Interview with Ashok Rajani

Ashok Rajani
Ashok Rajani

The growing domestic apparel market is an opportunity for Indian manufacturers
Incorporated in 1978, Apparel Export Promotion Council (AEPC) is the official body of apparel exporters in India that provides assistance to Indian exporters and importers who choose India as their preferred sourcing destination for garments. Ashok Rajani, Chairman, AEPC talks about factors impacting Indian apparel exports and  shares his expectations from the budget.

What is the size of the textile industry in India? What percentage does apparel industry claim in it?

The size of textile industry of India is estimated about USD 118 billion, out of which apparel claims USD 73 billion. The domestic industry has market size of USD 56 billion and exports USD 17 billion.

At what rate is the apparel sector growing? What is driving this growth?

The global apparel markets have been stagnant since 2015. For India, the growth in 2015-16 was a nominal 0.2 per cent and in 2016-17 it is expected to be similarly modest. However, India's domestic market is growing, which is an opportunity for the apparel manufacturers.

Can you please share details of apparel exports of India for the year 2016? Which new regions have Indian textile manufacturers touched base last year?

India's apparel exports to world have declined 0.2 per cent for the period of April-December 2016 due the decrease in import from its major markets like US and UAE.  India's apparel exports has shown a good growth in non-traditional markets like Russia, Oman, Tanzania, Argentina, Iran, Qatar etc.

Which textile products are faring well in the exports market?

In the current financial year 2016-17 products like babywear, men's trousers, men's shirts etc are faring well in exports.

Which three factors will have a huge influence on the Indian apparel export sector in 2017?

The following three factors will have a huge influence on Indian apparel export:
  • The revival of the EU, USA and UAE markets – the top three markets for India is critical for export enhancement.
  • The continuation of Merchandise Exports from India Scheme (MEIS) and effective roll out of the Special package will be critical as these are biggest support that the industry has presently.
  • Besides this, bilateral trade agreement with UK, post Brexit, and India- EU FTA can be huge positive influences on apparel export
  • Will the cashless economy help make the Indian textile industry more organised as a sector?

    The export sector has been organised but yes, the outsourcing and downstream industries will have to re-organise as the economy becomes cashless.  We are monitoring the transition carefully, as it is a huge industry with large downstream segments which need time for this readjustment. 

    Which activities will AEPC be focusing on in 2017?

    The current market sentiments are not upbeat. In fact India's RMG export to the world during April-November of 2016-17 was to the tune of USD 10962.5 million, a decline of 0.2 per cent compared to the same period of previous financial year. 

    Not withstanding the present slump, we are targeting double digit growth in 2017, in order to meet the export targets envisaged by the Prime Minister while he announced the special package. Frankly, in 2016 also, we put every effort to take the policy support to the exporters and sensitise them on its benefits and how to avail them. We reached out to over 1000 exporters across India and sent out several mailers and updates on the various policy announcements, procedural details, etc.

    The forthcoming India International Garment Fair (IIGF) is a platform for networking, influencing buyer sentiments and demonstrating our product strengths. We intend to fully leverage its potential in improving sourcing from India.   

    Besides this, 3 major initiatives are being worked upon by the export promotion team. These are :
    1)      Renewed focus on EU through a "Mega India Show" in a prominent EU country in 2017
    2)     Unlocking potential of clusters through customized intervention programme and multi level engagement with state governments  
    3)     Organising product specific fairs to tap product specific growth potential

    The Union government announced a Rs 6,000-crore package for the garment industry in June 2016. Are we already seeing the benefits of the package or the result is yet to be seen on ground? If not yet, how much more time will it take to see the effect?

    In this regard I would like to point that there was optimism with exports picking up between August and October. But with the delays in roll out of package, non implementation of some of the important support announced and of course the stagnation in EU and US markets,  the growth potential have been curtailed . 

    The growth witnessed during the months of August, September and October was proof enough that the package is an answer to the industry need for support. However, the impact will be more visible once it is rolled out in totality.

    What are your expectations from the Union Budget 2017 to be announced in February?

    The industry has been benefitted by the special package for the garment industry, announced in June 2016, which aims at facilitating new investment, exports and employment. We expect the budget to supplement it, taking the introduction of GST also this year.

    Some of the expectations from the budget are : 
    • Scaling up should be incentivised - Cap of INR 50 crore should be removed under ATUF scheme for attracting more investment in the industry.
    • Condition of term loan component of 50 per cent should not be imposed since there is no interest subsidy for the loans being taken from the banks.
    • Clubbing of license should be permitted under annual advance license for the enhanced Duty Drawback Scheme.
    • Funds should be released for Scheme for Rebate of State Levies (ROSL) immediately.
    • The entire 12 per cent PF should be contributed by central government for removing the need for additional registration and compliance requirement of payment of employer's PF contribution first and then taking its refund.
    • Some of the notifications pending under the special package like the notification for optional deduction of EPF for the employees less than INR 15,000 per month should be issued.
    • Drawback benefits and procedures should remain unchanged under GST regime.
    Published on: 18/01/2017

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