The country's apparel exports saw an unencouraging trend, with a marginal de-growth of 1 per cent in FY18 as well as 4 month of FY19, even after adjusting for apparel exports to the UAE, which have declined inexplicably and sharply over the past one year, according to Icra.
"With several internal as well as external headwinds, the past year turned out to be rather challenging for India's apparel exporters. Transition to the new taxation regime, besides posing liquidity challenges for the industry, added to uncertainties because of alternating stances on export incentives during the year," said Jayanta Roy, senior vice-president and group head, Icra.
Further a stronger rupee heightened the challenges in the international market by affecting competitiveness of players in an intensely competitive international apparel market, he added.
According to Icra, the country's apparel sector's performance is worrying as it is contrary to the global trends.
The global apparel trade is back on the growth trajectory with an estimated growth of 4-5 per cent in the first half of CY2018 (calendar year) and 2 per cent in CY2017 in US dollar terms.
The positive trend in the global apparel market is being led by the strong recovery in apparel imports by the European Union (EU), which accounts for two-fifth of the global apparel trade, it added.
"Going forward, steps taken by the government to address these concerns, will remain crucial for apparel exporters to capitalise on the revived global apparel trade as well as the continuing loss of market share by China, which opens up a lucrative opportunity for key players such as India, Vietnam and Bangladesh," said Roy.
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