India’s clothing export sector is anticipated to stay gloomy in the coming time, even as the majority of the issues have been settled, as per an ICRA note which was released recently. The note cited that the country’s clothing exports were expected to increase at a sluggish rate of 1 to 2 per cent Y-o-Y basis for the rest of FY 2019, a significant dip as compared to the 14 per cent growth Y-o-Y basis for the first quarter of FY ‘19.
Reportedly, after registering a 4 per cent dip in growth in the last FY and moderate growth rates of 1 per cent and 3 per cent in FY ‘16 and FY ‘17 respectively, the country’s apparel exports in FY ‘19 are expected to suffer fourth straight weak year.
Nation’s clothing exports have displayed a discouraging trend, recording a minor dip of 1 per cent in FY ‘18 as well as in the second quarter of FY ‘19.
Jayanta Roy, Senior VP & Group Head, ICRA was quoted as saying that due to various internal and external difficult growth situations, the previous year panned out to be even more challenging for the country’s apparel exporters. “Shift to the new taxation authority, besides posing liquidity challenges for the industry, added to uncertainties because of alternating stances on export incentives during the year. Further, a stronger rupee surged the challenges in the international market by affecting competitiveness of players in an intensely competitive international apparel market,” he added.
Furthermore, ICRA marked out that the faster refund of GST and improved clarity on the export incentives in the last few months, addressed most of the issues for the country’s exporters. However, the industry at present, is tackling other major worries on the continuation of export subsidy plans in the country, after being challenged by America at the World Trade Organisation (WTO), citing that such schemes are creating an uneven playing field for the US workers. This seems to be restricting the momentum of the nation’s apparel export sector’s rise.
Speaking on the same, Roy said “In the future, steps taken by the Centre to solve these concerns, will be crucial for apparel exporters to cash-in on the revitalized international apparel trade as well as the continuing loss of market share by China, which opens up a lucrative opportunity for key players such as India, Vietnam and Bangladesh.”
