RMG exports from India were worth $1,568.5 million in May 2015 an increase of 5.1 per cent against the corresponding month of May 2014 which was $1,492.4 million. India’s RMG exports to world for the period of April-May 2015-16 (cumulative) was $3,012.7 million, up 7 per cent compared to the same period of previous financial year. During April-May 2014-15, India’s apparel exports were to the tune of $ 2814.4 million. Export in dollar terms for April-March of the FY 2014-15 increased by 12.3 per cent over the same period of previous fiscal and reached to $ 16,846 million.
Exports bullish but lack of incentives mar growth
Speaking about the exports growth, Virender Uppal, Chairman of the Apparel Export Promotion Council (AEPC) said, apparel exports have registered a growth of 7 per cent, as compared to the same period of last year. “As the incentive in FTP 2015-2019 has been withdrawn it had a dampening effect on overall trade. Apparel exporters work on very thin margins, therefore, the incentives were a big help. In the FTP 2015-19 announcements, garment export sector got 2 per cent reward only on 239 HS lines out of 398 lines. The service sector got 5 per cent scrip under Service Sector India Scheme.”
Further the chairman informed that, no Merchandise Exports from India Scheme (MEIS) has been announced to Latin America, West Asia, CIS Countries, Africa and Oceania countries. “Global apparel exports were $473.6 billion in 2014, out of which India exported only $16.5 billion, while China exported around $173.5 billion, almost 11 times that of India and Bangladesh exported $28.1 billion almost double of India. India is way behind China, Bangladesh and Vietnam. Cambodia is growing more than two times faster to push it further behind. The need of the time is to look into the situation and provide policy support along with the exports incentives on urgent basis,” he added.
For the financial year 2015-16, the Ministry of Textiles has set a target of $18.7 billion, which is 11 per cent higher than last year’s actual achievement. “We could achieve 97.66 per cent of the target in the last FY 2014-15 registering a growth of 12.3 per cent. This was possible because of the government support/incentives based on the Chapter 3 provisions of FTP along with the duty drawback, TUFs, EPCG, interest subvention and other schemes of the government. Achieving the target of $18.7 billion in 2015-16, would be a very ambitious task and difficult to achieve, unless, the recommendations of the AEPC are accepted and implemented in the year 2015-16.” Giving an optimist account of export projections, chairman AEPC stated that, India has achieved a CAGR of 8.1 per cent during the post quota period (2005-14), if we apply this CAGR of 8.1 per cent, garment export projections for each of the years up to 2019-2020 can touch $24.9 billion.
AEPC seeks incentives to boost exports
Non-traditional markets which used to constitute 35-40 per cent share in India’s garment exports are poised to receive a setback due to the withdrawal of Chapter 3 benefits. Markets like Latin America, Africa and Central Asia have been excluded from the list. The EU constitutes 41per cent of India’s RMG exports but conditions in major markets like EU continues to be subdued. Further, India is facing duty disadvantage of 9.6 per cent compared to competing countries like Bangladesh and Pakistan who have zero duty access under LDC/GSP+ status of EU GSP Scheme.
The US constitutes 21.7 per cent of India’s RMG exports and market condition over there is still under gradual recovery. Buyers are asking 25 per cent lower price to place orders as inflation is going down in importing countries and rivals are offering products at lower costs.
Uppal requested the government to look into demands of AEPC to boost exports, which include, inclusion of 2 per cent fabric within 5 per cent overall entitlement under EPC for improving fabric base, announcement of 3 per cent interest subvention scheme to partially mitigate high cost of lending, which is hovering around 11-12 per cent interest rates, as compared to 4-6 per cent in competing countries, till such time, separate chapter for pre and post shipment export credit at fixed rate of 7 per cent interest, as done in the past, is announced by the government, duty credit scrip at 5 per cent to major markets like US, EU, Canada, Mexico, Australia, Switzerland, Russian Federation, Ireland, Brazil, China, Republic of Korea, Norway, Chile, Turkey, Saudi Arabia, South Africa and Malaysia, simplification in landing certificates as proposed by AEPC and even for one star exporter should be considered, actual implementation of 24 x 7 clearances of import and export must be ensured by customs at all airports and shipping ports.
He further added that the government has not given any indication about the finalisation of India-EU FTA, CEPA with Canada, which needs to be implemented on an urgent basis so as to mitigate the duty disadvantage suffered by India vis-a-vis our competitors like Bangladesh, Cambodia, Vietnam and Pakistan in the major markets and upward revision of duty drawback rate for RMG industry.
