From Paris Hilton to Oprah Winfrey, Americans? love for the kurti during their Indian sojourns is well-known. Now their penchant for Oriental elegance at home is weaving a revival of the Indian garment industry?s lost fortunes.
A fresh pick-up in supply orders from the US is helping reverse a 7.3% slide in India?s garment exports between April and December last year, the weakest performance since the 2008-09 global financial crisis, official and industry sources said.
Though the US has been a key market for some time now, its role has significantly increased after Indian garment industry?s top market, Europe, faced a sovereign debt crisis, crimping demand. Elevated labour wages, frequent power outages and volatile raw material costs just made matters worse.
?Apparel purchase orders from the US have gone up recently, which is somewhat salvaging the situation for us, even though margins still are not up to the mark. The government has also been facilitating exports to new markets, such as South America or Japan, which has started yielding results,? said Rahul Mehta, president of the Clothing Manufacturers? Association of India.
?I expect garment exports to achieve good growth in the current fiscal despite lingering crisis in the EU, though exports in the 2012-13 fiscal may have remained flat,? he added.
Apart from helping the country?s overall export figures to improve, the uptick in demand will also aid in achieving the investment target of R151,000 crore in the textile sector during the 12th Plan period through 2016-17, under the Technology Upgradation Fund Scheme (TUFS), sources said. The government plans to offer subsidy worth R11,952 crore to meet the investment target under the TUFS during the current Plan period.
Total textile and clothing exports dropped to $22 billion between April and December, down 7.3% from a year before, shows the latest provisional data. However, a sharp depreciation of the domestic currency drove up export value in rupee term by 6.9% to R1,19,855.65 crore. By contrast, the country?s overall exports dropped by 5.5% during the April-December period, although in the rupee term, the shipments grew roughly 8.1%.
DK Nair, secretary general of the Confederation of Indian Textile Industry (CITI), said some textile product shipments are looking up now, although garment exports are still facing problems. Garments make up for more than 40% of the total textile and clothing exports. ?Overall, I think the total textile and garment exports may have remained almost flat in 2012-13 at $35 billion, although 2013-14 is going to be a good year,? he said.
The signs of recovery in the textile sector augur well for investment under the TUFS. ?Investments are expected to go up in the next fiscal, although in 2012-13 investments may have been to the tune of R20,000 crore to R25,000 crore. TUFS had attracted investment to the tune of R76,000 crore in the best year, and on an average R35,000 crore to R40,000 crore investments are done. So I think the target will be achieved, although some other factors like the economic situation will have to be considered,? Nair said.
The government mainly provides interest subsidy against loans to units, capital subsidy and limited cushion against exchange rate fluctuation for upgrading technology at existing units, as well as to set up new units.
Apparel Export Promotion Council chairman A Sakthivel has sought a 5% duty credit scrip to garment exporters for shipments from 2012-13 to 2016-17 on actual user basis, which won?t be transferable, to help boost apparel exports. The scrip will be used for offsetting custom duties on the specialty fabrics, he said.
