India’s apparel exports have increased by two per cent from 2015 to 2018. The country faces competition from Bangladesh and Sri Lanka which have competitive manufacturing costs and enjoy duty free access to major markets like the EU. So some garment units have set up units in Ethiopia due to zero duty access for Ethiopian exports in the US and the EU and due to incentives being offered for investments there. A special package for garments and made-ups offers labor law reforms, additional incentives under the Amended Technology Upgradation Fund Scheme, enhanced duty drawback coverage and relaxation of income tax rules. Rates under the Merchandise Exports from India Scheme have been enhanced from two per cent to four per cent. The interest equalization rate for pre and post shipment credit for exports by micro, small and medium textile units has been enhanced from three per cent to five per cent. Benefits of the interest equalization scheme have been extended to merchant exporters, something that was earlier limited to manufacturer exporters.

India’s apparel exports fell by 1.2 per cent in fiscal year ’19 from fiscal ’18, which in turn was four per cent lower than the previous year. The share of apparel exports in the country’s total textile exports fell from 51 per cent in fiscal ’17 to 45 per cent in fiscal ’19.