India’s garment exports for March have contracted by 0.7 per cent compared to a year ago. This slowdown is across all sectors, led by the gems and jewelry sector, whose exports fell sharply by 16.6 per cent from a year ago. Garment exports have now fallen behind Bangladesh’s and Vietnam’s in absolute dollar terms.
Vietnam’s garment export grew 10 per cent last year and is expected to continue at the same pace this year. Notably, Vietnam has now tapped newer markets like Russia and China, in addition to the US and the European Union.
India’s garment sector was affected first due to demonetisation. Due to last year’s cash disruption, orders were lost, and these can’t be regained easily from competitor countries. Second the delay in getting GST refunds and the burden of cost in locked capital. The delayed refund does not include the interest cost. Exports need to be urgently zero-rated. The overvalued exchange rate makes India’s exports relatively expensive. Then there is the continued unreliability of electricity and other infrastructure facilities. Small and medium enterprises need a common plug and play, seamless hard and soft infrastructure—whether it’s effluent treatment or inspection or logistics.