Lack of adequate sops and overall dull market, apparel exports may miss the earlier target of $ 17.25 billion in the country. According to industry sources, as against the target of $17.25 billion, apparel exports worth $16.50-16.75 billion is being anticipated.
"The target may be missed due to several factors such as lack of adequate sops as well as international market conditions. For instance, the European market has not been so bullish as far as apparel exports from India are concerned," said an Apparel Export Promotion Council (AEPC) official on condition of anonymity.
In the month of February alone, the industry saw an 8 per cent growth as against the expected 12-15 per cent growth. This is also because exporters reduced capacity to take orders amidst zero interest subvention and other export oriented incentives.
"Europe forms about 48 per cent of India's apparel exports. The industry has been demanding an FTA with Europe in this regard. Moreover, the industry has also demanded interest subvention but which wasn't announced in the recent budget as well," said A Sakthivel, president of Tirupur Exporters Association.
According to industry experts, as against an inflation of 6-7 per cent in India, inflation in Europe is much lesser. This makes apparel exports unviable since raw material costs in India are rising faster than the finished goods prices in Europe. If and when passed, the FTA will place Indian garment exporters to par with their Bangladeshi counterparts who export apparel duty free to European nations.
What's more, the council is projecting further decline in apparel exports growth in the first quarter of next fiscal. "Unless the government meets some of the demands of the industry, the growth may further decline in the coming quarters," the AEPC official stated.
Buoyed by the previous year's growth and China off-loading its export orders, AEPC had targeted a robust 13-15 per cent growth rate for the second consecutive year i.e. 2014-15.
Indian apparel exports were able to post a healthy growth rate of 15.5 per cent at $14.9 billion in 2013-14 as against $12.9 billion in 2012-13, thanks to revived demands from the US and European markets. At 13-15 per cent, Indian apparel exports were expected to touch $17.25 billion for the year 2014-15.
Globally, on one hand, while China - which, at 36 per cent global share is the largest apparel exporter - is being forced to off-load export orders due to high manufacturing costs and labour shortage, Bangladesh is also facing safety and compliance issues.