New policy to help apparel exports to grow 20%

Textiles Ministry has set a target of $20 bn for current financial year as against actual apparel exports of $17 bn in 2015-16

India’s apparel exports are likely to rise about 20 per cent this financial year, following a number of measures taken by the government to encourage investment and raise foreign shipments.

According to trade sources, the ministry of textiles has set a target of $20 billion (Rs 1.35 lakh crore) for the current financial year as against exports of $17 billion (Rs 1.14 lakh crore) in financial year 2015-16 (FY16). Given the sentiments in foreign markets, the target looked ambitious as major importers such as the United States and European Union preferred countries such as Pakistan and Bangladesh.

“But the latest initiatives taken by the government are set to boost India’s apparel exports. Hence, the target looks realistic now,” said Rahul Mehta, president, Clothing Manufacturers’ Association of India (CMAI).

The government increased the subsidy allocation under the amended technology upgradation fund scheme (ATUFS) from 15 per cent to 25 per cent.  It also included state levies under drawback schemes to enable manufacturers to claim more duty refund, thereby reducing working capital expenditure.

“The department concerned would not meet with apparel manufacturers to decide on the types of levies that could be included in the drawback schemes. But, this would certainly widen our duty refund claims, which would ultimately make our product cost competitive,” said Mehta.

Meanwhile, the government has put a caveat on additional ATUFS subsidy. Release of the subsidy amount is now contingent on the company proving employment generation.

“In the detailed project report (DPR) submitted to the government, apparel companies have claimed employment generation, which they would have to prove now. But, the measures announced by the government would certainly improve overall apparel exports from India as we are exploring non-US and non-EU markets for growth,” said Kavita Gupta, textiles commissioner, ministry of textiles.

Meanwhile, the industry is confident of employment generation in this sector. The additional subsidy would tempt companies to invest more, which is expected to generate more employment.“In the entire promotion effort, fabric and home textile industry have been ignored in spite of several representations and justifying presentations made by Cotton Textiles Export Promotion Council (Texprocil). The home textile sector is as labour intensive as apparel manufacturing. The process is the same, ie, adding value after cutting the fabric and using trims, in the manufacture of finished products,” R K Dalmia, chairman, Texprocil.

Extending special benefits to the home textile sector will not only lead to substantial increase in employment in rural India, but will also augment exports.

This in turn will bring about higher fabric consumption and capacity building in the downstream industry resulting in inclusive growth in the entire value chain.