Indian apparel exporters are facing stiff competition from their counterparts in Bangladesh and Vietnam.
Both these countries grant tax incentives in addition to export incentives. Besides these countries are preferential importers for several global markets.

Indian exporters used to get a duty drawback of 7.5 per cent before GST implementation. This has been slashed to 2.5 per cent due to which there is a significant impact on exports. As incentives have been cut, the prices of Indian products have increased.

In addition key global markets like Sri Lanka and the Middle East have imposed a value-added tax (VAT) on apparel exports from India. Recently, the UAE imposed VAT on apparels imported into their country, which further led to an increase in prices. With the duty drawback slashed, exporters were already struggling to generate export volumes at competitive prices. Now they face a stiffer competition in these regions due to changes in tax rates.

Export incentives for cotton and polyester have reduced. This makes Indian products more expensive in international markets and reduces their competitiveness.

Nearly a year after the implementation of GST, exports of textiles as well as garments have been found to have declined significantly.

Gujarat accounts for 12 per cent of the apparels exported from India. Exports have gone down by an estimated 30 per cent from Gujarat.