Readymade garment exports up 25% in Sept; firms say can't sustain growth

Exporters attributed the increase mainly to the upcoming Christmas season in western markets
After seeing a fall for three months in a row, ready-made garment (RMG) exports rose by 25 per cent in rupee terms and 30 per cent in dollar terms in September. But exporters say this will not be sustainable since government policies are not favourable.

RMG exports rose to Rs 10,707 crore in September 2017 from Rs 8,583.55 crore in the same month a year ago. In dollar terms, these figures were $1.662 billion as against $1.284 billion. Of the total RMG exports, 52 per cent is woven and 48 per cent is knitwear.

The sector started the year in April with 27.60 per cent growth in rupee terms and a 31.65 per cent increase in dollar terms. But in the following month growth (in rupee terms) was only 3.84 per cent.

Exporters say that garment exports this year will surpass last year’s total exports of $17.358 billion as, generally, exports tend to grow in the second half.

January to March are the crucial months for RMG exports. Around 30-40 per cent of exports have taken place during these three months in the last few years.

Exporters attributed the increase mainly to the upcoming Christmas season in western markets. The other factor is that inventories piled up due to the GST are now being cleared. Tirupur Exporters’ Association President Raja Shanmugam said that people are now becoming used to the system. In the last three months while global demand was increasing, exporters could not cater to it due to tax-related confusion.

“Now we don’t have a choice, but the GST makes our products costlier compared to other countries,” said Shanmugam. He added the September numbers are not sustainable in the current environment.

Another exporter agreed and said unless India signs an FTA with European countries exporters will be in deep trouble. Competing nations have a duty advantage, which India does not possess.

Customers have also started asking for a reduction in price after the rupee started strengthening against the dollar. This comes at a time when the cost of doing business is going down for exporters.

Customers are sourcing from India as part of a de-risking strategy. “The day is not far when competing nations will catch up with this trend,” said a leading exporter.

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