The exports declined to $11.96 billion during the April-September period, compared to $13.08 billion a year earlier, showed the provisional data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S).
However, exports value in the domestic currency went up by 10.4% between April and September to R 65,377.41 crore, thanks to a sharp depreciation of the rupee.
According to industry executives, with the slowdown in top markets such as the US and the EU- which accounts for around 65% of the export basket of the segment the lofty target for 2012-13 is all set to be missed.
Confederation of Indian Textile Industry secretary-general DK Nair said although demand seems to be returning, a sharp rebound in exports is unlikley.
Exports of cotton garments, including accessories, dipped 17.7% to $3.98 billion in the first half of the fiscal, while the shipments of cotton yarn fabrics and made-ups dropped 2.6% to $3.42 billion.
Man-made yarn and fabric shipments tumbled by 13.25% to $2.35 billion. The three segments account for around 82% of the total textile and garment supplies from the country.
The textile ministry had raised the export target for 2012-13 from $38.31 billion earlier this fiscal.
The country had exported textiles and garments worth $34 billion in 2011-12, up 26% from a year before, despite the global macro-economic crisis.
This is because of a 15% depreciation of the rupee against the dollar, which encouraged exporters to ramp up overseas despatches.
However, demand from overseas slowed in the first half of the fiscal as the EU struggled to tide over the debt crisis while the US was staring at a budget crisis.
Moreover, the textile restructuring plan is yet to be implemented to yield desired results, although the Centre has initiated steps in this regard. Expectations of higher exports intensified after the government announced the restructuring of debt worth R35,000 crore to bail out cash-starved textile mills that have fallen into a debt trap owing to a sudden fall in product prices after two successive years of relentless rise in raw material costs.
Moreover, under the foreign trade policy announced earlier this fiscal, the commerce ministry extended the zero-duty Export Promotion Credit Guarantee scheme by a year to March 31, 2013.
In the case of the apparel sector, the market-linked focus product scheme was extended until the end of the current fiscal for exports to US and the EU. Apart from this, a 2% interest subsidy scheme for the labour-intensive readymade garment and knitwear sector has been extended until March 2013.