The Indian apparel industry is on the backfoot and fighting for survival. However, much one may debate on GST versus Duty Drawback, the reality is that till the time GST refund mechanism is not running smoothly, the garment export industry will continue to suffer capital shortage and rock-bottom margins, thereby weakening its competitiveness.
The seriousness of the situation is obvious from the fact that the industry is collectively attacking the situation from various directions in a very concerted way. For the first time ever, the agenda for all, from the biggest to the smallest exporter, is to get duty drawback reinstated as soon as possible at the rate it was prior to implementation of GST till the refund mechanism is fully functional, which is not expected to happen before June 2018.
The obvious noise that the trade associations and small exporters are making at various forums have been noted by all and reported extensively by even national newspapers. But what has gone unnoticed is the intense efforts going on by top exporters on a personal level at the corridors of power. Some medium-level players have criticised the bigger exporters for abandoning them in these crises and looking only at their own growth strategy, the general feedback was that bigger exporters wanted to remain in the good books of the Government and so did not join the majority in raising their voice.
However, contrary to the perception, a reliable source informed Apparel Resources that the day the duty drawback rates were slashed. Harish Ahuja, CMD, Shahi Export, the biggest exporter of this country met senior officials of the Government and informed them that the move was suicidal for the industry and that they may alone have to lay-off 60,000 workers (60% of its workforce) if corrective measures were not taken soon, highlighting the huge negative impact that the move would have.
The other bigwigs of the industry too, like Orient Craft, Richa Global, Texport to name a few, have been lobbying aggressively at the ministry-level for a more pragmatic approach to the current stand-off so that the situation can be tied over with minimum causalities. The fear of mass unemployment is the strongest plank for the industry to bat on and the Government understands this.
