Confusion over continuation of the duty drawback scheme, sharp decline in Rebate on State Levies (ROSL), prolonged uncertainty over GST rates on knitwear/woven garments coupled with intense competition from neighbouring countries have impacted the exports of readymade garments (RMG) at national level, including at Tirupur, the knitwear capital of India in the first half of the current fiscal.
Confusion over continuation of the duty drawback scheme, sharp decline in Rebate on State Levies (ROSL), prolonged uncertainty over GST rates on knitwear/woven garments coupled with intense competition from neighbouring countries have impacted the exports of readymade garments (RMG) at national level, including at Tirupur, the knitwear capital of India in the first half of the current fiscal. According to the industry data provided by Tirupur Exporters’ Association, the largest knitwear/readymade garment cluster in India, the all India RMG exports in the April-September period grew only 4.53% as against a minimum growth projection of 10% to Rs 59,121.51 crore. However, the current growth rate is little better than the first six months of 2016-17 fiscal, which saw only a 3% growth over 2015-16, the sources added.
Interestingly, the month of September played a huge role in salvaging the industry to report 4.53% growth in the first six months. In September alone, the RMG exports grew 25% to Rs 10,707.86 crore as compared to Rs 8,561.73 crore reported in September 2016. Except, April and May, the RMG exports in June, July and August saw degrowth of 5.5%, 15.47% and 3.84%, respectively due to uncertainty over regulatory issues. Though the second half of every fiscal would always be better than the first half as far as RMG is concerned, but the industry sources pointed out that it is difficult to post 10% growth as projected for the entire fiscal as exporters still not come out of the regulatory blues and other issues. For the fiscal ended March 31, 2017, the RMG exports were at Rs 116,381.24 crore and it was Rs 111,013.75 crore in 2015-16 fiscal. Interestingly, Tirupur, the knitwear hub of India and accounts for more than 22% of total RMG exports from India over the years, saw a marginal growth in the first six months to around `13,000 crore as compared to Rs 12,550 crore reported in the same period last fiscal.
Tirupur cluster, which recorded over Rs 26,000 crore in exports in the last fiscal, has targeted Rs 35,000 crore exports in the current fiscal. The cluster, however, may find it difficult to achieve the same with the first half almost seeing a nil growth, the industry sources said. Speaking to the FE, Raja M Shanmugham, president, Tirupur Exporters’ Association (TEA), exporters were under enormous stress in the last few months due to uncertainty on the duty drawback scheme which was brought down from 7.7% to 2%. The exporters were also hit due to reduction in ROSL to 1% from 3.5% earlier. In addition to that the prolonged confusion over GST rates on knitwear/textile garments also cast a shadow on the exports and overall the industry lost 5% growth in the first six months.