Export of Ready Made Garments (RMG) continued its southward journey, recording a drop of 12.12 per cent to $6.61 billion from $7.522 billion from April to August in the corresponding time period last year due to the impact of the GST and the reduction in duty drawback.
The year started with a 22.78 per cent drop in April, from $1.747 billion a year ago to $1.349 billion in 2018. In August, the export touched $1.292 billion in 2018 as compared to $1.338 in 2017.
But at the same time, the exports clocked a 5.03 per cent growth in rupee terms, thanks to currency fluctuations. The exports in August 2018 was Rs 89.87 billion as compared to Rs 85.57 billion clocked in August 2017, a growth of 5.08 per cent.
Exporters said the impact after the implementation of the GST, reduction in duty drawback, and ROSL (remission of state levies) was visible on the export trends.
"With the Government's initiatives, we expect to see the reverse trend this financial year," said Raja M Shanmugham, president of Tirupur Exporters’ Association.
Another official from the exporter fraternity said the duty-drawback committee recently met the Apparel Export Promotion Council (AEPC). They had also met the Tirupur Exporters Association in Bengaluru in July, but any announcement is yet to be made. The traders fear it may negatively impact the relationship with their clients.
"A delay will drive our buyers to resort to Bangladesh, Vietnam, Ethiopia, Myanmar and once if they settle there it is difficult to bring them back immediately. Meanwhile, the season will go off with partial orders," the official said.
R Rajkumar, managing director of Best Corporation, expressed hope that next year would bring better fortunes for the RMG segment.
The rupee falling to an all-time low might help the exporters' cause as it will narrow the price difference between Made-in-India textiles and competing nations, including Vietnam, Cambodia and Bangladesh. The development comes at a time when exporters are going to finalise agreements for the next set of orders.
"It will benefit exporters, who will be able to compete better with other competing countries. With Government incentives and the dollar at 70, we should be good to compete,"
Shanmugham, president, Tirupur Exporter Association said the gap between Made-in-Tirupur and other neighbouring competing countries would be reduced by around 2-3 per cent. Currently, the gap ranges between 10-15 per cent.
"Though, we will still be costlier, customers won't mind to hedge the risk if the cost difference upto 5-7 per cent. If the situation continues, we can expect a growth of around 10 per cent. The fall is a pleasant surprise for the industry," Shanmugham said.