Concerned about the recent fall in exports of textiles and garments and rise in imports from countries such as Bangladesh, exporters are looking at the government to come up with more incentives in the forthcoming Union Budget to prop up the domestic industry.
The Textile Ministry has already formed a committee to look into the issues raised by the industry and exporters are hopeful that together with the Finance and Commerce Ministries, some assistance could be extended to the sector. Garments exports have suffered a huge blow with three consecutive months of fall since October 2017 and hopefully the industry’s problems would be looked into seriously and suitably addressed, pointed out HKL Magu,Chairman, Apparel Export Promotion Council (AEPC).
“Under the new GST and drawback rules, the reimbursements of taxes for the sector have gone down to the extent of 7 per cent (of the value of exports), whereas an additional incentive of 2 per cent was given to the sector in the foreign trade policy review in December. There is a shortfall of 5 per cent which has to be addressed in the Budget as it is pulling down exporters,” Magu told BusinessLine.
AEPC has sought a number of interventions from the government in the Budget for 2018-19, which includes more incentives, continuation of duty-free import of speciality fabric up to 1 per cent of export value of garments, round-the-clock customs clearance, withdrawal of GST on air-freight and duty-free import of samples.
Exports of garments and textiles declined 3 per cent in December 2017 to $2.99 billion, although in the April-December 2017 period it posted a growth of 2 per cent at $26.13 billion.
What has rattled the domestic industry more is the rise in imports in the comparable period. According to figures compiled by textile body CITI, India’s imports of garments from Bangladesh increased 66 per cent to $111.3 million during July- December 2017 compared with $66.9 million in the same period last year.
‘At a disadvantage’
“Garment manufacturers in India have to pay duty on imported fabrics, while Bangladesh can import fabric from China duty-free and convert them into garments and sell to India duty-free. This is putting the Indian garment industry at a major disadvantage and this figure is expected to go up in coming months,” according to Sanjay Jain, Chairman, CITI.
CITI proposed that by including cotton yarn under the Merchandise Export from India Scheme (MEIS) and providing ROSL (Rebate of State Levies) for fabrics, Indian can retain its competitiveness in the global market.
Magu said that the positive response from foreign buyers at the on-going India International Garment Fair in New Delhi proved that there was still a lot of global interest in Indian garments.
“Despite the fact that we have not provided airfare to our exhibitors this year, we have already had 400 participants from across the globe. We expect about 100 more tomorrow as the Hong Kong fair, happening simultaneously, will end on Thursday. This makes us optimistic about the future,” he said.