India’s garment exports have dipped for nine months in a row up to June. Apparel exports dropped almost four per cent in 2017-18 when the country’s overall goods exports jumped nearly 10 per cent. The contraction in exports has already stroked fears of job losses and compounded problems of policymakers who are contemplating how best to compensate textile and garment sector once subsidies to promote such exports are phased out.

Garment exporters are handicapped by duty disadvantage against key competitors like Bangladesh and Vietnam to key markets — the EU and the US — and high logistics costs. While Bangladesh ships out garments to the EU at zero duty, Indian companies are forced to cough up 9.6 per cent. India’s logistics costs account for as much as 15 per cent of consignment value against 10 per cent in many countries.

Under the Merchandise Exports from India Scheme, garments and made-ups exporters get duty exemption scrips, freely transferable for cash, worth four per cent of their total exports. But this supports seems inadequate. The cut in duty drawback and RoSL in the GST regime, capital blockage due to slow GST refunds initially and uncertainties on the future of export subsidies have affected the deeply-fragmented garment industry.