After a meagre 2.8% rise in March, India’s garment exports grew 9.2% in April from a year before, Apparel Exports Promotion Council (AEPC) chairman Virender Uppal said on Tuesday.
Apparel exports hit $1.44 billion in April, compared with $1.32 billion a year earlier. The growth rate in garment exports last month is lower than 12.2% expansion in the entire last fiscal. However, the growth is still impressive, considering the country’s overall exports dropped 14% in April from a year before, having dropped by 21% to hit a 67-month low in March.
Despite the relatively better performance by the garment sector, Uppal said there has been “a vacuum in a policy support” to the readymade garment manufacturing export industry. In the recent FTP announcement, certain export incentives were withdrawn. 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.
“No Merchandise Exports from India Scheme (MEIS) has been announced to Latin America, West Asia, CIS countries, Africa and Oceania countries. The non-traditional markets which constitute around 35% share in India’s garment exports are poised to receive a setback due to withdrawal of the benefits of the Chapter 3 benefits,” Uppal said.
The EU market constitutes 41% of the India’s RMG exports. While conditions in major markets like EU continue to be far from satisfactory, India is also facing a duty disadvantage of 9.6%, compared with competing countries like Bangladesh and Pakistan which are having zero duty access to that market.
Similarly, the US constitutes 21.7% of India’s RMG exports and the market condition in the US is yet to rebound sharply. “The prospects of considerable improvement in the market are rather limited due to competition from countries like Vietnam and Mexico, which have zero duty access under preferential treaties with the US,” Uppal said.
AEPC seeks sops to boost exports
Uppal has demanded a 3% interest subvention retrospectively, from the beginning of the last fiscal, to partially mitigate high cost of lending, which is hovering around 11-12% compared with 4-6% in competing countries. He has also sought support from the FTP — a 5% duty credit scrip to major markets.
AEPC has said the government should ensure swift clearances of import and export by customs.
The government should also finalise on an urgent basis the India-EU FTA and the CEPA with Canada so as to “mitigate the duty disadvantage suffered by India vis-a-vis its competitors like Bangladesh, Cambodia, Vietnam, Pakistan, etc., in the major markets”, Uppal said.
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