India will likely achieve just over 90% of its garment export target in the current fiscal, despite the sector putting up a better show than textiles and many other merchandise segments, sources said on Wednesday.
The country’s apparel exports may just about cross $17 billion in 2015-16, compared with the target of $18.73 billion for the fiscal, as outbound shipments to key markets like the US and Europe remained lower than expected due to an economic slowdown, they added.
According to Apparel Exports Promotion Council (AEPC) chairman Ashok G Rajani, the garment segment still witnessed a 5% rise in exports in December from a year before and a 2.8% increase during the April-December period to $12.47 billion, far outpacing an 18% contraction in the country’s overall exports.
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.
Already, garment exporters are concerned about Vietnam, a key competitor, likely getting duty-free access to the EU market from 2017 under a free trade agreement concluded between the two parties late last year, while Indian exporters have to pay a 9.6% duty to ship out to the 28-member bloc, said Rajani. Even the proposed Trans-Pacific Partnership, once implemented, will allow Vietnam zero-duty access to the US, while Indian garment exporters are required to pay duties in the range of 17-30%. While the EU made up for almost 40% of Indian garment exports last fiscal, North America accounted for just above 25%.
“The India-EU Broad-based Trade and Investment Agreement (BTIA) is yet to be finalised, exporters are expecting faster conclusion of the talk so that they can compete with Bangladesh and Vietnam,” he added.
India and the EU on Monday took stock of “outstanding issues” for the proposed free trade agreement (FTA) after a gap of almost three years. The EU suggested that a secretary level meeting be held on the issue, commerce secretary Rita Teatoia said on Monday, adding that India would decide on how or whether to proceed after that meeting. However, she added: “We are keen to go ahead and work towards a balanced agreement.”
Rajani has sought the simplification of and flexibilities in labour laws. “Women employee should be allowed to work in night shifts, fixed term employment, given the industry’s seasonal nature, enhancement of working hours and relaxation in overtime and quarterly cap and liberalising procedures for lay-offs,” Rajani said. An investment of R30 crore creates opportunities for 2,200 jobs and R120 crore worth exports, he said at the 56th India International Garment Fair.
Textiles minister Santosh Kumar Gangwar inaugurated the fair, which is expected to attract over 800 buyers from across the globe.
For its part, the textile ministry has sought a quick resolution of the India-EU free trade agreement. Already, competing countries like Bangladesh and Pakistan have zero-duty access to the EU market. Gangwar last month told FE that he had already recommended easing of labour laws for the sector, including doubling overtime limit for workers and easing restrictions for women to work at night in factories.