Textile export to fall due to lack of govt support: Industry

India’s textile exports are likely to decline by 10-12 per cent this financial year, says Ashok Rajani, chairman, Apparel Export Promotion Council.

He points to less of tax exemptions for exporters, the rupee's rise against the dollar and shifting of orders to competing countries.

Readymade garment export declined 41 per cent in October to ~5,398 crore ($830 million) from the same month last year. Export of manmade yarn, fabric and made-ups fell 8.3 per cent to ~2,310 crore.

Overall export of retail and lifestyle products grew at a compound annual rate of 10 per cent from 2012-13 to 201516. The government's target for textile and garment sector exports is $45 billion for 201718, as against $38.6 bn and $40 bn for 2016-17 and 2015-16, respectively.

The decline in export of readymade garments indicates India’s failure to raise its global share, despite the world leader, China (42 per cent of global total) ordering the shutting of many textile units on environment concerns. Exporters blame unfavourable government policies, such as reduction in duty exemptions.

“While the government has increased the Merchandise Exports from India Scheme(MEIS), the Remission of State Levies remains far below our recommendations. Overall, textile exporters are witnessing a shortfall of 2.7 per cent in incentives now, compared to the pre-goods and services tax era. Also, appreciation in the rupee has hit exporters’ receivables,” said Rajani.

The Directorate General of Foreign Trade recently raised the MEIS rate from two to four per cent on readymade garments and made-ups for export between November 2017 and June 2018.

And, the Union textile ministry recently announced a solar energy subsidy scheme for small powerloom units; a ~250,000 subsidy will be given for setting up each photo voltaic plant. “This will help the unit to pay back bank loans within three to four years, after which the unit shall get practically free electricity,” said Kavita Gupta, textile commissioner, on Monday.

The government's target for apparel export is $20 billion for FY18, against $16.8 bn for FY17. Rahul Mehta, president of The Clothing Manufacturers Association of India, believes this is unlikely, with not much change from last year.