Exports for ’14-15 are likely to be lower than even 5% growth expected until recently
India’s overall textile and garment exports grew just 1.7% during the April-February period of the last fiscal from a year before, while imports have risen by 14.2% during the period, according to the latest official data.
The overall textile and garment exports — which also include those of jute, coir, handicrafts and handloom items — will not just miss the initial official growth target of 15% for 2014-15 but also fall short of the 5% expansion rate expected until recently. According to the provisional data, the overall textile and garment exports touched $35.29 billion during the April-February, compared with $34.72 billion a year before. The government had initially set the export target at $45 billion for 2014-15, compared with the actual exports of $39.3 billion in the previous fiscal.
Exports of fibres crashed over 36% up to February last fiscal, while some other textile items witnessed just a 0.4% rise, thanks primarily to a slowdown in top buyer China, according to industry executives. The communist neighbour usually accounts for over 70% of India’s cotton and 40% of yarn supplies. Consequently, exports of raw cotton, including waste, dropped almost 47% during the April-February period from a year before (See table). The only major growth driver has been the garment segment, with a 13.4% rise between April and February from a year earlier.
“The textile industry needs some incentives to export products to countries such as Bangladesh, Vietnam and Cambodia. These countries import textile items in large volumes for converting them into finished products such as garments for subsequent exports, so we can capture these markets more effectively with some government help,” said DK Nair, the secretary-general of the Confederation of the Indian Textile Industry. He added that currently domestic textile exporters are given a 2% export incentive for outbound shipments only to the US, the EU, Canada and Japan — the markets where the apetite is far more for garments than for textiles.
Imports of textiles, however, went up to $5.57 billion between April and February, compared with $4.87 billion a year before. However, Nair said since most of the items imported are used as inputs for finished goods, the situation isn’t alarming yet.
However, despite the recognition of the textile sector’s role in the Make in India concept as well as in jobs creation, with the Ajay Shankar-led panel envisaging annual outbound shipments worth $300 billion by 2024-25, a lack of adequate focus and proper planning in boosting exports have also taken a toll, textile industry executives had said earlier. The government is yet to come up with the textile vision document, which was to be based on the recommendations of the Ajay Shankar panel, even ten months after the report was first submitted with the textile ministry.
Subdued textile export demand has reflected in the industrial production data as well. According to the index of industrial production data, the textile segment grew just 2.4% from the April-February period from a year
Higher textile exports augur well for the economy as they accounted for 12.6% of the overall exports last fiscal and the sector employs 35 million people, having become the largest employer after agriculture.
The country’s textile and apparel exports have expanded at an average of 11% over 10 years through 2013-14, still lagging the growth rates achieved by some much smaller nations. Even Vietnam could achieve a peak export growth rate of 30% while Bangladesh could achieve a growth rate of 18% during this period.