Indian apparel exports decline by 14pc in Jan 2018

Indian apparel export in January this year witnessed decline by 14 percent in rupee and 8 percent in dollar terms compared with the year earlier month, as per latest official data. The sharp fall in the exports of cotton textile by 16 percent year-on-year, apparel by about 14 percent year-on-year and man-made textiles by 7 per cent year-on-year contributed to the sub-optimum performance.

Between April and January of last financial year, apparel exports stood at Rs93,745 crore and for the same period this fiscal, it was Rs88,709 crore, a drop of 5%. The Apparel Export Promotion Council (AEPC) were hoping to remain at $17 billion of total apparel exports this year, said a spokesperson of AEPC.

Usually, orders are good between January and March. However, this year, exporters are cutting back on orders because of financial crunch, said the spokesperson.

If a garment unit with Rs10 crore turnover has Rs1 crore locked up in pending refund arrears, it is a problem for exporters. Almost 80% of the benefit in the apparel package announced by the Centre in 2016 is towards ROSL. Almost 55 % of garment exporters had not received the ROSL (Rebate of State Levies) since last July and this amounted to almost ₹2,000 crore, the AEPC spokesperson added.

Apparel is a labour-intensive sector and the ongoing issues are weakening it, said Raja Shanmugham, president, Tirupur Exporters’ Association. While the refunds from the Centre are pending, the industry continues to make the mandatory payments every month. This is crippling the industry.

The international market is not bad. There is an internal competitiveness problem, added Sanjay K. Jain, chairman, Confederation of Indian Textile Industry, on the reason for drop in exports of not only garments but also other textile products.

While the country’s exports are growing, decline in apparel and textile exports will bring down the share of the sector in the export basket. The annual textile and clothing exports this year compared to last year will be a close call. It might be the same as last year. However, yarn and garments are going to be lower, Mr. Jain added.

Expressing concern over the decline in exports, Jain stated that one of the key factors for decline in exports is embedded duties which are more than 5 percent and the same is not getting refunded at any stage. CITI has been knocking at every door from the PMO to the textile ministry for the immediate restoration of export incentives for cotton yarn which is the most vulnerable sector at this juncture as cotton yarn exports have decline by more than 26 percent from 2013-14 to 2016-17 despite adding over 3 million spindles and 62,000 rotors spinning capacity during this period.

There was also a continuous rise in the imports of textile products post GST. The imports of textile yarn, fabric and made-ups has increased by 15 percent from Rs 8,592 crore in April to January 2017 to Rs 9,914 crore in the same period this year.