The government has set the country’s clothing export target at $18.70 billion for the current fiscal, eyeing an 11% rise in outbound shipments from the actual level of 2014-15, according to official sources.
The country’s garment exports touched $16.85 billion in the last fiscal, up 12.2% from a year before. Still, the exports fell short of the official target of $18 billion for 2014-15. In the first two months of the current fiscal, the growth rate in apparel exports also slowed to just 7% from a year earlier at $3.01 billion.
The country’s overall textile and garment exports grew roughly 5% in the last fiscal to $41.4 billion from a year before, but still lower than the official target of $45 billion for 2014-15. The government has set the target for the textile and clothing exports at $47.5 billion for 2015-16.
According to Apparel Exports Promotion Council (AEPC) chairman Virender Uppal, achieving the garment export target would be “difficult” and “an ambitious task” unless the government provides adequate policy support, including subsidies, especially after the abolition of certain export subsidies for the sector in the recently-announced foreign trade policy for 2015-20.
With demand from crisis-ridden Europe, which accounts for almost 41% of the country’s garment exports, remaining tepid and the chances of a free-trade agreement with the EU in the current fiscal still remote, the shipment target for the current fiscal would be hard to achieve, especially in view of stiff competition from countries like Vietnam, Bangladesh and Cambodia.
For its part, the textile ministry has sought a quick resolution of the India-EU free trade agreement, which would pave the way for duty-free access of Indian textile and garment items to the EU, according to a senior textile ministry official. Currently, while Indian mills have to bear an export duty of 9.6% for supplies to Europe, those in competing countries like Bangladesh and Pakistan have zero-duty access to that market.
The ministry has also asked for the continuation of the interest subvention scheme, which was withdrawn from late 2014, to boost exports. Industry executives say under the scheme, certain segments like the SMEs, hand looms, handicrafts and garments, were entitled to a 3% interest subvention on export credit.
Among other things, AEPC had recommended a 5% duty credit scrip for major markets, including the US and the EU, and a flat rate of 2% for other nations.