Apparel Online India Magazine March 1st Issue 2019 | Page 92

INDUSTRY LIVE
HOW INDIA’S STAGNANT APPAREL
EXPORT CAN ACHIEVE THE
AMBITIOUS TARGET?
I
ndia’s apparel export for 2018-19 is
estimated to be US $ 16,650 million
(US $ 16.6 billion) which is a flat growth
compared to that in the last fiscal. Apparel
exports for the period April-December
2018 remained US $ 11,350 million, which
showed a negative growth of (-) 8.35 per
cent compared to the corresponding period
last year. On the other hand, India has a
target of achieving US $ 33 billion by 2023-
24. The projection is aimed at progressively
achieving a yearly growth rate from 12.2 per
cent to 18 per cent in five years period.
The issue was highlighted recently in the
Board of Trade meeting held at Vigyan
Bhavan, New Delhi. Dr. A. Sakthivel,
Acting Chairman, AEPC, submitted a
detailed presentation in this regard to the
Union Minister of Commerce & Industry,
Suresh Prabhu and other senior officials
of various departments.
“We have reviewed the export performance
and made suggestions; industry and all
stakeholders need to work together,” said
Dr. Sakthivel.
Challenges at global level
World apparel growth is only four
per cent and major foreign apparel
brands are facing challenges due to
emerging competition mainly owing to
e-commerce, rationalisation of stores,
reduction in margins leading to price
pressure on suppliers. These brands,
therefore, resort to digitisation in supply
chain and process set-up to overcome
the impending problems. However, there
is still inadequate adoption of digitised
manufacturing set-up by India due to lack
of institutional support.
At internal level
On the other hand, within India, a gap
of 6.93 per cent in benefits in pre- and
post-GST period is there owing to 2.70 per
cent pending as drawback and 4.23 per
cent pending as embedded taxes, which
are not yet refunded. Moreover, the benefit
of GST is not visible in cases with lower
input prices like fabrics. There is also a
significant reduction in financial support
being provided to export promotion
activities through budgetary mechanism
MAI (Market Access Initiatives) scheme
(Rs. 19.20 crore in 2013-14 to Rs. 6.02 crore
in 2018-19).
Solutions
Industry can do on its own
• Setting up of smart factories – 4.0
technology will lead to reduction in
waste,
• Capacity building by digitisation,
• Strategy to enhance women employment
in apparel sector,
• Product development through HS
codewise strategy to arrest the
decline and propose at least a growth
of 5 per cent to 15 per cent in the next
five years.
Government needs
to come forward
• Refund of embedded taxes and deficit in
policy support in post-GST; 6.93 per cent
on FOB value of exports through Rebate
of State Levies (RoSL) route (Ministry of
Finance),
• FTA with EU and CEPA with Australia
and Canada (Ministry of Commerce),
• Addition to Gender Budget– A wage
support of 10 per cent by Union Budget
for women workforce (Ministry of
Finance),
• Enhance the ambit of interest
equalisation scheme – 5 per cent interest
equalisation to all apparel exporters
(Reserve Bank of India),
• Provident fund support from
employer’s share,
• Contribution of 12 per cent of wages up
to 2023-24 period,
• Extension of terminal date of registration
of new workmen beyond 31.3.2019
(Ministry of Labour & Employment).
Uniform state support
• Land & flatted factory sheds – the policy
may add ‘plug & play’ factories on lease
basis,
• Power subsidy – 50 per cent tariff support,
• Freight subsidy – 50 per cent freight
subsidy for fabric/made-ups/RMG units,
• Full support on ESI.
The issue of stagnant apparel export was discussed in the Board of Trade meeting in which Union Minister of Commerce & Industry Suresh Prabhu and many top officials were present
92 Apparel Online India | MARCH 1-15, 2019 | www.apparelresources.com