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'Inexplicable disregard towards T&G sector baffles me' – Mr Mehta, CMAI
Apr '09
Mr Rahul Mehta, President, CMAI
Mr Rahul Mehta, President, CMAI
The textile and clothing industry in India is witnessing its worst period since its inception hundreds of years ago. One single economic crisis in the US has brought down the sector to its knees which was riding high on unprecedented growth rates of the past few years. The industry has turned towards the Union government for help and has among many demands sought a two year moratorium on repayment of loans to help the sector survive through the crisis.

Other than the moratorium on repayment of loans, they have demanded an increase in duty drawback rates, interest subsidy of 4 percent on export finance and an increase in tax refunds on exports. Industry experts aver that an urgent resolution of these demands will not only help re-employ one million workers thrown out of their jobs, but will also generate employment for an additional 2.5 million people in the next few years.

Speaking exclusively to Fibre2fashion, Mr Rahul Mehta, President of the apparel trade body, Clothing Manufacturers Association of India (CMAI) and also the Director of Creative Group of Companies, which is in to the manufacturing and exports of readymade garments, commented on the pressure on domestic and exporting companies in the current scenario as well as the merits of the demands put up by the industry bodies.

Mr Rahul Mehta was kind enough to spare time from his busy schedule and gave exhaustive replies. He said, “The Indian Apparel Industry is undoubtedly going through its worst crisis since it took its first fledgling steps in the 70's. As against the heady 15% - 20% annual growth in the heydays of quotas, to the over 30% growth immediately after the abolishing of the quota regime, to the less than 10% growth last year and fears of a negative growth in 2009 – 2010, it has been a roller coaster ride for the industry”

So we asked him the obvious question as to what went wrong that the industry finds itself in this crisis, to which, he replied by saying, “Obviously, the global financial crisis has hit the industry hard. The US and EU markets constitute over 65% of our exports and the slow down in these economies have impacted our exports in a significant way. However, today's scenario has to be seen in the context of various factors”

Listing out the factors he said, “The weakening of the rupee has certainly reduced the extent of the impact, but it would be fallacy to think that the problems have been eliminated by the Dollar–Rupee parity. Consumers in the major markets also seem to have shifted towards cheaper products and therefore more economical sources of supply. Countries which are able to supply cheaper goods have therefore been less affected.

“Several of the leading manufacturing countries have taken various steps to mitigate the hardships faced by their respective garment Industries. For e.g., Vietnam has reduced bank interest to 4% and provides interest free bank loans for payment of social security; Pakistan has introduced a Special Opportunity Zone, from which one can export to USA without paying any import duty in the US.

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