Apparel clusters of Punjab, Haryana, UP see growth after 9 months
The free fall of the rupee has halted the declining trend in India’s garment exports after almost nine months, with the sector registering around 6% positive growth in July this year as compared to the corresponding period previous year.
The recovery, which is in the rupee term, has given a ray of hope to apparel exporters, particularly from Punjab, Haryana and Noida in Uttar Pradesh, with combined employee base of around 2 million workers. Punjab and Haryana house more than 200 exporters. These northern states had been facing a decline in apparel exports because of high input costs compared to the Tirupur cluster of Tamil Nadu.
In the rupee term, exports for the month of July this year was Rs 8,757.23 crore as against Rs 8,262.94 crore in July 2017. The growth was mainly due to strengthening of dollar against the rupee, the exporters said.
“The situation has improved a bit, although Indian garment exporters are facing a stiff competition from countries such as Bangladesh, Vietnam, Cambodia and Ethiopia. To boost the exports, the government should dole out some incentives or devise a mechanism to refund embedded taxes in the GST regime,” Apparel Export Promotion Council chairman HKL Magu said.
Ludhiana-based KG Exports’ Managing Director Harish Dua finds it a temporary phenomenon. “To say that exports are now on growth trajectory is not right. The increase in exports in terms of rupee is attributed to strong dollar,” he said.
In dollar terms, export of readymade garments, however, remained in the negative territory. It dwindled marginally by 0.60% in July this year as compared to corresponding month of the previous year. The labour-intensive apparel sector is witnessing a continuous decline in exports since October 2017. In dollar terms, the country’s readymade garment exports were to the tune of $1.275 billion in July 2018 against $1.282 billion in July 2017, a decline of 0.56%.
The government must do something to boost exports such as increasing duty drawback rates. In addition to this, it should restrict exports of cotton and viscose yarn to facilitate the domestic exporters, Dua said. “The government should promote value addition to the cotton and viscose yarn rather than exporting it as a raw material,” he added.
Overall, India’s readymade garment exports in April-July 2018 was to the tune of Rs 35,860 crore, a decline by 10% as compared to corresponding period. In dollar terms, it was $5.321 billion in the first four months of the current financial year, a decline of 13.95% as compared to the same period last fiscal year. During April-July 2017, India’s apparel exports were to the tune of $6.183 billion.