'Apparel exports to fall short by 24%' - Mr Vaid, AEPC

January 07, 2009 - India

Apparel exports from India have fallen sharply since August 2008 due to declining sales in the United States and the European Union while those from Bangladesh, Indonesia and Vietnam are on an upswing.

Apparel Export Promotion Council (AEPC), today hosted a press conference to discuss the status of clothing industry in the face of global economic recession. The conference was presided over by chiefs of major industry associations like the Clothing Manufacturers Association of India (CMAI), Garment Exporters Association (GEA), Apparel Exporters and Manufacturers Association (AEMA) and Tirupur Exporters Association (TEA). Among those present were AEPC Chairman Rakesh Vaid, AEPC Executive committee member Hari Kapoor, CMAI President Rahul Mehta, GEA President G.S. Madan and TEA President A. Sakthivel.

All of them called for revisions in the current stimulus packages announced by the government. Fresh data from the Apparel Export Promotion Council (AEPC) shows that apparel exports plunged 11.29 per cent in November to 621 million dollars compared to 700 million dollars in the same period of 2007. Thus the period between April to November shows a decline of 0.2 per cent in exports compared to corresponding period of previous year.

"Apparel exports are likely to fall 24 per cent short of the 11.62 billion dollar target in the current financial year and may total up to 8.78 billion dollars," said Mr Vaid. In 07-08, the country exported garments worth 9.69 billion dollars, nine per cent more than in previous year.

“India is clearly losing its edge in global markets. The government and the industry must gear up to retain existing buying nations and explore fresh markets," he said. Mr Vaid said the global economic recession has led to customers like Steeve and Barry's along with Mervyns filing for bankruptcy. Buyers like Pacific Swimwear, Lane Bryant, Fashion Bug and Catherines have closed hundreds of stores due to sliding sales.

As a result, he added, nearly 500,000 Indian workers have already lost their livelihood in the apparel sector while more job losses are expected in the next three months. "Surveys conducted in export hubs of Gurgaon and Okhla here towards December-end show 84 per cent manufacturing units registered fall in export orders and employment in the range of 20 to 80 per cent," said Mr Vaid.

India's exports to the United States, which imported garments worth 85 billion dollars in calendar 2007, tumbled 11 per cent in rupee terms during October to December last year. But apparel exports to the United States from Vietnam jumped 35 per cent in dollar terms while those from Indonesia were up 8.44 per cent. Even exports from Bangladesh were up 6.6 per cent.

Similarly, India's garment exports to the European Union during January to August stagnated while those of China increased by 8.19 per cent, Vietnam by 9.85 per cent and Bangladesh by 3.01 per cent. Mr Vaid said India’s exports and its market share globally are on the decline. Due to better policy support by other countries, India is losing its advantage.

According to Mr Vaid, wild fluctuation in rupee-dollar exchange rates since April 08 have severely dented the competitiveness of Indian exporters, but the government has done nothing so far to help the clothing industry.

According to the export promotion council, basic infrastructure needs to be toned up and labour laws need to be amended to revive export potential. The exporters are also looking forward to a financially sound stimulus package for the apparel sector which is one of the topmost employer of the economically weaker section -- especially women.

The governments in Pakistan and China have announced sops for the textile and apparel export industry to ease operating pressure on companies and enhance their competitiveness. In India, however, the duty drawback rates have been slashed from 11 to 8.8 per cent for cotton apparel, from 11.2 to 9.8 per cent for blended garments and from 11.5 to 10.5 per cent for synthetic clothes.

The AEPC chairman has called for increasing the rates of duty drawback to 14.64 from 1 September, 2008. He said exporters should be entitled for 80HHC benefit under the Income Tax Act for coming five years. Fringe benefit tax as applicable to the information technology sector should be extended to garment exporters, he added.

About AEPC:
The AEPC is an apex body of more than 7,000 small, medium and large garment exporters. It was set up in 1978 and is sponsored by the ministry of textiles. It provides assistance to Indian exporters as well as international buyers who choose India as their preferred sourcing destination. The council helps in advising the government on policy issues, organizes trade fairs and trains workforce for the apparel industry.