AEPC expects Rs 5,000cr fresh investment to flow into the sector this year

Apparel Export Promotion Council (AEPC), an apparel industry body is expecting around Rs 5,000 crore fresh investments to flow into the sector during the current fiscal which may create as many as two million jobs with textile booster package of Rs6,000 crore announced by the government.

AEPC chairman Ashok G Rajani said that based on the initial feedback he has received, around Rs 5,000 crore may flow into the industry in fresh capex this fiscal year itself as government announcement of textile package comes as a game changer.

This additional investment into the apparel sector, which has not seen any investments for years, alone can create as many as two million jobs this year, also the impetus will be on the near-doubling of the capital subsidy to 25 percent of ones investment.

Regarding whether the industry will be able to meet the governments target of creating 10 million jobs and USD 30 billion in export earnings by 2020, Rajani said that without any doubt, it is very much doable. In fact, he is optimistic that they should be easily crossing these targets as the entire industry is very happy with the package and bullish on investments. After all, they arent capital-intensive industry but highly labour-intensive.

Rajani, who also runs a company called Flair Exports, said that his company will be setting up a new factory this year itself and is scouting for the right location. The factory will be in Navi Mumbai and he needs Rs 6-7 crore to open the new factory with 250 machines.

They will hire 300 more people for this factory to add to their 750 hands now.

When asked how the scheme will help raise exports, he said that the six percentage points margins that will come from the package will help him grow by at least 25 percent to Rs 75 crore from the present Rs 60 crore.

However, the 9.5 percent duty on exports is still a worry, which competitors from Vietnam, Bangladesh and Cambodia dont pay.

Also the enhanced duty drawback of 12.25 percent, up from 7.25 percent, is the biggest takeaway from the package which leaves the ball in the court of the industry as the government has given it the best deal possible.