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'Garment industry continues to lose Rs 120 bn/month' - Mr Mehta, CMAI
Jan '09
The Indian Garment Industry continues to face the grim reality of continued loss of over Rs. 12,000 crores per month due to compelled cut in production caused by the unending woes of slowdown of the Local and Global Markets, uncompetitive production costs, rising input costs, poor high cost power and unrelenting neglect by the Government even in the “Second Economic Stimulus Package”, said Mr. Rahul Mehta, President, The Clothing Manufacturers Association of India (CMAI).

The average cut in production by the Industry is as high as 15% since September, 2008, forcing high rate of closures and cut in production and employment. It is now feared that the situation will remain the same for the first half of 2009 as no further relief measures are expected from the Government for this fiscal year (ending 2009 March)

The Second Economic Stimulus Package had specifically promised to address the woes of the Textile and Clothing Industry acknowledged by the Government to be worst hit. But, as far as the Garment Industry is concerned, there is complete marginalization in the Package announced, Mr. Mehta lamented.

The Rs. 1,50,000 Crore (35 Billion Dollar) Indian Apparel Industry had high hopes of stimulation of exports by increase in Drawback and DEPB Rates and increase or removal of value caps and restoration of 4% Interest Subvention to pre-September 2008 levels were vital requirements to stimulate Exports which continue to decline for the fifth consecutive month till December 2008, Mr. Mehta pointed out.

One has also to note the serious decline in the target set of 11.62 Billion Dollars for 2008-09 by 24% to 8.78 Billion Dollars in a Global Market of 530 Billion Dollars where India aspires to become a 'Major Player', Mr. Mehta said.

What is most regrettable, Mr. Mehta added, is that the Apparel Sector is being neglected in spite of the enormous Employment potential, especially for semi skilled and unskilled Workmen, and Women, and conversely, the potential for Employment loss if the Industry gets deeper in to the crisis mode.

It is alarming that demand shrinkage in US and EU Markets, pressure to cut prices by intense competitive vial Nations armed with higher Export Rebates and incentives like China, Vietnam, Cambodia and Bangladesh would continue to edge out Indian Exporters. Mr. Mehta lamented. In contrast, China has increased its Export Incentives 3 times in the last 6 Months, raising them from 11% to 17%; Pakistan too has announced a R&D Rebate of 6% besides a 2.5% cut in Interest Rates.

The Government must move towards being more “industry friendly” by taking a pragmatic review to ensure survival and growth of the industry expected to become a “major global player”, he added.

Clothing Manufacturers Association of India

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