FROM THE ED­I­TOR-IN-CHIEF’s DESK…

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The pic­ture is just get­ting bleak for the gar­ment ex­port in­dus­try... The whole month, I have been hear­ing only wor­ried voices, but post the an­nounce­ment of re­duced duty draw­back rates, the sce­nario has be­come worse.

At a re­cently con­cluded event in Ban­ga­lore, the ma­jor dis­cus­sion cen­tred around how the ex­port in­dus­try is on a sui­ci­dal route and com­pa­nies now have to start think­ing of go­ing lo­cal, be­fore it is too late... No one re­ally un­der­stands why the Gov­ern­ment does not ap­pre­ci­ate the in­dus­try for its em­ploy­ment gen­er­a­tion po­ten­tial and en­cour­age­ment is not forth­com­ing. The type of mails that I am re­ceiv­ing are in­deed de­jected and for once right from the AEPC to the com­mon ex­porter..., the re­ac­tion is unan­i­mous – shocked...! One ex­porter wrote, ‘Sur­vival and the fu­ture of RMG ex­porters is doomed’. The AEPC Chair­man writes with equal pas­sion: ‘The present new rates are un­ac­cept­able’.

Though one may ar­gue that the move was an­tic­i­pated and ex­porters should have been pre­pared for the same…, But the fact is that the lob­by­ing was strong, and ev­ery­one was hope­ful that with a pro-ac­tive min­is­ter at the helm, the re­duc­tions would be min­i­mal…, cer­tainly not so dras­tic!

There was a gen­eral feel­ing that the present draw­back rates would con­tinue till such time when fi­nal con­sul­ta­tion re­gard­ing is­sues aris­ing out of GST im­ple­men­ta­tion are sorted out and proper mea­sures are taken to en­sure that ex­ports re­main zero-rated and no taxes are ex­ported.

How can the Gov­ern­ment ex­pect ex­porters to think of ex­pan­sion, when the very foun­da­tion of com­pet­i­tive­ness has been shaken? State Gov­ern­ments may go all out to pro­mote in­vest­ment in their re­gions, claim­ing many in­cen­tives, but is any­one lis­ten­ing to their worry of keep­ing their ex­ist­ing fac­to­ries run­ning prof­itably?

It is a Catch-22 sit­u­a­tion – if we don’t move to a zero-duty draw­back regime, our com­mit­ment to WTO stands vi­o­lated, but if we start re­duc­ing drawbacks be­fore ev­ery tax pain point is sorted out, the in­dus­try will be pe­nal­ized.

The Tex­tile Min­istry needs to look into the mat­ter more prag­mat­i­cally… No one is re­fus­ing the re­al­ity that duty drawbacks have to go, but the way the mar­ket is placed to­day, the move to dras­ti­cally cut down the sup­port would cer­tainly be a set­back for the in­dus­try.

The do­mes­tic man­u­fac­tur­ing in­dus­try on the other hand is much more pos­i­tive and with ‘Make in In­dia’ gain­ing mo­men­tum, the fo­cus is just on man­u­fac­tur­ing, not the mar­kets.

Of course, the po­ten­tial of the do­mes­tic re­tail in gar­ment­ing is still largely un­re­al­ized and with many in­ter­na­tional com­pa­nies look­ing at

In­dia as a mar­ket, it makes strate­gic sense for ex­porters to also ex­plore op­por­tu­ni­ties… But it is eas­ier said than done; the way the do­mes­tic mar­ket works is com­pletely dif­fer­ent from how ex­porters are tuned to work. Right from or­der place­ment to re­source pro­cure­ment to de­liv­ery ex­pec­ta­tions… the sys­tem re­quires a dif­fer­ent mind­set.

Also, why would an ex­porter want to va­cate the in­ter­na­tional edge that he has earned over the years… It is a space which is not only the one that he is fa­mil­iar with, but also the one which has made his com­pany the busi­ness en­tity that it is.

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