Worst may be over, but textile exporters still face a long road to recovery

Outbound shipment of the largest component of textiles — readymade garments — had zoomed up by more than 36 per cent in October
The textile export market might be looking up, finally. Outbound shipments of readymade garments zoomed at last in October. But a return to high growth is unlikely anytime soon, even though, as experts believe, the worst is over.

Outbound shipment of the largest component of textiles — readymade garments — had zoomed up by more than 36 per cent in October, after continuous fall for more than a year. The sustained impact of a devaluing rupee over the past six months, coupled with a demand for early supplies in October in the run-up to Christmas sales in major markets, such as the United States, drove growth in October, trade watchers said. However, this could not boost actual receipts, which stood at one of their lowest levels even in last month.

 
On the other hand, exporters say maintaining double digit-growth figures will be difficult over the next few months as order books may again dwindle soon, owing to continuing encroachment by aggressive suppliers from Vietnam, Bangladesh and Cambodia, who have eaten away at Indian exporters’ orders.

Labour charges are low in these nations, which have seen multiple manufacturers shifting operations to these nations. Major producers of garments such as Bangladesh receive trade benefits owing to its status as a ‘least developed country’ in major markets such as the European Union.

Apparels constitute the sixth largest export item for India, making up nearly 5 per cent of India’s overall export basket as of 2017-18.

“We expect growth November onwards, but they will be nothing like the double-digit figures seen last year,” Confederation of Indian Textile Industry (CITI) Chairman Sanjay Jain said.

India has been aiming to boost export of other textile products, such as yarns and fabrics. The government has pitched for greater systematic trade in these items with the Association of Southeast Asian Nations (Asean). Cheaper Chinese materials, as well as finished products, have flooded the Asean markets over the past few years, Jain added. This has hurt the yarn industry, but with government intervention, India can boost its exports to China itself, he added.

“There had been a global drop in demand and India faced it as much as other nations. But existing problems such as difficulties in getting refunds under the goods and services tax regime are now clearing,” Siddhartha Rajagopal, executive director at the Cotton Textiles Export Promotion Council of India, said.

However, industry insiders blamed the rising cost of raw materials as a further constraint. This year, the Centre has raised import duties on more than 400 textiles items by up to 20 per cent.


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