined by 6.46% to $2.27 billion during January- September this year compared to $3.07 billion in previous year.

The apparel industry has asked the government to introduce fiscal relief such as hike in duty drawback rated from the present 8%-13.25% to mitigate the increasing cost disadvantage, extension of 2% duty-free sops for exports to the US and the EX under the market-linked focus product scheme, abolition of countervailing duty on textile machinery and upfront exemption of all export-related services from service tax.