India’s textile exports are likely to decline 10 to 12 per cent for the fiscal following the reduction in tax exemptions granted to exporters; appreciation in the Indian rupee against the dollar; and moving of import orders to competing countries. In an alarming situation, the country’s readymade garments exports, which are a part of the textiles segment, fell by 41 per cent in October to Rs 5,398 crore ($830 million) as against Rs 9,111 crore ($1.4 billion) in the corresponding month last year. Exports of manmade yarns, fabrics and made-ups also fell by 8.3 per cent to Rs 2,310 crore for October 2017 when compared to Rs 2,518 crore in the same month last year.
The country’s overall exports of locally made retail and lifestyle products have grown at CAGR of 10 per cent during FY2012-13 to FY2015-16, mainly led by bedding bath and home decor products and textiles. The government set a target for textile and garment sector exports at $45 billion for FY2017-18 as against total exports valued at $38.6 billion and $40 billion for FY2016-17 and FY2015-16, respectively.
The fall in exports of readymade garments only goes to show the country’s failure to ensure international market share, mainly when the world leader China (around 42 per cent of global market share) has closed of a number of textile units following environment issues. Indian textile exporters are working hard to fill in the gap, but unfavourable government policies with reduction in overall duty exemptions may push Indian exporters on the back burner, analysis of industry experts say.
“India’s overall textiles exports are likely to decline by at least 10-15 per cent this year due to the reduction in overall tax exemptions. While the government has increased the Merchandise Exports from India Scheme (MEIS), the Remission of State Levies (RoSL) remains far below our recommendations. Unfortunately, the government did not consider central tax rebate at all. Overall, textile exporters are witnessing a shortfall of 2.7 per cent in incentives now compared to the pre-Goods and Services Tax (GST) era. Also, appreciation in the rupee has hit exporters’ receivables,” explains Ashok Rajani, chairman, Apparel Exports Promotion Council (AEPC).